I woke up this morning from a dream which was set in the late 1700’s. I believe it was 1796, because I was presenting to an enormous room full of people and the banners hanging declared “Welcome to the Federalist Party National Convention.” I was wearing pantaloons and extremely uncomfortable shoes. But I looked good, and on behalf of Ben Franklin Technology Partners, I had just accepted the “Incubator of the Year” award from the National Business Incubation Association (NBIA).
In my acceptance speech I thanked Alexander Hamilton who was sitting with the New York delegation. Hamilton, in my opinion, was the father of modern business incubation. Mr. Hamilton was not a big-time free-trade guy in the late 18th Century. He believed that support for private enterprise was the BEST way to protect the newly minted America from its enemies and from tyranny itself. A few years before, in 1791, he delivered to Congress a report called, blandly, “Report on Manufactures”. The report essentially outlined what later would become the baseline for the long-lost Whig party and was one of the divisive issues that had moved him to the right of his Federalist colleagues like John Adams. His report declared that only by providing subsidies to the new manufacturing industries could our nation become self-sufficient. If that sounds like government handouts, you’re missing an important nuance. His political opponents of the day, Jefferson, Madison, et.al., wanted to maintain a “craft” industry based economy. Think local smithy and cooper. Think draught-horse drawn ploughs. Noble and proud yes; but not the future. Jefferson and his supporters would have put up intimidating tariffs to protect existing business formations, but would have done little to support infrastructure development and new industry. Jefferson was most importantly not a fan of bigger businesses. As visionary as he was, he did not see how America’s future was tied to the growth of private enterprise.
Hamilton begged to differ. Hamilton and his followers believed that support for new industries was the better way. In his report, he said “The embarrassments, which have obstructed the progress of our external trade, have led to serious reflections on the necessity of enlarging the sphere of our domestic commerce: the restrictive regulations, which in foreign markets abrige the vent of the increasing surplus of our Agricultural produce, serve to beget an earnest desire, that a more extensive demand for that surplus may be created at home”. I hate to trample on other’s deathless prose such as “abridge the vent of the increasing surplus of our Agricultural produce”, but what he was saying is true today. Allow me to paraphrase: “Our domestic economy sucks eggs, and foreigners don’t buy enough of our stuff, so we need to invest in new businesses.” Hamilton was right then, and his prescription is right for this time as well. Support for new industries and new businesses is an important undertaking for the government. I’m not talking about broad-based stimulus spending to save the economy for today. I’m talking about systematic investments in efforts that support new businesses, during good times and bad times, for tomorrow.
The government’s role in the economy is not to be the economy, but to prep the soil for the economy. Ironically, Hamilton’s Report on Manufactures was based to some degree on the same premise as President Obama’s recent comments about how entrepreneurs didn’t build their own businesses alone. Hamilton and Obama would have agreed that every generation of industrialist and financier; every earlier Congress and local Chamber of Commerce; every butcher, brewer and baker from Adam Smith’s time until ours, built the foundation on which today’s economy is built. We all indeed built that. But the decisions of government spending should not be to create the economy, but rather to support the creators of the economy. We all have the pieces of past generations to build on, but only the entrepreneur steps out and finds ways to assemble those pieces for the future. The core difference between Jefferson and Hamilton then was the notion of who is best suited to lift the tide: government or business. Shadows of that disagreement loom over our current Presidential campaign. In my weird time-distorted dream, I found myself saying all this to the Federalist Convention and I was about to nominate Alexander Hamilton for President of the United States…when I woke up.
It was, of course, actually 2012 and I realized that I had actually been presenting at the NBIA conference. The room was full of people who spend their professional lives working and coaching the entrepreneurs of our modern digital age. To these supporters of entrepreneurs, I suggested that entrepreneurs would find a way to improve the economy of the world, and generally the state of man, with or without them. It is the entrepreneur, I said, who would build great things, not the incubator manager like me. Hamilton’s Report on Manufactures sought to encourage the spirit of enterprise, innovation, and invention within the nation. Our duty as incubator managers and believers in the spirit of free enterprise is to support the entrepreneur–to embolden and empower them in the Hamiltonian tradition–as they seek to “build that”.