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Archive for the ‘politics’ tag

Occupy Wall Street is about student debt

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Up to this point I hadn’t thought much about the macro reasons behind Occupy Wall Street, assuming it was driven by a general disaffection with economic inequality. But when I checked out We Are the 99 Percent this weekend, I saw a clear common thread among the protesters: the presence of overwhelming student debt.

Student loans are a unique kind of financial instrument. They are the only kind of debt that can’t be forgiven through bankruptcy, even when the loans come from private sources rather than government-affiliated institutions (like Sallie Mae). These loans have been a pretty standard part of the American education system for the past decade, especially among private, for-profit universities, where 96% of students graduate with an average of $33,000 in debt [PDF].

Protestor at Occupy Wall Street

Indeed.

The past 70 years of American education have been built around a simple social contract: go through four years of liberal arts education, and there will be jobs waiting for you on the other side. You can even take on an otherwise unconscionable amount of debt to do it — after all, education is an investment, not just an ordinary expenditure.

Over the past three years, that social contract has been broken. The jobs that used to be available to young people with passion and drive but no appreciable skills are gone, and the graduates who would have taken those jobs are unemployed. But they still bought into the social contract, accepting suffocating amounts of student debt to get the education that didn’t give them the skills they actually needed to get a job. And just when these young people should be at the height of productivity — working hard, inventing things and starting companies — they are left deep in debt with no marketable talent.

So they’re angry, although without the channels or eloquence to express that anger in a meaningful way. So they lash out at the faceless financial-industrial complex — the people who ostensibly have created and maintained this destructive environment from behind the curtain.

But reality is much more complicated. While the folks on Wall Street have managed to hack the system, manipulating a need for liquidity and market inefficiencies to drive incredible financial returns, they’re hardly the only group at fault for a badly broken educational framework.

As a first stop, the frustrated graduates should take a look at the for-profit university administrators who adopted shady, over-promising marketing practices or the government officials who allowed often well-intended laws to be hijacked to saddle students with unforgivable debt. Or perhaps they should take a look at the state education heads and politicians who have resisted a move toward more practical, vocational education for some segments of Americans.

I maintain that unemployment is not high due to a lack of jobs — General Assembly, for one, has plenty of open positions. Rather, it is high due to a colossal mismatch of skills and market needs resulting from a dated and broken educational system.

The protestors at Occupy Wall Street are right to be angry. But articulating the problem is the first step in fixing it.

Written by Brad Hargreaves

October 9th, 2011 at 2:02 pm

Startups and Libertarian Populism

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As more and more people look to the startup community to save our nation and our economy, it is only reasonable for things to get way more political. As more former bankers and teachers and rodeo clowns start companies, we’re witnessing the emergence of entrepreneurs as a political bloc.

But we are influenced by a different set of issues than the average partisan — H1B visa reform, patent reform, regulatory streamlining, et cetera — some of which haven’t yet been divided along partisan lines. In fact, it’s extremely difficult to assign the “entrepreneur’s agenda” to a traditional right-left spectrum. But this makes it even more interesting to attempt to arrive at some conclusions about the unique political beliefs of entrepreneurs.

However, some challenges. First, it’s notoriously hard to generalize anything about an entire industry. You can say that auto dealers and doctors tend to be conservative while teachers and scientists tend to be liberal, but technology-focused entrepreneurs are an even more diverse bunch. I’ve met founders who are die-hard socialists and others whose neo-conservative beliefs would make Glenn Beck blush. Second, politics is something that many founders simply don’t discuss in public. It’s tends to have a pretty poor risk-reward ratio.

However, I’ve seen a couple broad, fairly common threads among the political beliefs of startup founders, investors and early employees. I summarize them as “Libertarian Populism”, combining two political philosophies rarely seen together in the wild:

Libertarianism: A strong belief in individual freedom of thought and action. See the broad-based support for patent reform, creative commons licenses, regulatory reform (often de-regulation) and immigration reform.

Populism: The belief in the struggle of the people versus the “elites”, commonly represented by large corporations, specifically Wall Street. This tends to be particularly strong in developer-centric communities like Hacker News — most of the articles I’ve written that have hung on the front page for a while have had a strong populist streak.

But it’s more than just the independent adoption of these beliefs. Rather, libertarianism and populism are combined into a desire for freedom from all institutions, with little distinction between government and large corporations. After all, government and larger companies are both things that can (and do) harm small businesses. In many cases, government and big companies seemingly collaborate to attack startups: modern US patent policy, for instance, gives a massive advantage to enterprises with hoards of cash and lawyers.

Many entrepreneurs — especially the more common, cash-flow-focused entrepreneurs creating lifestyle businesses — consider their actions to be a declaration of independence of sorts from institutionalized corporate America and 9 to 5 drudgery. Yet the government’s rules tend to be written with the assumption that all companies are big companies, and the resulting administrative headache creates an antagonistic relationship between entrepreneurs and governments. Add to that the fact that big corporations — say, a health care provider — have similarly unfriendly rules, and the entirety of mainstream American institutions are thrown into the same bucket. Thus, libertarian populism.

This all has interesting implications. For instance, I’ve lately seen entrepreneurial populism leveraged to attack VCs. Take Chris Dixon, for instance, who has done a remarkable job leveraging his audience’s populist streak to paint VCs as the “other”. In reality, Chris is probably wealthier than most VCs — but he doesn’t have to answer to LPs, who are easy to lump into the government/corporate mob (and often justifiably so).

As our nation’s expectations of the startup community grows, expect the politicization of entrepreneurs to only deepen.

Like this? Vote for it on my favorite news site, Hacker News.

Written by Brad Hargreaves

September 3rd, 2010 at 7:44 am