During 1939, in a garage, Bill Hewlett and Dave Packard started a new firm. Also in a garage, several decades later Steve Wozniak and Steve Jobs started Apple. Yes, Walt Disney worked in his uncle’s garage and Mattel, the toy company that makes Barbie dolls began in a garage. Google did not begin in a garage but they did use one.
The Economic Lesson
For most of these garage stories the key actually was funding. In some way, they needed to secure the money to proceed. And that takes us to today.
With current unemployment high and growth sluggish, economists who disagree with a new Keynesian demand side stimulus are increasingly focusing on the entrepreneurs that have energized our economy. Nobel Prize winner Edmund Phelps suggests a First National Bank of Innovation that lends to entrepreneurs. Journalist Thomas Friedman quotes innovation experts when he recommends tax breaks for start-ups and a cabinet position that focussed on encouraging innovation. In a second column he says we need “More (Steve) Job, Jobs, Jobs, Jobs”.
These ideas remind me of Alexander Hamilton’s development program. Through a “Report on Manufactures” and a First Bank of the United States, in 1791, he too suggested a plan that would fund business development in order to stimulate and diversify U.S. economic growth.