If error is a key part of innovation, then one of America’s greatest advantages has come from its relatively benign attitude to business failure. Bankruptcy laws in most American states have allowed innovators to ‘fail fast and fail often’ as the Silicon Valley slogan has it. In some states, the ‘homestead exemption’ essentially allows an entrepreneur to keep his or her home if their business fails under Chapter 7 bankruptcy rules. Those states with homestead exemptions have shown more innovation than those without.
