How the Recovery Act of 2009 Affects Entrepreneurship in the United States - Research Paper Example

Entrepreneurship is a term that goes beyond mere creation of businesses according to Gregwatson (2010). Some scholars have defined entrepreneurship as the process by which people identify opportunities, assign resources and create value. Value creation in this sense is done through the identification of needs that are yet unmet or by identifying opportunities for change. Entrepreneurship may also generally refer to the act of being an entrepreneur. Entrepreneurs are people who identify opportunities as they find problems in society and find ways of solving them. Entrepreneurship may take different forms the most common of which are starting a new business, venturing into a new market, coming up with new methods of production, and adopting a new organizational form. Entrepreneurs generally are people who are innovative and take risks with an aim of making profits. It is worth noting that entrepreneurship plays a great role in the development of nations, and the world at large. In fact, all parts of the world have experienced the benefits of having entrepreneurs around. Entrepreneurship in Early American History The United States of America has been a great beneficiary of entrepreneurial minds since its establishment as a nation. It may well be stated that at the very centre of the ideals of America is the entrepreneurial spirit. Adam Smith and Richard Cantillon are much credited with the advent of Entrepreneurship in the United States of America in the 17th and 18th centuries. Although their concept of entrepreneurship was largely ignored then, it drew great attention in the late 19th century and has henceforth achieved profound popularity especially in economics and business fields. American entrepreneurial history has notably taken greater shape ever since the early 20th century – a time at which the political environment became more business friendly. America in the 19th century was characterized by divergence between major business groups which included non-farm entrepreneurs and farmers as noted by Reich (2007). Large private communication and transport companies that emerged in the latter part of the 19th centuries saw these conflicts take a new, sharper focus with the companies being seen as enemies of the two groups. The establishment of the merger movement between 1870 and 1930 saw the rise in concerns over the economy and the individual’s opportunities. It has been noted by some scholars that entrepreneurship in America was stimulated by the rigorous documentation of histories of industries. This was then comparable to writing the biographies of prominent and reputable personalities. A second stimulus to entrepreneurship came in 1927 when Harvard Business School under Professor Gras started created historical scholarship of businesses and how they operated. Those who underwent this training gained a lot of insight into different aspects of entrepreneurship and put the ideas that they gained into actual practice by establishing new businesses. Entrepreneurship in America in the Last Twenty Years The past two decades have seen many entrepreneurs emerge in the USA. The American psyche is greatly driven by the thought of being the next Carnegie, Edison, Kiyosaki, Bill Gates or Donald Trump – great and admirable entrepreneurs. While many entrepreneurs engage in the traditional trade that involves selling good goods and/or services, a new breed of entrepreneurs have somehow managed to make money of money as noted by Reich (2007). Financial entrepreneurship as this activity is popularly called is fast becoming a dominant contributor to the country’s economy. Indeed the last 20 years have seen every budding Donald Trump get the company of thousands of aspiring entrepreneurs, most of whom prefer to be equity fund managers. One thing that has boosted the development of the entrepreneurial spirit in the USA is the notion that competition breeds better service and grater efficiency. This being the case, new businesses have continued to come up to compete with those that have already been established. Government Interference and Entrepreneurship Business activities have been impacted by government activities and regulations since time immemorial. Better said, entrepreneurial activities are always subject to the political environment and sometimes are hampered by activities of government. The government may interfere with businesses in countless ways. Many a time, such interferences are aimed at protecting the majority of consumers from unfavorable exploitation. Some ways by which the government interferes with businesses include zoning, enacting business licensing requirements, and regulation of activities such as the manufacture, distribution and use of goods. Other interferences include the enactment of regulations on importation and exportation of products and the imposition of taxes which in most cases lead to the increase in prices of products. Yet again, the government’s policies on business activities greatly impact how entrepreneurs conduct their activities. When the policies are favorable, the business people are more likely to succeed under idea situations, the converse being true when the policies are unfavorable. The American Recovery and Reinvestment Act of 2009 (ARRA 2009) The American Recovery and Reinvestment Act is also commonly referred to as The Recovery Act or the Stimulus (Calmes 2009). The Act is a stimulus package that was enacted in February 2009 that followed the 2008 Stimulus Act and the Emergency Economic Stabilization Act in the same year according to Calmes (2009). The ARRA was enacted with an aim of creating jobs and promoting investment and customer spending during the recession. The stimulus was established in application of the Keynesian economic tradition that states that government expenditure should be used to cover the output gap. This gap is created when consumers spend less during a recession. Modern economic argument is in favor of monetary policies over fiscal ones, like the fiscal stimulus (Bean 2007). With the Federal Reserve already having reduced interest rates to null, the US government had very little options to deal with the recession, with a liquidity gap staring into the country’s face. This state of affairs also meant that the monetary policy had less chances of being effective. In overall, the Act was nominally worth about 787 billion USD and included provisions for tax cuts, increase in unemployment benefits as well as a number of other social welfare benefits (NCRR 2010). Other things that came with the Act include provisions for domestic spending in education, infrastructure, healthcare and boosts to the energy sector (Calmes 2009). Also included in the Act are several non-economic items that are aimed at aiding the country’s economic recovery in the short and long term. The American Recovery and Reinvestment Act is bound to benefit many parties; individuals, small businesses and large corporations. As earlier noted, the stimulus package will help people who are in need such as those who are unemployed. With the unemployment benefits that come their way, those who are unemployed can start their small businesses. Further more, the stimulus package will help in the development of infrastructures that benefit individuals and businesses in various ways. Businesses an individuals are also bound ton enjoy tax reductions which means that they will enjoy slightly greater profit margins that they previously did under certain conditions. With the stimulus boosting the energy sector, already over 52,000 clean energy jobs have so far been created. Other jobs that have somehow been supported across the country number about 11,000. It is worth noting that the Act will have greater impact on businesses and individuals in the long-term as compared to the shorter term. Conclusion The establishment of businesses is mainly what most entrepreneurs do across the world, the US being no exception. As they carry out their activities, the entrepreneurs are impacted by several environmental factor including government interventions. Entrepreneurial activities are greatly impacted by government interventions which are mostly established to protect the majority or nationals. In the USA, the American Recovery and Reinvestment Act of 2009 is bound to have several effects on the entrepreneur. Many businesses are geared to benefit from tax reductions, individuals are getting jobs and the unemployed have access to funds with which they can start their own businesses. Works Cited Bean, Charles. Is there a new consensus in macroeconomics?. London School Of Economics. London.2007. Calmes, Jackie. "House Passes Stimulus Plan Despite G.O.P. Opposition”. New York Times. 2009. Gregwatson (2010) Entrepreneurship Definition. Viewed 3rd August, 2010 http://www.gregwatson.com/entrepreneurship-definition/ NCRR (2010) NCRR Recovery Act Information. Viewed 3rd August, 2010 http://www.ncrr.nih.gov/the_american_recovery_and_reinvestment_act/ Reich Robert (2007) Rethinking American Entrepreneurship. Viewed 3rd August, 2010 http://www.prospect.org/cs/articles?article=rethinking_american_entrepreneurship Read More