PE Obama’s 1st Big Mistake
blogmaverick.com
blogmaverick.com
I'm sure that one layer below this there will be, or at least should be, entrepreneurs that are consulted in order to get the most bang for the buck.
But I honestly don't see Mark Zuckerberg lecturing Robert Rubin and Warren Buffet on how to save the economy...
The people you talk to about matters of economy and finance are people with a background in finance and economics.
Cuban did not say there was anything wrong with such experts, but that the team should have someone who runs a small business for a living, that's all.
For example, I just thought of an almost identical situation.
Ron Paul's campaign advisor on the economy, and one of the two people who predicted the economic collapse in detail two years ago, is also an active entrepreneur. Now, Cuban did not say it has to be someone who is much of an expert, but it doesn't mean it should be some entrepreneur with zero economy experience.
I honestly don't see Mark Zuckerberg lecturing Robert Rubin and Warren Buffet on how to save the economy...
Cuban clearly implies he wants a good candidate, and not for example, a 23 year old web 2.0 hero.
Also, Cuban went out of his way to include franchise owners, mom and pop store owners, and independent contractor's all over the country in his definition of entrepreneur.
Besides distorting Cuban's points, I think it is very limiting to think that entrepreneurs are 20 year old founders of web startups, when they could be 45 or 65-year-old economists who have also started multiple startups in their life, whenever you hear the e-word.
My point is that making economic policy, especially in the current environment, is a difficult and specialised task. The people that have the best shot at getting it right are the ones that have the experience, connections and know-how of how to do it. And entrepreneurs don't - they are in a completely different business.
This is nothing bad about Mark Zuckerberg, Jeff Bezos or any other entrepreneur - I just think that you should get the best man for the job. I wouldn't want Robert Rubin to be the CIO of my startup either, even though I know he's as smart and dedicated as anyone. It's simply not his expertise.
While I have to agree that it would be hard to find such versatile people, the argument is not logical. If a implies b, it doesn't mean that b implies a. If it did work that way, then it would mean any CIO could never make a great expert on finance and economy, and vice versa, and that's not qualifiable (or realistic.)
I just think that you should get the best man for the job.
It is not qualifiable that Obama has found the best man (or woman) for the job. Therefore, it is not qualifiable that entrepreneurs should not feel they should be represented by some economist or expert in finance who has entrepreneurial experience.
Somebody who has their money tied to their business, as Cuban said, and depends on their business for all of their income, is the kind of entrepreneur who should be represented. I believe Mark's point is that the economists advising Obama make money as government employees, company executives, book publishers, researches, faculty, or similar--I made this up, but if they're not entrepreneurs, they must be getting paid some other way.
(In fact, to add my own thoughts, many high-ranking economists and high-ranking finance experts could have been a part of the problem in the first place, while at the same time, entrepreneurs spent the same years trying to create value for their customers. They: create value in order to make money, actually have contact with real, "regular" people, try to solve people's existing and future problems after listening to these "regular" people, and do so because they've chosen to bet almost all of their income and quality of life on solving problems. This is completely different from being a professor or book author, tv personality, and, in some way, having a hand in creating the problem in the first place.)
My point is that making economic policy, especially in the current environment, is a difficult and specialised task. The people that have the best shot at getting it right are the ones that have the experience, connections and know-how of how to do it. And entrepreneurs don't - they are in a completely different business.
I think my points about how an entrepreneurial perspective could be beneficial as well as that entrepreneurs could definitely be experts on the economy argue your point, but I also want to note that Cuban mentions having one experienced entrepreneur representing one person on the committee, not necessarily a committee full of entrepreneurs (never mind all without experience in finance, and all relatively young, and all from Silicon Valley, to boot.) So, of course you need many experts as well as those with political connections on the committee. But at least one expert should have entrepreneurial experience. He even goes out of his way to point out several times that Buffett isn't an entrepreneur in the same sense that most entrepreneurs are small mom-and-pop shops and independent contractors.
Of course, I could be mistaken--maybe Mark Cuban did imply that he wants a great entrepreneur advising on the economy, whether or not they have economic experience--but I just did not read it that way, and it would be hard to argue that a sane person would want any random entrepreneur. I've heard Cuban has an ego, but I don't think it's that big. :)
(And again, such people exist, like the economic advisor to Ron Paul, as well as likely hundreds of other great choices. I think that Obama and the existing committee would not mind having an entrepreneur on board, and Cuban's post is a great way to point out this missing piece.)
I think we (the News.YC users) saw items in the blog post that made us want to discuss it, but of course, we saw different things. In my view, I didn't see anything wrong in his post, therefore causing me to think that it's a good idea for him to try to get a search for an entrepreneur started, and I wanted to provide what I thought. Thanks!
He wants to make sure that tech entrepreneurs are heard in the new government - which I certainly agree is a good idea. Both for the entrepreneurs and the economy. My grudge with the post is that he finds it perfectly reasonable that tech entrepreneurs should be represented at the very top level of the economic advisers to the president. My argument is that the tech entrepreneur expertise should be represented one level further down. Both because, as I've argued before, that the expertise that's needed is very different from doing startups, but also because tech startups don't account for that large a portion of the overall economy. Cuban's arguments could just as well be applied to mom and pop stores, which are probably more underpinning of the economy than startups, the biotech sector, the defense industry, the automobile industry, agriculture, advertising, aerospace, big oil, clean energy, food products etc. etc. These are all important, but none of them, including startups, are big enough in an economical sense that they should be represented at the top level.
Yes, an argument could be made that startups are the future of America. But the same argument could be made of mom and pop stores, clean energy and many others.
Macroeconomics is a step removed from the people who really make it work. So, to get the best macroeconomics we need to make sure we get things right at the micro level. I don't see this happening with people who've spent their lives at the macro level.
EDIT
After reading the article, I also see you've set up a strawman. Cuban is not arguing you stick a lone group of tech entrepreneurs in Obama's advisory board. He says Obama needs to directly talk with them to see what they need, explicitly including non tech people in this by his mention of Joe the Plumber. Instead, Obama has insulated himself from these people with his advisory board. I agree with Cuban that this is a bad sign.
They're not really supposed to receive representation in a cabinet position. That is what the legislature is for.
I'm having trouble finding a coherent point there. Why is it so bad to close a hole in a team?
A team of thousands of different people from thousands of different sectors obviously isn't a viable solution. This is why at the top level you have people that understand macro economy, finance and politics. Below this you have the whole armada of different sectors that should be heard in respect to regulation, economy, etc. that relates to their industry.
Basically if you want tech entrepreneurs to be on the economic team advising the president you should also have dairy farmers and advertising executives. And that would be a mess.
No fair adding the word "tech" to the original article, then criticizing it for the word "tech". :)
A "small business representative" is exactly what the article calls for. And the article isn't calling for this person to know about their industry, but to know about small business; the pressures of mandated paperwork on a one-person operation, tax pressures, basically all those things that come up when you're too small to have or afford an HR department and dedicated finance staff. The US Federal government, being the single largest entity on the planet AFAIK, has a bad habit of forgetting that paperwork isn't free; the cognitive costs alone when it isn't your job to fill out the paperwork correctly (with steep fines for errors in some cases) can be significant, even before we discount time. (For example, consider your taxes; even moderately complicated individual taxes won't take that much of your calendar year, but the cognitive costs can be daunting. And that's what an individual is expected to pay...)
Interestingly, the bigger and more prominent your board of advisors, the harder it becomes to use them for the former purpose and the easier it becomes to use them for the latter.
I'm guessing this is because prominent people are super-busy. Sounds reasonable.
It would amaze you how many things that are "common sense" for an entrepreneur are hard for someone sitting in their ivory tower.
This is not just a problem in economics. After I got out of Princeton with a PhD in Electrical Engineering, it amazed me just how orthogonal to the real world much of my adviser's academic work proved to be - I happened to land a job that directly dealt with one of his core areas of research, though I wasn't involved in that area during my PhD myself. My realization led me to write a paper that pointed out that his work was dealing in mathematical models that were not very relevant to the real world, which predictably led to our intellectual parting of ways.
I felt experience working as an engineer should be mandatory for anyone aspiring to be an engineering professor, yet you will find that most engineering faculty have never worked outside of academia.
On the other hand, Krugman himself has been a strong advocate of nationalized health care. Milton Friedman argued how the health care problem is really one of licensing regulations designed to maximize pay for doctors. Imagine an American Software Association that decides how many licenses to grant every year, and you need those credentials to be a hacker. Yes, Friedman addressed the "quack" argument too.
We're talking economics here. Smart people familiar with basic economics don't risk 100% of their net worth.
In what sense does this article have any practical value for entrepreneurs, or even the Obama administration? Seems like Schmidt, Page and Brin have been offering plenty of informal advice along with lots of other successful entrepreneurs.
I'll take "last week of February 2009" if it's available.
"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...Your current group has no one with 100pct of their networth on the line. I promise you that the possibility of losing it all will provide a completely different perspective than any of the “knowledge” the esteemed, learned members of his current advisory team offer."
Personally, I don't think we need to make any sweeping changes to encourage entrepreneurship directly. The United States is already a great place to start a business. The key making sure that is true 20 years from now by continuing to invest wisely in education, research, energy...etc.
And by keeping taxes and regulations light and minimal.
I would like to point out that our government's investments in education and energy haven't gone very well, though its investment in general research probably does more good than harm.
But no more than that.
I would like to point out that our government's investments in education and energy haven't gone very well, though its investment in general research probably does more good than harm.
It's also worth while to point out that many other industrialized nations have also made investments in energy and education and had better results. So, we shouldn't abandon the idea (as you seem to be implying) but rather take a good look at how we do things.