Why the Small Business Administration Should Make Startups a Priority

In a recent interview about antitrust issues, Robert Atkinson, an economist who is president of the Information Technology and Innovation Foundation, suggested that the Small Business Administration should be reinvented as the “New Business Administration” to make potential, rather than size, the basis of government support. It’s an idea that he and his co-author Michael Lind first suggested in their 2018 book Big Is Beautiful: Debunking the Myth of Small Business, which contends that contrary to popular wisdom large rather than small companies drive innovation and employment. Inc. asked Atkinson how a new version of the agency would improve the odds for startups.

Is the idea behind remaking the Small Business Administration into the New Business Administration to shift the emphasis from hair salons and luncheonettes toward startups with ambitions to grow?
That’s part of it. There are the 80 to 85 percent of companies that just want one establishment and to hire their spouse and a few friends. A lot of SBA efforts are to provide aid and comfort and regulatory exemptions for those companies just because they are small. That doesn’t make any sense. Small firms on average don’t pay employees as much as larger companies, and they are not as innovative sometimes. So if we’re going to tilt the playing field anywhere, let’s tilt it to helping firms get off the ground. That could be someone who wants to start a knitting shop.

How do you prioritize new over small?
For the first five years these companies would get a little bit of leeway on all the rules and regulations that would normally apply to them. And after that time the regulations would kick in. Whereas now a lot of small businesses just get these exemptions for life. It is legal for a business of 15 people to discriminate on the basis of race. I don’t see why that should be the case, if you believe that racial or gender or religious discrimination are bad.

What’s an example of a regulation that could usefully be eliminated in the beginning?
Let me start with something that is really simple and doable, and it’s almost criminal that we haven’t created it in the U.S. Countries like Portugal and Chile have set up programs where you can open and register a business on the Internet within an hour. Not just the national requirements–all the way down to state and city. So that would be one thing. Just to say OK, you are a new firm. We are going to make it very, very easy for you to get your business off the ground in a day.

Read more of this Inc. interview by clicking here.