Yeah, the underlying paper is by the Hudson Institute, which is a right-wing think tank. Any place with a political axe to grind will bend facts to suit their hypothesis.
In any case, Felix Salmon makes this statement which struck me as odd:
> Intuitively, if people can’t find work for an existing company, they should be more likely, not less likely, to go out and found a new company themselves, instead.
My guess is that he means "intuitive" in the sense that if you can't find a job that already exists, your only alternatives are either creating a new one for yourself or being out of work (and suffering economic deprivation) indefinitely.
In reality, though, this is not as intuitive a leap for people to make as he thinks. If there's no jobs available at existing companies today, that doesn't mean that there won't be some tomorrow; and starting a new business involves navigating a big thicket of complicated issues most people have no experience dealing with, like forms of legal organization, raising capital, state and local regulatory compliance, taxes and accounting, insurance, etc.
Social factors are also important: if everyone around you makes a living as an employee, the idea that you can start your own business might never even really occur to you, because you have no role models for that kind of behavior. If you go ahead and do it anyway, you risk looking like the odd man out in your social group -- constantly having to explain your decision to people who don't really get it. And of course there's the non-trivial risk of failure, which potentially exposes you to scorn ("I told you opening that shop was a dumb idea, but you wouldn't listen," says your mother-in-law).
Given the choice between checking the job listings again tomorrow and taking on a radical change in lifestyle that requires learning a whole bunch of new skills, it's understandable that just sticking to the job listings as long as they can is the more appealing choice for lots of people.
It's intuitive if you assume that people are homogeneous and it is only circumstance that affects their behavior. I suspect that people who found companies that ever actually hire a significant number of employees are unlikely to have a hard time finding work.
Comments
Yeah, the underlying paper is by the Hudson Institute, which is a right-wing think tank. Any place with a political axe to grind will bend facts to suit their hypothesis.
In any case, Felix Salmon makes this statement which struck me as odd:
> Intuitively, if people can’t find work for an existing company, they should be more likely, not less likely, to go out and found a new company themselves, instead.
Why is this intuitive..?
My guess is that he means "intuitive" in the sense that if you can't find a job that already exists, your only alternatives are either creating a new one for yourself or being out of work (and suffering economic deprivation) indefinitely.
In reality, though, this is not as intuitive a leap for people to make as he thinks. If there's no jobs available at existing companies today, that doesn't mean that there won't be some tomorrow; and starting a new business involves navigating a big thicket of complicated issues most people have no experience dealing with, like forms of legal organization, raising capital, state and local regulatory compliance, taxes and accounting, insurance, etc.
Social factors are also important: if everyone around you makes a living as an employee, the idea that you can start your own business might never even really occur to you, because you have no role models for that kind of behavior. If you go ahead and do it anyway, you risk looking like the odd man out in your social group -- constantly having to explain your decision to people who don't really get it. And of course there's the non-trivial risk of failure, which potentially exposes you to scorn ("I told you opening that shop was a dumb idea, but you wouldn't listen," says your mother-in-law).
Given the choice between checking the job listings again tomorrow and taking on a radical change in lifestyle that requires learning a whole bunch of new skills, it's understandable that just sticking to the job listings as long as they can is the more appealing choice for lots of people.
It's intuitive if you assume that people are homogeneous and it is only circumstance that affects their behavior. I suspect that people who found companies that ever actually hire a significant number of employees are unlikely to have a hard time finding work.