The Right Government Policy Toward Entrepreneurship
I've said many times that the best way government can promote entrepreneurship is to get out of the way, so I can't support the Obama Administration's annual Global Entrepreneurship Summit, a government-sponsored meet-and-greet for prospective entrepreneurs, funders, politicians, and hangers-on. But I agree with this statement from Vivek Wadhwa:
Government efforts to promote entrepreneurship always fail because they focus on building science parks and top-down clusters. Policy makers believe that by erecting fancy buildings and providing subsidies to select industries and venture capitalists, they can create innovation hubs. This is the wrong approach; what needs to be done instead is to remove the obstacles to entrepreneurship and change the culture so that failure is accepted and experimentation is encouraged. And then entrepreneurs need to be educated and provided with mentoring, inspiration and seed funding.
Wadhwa is using the term "entrepreneurship" to mean startups, but the statement applies also to Mises's more general concept of entrepreneurship as action under uncertainty. Now, I don't think government is very effective in educating, mentoring, and inspiring entrepreneurs, no matter how defined. That is for market participants to work out. But Wadhwa is exactly correct that the government's typical top-down approach reflects little more than government officials' personal preferences for particular technologies, locations, products, and other forms of government consumption.