Freedom Line Blog

Balaji S. Srinivasan, a computer scientist and co-founder of the genomics company Counsyl who also serves as a Stanford University lecturer, made waves earlier this month when he told an audience of young Silicon Valley entrepreneurs that they should secede from the United States. Wisely, Srinivasan didn’t call for Silicon Valley braniacs to attempt to form an independent state. He did, however, encourage his audience to look for ways to work around, or beyond, America’s suffocating government.

His speech became a rallying cry for innovators frustrated at America’s tax laws, regulatory burdens and other bureaucratic barriers to creativity. Since  Srinivasan essentially called for the creation of physical and virtual libertarian cities, his speech crossed over from Silicon Valley’s tech crowd into websites and email lists consumed by those of us who champion individual freedom and free market economic policies.

Because of government policies and social factors, the U.S. has become obsolete according to Srinivasan.

The logical conclusion of Srinivasan’s philosophy are free states and free cities, or perhaps seasteading. But Srinivasan recommends a number of more viable options in the near term.  The New York Times points out that it’s already possible utilize technology to opt-out of government oversight, intervention and taxation by “spending unregulated digital currency, sleeping in unregulated hotels and manufacturing unregulated guns.”

Srinivasan’s speech should be a wake-up call to entrepreneurs, innovators and employers hampered by government interference. The speech should be taken even more seriously by the federal government.  Technology has created opportunities for clever individuals to live outside of government, and the more damage taxes and regulations cause to individuals and businesses, the more taxpayers and job creators will choose to avoid the government.

California Democratic Governor Jerry Brown appointed Michael Rossi, former Bank of America executive and GMAC subprime mortgage guru, to be his unpaid “jobs czar.” Brown hopes that Rossi will be able to tell Brown how to revive the state’s sagging economy.

It’s telling that Brown chose a career Big Business executive instead of a successful entrepreneur.  The two types of people – and their skill sets – couldn’t be more different.

Rossi’s path to success involved managing large corporate structures that focus heavily on exploiting government-created revenue streams, such as subprime mortgages that but for government-owned Fannie Mae and Freddie Mac’s guarantee would never have been made.  It also doesn’t help that today BofA is announcing its second straight year of layoffs (3,500 employees this year alone).

It would be far better for Brown to enlist the help of an entrepreneur with success starting and growing businesses.  As the Kauffman Foundation showed in a study released last summer, “new firms add an average of 3 million jobs in their first year, while older companies lose 1 million jobs annually.”

Here’s the Kauffman Foundation’s explanation:

Most notably, during recessionary years, job creation at startups remains stable, while net job losses at existing firms are highly sensitive to the business cycle.

“These findings imply that America should be thinking differently about the standard employment policy paradigm,” said Robert E. Litan, vice president of Research and Policy at the Kauffman Foundation. “Policymakers tend to focus on changes in the national or state unemployment rate, or on layoffs by existing companies. But the data from this report suggest that growth would be best boosted by supporting startup firms.”

If Governor Brown wants to create jobs he should consult the people creating jobs – not those managing a declining workforce.