Some Chicago Boyz know each other from student days at the University of Chicago. Others are Chicago boys in spirit. The blog name is also intended as a good-humored gesture of admiration for distinguished Chicago School economists and fellow travelers.
We must think things, not words, or at least we must constantly translate our words into facts for which they stand, if we are to keep to the real and the true.
Oliver Wendell Holmes, Jr., Law and Science and Science and Law, 12 Harv.L.Rev. 443, 460 (1889).
This may seem slightly redundant, in light of David Foster’s post below which inspired me to post this on my own blog, but Lexington Green strongly felt that the point could stand repeating ( or shouting from the rooftops). So, here goes:
Senator Chris Dodd (D-Connecticut) is working hard in Washington…. to make sure that only those who are already Rich and Powerful will have a shot at being rich and powerful.
Democratic Senator Christopher Dodd wants to impose some changes on the way that financing for new ventures works in America:
First, Dodd’s bill would require startups raising funding to register with the Securities and Exchange Commission, and then wait 120 days for the SEC to review their filing. A second provision raises the wealth requirements for an “accredited investor” who can invest in startups — if the bill passes, investors would need assets of more than $2.3 million (up from $1 million) or income of more than $450,000 (up from $250,000). The third restriction removes the federal pre-emption allowing angel and venture financing in the United States to follow federal regulations, rather than face different rules between states.
Here’s Keith Rabois, an early PayPal employee who is now a VP of Slide and an angel investor:
Anyone still need more evidence that Obama and the Democrats intend to destroy Silicon Valley and the dreams of entrepreneurs?
Numerous other comments from investors at VentureBeat. (link via Power and Control, who adds comments of his own)
Note that while government seeks to protect individuals without a certain level of assets & income from participating in the economically-essential and often profitable activity of venture investing (even though some of these individuals may be highly sophisticated in their understanding of finance and of the relevant markets), it also seeks, via elaborate advertising campaigns, to lure people of all income levels–in practice, especially the poor–to “invest” their money in state lotteries.
Disclosure: I have investments in venture capital.
On this Reason post [h/t Instapundit] about possible serious political warping of the “stimulus”spending, commenter nate made an interesting claim:
I work in a federal agency that had a good portion of stimulus cash and was part of the team that picked projects to get funds. We really didn’t look at unemployment in the area. Our main criterion was whether the project had been designed and engineered to a point that we could get construction going pretty quickly. Once we set out our list, we sent it up to OMB. They knocked some stuff out and changed it up some, but for the most part the final list looked like what we sent them. I doubt politics had too much to do with the selection of projects.
I actually think this is very likely. As much as I would gain emotional satisfaction from the idea that perfidious Democrats systematically channeled hundreds of billions of dollars to their cronies in old style big city machine corruption writ large…
… I just don’t think they’re that competent.
Instead, I think the asymmetry could largely result from the type of projects that nate and his colleagues were primed to fund. They didn’t fund projects because the projects fulfilled an important need. Neither did they fund projects that local areas could not afford and therefore had never started. Instead, they funded projects based solely on how far along the projects already were in their development.
As someone who’s written several times (here and here) about the course of modern health care (its inherent complexity and cost), I’ve been watching the latest moves in US health care funding with a great deal of interest.
From the introduction of antibiotics to the breakthroughs in transplant surgery, medicine in the 20th century was in a position to provide dramatic improvements in health care (both quality of life and length of life) at relatively modest cost. Many consider it a golden age in medicine. My personal belief is that medical care is about to hit another burst of creativity and success (but at much higher cost-to-benefit) as non-invasive imaging, micro-surgery, diagnostic testing, and DNA-propelled pharmaceutical customizations kick in. I may be wrong, but I think my beliefs are a reasonable extrapolation of the trends in medical care since the end of the 1970s “silver bullet” period of medicine.
So what do my guesses about modern medicine mean in a new era of greater tax subsidies for US health care? An era which, by necessity, must politicize health care further. It got me to thinking about the hidden subsidies during earlier periods of American history, powered by the domestic political systems of the time, and driven by citizen/voter appetites. And it got me thinking about the law of unintended consequences.
After a few minutes scribbling on the back of an envelope, I came up with the following:
