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Why Socialism Is Better for Entrepreneurs

Imagine, for a moment, that you’re on top of a hundred story tall sky-scraper standing in front of a tightrope that goes a 50 feet across to another hundred story tall sky-scraper. Suppose you knew that 90% of people who attempt to cross this tightrope fall off of it (there’s no net, no balance bar, nothing). But if you can cross the tightrope, you’ll be handed a briefcase with 10 million dollars in it to do with as you please. Would you, personally, try to cross it?

I’ll tell you straight away that I wouldn’t. And how many people would?

But this is pretty much exactly what we ask entrepreneurs to do in America. About 9 out of 10 startups that receive funding fail. The ugly truth is that if you try to start a business, you’re likely to fail. Even if you ‘succeed’ you may not get much of a prize: if you spend 10 years (which, by the way, is around how long you need to spend in a startup to approach a successful exit) paying yourself a startup wage (around $40-$50k), and at the end of that time you sell your company for a million dollars, you could have just gotten a six figure corporate job and made around the same amount of money over that time.

And if you do fail (which I repeat: you’re most likely to), you’ll be out of work. But with all that goes in to trying to save a failing startup, you’re also likely to have depleted your savings and possibly gone into debt.

Who, in their right minds, would do such a thing?

Now imagine that instead of just a tightrope between two skyscrapers, there was a safety net as well. And a balance bar. And maybe an over-wire as a backup in case the net failed. But there’s a catch: instead of $10 million dollars, now you’ll only get $9 million. Would you attempt the crossing under these new circumstances?

I still wouldn’t because a hundred stories up is just too damn high; but I’d be willing to bet a way higher percentage of people would try now that falling doesn’t mean certain death.

That’s what a social safety net does for entrepreneurs: provide you a soft landing in case you fail (which, to be clear, you almost certainly will). Incidentally, that’s also why many of the highest concentrations startups are in states with better social services, states like California, New York, and Massachusetts. If you listen to conservatives, CA, NY, and MA shouldn’t have ANY businesses, whereas Kansas, South Dakota, and Wyoming should be booming startup havens. But they’re not. And the reason why, I hope, is now obvious: states that make sure that failure isn’t a death sentence allow people to take more risks – and a startup is one hell of a risk.

Wouldn’t you take more risks if you knew failing wasn’t that bad, and better, that you’d be able to recover from it easily? Don’t we want people to make the leap and build something amazing?

If you answered yes to these questions, then you should support a strong social safety net, and other socialist policies.

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