Tim Worstall

December 31, 2008

Or, if things turn really nasty, for 2010, maybe 2011. The US will be the first of the major economies to emerge from recession*.

No, this isn’t just because the US was the first of the major economies to enter it either. There’s a lot of talk currently (and a lot of misdirected action alas and alack) about fiscal boosts, extra spending and the like. And everyone is sure that their plan will put the people back to work. But it’s one of the insights of the Austrian School of economics that there’s actually a mechanism by which new jobs are created: entrepreneurs. People setting up new businesses to try out new products, new ways of doing things.

We’ve currently a lot of people in finance, in construction, possibly also in auto making, who aren’t going to be needed or desired in those sectors for years to come, if ever. The way they’re going to get back to work (and one way we could say that a recession is over is that there’s no longer any notable unemployment) is when people figure out how to use that labor and all the other resources being freed up by not being used in finance, construction and so on. The people who will figure that out will be those entrepreneurs.

America I think has more would be entrepreneurs than any other country I’ve ever lived in. It most certainly has the finest financing mechanism for new companies, all those Angel Networks and Venture Capitalists. It also throws the fewest roadblocks in front of someone wanting to start something new and has the best system to clean up the failures (as, inevitably, most new ventures do not succeed).  It’s partly social, partly legal, partly financial and partly economic, but the US is the best place in the world for nurturing the ambitions of entrepreneurs. And since it’s going to be entrepreneurs that dig us out of this mess it’s going to be America that comes out of this mess first.

* This does depend on one proviso, that the current batch of politicians don’t repeat the darn fool sillinesses that the ones back in the 30s tried nor come up with some new lunacies all of their own.