The Valley of Creative Destruction

I was tooling around on the White House website and came across this video from Austin Goolsbee:

To summarize for those of who don’t want to watch (although Golsbee is a decent speaker), he talks about how many start-ups end up failing (falling into the “Valley of Death”) and how the government can make them more successful. The four steps he outlines to do this are capital, regulatory reform, mentoring and tax relief.

While the second and fourth of those are useful, I think the entire idea is bullshit. There’s a concept behind the “valley of death” that Goolsbee knows well – creative destruction. In order for one startup business to succeed, many have to fail. We have to find out what doesn’t work before we can find out what does. And having the government hold people’s hands and make businesses “too small to fail” interferes with that process.

We need the Valley of Death. Government should not be tipping people into it with regulations that favor big business (CPSIA comes to mind) or ridiculous taxes. But business that succeed overcome the valley by crawling over the broken bodies of those that came before. Failure to fail is not an option.

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