Monday, June 12, 2006

What [makes] me worry?

I got my reasons for blogging anonymously. If I had any inside stories or even moderately interesting ideas, somebody might care who I am.

Oh well.

I certainly try to qualify my blather by saying a word or two about my background where it shores up any implied claim of competence to opine. But I came across a little essay today that is all about the world as seen by a software entrepreneur and if you read it imagining that Greensmile agrees with or finds fascinating almost every word [qualifications and quibbles will make up the rest of this post], you will know me a bit better. Most of the years that it took me to reach oldfarthood were whiled away at a string of 10 or 15 software start-ups. Most of them are out of business but that is another story. Knowing me a bit better is not necessarily good for you but it can help calibrate your evaluation of my drecky editorializing.

If you don't care where American's next jobs are coming from, you can skip that essay. If you think technology is for geeks and completely irrelevant, you won't care about that essay. If the one word you understand is "taxcut" most of that essay will just make you sleepy. In a word, Dubya, you can quit reading right here.

This is not where I came in. I started this blog by promising aphorisms and I meant to stick to short posts because I and much of the online world, don't have time, don't make time, for long reads. Too bad. I just recognized in the voice of this geek Graham, many of the screwups that prompted me to blog. These screwups hurt ME. Graham rather offhandedly diagnoses faults in the system that the workers, the investors and the inventors in this country should most fear and most fiercely oppose. The author has succeeded where many have failed so perhaps his outlook is a bit more sanguine than scarred cast-offs of his industry like myself can support.

This is not where I get off. Yes, I seem to have said more than I thought would be worth saying. Yes, I can't keep from knocking over the capital R Religion honey jar. Yes, I know if I don't squeeze out something for you to chew on about once a day, my hit counter goes comatose. But I'm not going to look in that mirror any more. I just need to get in a few more hours on the bike, a few more camping expeditions, a few more yard and fixup projects now that the days are long. But when I get around to writing, I will try to get past complaining...all the way to, perhaps, writing my congressman.


Capital gains tax is, in my opinion, not a huge disincentive to the investor IF it is only applied to money that the investor has got by cashing in, taking the investment value off the table. At that point it is income. If, like Steve Jobs, you take a dollar of salary and the rest as stock, how the hell else are you going to eat? I am sure Steve has other money to spend but there have been plenty of us ( whose code you exercise daily) who took pay cuts, worked hours rarely asked of anyone but medical interns and all in return for the potential, some ISO shares. I got the brass ring one time out of ten start-ups. A start-up war horse continues working like that after a few bad outcomes by telling himself the sacrifice and the commitment and the learning look good on the resume. I would only exempt money taken out of an enterprise that prospered if that money were dedicated to funding some other enterprise. Its an abusable stipulation but I do believe private money knows better where to grow than government money. The government trough is for pigs and this administration can show you a whole feed lot of them. If you take your capital gains so you can buy a boat, pay the damned tax because you are just using it as income.

Graham does say: "Immigration policy is one area where a competitor could do better." But I think he gives a rosier impression than facts will bear

And he says "The US is a rich country": historically yes. At the moment, relative to other countries yes. The concentration of wealth, to the extent that some people have money to burn on the long-shot investments is just how Republicans think things should be. But the critical seed money for the earliest stages of start ups is not coming from the super-rich. The first few hundred thousand comes from another entrepreneur who has made it. The corporate and family wealth concentrations that current tax and investment policies foster are heading the country toward a Guatemalan profile of wealth distribution...seen any good Guatemalan start-ups lately? The largest fortunes are invested with a regimen of caution that would stifle a venture capitalist. Having a modest share of that US wealth that I got as wages means I do not personally suffer much from the ever more top-heavy distribution of that wealth. I do not suffer the blighted neighborhoods and crappy schools that need attention right now. But politics should also be about what policy you make now so that you will be better off later. It is the future I worry for. Our wealth as a nation is in decline for fundamental reasons that the Bush programs will not repair. The decline is one part of the problem but the rules that let what money we do have be sucked into the family fortunes of one or two percent of the nation to the detriment of the middle class is also a problem. The middle class investor is also a cautious investor but the increase of their numbers paralleled an increase in the formation of start-ups spanning the years from 1983 to 2002. This rise in numbers can be attributed to new IRA and 401K programs that gave individual investors tax protected options that used to be reserved for corporations and family trust funds. The rise in venture capital was partly induced by the attraction of a broadly rising market fueled by all that 401K money. Has that goose laid its last golden egg? The middle class is shrinking and has less to save. We are at the beginning of an era when that retirement money is cashed in to pay for things like assisted living.

The importance to intellectual vitality in both culture, politics and commerce that Graham claims for basic freedoms of expression is an accurate enough statement. The chilling effect on individuals [other than us hardy liberal bloggers of course] on the media and, of course on government employees of an authoritarian spy culture is a bit understated in the article.

One omission. Graham could have mentioned the stupidity of the barriers to innovation we have let our patent system become. Since Reagan's administration, rather than fund the USPTO so only sound and novel patents get assigned, we have instead left it up to the courts by allowing any kind of crap at all to gain a patent. So invent away but be ready to hire a phalanx of lawyers if you get some traction in the market.

But then I should remember: that essay was about why the US is the best place for start-ups.

so far.

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