Progressive Enterprise: Innovation Through Intervention?

Entrepreneurship is a wonderful thing. New businesses account for about half of all job creation in the U.S. and represent the fullest vision of the American dream. Underlying much right-wing animosity toward Liberals is the sentiment that we just don't 'get' the free market. There is a notion that Liberals dislike autonomy and innovation; that they are unable to appreciate the majesty of enterprise; and that all 'leftist' activity is in opposition to the market.

Obviously, this is hogwash. But I found some intriguing data that suggests that such attacks are not just wrong-headed, but flat-out self-contradictory. Lo and behold, 'leftist' policies of aiding low-income minority populations and socioeconomically disadvantaged demographics might just make a lot of sense from an entrepreneurial perspective. A 2005 Assessment of entrepreneurship found that:

• Black men with graduate experience are three times as likely to report participation in a start-up activity than white men with the same educational background; Hispanic men are 50% more involved than comparable white men.
  
  
• While educational attainment and household income are not associated with more participation in start-ups for the majority, for blacks and Hispanics educational attainment is associated with much higher levels of participation.
  
  
• The impact of income is often a distinction between those with the lowest annual income, under $30,000 year, and all other individuals. In a similar fashion, the impact of education generally involves those that have gone beyond high school compared to those that have no training beyond high school.
  
  
• The determinants of if people got involved in start-ups were if they answered affirmative to the following sorts of questions: (1) Do you know someone personally who started a business in the past two years? (2) In the next six months do you think there will be good opportunities for starting a new business where you live? (3) Do you have the knowledge, skill and experience required to start a new business?
  

So what can we take away from these points? Let me repackage the above points a bit to make their relevance to progressive policy a bit more clear:

Blacks and Hispanics are very engaged in entrepreneurship, but their degree of participation is more dramatically contingent on educational achievement than it is for whites. Thus they represent an active demographic that is generally more 'uneven' with regards to the dynamics of educational distribution.

Indeed, the poorest and least educated people--who are more likely to be African-American or Hispanic (both have a poverty rate of about 20%)--get the least changes at entrepreneurship. So minorities are more active, but more vulnerable to conditions averse to entrepreneurship (poor education, poverty).

Lastly, social capital and community context--who you know, the immediate hopes you have, and the conditions in which you have to function--are critical determinants of entrepreneurship. Thus again, those in disorganized, struggling, or marginalized communities are probably less likely to have the first-hand experience and contextual encouragement necessary to take commercial risks.

See where I'm going with this? Progressive policies aimed at helping working families and low-income individuals aren't strategies to keep 'undeserving' people fat and happy. Its a recipe for helping to build whole new demographics of dynamic, productive individuals. Individuals who represent a high-potential group of innovators and entrepreneurs, but who are disproportionately inhibited by some of the socioeconomic correlates of entrepreneurship.

See, right-wing blowhards? We're actually looking to infuse the American economy with a shot in the arm. It's just going to take a bit of compassion and progressive pragmatism to give would-be Google guys a fair shake at changing the world.

Richard Rorty & Pragmatism

Richard Rorty passed away recently. You can read a bit about him here and here. I only read one of his books (this one), but I thought it was fantastic. You can read more about it here.

Rorty was heir to the American philosophy of pragmatism, which said that: "meaning and the truth of any idea is a function of its practical outcome. Fundamental to pragmatism is a strong antiabsolutism: the conviction that all principles are to be regarded as working hypotheses rather than as metaphysically binding axioms."

From a pragmatic point of view, context is everything--what is 'best' or 'right' is contingent on the motivations, goals, observer, etc. This might seem almost like a given in today's information age, where so many voices have filled up the public arena that there can be little doubt that all of us define our own truths on our own terms. Indeed, pragmatism seems all the more important in today's complex and interconnected world, where notions of absolutism seem ever more distortive and misleading. The principle that what matters is what 'works', and what is best is what makes people happy, takes on a new significance in an age of globalization, diversity, and inescapable relativism.

To get an idea of the 'common sense' approach of pragmatism, check this out, from John Dewey, a father of pragmatism, circa 1937:

I conclude by saying that the present subject is one of peculiar importance at the present time. The fundamental beliefs and practices of democracy are now challenged as they never have been before. In some nations they are more than challenged. They are ruthlessly and systematically destroyed. Everywhere there are waves of criticism and doubt as to whether democracy can meet pressing problems of order and security. The causes for the destruction of political democracy in countries where it was nominally established are complex. But of one thing I think we may be sure. Wherever it has fallen it was too exclusively political in nature. It had not become part of the bone and blood of the people in daily conduct of its life. Democratic forms were limited to Parliament, elections and combats between parties. What is happening proves conclusively, I think, that unless democratic habits of thought and action are part of the fiber of a people, political democracy is insecure. It can not stand in isolation. It must be buttressed by the presence of democratic methods in all social relationships.

Man, wouldn't this have been helpful in Iraq? Pragmatism is about embracing the big issues in life, but in a way that never disconnects them from reality. We desperately need pragmatism again in America.

Read up on Rorty, Dewey, and the rest of the pragmatists when you have a sec. You'll be glad you did.