Why Start Up if Uncle Sam Pays over $150,000 a Year?

The number of federal workers making over $150,000 a year has skyrocketed in recent years according to the USA Today. Is this just catch-up or another signal that the government is expanding and crowding out entrepreneurs and those who use capital to produce societal wealth?

Federal salaries have grown robustly in recent years, according to a USA TODAY analysis of Office of Personnel Management data. Key findings:

•Government-wide raises. Top-paid staff have increased in every department and agency. The Defense Department had nine civilians earning $170,000 or more in 2005, 214 when Obama took office and 994 in June.

•Long-time workers thrive. The biggest pay hikes have gone to employees who have been with the government for 15 to 24 years. Since 2005, average salaries for this group climbed 25% compared with a 9% inflation rate.

•Physicians rewarded. Medical doctors at veterans hospitals, prisons and elsewhere earn an average of $179,500, up from $111,000 in 2005.

Federal workers earning $150,000 or more make up 3.9% of the workforce, up from 0.4% in 2005.

via More federal workers’ pay tops $150,000 – USATODAY.com.

Obama Engages Muslim World With Entrepreneurship – Entrepreneurship and Development

President Obama is currently hosting a two day Presidential Summit with more than 250 business and social leaders from 50 countries, most with large or majority Muslim populations.

The summit is the follow up to Obama’s Cairo speech last summer and looks to use entrepreneurship, and social entrepreneurship, as major tools in increasing development throughout the Muslim world.

Many in the article claim that this is a nice thought, but that other issues – Iran nuclear policy, Iraq and Afghanistan, and Israel – matter far more.

From the piece;

Commerce Secretary Gary Locke opened the gathering by challenging the entrepreneurs to take “the tremendous success that all of you have had individually and expand it throughout the Islamic world.”

“There are over a billion people living in Muslim-majority countries today, and they represent a vast reserve of underutilized potential in the global economy, both in terms of their demands for goods and services as well as their ability to create technological and social innovations that will drive economic growth and social development,” Locke said.

Here is the official summit page and here is the official White House Press Briefing. BTW, it appears you can stream it live as well.

Obama Hosts Global Summit on Entrepreneurship – FoxSmallBusinessCenter.com.

Ortmans: The Untapped Potential of Research Universities

Jonathan Ortmans at the Policy Dialogue for Entrepreneurship has an interesting post on the incredible economic assets that make up part of the entrepreneurial ecosystem of the American Research University.

Ortmans does a great job of highlighting some of the issues at hand and also the growing concern over Technology Transfer Offices that were created by the Bayh-Dole Act of 1980. He also points to the work of Robert Litan and Lesa Mitchell at Kauffman and their ideas on opening up the university intellectual property process to market forces.

The blog post mentions a February 24th meeting of University leaders and key stakeholders that will be hosted by the Department of Commerce’s new Office of Innovation and Entrepreneurship.

Ortmans’ Post: Policy Dialogue on Entrepreneurship | The Untapped Potential of Research Universities.

Tom Friedman Calls for Year of “Start-Up America”

Just got an email from my friends at the Network for Teaching Entrepreneurship (NFTE) that Tom Friedman calls on President Obama to make 2010 the year of ‘Start-Up America’ as the cure for what ails us (and his political fortunes). Friedman suggests Obama turn to programs such as NFTE and National Lab Day that teach students about innovation, entrepreneurship, and science.

Friedman writes, “We need to get millions of American kids, not just the geniuses, excited about innovation and entrepreneurship again. We need to make 2010 what Obama should have made 2009: the year of innovation, the year of making our pie bigger, the year of “’Start-Up America.'”

Here are some snippets describing the programs.

NFTE:

“NFTE works with middle- and high-school teachers to help them teach entrepreneurship. The centerpiece of its program is a national contest for start-ups with 24,000 kids participating. Each student has to invent a product or service, write up a business plan and then do it.”

National Lab Day:

“Introduced last November by a coalition of educators and science and engineering associations, Lab Day aims to inspire a wave of future innovators, by pairing veteran scientists and engineers with students in grades K-12 to inspire thousands of hands-on science projects around the country.

Any teacher in America, explains the entrepreneur Jack Hidary, the chairman of N.L.D., can go to the Web site NationalLabDay.org and enter the science project he or she is interested in teaching, or get an idea for one. N.L.D. will match teachers with volunteer scientists and engineers in their areas for mentoring.

‘As soon as you have a match, the scientists and the students communicate directly or via Skype and collaborate on a project,’ said Hidary.”

While Friedman doesn’t mention it directly, perhaps Obama’s Office of Social Innovation is talking with these groups. Anyone know if Sonal Shah (a former Google philanthropy director) has been active on these fronts?

Growthology on Obama’s Social Innovation Fund

While I appreciate Dane Stangler of Growthology updating us on Obama and his social innovation fund, I am beginning to wonder what impact this will have. According to his post,

Last week President Obama hosted an event at the White House to highlight innovative programs in the nonprofit sector. The President acknowledged that in areas like education and health, the government can only do so much: “So if anyone out there is waiting for government to solve all their problems, they’re going to be disappointed.”

The White House now has a $50 million Social Innovation fund and will look for programs that are as impressive and effective as those highlighted by President Obama. This includes Geoffrey Canada’s Harlem Children’s Zone, HopeLab, Bonnie CLAC, and Genesys Works.

While I have long applauded Obama and his efforts to highlight social entrepreneurs, its been a lot of talk so far. And, I also wonder, what can $50 million really do when we are giving away trillions to old line companies and their consumers (ie cash for clunkers)? Am I misguided? To quote a cultural phenom from year’s past, “Where’s the beef?”

BTW, my firm, FamilyFantasySports.com is awarding more than $40,000 for college savings to families participating in our fantasy football leagues. Moreover, we are partnering with charities such as Most Valuable Kids, St. Joseph Orphanage, and Dreams for Kids and allowing them to use our infrastructure as a fundraising tool for their important organizations.

While we would surely accept an invite to the White House for a press conference and funding to allow us to teach more families about college savings and help them get started with their 529 accounts, we are steadily growing our firm, regardless of how many press events the White House holds.

Chron of Philan Interviews Sonal Shah and Melody Barnes

Details are still slowly emerging about what Obama’s Office of Social Innovation is going to do. Here are a few more via The Chronicle of Philanthropy’s interview with Sonal Shah (Director of the office) and Melody Barnes (Dir of White House Domestic Policy Council). From the piece by Suzanne Perry:

Q: The office does not have the budget to award grants. How do you see your role? As a bully pulpit?

A: Ms. Barnes: We’re more than a bully pulpit. There are four staff people, several of them with significant experience in this area. We’ve got some good and experienced minds working on this. They’re also working with the staff in the cabinet agencies and the departments to leverage all of our resources as we’re reaching out and working with business and philanthropy.

Ms. Shah: We’re also a coordinating body, so we can bring different groups together from different agencies. We can bring someone from health care, someone from the social-innovation fund, and someone from education together to have a conversation about doing things similarly across the board and working across agencies.

As we see ideas that may not necessarily fit into one agency or another, we can also help direct and create partnerships that might not otherwise have existed. A lot of the foundations will come here and we’ll know about projects or programs taking place in different agencies and being able to link them up with the right groups that are working on it and figuring out ways that partnerships can happen.

Q: Will you have a formal structure—an advisory board, for example?

A: Ms. Barnes: We are investigating and thinking about that now and engaging with our senior colleagues here. But we already have had so many meetings and conversations with the philanthropic and business and NGO [nongovernmental organization] community that we’re getting great ideas.

Q: Are you planning any kind of formal unveiling of this office?

A: Ms. Shah: What we wanted to do, to be fair, is accomplish a few things and then talk about how the social-innovation fund is working. We didn’t just want to announce an office and not have anything backing it.
We’ve been working away; the national-service legislation is a big part of what we were working on, we’re working on a few things for the summer. As those pieces come together, you’ll see more discussion about it.

Q: What are your immediate priorities?

A: Ms. Shah: We’ll be focusing on the social-innovation fund, which we believe is critical for setting a precedent for other types of programs. We’ll be working closely with our colleagues in various agencies to see if there are ways to create parallel funds or at least to harmonize some of our discussions.

Culture War On Capitalism?

AEI President Arthur C. Brooks has a must read piece in today’s WSJ titled The Real Culture War is Over Capitalism. I have been worried about this since the Bush Admin saved AIG, etc. The fact that the US Gov and the UAW are going to own GM puts us into the surreal — seriously, I might as be on acid. From Brooks:

There is a major cultural schism developing in America. But it’s not over abortion, same-sex marriage or home schooling, as important as these issues are. The new divide centers on free enterprise — the principle at the core of American culture.

Despite President Barack Obama’s early personal popularity, we can see the beginnings of this schism in the “tea parties” that have sprung up around the country. In these grass-roots protests, hundreds of thousands of ordinary Americans have joined together to make public their opposition to government deficits, unaccountable bureaucratic power, and a sense that the government is too willing to prop up those who engaged in corporate malfeasance and mortgage fraud.

The data support the protesters’ concerns. In a publication with the ironic title, “A New Era of Responsibility,” the president’s budget office reveals average deficits of 4.7% in the five years after this recession is over. The Congressional Budget Office predicts $9.3 trillion in new debt over the coming decade.

And what investments justify our leaving this gargantuan bill for our children and grandchildren to pay? Absurdities, in the view of many — from bailing out General Motors and the United Auto Workers to building an environmentally friendly Frisbee golf course in Austin, Texas. On behalf of corporate welfare, political largess and powerful special interests, government spending will grow continuously in the coming years as a percentage of the economy — as will tax collections.

Still, the tea parties are not based on the cold wonkery of budget data. They are based on an “ethical populism.” The protesters are homeowners who didn’t walk away from their mortgages, small business owners who don’t want corporate welfare and bankers who kept their heads during the frenzy and don’t need bailouts. They were the people who were doing the important things right — and who are now watching elected politicians reward those who did the important things wrong.

Office of Social Innovation — Sonal Shah

With the recent announcement of a $60 million social innovation fund and $6 billion overall for civic participation/volunteerism, the Obama Administration continues to expand its social innovation agenda.

The leader of the new Office of Social Innovation is to be Sonal Shah, formerly of Google.org — the philanthropic arm of Google.

I am just learning about Shah, but Obama gets diversity and free use of one of the top brands for innovation and entrepreneurship with her appointment (10 years ago it would have been someone from MSFT, Yahoo or Amazon). According to coverage of her first public speech at Philanthrocapitalism (h/t Phil Auerswald),

Sonal Shah, formerly a senior executive at Google’s philanthropic arm, Google.org, gave her first public speech as head of the new White House Office of Social Innovation. She said the doors of her office are “wide open” and warmly invited philanthropists and social entrepreneurs to come forward with innovative ideas about how to work together.

Babson Pres & NH Guv View Obama as Entrepreneur-in-Chief

Read the article and decide for yourself. The piece, by Babson College President Leonard Shlesinger and former New Hampshire Governor Craig Benson, highlights campus entrepreneurs and social entrepreneurs, but I am not quite sold. Here is a snippet:

The stimulus bill just signed into law is an example of his entrepreneurial approach. Those on both the left and right criticized the bill as being inadequate or wrong for the economic crisis the nation is facing. Depending on your view, there were either too few or too many tax cuts, and too much or too little spending.

The president’s response was candid and straightforward. To paraphrase, he said that we don’t know how much money it will take to turn around the economy and which parts of the bill will work best, but we do know that we have to get started.

That is the response of an entrepreneur: Make a decision, get ready to make the next decision and continue to make decisions with what information is available. In the face of extreme uncertainty when no one, including our best economists, knows what the perfect solution is, the right approach is to take action, create new opportunities and move to the next decision.

What’s important is to keep moving in the right direction. Entrepreneurs do not wait for the ideal solutions to emerge because they know that sometimes, as they act, solutions will emerge from the unlikeliest of places.

Obamanomics: Cuban No Likey, Chicago School All Over It?

When I opened my WSJ this morning, there was a large horizontal color photo of PE Obama and the people who attended his economic meeting in Chicago on Friday. There were old school DEMs/Chicagoans (Rahm Emanuel, Bill Daley, and Penny Pritzker), economic luminaries (Volcker, Reich, Rubin), and Corporate Achievers (Google CEO Eric Schmidt, Time Warner Inc. Chairman Richard Parsons, Xerox CEO Anne Mulcahy).

I was most thrown by Jennifer Granholm (Michigan Gov) — whose policies have helped the auto industry over the cliff quicker. I guess she was there to make sure an auto industry failure looks as scary as the threatened financial collapse.

Mark Cuban was most unsettled by the fact that there were no real risk takers in the group — people whose whole lives were tied to their firms. As he states in his post, PE Obama’s 1st Big Mistake:

Not a single entrepreneur. Yes Warren Buffett started a business, but he will be the first to tell you that he “doesn’t do start ups”. Which means there isn’t a single person advising PE Obama that we know of that knows that its like to start and run a business in this or any economic climate. That’s a huge problem.

If we are going to solve our current economic problems, our President needs to get first hand information on the impact his proposed policies will have on real Joe the Plumbers. People who are 1 person companies living job to job, hoping they get paid on time. We need to know what the impact of his policies will be on the individually owned Chrysler Dealership in Iowa. The bodego in Manhattan. The mobile phone software startup out of Carnegie Mellon. The event planner in Dallas. The barbershop in LA. The restaurant in Boston.

Entrepreneurs that start and run small businesses will be the propellant in this economy. PE Obama needs to have the counsel of those who will take the real risk inherent in creating companies and jobs. Those who put their money and lives on the line with their business.

I agree with Cuban. There was no one in the photo that represents my firm (2 people plus a handful of interns). Our company is far more representative of the average US firm and especially new firms than the firms and interests assembled in Chicago.

We are 6 months old, pay various vendors (from lawyers and software providers to printing firms and publishers who we advertise with), and are looking to grow by a factor of 10 over the next 2 years. Whether we achieve that goal and others isn’t really the point. The point is that firms who do achieve goals like ours will be the firms that pull the US out of recession and back to growth.

Another interesting angle on forthcoming Obama economic policies comes from his links to the ‘Chicago School of Economic Thought’ and the faculty of the Univ. of Chicago’s Graduate School of Business. Obama’s rise to power in the Hyde Park neighborhood on Chicago’s South Side (home of the U of C) clearly has given him great access to top thinkers at Chicago. From the WSJ,

One reason for the alliance among economists at Chicago and elsewhere with Mr. Obama is that they feel he is a fellow traveler, sharing their empirical, data-driven bent. James Heckman, a University of Chicago Nobel laureate, looked over the Obama campaign’s education plan at the request of Austan Goolsbee, a Chicago business-school economist who is expected to head the White House Council of Economic Advisers.

“They were extremely interested in facts,” Mr. Heckman said. “There seemed to be, with the people I dealt with, less of an ideological bias and more of an empirical one. A lot of economists like to feel that the direction of the profession is going that way, too.”

Many economists were cheered in April when, amid higher gasoline prices, Mr. Obama opposed a gas-tax holiday — an idea supported by Sens. John McCain and Hillary Clinton, who was competing with Sen. Obama for the Democratic nomination. Textbook economics said in response to the tax cut, demand would simply raise gas prices to their previous level, and so the benefit of the cut would flow to energy producers rather than consumers.

“The gas-tax episode was a very good sign,” said Princeton University economist Jose Scheinkman, who spent most of his career at Chicago and was chairman of its economics department from 1995 to 1998.

BTW, Austan Goolsbee was a favorite of students when I attended the GSB. (I did not take a class from him).