My point here is that our federal government has spent untold amounts of our scarce tax dollars in the name of “creating jobs,” with little or nothing to show for it. Given this, we should all approach the new “J.O.B.S. bill” with a healthy dose of skepticism. Politicians have a built-in incentive to appear as though they’re doing things that make our lives wonderful. But just because they claim to be doing great things, doesn’t mean that they are.
As for the new “J.O.B.S. bill,” a version in the Senate passed, but now it goes to the House of Representatives for amending, and a vote.
One of the claims about this bill is that it would expand a phenomenon known as “crowd funding.” As writer Catherine Clifford noted at Entrepreneur.com, the bill seeks to make it “easier for startups to raise small amounts of money from large pools of investors” by utilizing this burgeoning mechanism for funding.
But this great effort on behalf of the U.S. Senate raises an important question: does the process of crowd funding need help from the government?
Crowd funding is the term of art used to describe a process whereby people pool their money to support a particular cause. Raising money for disaster relief is an example of this process, yet in recent years crowd funding has been utilized to fund everything from social movements (think “Occupy Wall Street” supporters plopping thousands of dollars in a bucket along the side of the road) to private artistic creations to small businesses.
So with crowd funding going so well, why would the Senate need to make it “easier” for businesses to utilize the technique? Might it be the case that government’s effort to “help out” with crowd funding might makes matters worse?
One of the expressed concerns of the Senate about expanding business owners’ access to capital was that investors would be adequately protected in the process. And the J.O.B.S. bill addresses forms of funding other than crowd funding, and allows businesses to raise investment capital more easily.
But crowd funding by its nature is not an “investment.” Visit Kickstarter.com and notice the artistic and creative endeavors that one can help fund – yet if you contribute to a project, you’re really more of a “donor” than you are an investor, and you do not receive a “share” of the enterprise.
So how does Congress “protect investors” who provide crowd funding, when in fact crowd funding is not an investment matter in the first place? If the final J.O.B.S. bill seeks to impose regulations on crowd funding as though providing crowd funding is similar to buying securities, the bill could severely hamper the very essence of this grassroots phenomenon.
Until Congress and the President demonstrate that they have a respect for the entrepreneurs, artists, and risk takers who make our economy function, we should all be skeptical of politicians who purport to “create jobs.”
Austin Hill is an Author, Consultant, and Host of "Austin Hill's Big World of Small Business," a syndicated talk show about small business ownership and entrepreneurship. He is Co-Author of the new release "The Virtues Of Capitalism: A Moral Case For Free Markets." , Author of "White House Confidential: The Little Book Of Weird Presidential History," and a frequent guest host for Washington, DC's 105.9 WMAL Talk Radio.
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