Is Bankruptcy Law Bad for Entrepreneurship?
An article at Knowledge@Emory raises an interesting possibility. They question whether the newly passed Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 may dampen our entrepreneurial economy. Why? Because so many entrepreneurs use personal credit cards and second mortgages on their homes to finance start-ups. For these entrepreneurs, easy bankruptcy provides a safety net if things don’t go right.When I teach entrepreneurs and potential entrepreneurs I try to push them to think about start-ups in a prudent and responsible way. Success and failure will both have consequences, so they need to think things through very carefully. I am much less concerned with how many of them start-up a business as I am with how many of them still are operating their businesses three, five, even ten years from when I have them in class. Those businesses that do last over time are my measure of the success of what I do, not the volume of those who do any old start-up.
I want them a little afraid at their start-up. I want them a little nervous. I want them a little worried about what happens if they fail. Entrepreneurs who rush in blindly like marauding pirates have not learned the lessons we try to teach them in our classes.
William T. Sellers on April 8th, 2005 9:51 am
The upcoming bankruptcy law, first since the Internet, fall of communism, the PC, securitization, collateralized mortgages, derivatives, etc, etc. will have enornous repurcussions. Get ready for widespread deflation in the main, unless the Fed drops their funds rate back under 1/2%, and starts spreading helicopter money over the country.
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