Without the state

Start your own business?

2013-05-07T12:08:59+01:00

A recent item on the BBC web site briefly looked at the question of whether start ups could be the answer to Spain’s economic problems. Given that the example they chose was yet another cup cake seller, you could be excused for dismissing this as hyperbolic nonsense. It isn’t though.

Out of curiosity I created a very simple spread sheet model that looked at what might be the position five years after the creation of a notional cohort of new businesses. For simplicity I assumed each of these would be a single person at the outset, but it would not be too difficult to refine things to allow for a range of business sizes from the outset. I found some data which suggested that, in the UK at least, 45% of startups were still trading after five years. That is actually better than I expected, but I took that, and constructed a year on year table of survival rates that led up to that figure. New starts also tend to grow more rapidly so I also created another table of year on year growth rates. I’m looking for some data to make this a bit more robust.

From these two simple tables I set up a spread sheet to see what the situation would be after five years. The proponents of big business, politicians and the apologists for the big state will all use the relatively high failure rates of startups as an argument for putting large amounts of state money into supporting the work of large firms. What I already knew , and which seems to be confirmed by the figures from my simple model is that it isn’t the failure rate that counts, although if that can be reduced it is a bonus. What makes the difference is that because of the higher growth of new starts it doesn’t take long before the employment in surviving businesses more than makes up for the failures. In fact even on quite pessimistic assumptions about growth, the increased employment in surviving businesses almost replaces the failures, while on moderately pessimistic ones after five years there has been no reduction. On the sort of growth historically seen, the employment generated can be quite startling.

If we add to this an assumption of fresh cohorts of new startups in each subsequent year, a not unreasonable assumption even for a small town, then the numbers begin rapidly to accumulate. This isn’t just a model though. The small town of Fairfield in Iowa, popln 9000, managed to create 2000 jobs in 15 years.

The problem is that we tend to look on a new start that doesn’t succeed as a failure, whereas it isn’t, it is an experiment and sometimes experiments give us different answers to the ones we expect. We need to look for ways to avoid the stigma of failure attached to unsuccessful business ventures. Government intervention in support of large scale projects hasn’t exactly got an unblemished reputation either and the money lost in fiascos like De Lorean, or in shoring up the banks vastly outstrips what is lost in small business failures.

If anyone is interested I can send you a copy of the spread sheet to try for yourself. I would love to do an interactive version but don’t have the skills.

Previous posts on related topics:

http://www.withoutthestate.com/panchromatica/2010/03/a-tale-of-two-ecovillages-damanhur-and-findhorn.html

http://www.withoutthestate.com/panchromatica/2004/07/africa_is_not_y.html

http://www.withoutthestate.com/panchromatica/2004/06/economic_garden.html

EDIT: This paper from 2004 published by Warwick University looks at the issue of firm growth from a number of perspectives.

Start-up size and subsequent growth: English and Spanish new businesses compared

Leadership? No thanks!

2013-04-03T16:03:00+01:00

"Put not your trust in new leaders, better systems, new organisations or regulatory reorganisation," says the Archbishop of Canterbury. "Human fallibility recognised, God's sovereignty trusted; these are also the only stable foundations for human beings in society," he said. "Setting people or institutions up to heights where they cannot but fail is mere cruelty."

Well, he would say that wouldn’t he? But there is a point in there. The 1980s and 90s was a period obsessed with leadership. Probably hundreds of management books purported to describe the essentials of being a great leader. But leadership implies the led. No one seemed to be asking what they want and despite the rhetoric of both Labour and the Coalition governments, they are in practice wedded to a centralised political system in which there are indeed leaders, but the rest have to follow whether they want to or not.

It isn’t about being a leader. It’s about the exercise of power and control.

A war on science?

2013-03-26T15:33:50+00:00

It really seems so.

Suppression of research into gun violence

Lying cheating barstewards

2013-03-16T14:56:00+00:00

It should be no surprise that those given access to power over others will tend to use it, but we seem to be getting more than our fair share of lying cheating bastard (henceforward LCB) stories lately.

Selling horsemeat for beef, the resignation of the head of the RC church in Scotland, accusations about the former CE of the Liberal Democrats, lies by Teresa May over immigration, lies by Ian Duncan Smith over free labour for big companies in the guise of support for job seekers, endless stories of sexual misconduct by RC priests, the investigation into Jimmy Saville turning up all sorts of other nastiness, phone hacking, police corruption, appalling behaviour by the companies paid our money to help people back to work, lies over the change from DLA to so-called Personal Independence Payments, lies over what Hilary Mantel is supposed to have said by newspapers and politicians alike, – these are just what springs immediately come to mind.

Is their a remedy? The State depends on the acquiescence of the people and on the support of cronies in the big corporates. Without breaking the law do everything you can to simply ignore it. Do all you can to make it an irrelevance and the big corporates superfluous. Give away as little power and information as possible. Routinely use a proxy web server, routinely encrypt e-mails, turn off wifi and Bluetooth whenever possible on your mobile phone, (you'll save battery life anyway), pay cash or barter for goods and services, reduce your dependence on centrally provided infrastructure like power and water by upgrading insulation, installing solar power or heat exchangers wherever feasible.

Building a new society inside the shell of the old one – make government and the corporate state irrelevant.

Are you paranoid - or are you really being watched?

2013-01-27T12:02:27+00:00

C4's conspiracy thriller Utopia has a fascinating web-site attached, describing how we are being watched by government and others and our privacy invaded - but also the many ways in which we collaborate, willingly or from ignorance, in that process. Did you know for example that the government are considering ways to use ANPR cameras at filling stations to restrict access to fuel for uninsured drivers? Of course it doesn't have to be the uninsured. You just might be on a list somewhere and making you buy fuel more frequently keeps you under observation and limits your mobility.

Remember - just because you are paranoid, doesn't mean they are not out to get you...