A coalition of the nation's most influential organizations representing small business owners and entrepreneurs is urging U.S. Senate leaders to work together to bring crowdfund investing legislation to the Senate floor for a vote. In a letter addressed to Senate Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY), the groups note that crowdfund investing legislation passed the U.S. House 407-17, and President Barack Obama has expressed his support for the legislation through a Statement of Administration Policy as well as in his Startup Legislative agenda recently delivered to Capitol Hill.
(READ THE LETTER BY CLICKING HERE.)
Crowdfund investing platforms will allow entrepreneurs who lack access to funding networks the opportunity to bring their business ideas directly to investors through regulated, online platforms. As the groups note in the letter, "Americans will have the opportunity to invest in small businesses in their local communities, or support entrepreneurs in rural areas where business formation is critical to sustaining those communities." The letter points out that capital access remains a serious challenge for startups and growth-oriented businesses, and without "adequate sources of capital, the economy will continue to underperform, and the recovery will remain less than robust." Funding streams "remain cautious, locked or tentative," write the groups.
Two crowdfund investing bills have been introduced in the U.S. Senate. Majority Leader Reid announced yesterday that the U.S. Senate will address the package of capital formation bills that overwhelmingly passed the U.S. House. With respect to crowdfund investing legislation, state regulators have engaged in a campaign of "fear and fraud," which has deprived Senators from learning the facts about how crowdfunding currently works through gift-based platforms, and how technology -- and a new regulatory framework - will play a central role in rooting out potentially bad actors on crowdfund investing platforms.
As the groups note in their letter:
"On these platforms, investors will dynamically engage with other investors to vet business ideas and fund those businesses that have significant promise. Crowdfund investing platforms will be open and transparent, and operate under a new regulatory framework. The platforms will protect investors by utilizing proven technologies and tap into 'the sunshine' of social media. This is what has made gift-based crowdfunding so successful, and why crowdfund investing has been a major success in other parts of the world. Entrepreneurs looking to raise capital will be required to provide significant financial information to potential investors, as well as withstand the scrutiny of the crowd in regards to the feasibility of their business plans and models."
The small business groups are optimistic about the legislation's fate. In the letter, they communicate a belief that "a consensus is achievable for advancing legislation that enables effective crowdfund investing platforms for small businesses while protecting investors." Majority Leader Reid said the Senate Banking Committee will hold an additional hearing on the package of capital access bills next week, which the groups hope will include expert witnesses on crowdfunding so that Senators can be properly informed about existing platforms, and how the new space will protect investors.
The groups underscore the importance of the need to work together to enact solutions that will help small business owners invest, grow and create jobs "Capital is the lifeblood of our economy, and without it small business owners and entrepreneurs simply cannot generate the new jobs, breakthrough innovations and economic impact that are necessary for bringing our nation back to sustained growth," the groups conclude in the letter.
The letter was signed by Harry Alford, President & CEO, National Black Chamber of Commerce; Kristie Arslan, President & CEO, National Association for the Self-Employed; Roger Campos, President & CEO, Minority Business Roundtable; Allen Gutierrez, National Executive Director, The Latino Coalition; Barbara Kasoff, President & CEO, Women Impacting Public Policy (WIPP); Karen Kerrigan, President & CEO, Small Business & Entrepreneurship Council; and Todd McCracken, President, National Small Business Association.
Karen Kerrigan, President & CEO
Consumer Confidence: Up ... But Big Questions Continue
On February 28, the Conference Board reported that its Consumer Confidence Index, which had declined in January, increased in February from 61.5 a month earlier to 70.8.
Consumers were more optimistic on their assessments of both current conditions and their short-term outlook. That's certainly welcome. But all of this needs to be put in perspective.
For example, before the deep recession and poor recovery took over, the Consumer Confidence Index was far higher. Five years ago, in February 2007, it came in at 111.2. Over the three years prior to the most recent recession, the index range ran between 85.2 and 111.9. For good measure, over the past three-and-a-half decades, the high was 144.7 in January 2000.
So, while consumer confidence is improved compared to where it's been over the past year - falling short of the 72.0 mark hit last February, which was the high mark for the past four years - we're still nowhere near where we should be, especially more than two-and-a-half years into a recovery.
In addition, while improved, consumers remain far from optimistic in terms of their outlooks for both business conditions and the labor market.
On business conditions, the Conference Board reported: "The proportion of consumers expecting business conditions to improve over the next six months increased to 18.7 percent from 16.7 percent, while those anticipating business conditions will worsen decreased to 11.8 percent from 14.6 percent." And on labor markets: "Those anticipating more jobs in the months ahead increased to 18.7 percent from 16.4 percent, while those anticipating fewer jobs declined to 16.9 percent from 19.1 percent.
Again, while any positive moves are appreciated, these levels hardly reflect a robust confidence in the economy. Indeed, it's quite the contrary.
Finally, it must be noted that this measure of consumer confidence might already be outdated. The cutoff date for these results was February 15. With the recent rise on gas prices, and expectations for rising costs at the pump in coming weeks and heading into the summer, especially with uncertainty swirling around Iran, it would not be surprising to see consumer confidence take a hit as a result.
In the end, of course, consumer confidence reflects the state of the economy and job creation, along with key costs like energy. Consumer uncertainty, along with business and investor uncertainty, need to be reduced via sound public policies, which mean a shift to smaller government, namely, substantive, permanent tax and regulatory relief, reduced federal spending, sound monetary policy focused on price stability, and stronger leadership on free trade in the global arena. That shift would be good for entrepreneurship, business, investment, growth, jobs and therefore, consumer confidence.
_______
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.
Consumers were more optimistic on their assessments of both current conditions and their short-term outlook. That's certainly welcome. But all of this needs to be put in perspective.
For example, before the deep recession and poor recovery took over, the Consumer Confidence Index was far higher. Five years ago, in February 2007, it came in at 111.2. Over the three years prior to the most recent recession, the index range ran between 85.2 and 111.9. For good measure, over the past three-and-a-half decades, the high was 144.7 in January 2000.
So, while consumer confidence is improved compared to where it's been over the past year - falling short of the 72.0 mark hit last February, which was the high mark for the past four years - we're still nowhere near where we should be, especially more than two-and-a-half years into a recovery.
In addition, while improved, consumers remain far from optimistic in terms of their outlooks for both business conditions and the labor market.
On business conditions, the Conference Board reported: "The proportion of consumers expecting business conditions to improve over the next six months increased to 18.7 percent from 16.7 percent, while those anticipating business conditions will worsen decreased to 11.8 percent from 14.6 percent." And on labor markets: "Those anticipating more jobs in the months ahead increased to 18.7 percent from 16.4 percent, while those anticipating fewer jobs declined to 16.9 percent from 19.1 percent.
Again, while any positive moves are appreciated, these levels hardly reflect a robust confidence in the economy. Indeed, it's quite the contrary.
Finally, it must be noted that this measure of consumer confidence might already be outdated. The cutoff date for these results was February 15. With the recent rise on gas prices, and expectations for rising costs at the pump in coming weeks and heading into the summer, especially with uncertainty swirling around Iran, it would not be surprising to see consumer confidence take a hit as a result.
In the end, of course, consumer confidence reflects the state of the economy and job creation, along with key costs like energy. Consumer uncertainty, along with business and investor uncertainty, need to be reduced via sound public policies, which mean a shift to smaller government, namely, substantive, permanent tax and regulatory relief, reduced federal spending, sound monetary policy focused on price stability, and stronger leadership on free trade in the global arena. That shift would be good for entrepreneurship, business, investment, growth, jobs and therefore, consumer confidence.
_______
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.
France Fights to Protect IP
The great early 19th century, French economist Jean-Baptiste Say noted the importance of property rights: "Political economy recognises the right of property solely as the most powerful of all encouragements to the multiplication of wealth."
On protecting private property as a necessary role of government, Say wrote: "Without this protection of each individual by the united force of the whole community, it is impossible to conceive any considerable development of the productive powers of man, of land and of capital; or even to conceive the existence of capital at all; for it is nothing more than accumulated value, operating under the safeguard of authority."
While the technological state of our economy is light years ahead of where it stood two hundred years ago, the protection of private property - including intellectual property - remains a critical duty of government, and central to economic development and growth.
On February 20, The New York Times ran an interesting article titled "A Piracy Law in France Appears to Curb File-Sharing and Lift Digital Music." The main point of the story was that two years afo France approved a measure to fight digital piracy, and the result has been a sharp decline in file-sharing piracy, growth in digital sales, and a stabilization of music industry revenues.
The article described the process under the French law: "The agency that administers the three-strikes system, known by the French abbreviation Hadopi, had sent 822,000 warnings by e-mail to suspected offenders as of the end of December. Those were followed up by 68,000 second warnings, issued through registered mail. Of those, 165 cases have gone on to the third stage, under which the courts are authorized to impose fines of €1,500, or nearly $2,000, and to suspend Internet connections for a month."
The piece also quoted Éric Walter, the secretary general of Hadopi, explaining: "Our work is to explain to people why piracy is a bad thing and why they should stop... When the people understand that, they stop. Of course, some people don't want to understand. Then we have to transfer their dossiers to the justice system."
A study on the impact of Hadopi by researchers from Carnegie Mellon University and Wellesley College was referenced in the article. That study, conducted by Brett Danaher, Michael D. Smith, Rahul Telang and Siwen Chen, summed up its key findings this way: "Our results suggest that increased consumer awareness of HADOPI caused iTunes song and album sales to increase by 22.5% and 25% respectively relative to changes in the control group. In terms of robustness, we find that these sales changes are similar for each of the four major music labels, suggesting that our results are not driven by one particular label. We also find that the observed sales increase is much larger in genres that, prior to HADOPI, experienced high piracy levels (e.g., Rap and Hip Hop) than for less pirated genres (e.g., Christian music, classical, and jazz). This tends to strengthen the causal interpretation of our results given that if HADOPI is causing pirates to become legitimate purchases, its effects should be stronger for heavily pirated music."
So, credit France for taking a significant and apparently powerful step to protect intellectual property. Jean-Baptiste Say would be pleased, and U.S. policymakers should take note.
_______________
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.
On protecting private property as a necessary role of government, Say wrote: "Without this protection of each individual by the united force of the whole community, it is impossible to conceive any considerable development of the productive powers of man, of land and of capital; or even to conceive the existence of capital at all; for it is nothing more than accumulated value, operating under the safeguard of authority."
While the technological state of our economy is light years ahead of where it stood two hundred years ago, the protection of private property - including intellectual property - remains a critical duty of government, and central to economic development and growth.
On February 20, The New York Times ran an interesting article titled "A Piracy Law in France Appears to Curb File-Sharing and Lift Digital Music." The main point of the story was that two years afo France approved a measure to fight digital piracy, and the result has been a sharp decline in file-sharing piracy, growth in digital sales, and a stabilization of music industry revenues.
The article described the process under the French law: "The agency that administers the three-strikes system, known by the French abbreviation Hadopi, had sent 822,000 warnings by e-mail to suspected offenders as of the end of December. Those were followed up by 68,000 second warnings, issued through registered mail. Of those, 165 cases have gone on to the third stage, under which the courts are authorized to impose fines of €1,500, or nearly $2,000, and to suspend Internet connections for a month."
The piece also quoted Éric Walter, the secretary general of Hadopi, explaining: "Our work is to explain to people why piracy is a bad thing and why they should stop... When the people understand that, they stop. Of course, some people don't want to understand. Then we have to transfer their dossiers to the justice system."
A study on the impact of Hadopi by researchers from Carnegie Mellon University and Wellesley College was referenced in the article. That study, conducted by Brett Danaher, Michael D. Smith, Rahul Telang and Siwen Chen, summed up its key findings this way: "Our results suggest that increased consumer awareness of HADOPI caused iTunes song and album sales to increase by 22.5% and 25% respectively relative to changes in the control group. In terms of robustness, we find that these sales changes are similar for each of the four major music labels, suggesting that our results are not driven by one particular label. We also find that the observed sales increase is much larger in genres that, prior to HADOPI, experienced high piracy levels (e.g., Rap and Hip Hop) than for less pirated genres (e.g., Christian music, classical, and jazz). This tends to strengthen the causal interpretation of our results given that if HADOPI is causing pirates to become legitimate purchases, its effects should be stronger for heavily pirated music."
So, credit France for taking a significant and apparently powerful step to protect intellectual property. Jean-Baptiste Say would be pleased, and U.S. policymakers should take note.
_______________
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.
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