Ron and Ed welcomed Chris Edwards to the show to talk about two recent reports he has authored for The CATO Institute. In How Wealth Fuels Growth, the role of wealth in the economy is the focus. In this recent study Chris examines wealthy individuals as “angel” investors, who fund startup businesses. Angel investors provide a unique source of support for America’s entrepreneurs, particularly in leading-edge industries. In Entrepreneurs and Regulations: Removing State and Local Barriers to New Businesses, Chris writes about how the U.S. economy was damaged by the COVID-19 crisis in 2020. Output plunged and unemployment spiked. Mandated shutdowns, social distancing, and altered consumption patterns resulted in many businesses closing permanently and laying off workers.

Before we get to the show notes, let’s learn a bit more about Chris Edwards.
Chris Edwards is the director of tax policy studies at Cato and editor of DownsizingGovernment.org. He is a top expert on federal and state tax and budget issues. Before joining Cato, Edwards was a senior economist on the congressional Joint Economic Committee, a manager with PricewaterhouseCoopers, and an economist with the Tax Foundation. Edwards has testified to Congress on fiscal issues many times, and his articles on tax and budget policies have appeared in the Washington Post, Wall Street Journal, and other major newspapers. He is the author of Downsizing the Federal Government and coauthor of Global Tax Revolution. Edwards holds a B.A. and M.A. in economics, and he was a member of the Fiscal Future Commission of the National Academy of Sciences.

Here are the show notes (in chronological order). Listen to the show and use these notes as a guide.

Our guest today, Chris Edwards, is the founder of DownsizingGovernment.org. You can get lost at that link because of the amount of content. Be careful! :)
There is an “ever‐higher concentration of national wealth at the top.” Haven’t we been hearing about this for decades? Chris addresses this with “How Wealth Fuels Growth”. Link here: https://www.cato.org/policy-analysis/how-wealth-fuels-growth
“In the long run prosperity and higher income come from innovation.” —Chris Edwards
The two mRNA vaccines that have helped us defend against COVID are the result of private investment and over a decade of work. Government didn’t do it. Big businesses didn’t do it. Small entrepreneurial companies made these breakthroughs.
Both Moderna and BioNTech were founded about a decade ago. They were both funded by private investments when getting started. They took on a huge amount of risk and are benefitting (as are we all) as a result.
“It takes a special type of wealthy person to invest in startups. Thank goodness we have those types of people in America.” —Chris Edwards
Space tourism may or may not work. We don’t know and we need entrepreneurs to test this market. THAT is why we should be applauding SpaceX, Blue Origin, and Virgin Galactic. Not chastising them.
Did you know that about a decade ago, the business startup rate in the United States fell and never fully recovered? Economists think it’s the rise in regulations. Chris wrote about this at this link: https://www.cato.org/policy-analysis/entrepreneurs-regulations-removing-state-local-barriers-new-businesses
Today, over 20% of careers require a license. Occupational licensure is covered by Chris in his paper as well as by us in episode #225. Link here: https://www.thesoulofenterprise.com/225
We should be encouraging young people to be entrepreneurial and start businesses. It’s counterintuitive that this is not happening today.
While Americans are viewed as a very entrepreneurial culture, the US government has created a pretty heavily regulated country.
In his paper, Chris defines the “Entrepreneur Regulatory Barriers Index”, which uses 17 variables to rank the states on their barriers to startup businesses. Where is your state on the list? https://www.cato.org/policy-analysis/entrepreneurs-regulations-removing-state-local-barriers-new-businesses
Here are six charts that show 2021's record year for US venture capital - https://pitchbook.com/news/articles/2021-record-year-us-venture-capital-six-charts
From Chris: “There is a better way to promote local economic development that would not cost taxpayers anything: liberalize rules for home‐ based businesses.” More here: https://www.cato.org/policy-analysis/entrepreneurs-regulations-removing-state-local-barriers-new-businesses#trends-business-startups
“State governments should repeal certificate of need laws because they block new businesses and investments for no good reason.” They are idiotic and need to go. More from Chris here: https://www.cato.org/policy-analysis/entrepreneurs-regulations-removing-state-local-barriers-new-businesses#conclusion
It’s illegal for someone to start a letter mail company and compete against the United States Postal Service. There are probably many innovations we don’t see because of a lack of competition in this space.
The more regulations Chris talked about in his paper prevent entrepreneurs from entering new industries, the more larger corporations are helped. https://www.cato.org/policy-analysis/entrepreneurs-regulations-removing-state-local-barriers-new-businesses
“Silicon Valley’s wealth waterfall has been massive. Since the 1950s, each wave of innovation has created millionaires and billionaires who have plowed their wealth back into the next round of startups.” More from Chris here: https://www.cato.org/policy-analysis/how-wealth-fuels-growth#wealth-waterfalls
A big THANK YOU to Chris Edwards for joining us today. There are two fantastic papers he wrote that we talked about. Check out the next two bullet points for the links. And stay tuned for more of Chris as a guest on April 15th!
How Wealth Fuels Growth - https://www.cato.org/policy-analysis/how-wealth-fuels-growth
Entrepreneurs and Regulations: Removing State and Local Barriers to New Businesses - https://www.cato.org/policy-analysis/entrepreneurs-regulations-removing-state-local-barriers-new-businesses

Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.

This week was bonus episode 374 - “Las Casa Bonita” — Here are some of the links discussed: