Start me up.

AuthorHood, John
PositionFREE+CLEAR

[ILLUSTRATION OMITTED]

With too few businesses starting, the economy suffers. Promoting entrepreneurship needs to become a priority.

As we witness so many hotly contested races for president, governor, Congress and other offices, one proposition attracts near-universal agreement: Regardless of party or level of government, virtually everyone running for office this year believes we aren't creating enough new businesses.

They are correct. According to data from the U.S. Bureau of Labor Statistics, entrepreneurial activity has only recently recovered from the tumble that occurred during the Great Recession of 2007-09. By one BLS measure--the number of jobs created by businesses less than a year old--the U.S. economy is still performing far below pre-recession levels, although at least the trend line slopes upward.

Adjusting for population changes, researchers at the Ewing Marion Kauffman Foundation in Kansas City, Mo. have used BLS data to construct an Index of Startup Activity. For America as a whole, the index fell not just during the early stages of the recession, but through 2014. Last year, the index finally saw a large upswing. Whether that upswing will continue is unclear.

North Carolina is doing better than most states on this measure. We rank eighth in the country on the Kauffman Index, which measures business-creation rates by state. In the Southeast, only Florida fares better. But beating unimpressive national and regional averages is not an adequate response to this challenge. By historical standards, North Carolina still isn't creating enough new enterprises to meet escalating demand for good jobs that pay good wages.

While politicians and policymakers may agree about the importance of boosting entrepreneurship, they disagree strenuously about which tools are best for the job. The fiscal conservatives in charge in Raleigh believe that reducing taxes, particularly on investment and job creation, and removing regulatory obstacles will help. There is a lot of evidence to support their belief. A 2013 study in the Journal of Entrepreneurship and Public Policy, for example, found that state tax cuts promoted more business starts. Other studies show that lower regulatory burdens correlate with higher rates of self-employment, income growth and sustained business growth.

But fiscal and regulatory policies aren't the whole story, not by a long shot. Education levels, infrastructure quality, energy prices and crime rates also affect...

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