January 10, 2014

FOR SMALL BUSINESSES, SMALL MATTERS.

We tend to talk of entrepreneurship and business growth as if it were a matter of tweaking a few simple policy buttons: lowering taxes, making health insurance cheaper, hamstringing the EPA. Unsurprisingly, these issues map well onto big national policy battles. And yet, when I talk to small-business owners, I’m more likely to get an earful about their state’s workers’ compensation scheme or the local utility’s pricing schedule than I am about the federal tax rate. Yet almost none of the policy journalists I know could even describe in detail how workers’ compensation insurance works, much less articulate a coherent policy agenda for it.

Then there are the sort of soft institutional issues that Meyer highlights, such as whether the local legal system encourages frivolous lawsuits, or some arcane regulatory issue that’s specific to businesses. These things matter a lot, but they’re hard to measure and even harder to fix.

There are a few lessons in this: If you want to encourage entrepreneurship, talk to business owners, not policy wonks. And you often need to think local, not global.

Too much work for journalists and pundits.