Robert E. Litan and Ian Hathaway: Is America Encouraging ...

Robert E. Litan and Ian Hathaway: Is America Encouraging the Wrong Kind of Entrepreneurship?: "William Baumol... idea... that may help explain America���s productivity slump. Baumol���s writing raises the possibility that U.S. productivity is low because would-be entrepreneurs are focused on the wrong kind of work...

...In a 1990 paper, ���Entrepreneurship: Productive, Unproductive, and Destructive,�����Baumol argued that the level of entrepreneurial ambition in a country is essentially fixed over time, and that what determines a nation���s entrepreneurial output is the incentive structure that governs and directs entrepreneurial efforts between ���productive��� and ���unproductive��� endeavors.... Baumol was worried, however, by... entrepreneur[s]... ���unproductive���... who ... construct regulatory moats, secure public spending for their own benefit, or bend specific rules to their will, in the process stifling competition to create advantage for their firms...

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