An Idea for the Economy that will Freak Out a lot of People but could be Fun to Discuss.

The US Treasury is currently borrowing money at a Negative Real Yield. In any normal environment, if you can borrow money at a negative rate you should borrow as much as you can.  The premise is that any idiot should be able to earn a return of greater than zero with the money.  That’s a premise that should make the Democrats happy.

The problem for the Democrats is that the government hasn’t shown that they can earn a positive or even a break even return on their spending.  (Stunningly, bailouts excluded).

As the Republicans and Tea-Party will tell you, we have a spending problem.  The reality is that the problem isn’t how much we spend, it’s what we spend it on.  Our government is not very good at funding projects/investments that generate much if any return. Our government is so overhead laden that just to get the money from the Treasury to a project automatically starts it in a hole. Plus our federal government loves to hire people. That isn’t a problem in and of itself. The problem is that they over pay and let them keep their jobs forever. A basic tenet of business is that it is rarely a good idea to borrow short term funds for long term projects or employees unless you are damn sure of the returns. Our government never is.

So what to do ?

First we pick a goal. I want the goal to be employment. I want to help companies hire employees. I think the first problem to solve is creating jobs.

The Republican/ Tea-Party approach to job creation is to cut taxes. The theory being that more money in the pocket of individuals will cause people to spend more money in the economy thereby creating more jobs. Nope. Not happening. Why ? Because individuals have too much debt. Any money they get goes to pay credit cards, student loans and for the smart and fortunate into savings.

Individuals now have debt = to about 119pct of income vs historical levels  of .17pct in the 40s, 55pct in the 50s , 65pct in the 60s and a high of 133pct in 2007). It didn’t create enough jobs to have an impact and it won’t in this environment. They also think the same applied to  corporations will translate into more jobs. Nope. That is not the case. Big companies in particular are not cash poor. Whether its re-patriation of cash in foreign countries or lower tax rates, neither lead to the creation of new jobs in this economy.  It just leads to more cash in the bank.

So the Democrats are right, we should borrow more money. The Dems are wrong that the government knows how to spend the money. The Republicans/Tea Party are right that we have a spending problem. The Republicans/Tea Party are wrong that cutting taxes will result in more jobs.

So IMHO, creating  jobs isn’t about the government spending money on jobs /projects, nor is it about cutting taxes. It’s about taking a page from the technology and common sense world.

How is this for a revolutionary thought: Companies that would create jobs if they had more cash know who they are. Right ? If you own a company and are thinking to yourself “Self, if I could borrow or get an investment into my company I could hire X more people to grow the company/meet demand/release a new product/whatever”  So rather than guessing and hoping what might happen, why don’t we let companies self identify themselves ?

And not only should they self-identify themselves as companies, they should be able to bid on Government Loans or even actual equity investments. Call me crazy, but I think we should be playing a game of “I Can Name that Tune in X Notes” re-named and reformatted as “I Can Create X Jobs for Y Amount of Money”

Seriously. Call me crazy (and Im sure many of you will), but there is no reason why we can’t quickly create a federal website that allows existing companies to say to the Federal Government how much money they need and how many jobs they can create for that money and for what duration are they committing to maintain those jobs for the money.

Of course you will have to set some minimum parameters in order to prevent the dreamers, crazies and who knows whats from clogging up the system. I would set those minimums including: The company must be in business for at least 10 years. They must be have at least 100 full time employees. They must do 100mm in revenues.  And of course they must be up to date on their taxes and Im sure there are other things to think of as well.

I’m sure I have pissed off everyone who doesn’t qualify. Sorry.

The reality is that for this to work the universe of companies has to be small enough so that the system put in place is not overwhelmed. The companies must be big enough to be able to respond to any required due diligence information.  If this is made to work, the qualifications could be reduced to expand the universe of eligible companies.

Who would be the decision makers ? I would set up multiple 5 person regional committees across the country.  I’m not quite sure who would pick the members, or what their exact qualifications should be,  but I can tell you what I would set as a requirement. People would only be eligible to be on the committee if they had not made a political contribution of any kind directly to a politician or to a PAC of any sort in the last 5 years.  This can not be a politically dominated decision process.

The committees would then look at the submissions, starting with the ones that promised the most jobs at the least cost.  Then they would do their due diligence about the company and request and make a decision. Yes or No. Equity or Debt. Terms of repayment or ownership (exit or return of capital on par with other equity partners) Then on to the next.  Funding would come from short term treasury borrowings.   As long as the program had submissions and those submissions resulted in positive returns, the program would continue.

Oh, and one more important element. Transparency. You apply and get your money, the amount of money you got and the jobs you committed to and for how long will be published publicly. Visibility has a way of keeping people honest.

I know this is just a rough idea, but I wanted to put it out there for consideration. Rather than having Dems and Republicans fight ideological battles about job creation, lets get direct. Lets just ask companies to tell us how many jobs they would create and how much they need and see what it all adds up to and go from there

What do you think ?

156 thoughts on “An Idea for the Economy that will Freak Out a lot of People but could be Fun to Discuss.

  1. Pingback: An Idea for the Economy that will Freak Out a lot of People but could be Fun to Discuss. | Freedom Developers

  2. Cuban for president!

    Please help us.

    Comment by allcommercial -

  3. Business Investment Company), administered by the SBA. SBICs were created to bridge the gap between entrepreneurs’ need for capital and traditional financing sources. SBICs are managed by investment professionals, are partially funded by the government and essentially provide capital for domestic businesses in order to grow the economy and

    Comment by masatenisimi -

  4. Mark

    Nice idea but I would actually set it up in different categories. Just like investing looks at Large, Medium & Small CAPS I think it would behoove us to create that idea across a broader spectrum.

    Being a SMALL business owner myself I think you need to include US in order to actually hit all levels of the economy.

    Comment by kr1963 -

  5. Firstly, I would just like to say, that I am finding the fine and thoughtful commentary being posted here to be some of the most inteligent, and genuine commentary I have ever read on any board. Again, Marks simple, straight forward genius for getting things done shines through clearly, few other boards can boast such well thought out postings.

    To the gentleman above, “soot”, I would like to cordially and politely disagree with his statement that “Capitalism only works for 1% of the people”.

    You don’t have to be among the super rich to enjoy the benifiets of capitalism, athough, secretly, that is probably every capitalists deepest wet dream, in terms of real world practicality, it’s just not possible for everyone to be among the super rich.

    There is nothing wrong with being a private dentist, with your own office, earning 500K/year, or, being a small businessman who owns his own gas station, tow truck, and offers mechanics services along with his products, earning perhaps 3-400k per year.

    One can live very comfortably, and nicely, on those incomes, no, they will not own their own private chateau on the southern beaches of France, but, a small vacation cabin up in a mountain resort community, such as Big Bear, is well within their means.

    Saying that only the super-rich can enjoy the full benifiets of capitalism, ignores the above two, and hundreds if not thousands of other examples of modestly affluent people sharing the benifiets of capitalism, getting their “piece of the pie”.

    However, that is not to say, that capitalism is perfect, no, not by a long shot. Capitalism devoid of a social concience, or, devoid of common ethics, is a monster that can be worse than the worst dictatorship.

    I think what needs to be stressed, and debated, are the real, true, core issues that drove the latest global economic collapse. Clearly, in retrospect, it can be seen, that it is precisely the lack of ethics and the lack of a social concience, that caused much of this collapse to begin with.

    I think, what needs to be included in all of this, is a statement, or a plan, to encourage morality, ethics, fair play, and a strong social concience amongst all capitalists, everywhere. I really do believe capitalism can work, and work very, very well, if and when it is tempered with a strong conviction to support ethics and morality in all their dealings.

    Just my two cents on this topic.

    P.S.

    I would like to take a moment to post an appology for my earlier posting about my priate business plans for my little partnership firm. I am a newbie here, and mistakenly mistook this post, for the other posts that are specific to that topic. Please forgive my fo-paw in posting that piece to the wrong article.

    Sincerely,

    David Lee Frater

    Comment by David Lee Frater -

  6. @sirahlst In no way did I imply this was a solution to any problems, 1 it would be a 52 Billion dollar project annually, keep in mind over 700 billion was spent bailing out failing companies (where were their perfect business plans?) so compared to that quite minuscule. A capitalist may believe in a perfect business plans but I am on the side that all isms work on paper none work in reality and while it may seem capitalism is the best ism to date, capitalism does not work (it works for 1% of the worlds population and maybe 10% of the US population. When someone comes along with an ism that works for 50.1% of the worlds population i will be satisfied.

    Adding 901 new millionaires weekly will not do anything competition wise to markets, these people will buy land, homes, cars, jeweler y,cocaine, escorts, some will start business’ just like bankers, politicians and the like, this number is so small in the scheme of things and inventory for new homes & cars is astronomical these days. If you didn’t build a new home for 5 years I’m sure there would still be inventory available.

    It obvious all the education and old school techniques don’t and didn’t work my plan is not revolutionary it’s simple out of the box thinking that will get people talking about the real solution it is taxpayers money after all why not reward tax payers seems simple to me. Trickle it up instead of down.

    Do a search on the world largest off shore wind farms usa is not even in the top 25 nor does it have any such projects, how about desalinization plants, solar farms, high speed mag trains, etc. The depression brought the hoover dam, public works, homstead act where people were given 100+ acres how bout we stop subsidizing companies that are making billions right now and subsidize companies that might not be able to make a profit but put people to work and save our environment.

    Either way 5 years from now most people wont have electric bills so they are being gouged now on everything prices keep coming down where individuals will be able to have some solar, some wind at their house for 5k-10k it’s not about the million dollar turbines & farms. WiFi will blanket everywhere for free so cell phone companies current monopoly will also end sooner than people think. I personally don’t believe in solely electric cars as i want a gas engine as back up.

    Comment by 4topnotch -

  7. Pingback: socot

  8. Mark,

    The key to your argument is neither in the 10 year nor the $100M clause–rather it is in the statement “PICK A GOAL”. Yes, since things in the economy are highly linked, you have to start somewhere–and getting there will cost money. Like any kind of subsidy, this will not be Pareto efficient, of course, i.e., it will cost more than the benefits it delivers at the overall society level and in a neo-classical economic framework–but the clause above, interpreted strictly, indicates a conscious choice, so now it is a matter of gauging the magnitude of the cost.

    Now, for a solid exercise in intense hand-waiving:

    Bill above [1] is incorrect and too hasty with his web searches–those companies are direct mail related. The total number of companies with over $100M in revenue is larger, 41,777.[2] Accoding to the Bureau of Labor Statistics (bls.gov) report for July 2011, the unemployment rate is 9.1% representing 13.9 million people. That in average would call for each of those companies to add about 333 new “free” people, a sizeable number.

    The median salary in the US in a 2010-2011 survey[3] is $46,300, presumably excluding benefits–let’s say $55,000 with benefits, if the government agrees to pay for those too. That means the amount needed for the plan in order to get to full employment, net of administrative costs, is about $770 billion (hoping I got all my 0s right). While Warren makes that in 30 minutes [4] and Tiger can pay that in a settlement[5], that amount is roughly the size of the Bush bail-out, i.e., quite huge, meaning, among other things, that it it equivalent to giving every living human being in the world $100, for example. But again, if the goal picked is to solve unemployment, then that’s the (net) price.

    Economically, the effect would be to reduce the labor costs going into the products of that company set, i.e., to shift the supply curve for those products lower. Note that insofar as material costs are involved, the total costs of production for these companies would go up, if the “free” employees are actually part of the variable costs, i.e., they contribute to the company’s product quantity. In any case, they would benefit from a lower price/higher quantity/lower cost combination at the new market equilibrium point…if that is achieved. Presumably, these being the largest companies in their field, their participation in your program would move the market price “efficiently.” However, this may have disastrous effects on smaller market participants who are shut out of the “free” employee program and cannot survive at the lower market price thus arrived at–this adds to the deadweight cost of the subsidy and basically moves unemployment from where it is today to those specific, less than $100M in revenue companies. Will the program also provide for rescuing them?

    Finally, if the “free” employees are hired in positions not directly related to production, i.e., they constitute subsidized fixed costs, the total cost structure of production for the participating company is unchanged. This would constitute, at first blush, a pure subsidy to the company as society does not benefit from lower product prices in the short-run (yes, you can say that R&D will, in the long run; but “the long run is a misleading guide to current affairs. In the long run we are all dead”, said, serendipitously enough for this comment, Keynes[8]). The counterweight to that is the newly employed who become more willing-to-pay consumers thus increasing demand for products in the marketplace but thereby driving up their prices.

    Hope this makes sense,
    Alin V.
    Dallas

    [1] Comment above, comment-73925
    [2] http://www.manta.com
    [3] http://www.averagesalarysurvey.com
    [4] youtu.be/3apL56QpFjc
    [5] http://www.huffingtonpost.com/2010/05/21/elin-nordegren-divorce-de_n_584156.html
    [6] http://www.nytimes.com/2008/10/04/business/economy/04bailout.html?adxnnl=1&adxnnlx=1314896435-VF2GFIn17yt4ev/hAWr/Rw
    [7] en.wikiquote.org/wiki/John_Maynard_Keynes

    Comment by socot -

  9. Dear Mark,

    Bravo !!! I LOVE your idea !!! Yes, I agree completely, the BEST way to recover from this mess is to PUT PEOPLE TO WORK, with ENTERPRISE. Small startup enterprises HIRE PEOPLE !!! Why??? Because they generally don’t have the fat bank accounts needed to purchase expensive high tech solutions, and HIRE PEOPLE to do the work with simple, affordable tools instead, relying on the HUMAN BRAIN of their employees to perform complex operations, instead of some fancy piece of hardware, THAT’S WHY !!!

    Ghandi faced a similar dilemma when he was trying to find ways to get his people working and on the road to a better tomarrow. His solution to the problem of too many unemployed people, with too few jobs, was EXACTLY the same !!! He simply told the people of his country… “Production by the MASSES, NOT, Mass Production !!!”

    Which is precisely what you are saying as well !!! We MUST, absolutely MUST get America BACK to being a producing, exporting economy, as opposed to a non-producing importing economy. History shows us clearly, producing exporting ecomomies prosper, and consumerist importing economies FAIL.

    On that note… My Submission for my startup company that me and my business partner formed about 4 months ago, and needs a little help to get us up and running as it should. With a little infusion of inveswtment capital, we can and will, be break even in 60 days, and running a very nice profit in 90 days.

    The Frater-Dabney Arms Company is a Reproduction/Re-Enactment Black Powder Sportsman Shooting/Hunter Accessories and Supplies Manufacturing and Distribution Company. We are currently producing a new line of simple, but revolutionary projectiles for this sporting hobbyist marketplace. What makes our products different from others is, A) they are hand made the old fashioned way, the way our forefathers products were made, with simple hand tools, relying on the skill and craftsmanship of our employees to produce the very best products, for the lowest prices we can. And B) All of our projectiles are copper plated, NOT, copper jacketed, but PLATED, producing a much more accurate, reliable, and durable black powder projectile. One of the biggest problems with black powder reproduction firearms is something called “barrel leading”. Because black powder firearms only use pure (soft) lead projectiles, for reasons I will not delineate here. The soft lead projetiles have a tendency to leave a small deposit of lead in the barrels, building up to a point that requires the hobbyist to scrub the barrel frequently with wire brushes to remove the built up lead. Our simple, but very effective solution, is to copper plate the projectiles with a thin .0005″ layer of pure copper, this light plating of copper completely eliminates the barrel leading problem in these firearms. Our projectiles are simply, superior, to anything else out in the market for black powder firearms today.

    We are currently casting, polishing and plating 40 different calibers of black powder projectiles for both rifles and pistols, and with time, we will include hard to find, somewhat exotic calibers that were commonplace in earlier times, but impossible to find today. We are producing these projectiles under a brand name of “The Davey Crockett Brand”, and are sending them off as samples to various resellers and distributors of such products.

    As our companies products become accepted and recognized as a better, less expensive product than those offered by various competitors, we will expand our product line, to include, paper cartridges, and early metalic cartridges, of the rimfire, pinfire, and ceterfire varieties.

    Currently we are manufacturing round ball projectiles, conical projectiles, and Minnie-Ball projectiles for this marketplace, all packaged in tins, not crappy cardboard boxes. Round ball single shot loads are loaded using patches with a slightly undersized ball. We INCLUDE the pre-cut, pre-lubricated patches WITH our pathed round ball products, something nobody else does at all.

    We also have a revolutionary new projectile design, that we very much want to introduce as soon as possible. This new style of projectile is called, the “Steve R. Salvo” Stackable bullet. The genius of this design, is that, they are hollow based, cone topped wafers of copper plated pure lead projectiles, which stack inside the barrel, one on top of each other. One by itself is fine for target shooting, two stacked for small game, and three or more stacked for larger game. The wafers stack tightly on top of each other, allowing the hobbyist to vary their load, in the field, on the fly, with using only one product, instead of having to carry around with them, several different projectiles of varying grain weights. The design is PURE GENIUS if I may say so myself, and WILL, revolutionize Black Powder bullet design once released.

    In addition to these kinds of products, we wish to introduce to the black powder market another new revolutionary design for another product, that being the flints used by flintlock and wheel-lock firearms. Currently, everyone uses hand hewn, hand polished natural flints for this purpose. What we wish to introduce is an artificial man made flint that is less costly, more reliable, lasts longer, and needs no maintenace at all. These flints, will be made out of the very same ferrocerium material used by lighters and igniters all over the world. Again, our flints, will be superior to everyone eleses, in every way, and cost only a fraction as much !!!

    Well, I don’t wish to take up too much of your time, I am leaving out alot of details that can be provided and filled in very quickly if any investor is interested in investing in an enterprise such as ours.

    Sincerly

    David Lee Frater, Senior Partner, President

    The Frater-Dabney Arms Company

    davidleefrater@hotmail.com

    Comment by David Lee Frater -

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  12. Mark, the government of Israel is doing something similar albeit in much narrower context. At least the stated goals seem to be in line with your thinking: create jobs, reduce national debt among others. Some of this experience may be applicable, see http://www.moit.gov.il/CmsTamat/Rsrc/MadaanEnglish/MadaanEnglish.html

    Comment by Sasha O -

  13. Good idea. But why limit it to $100MM in revenue and 100 employees? There are a few hundred thousand companies in the U.S. with 100+ employees, but tens of millions with <100 employees.

    Lower the revenue too. Maybe $10MM? At that level, you still have a very good filter.

    You want to create jobs, but also want to encourage innovation. Your companies started small, under 100 employees, and you created a bunch of jobs.

    In terms of putting the idea in the hands of government, I don't know. Start a foundation, with the goal being to create jobs. Hmmmmm…….

    Comment by rangulo75 -

  14. @mc: You seemed to imply that your own marginal tax rate would have no effect on whether you would take on a new project. I find that hard to believe (or maybe understand).

    For my own clarity, let’s take it to an extreme. What if your marginal tax rate was 100 percent? Would you still be taking on new exhausting and time consuming projects knowing there was no profit to be had? Don’t get me wrong, I’m sure I could think of some things I might take on out of love for the subject if I was independently wealthy, but if I didn’t get to keep any of my money my new projects that I would get involved with would be few and far between I think. They would be called hobbies… expensive hobbies, but hobbies.

    What about those projects that could in fact be profitable if it weren’t for that 100% tax rate? Maybe if it were a 90% tax rate you would get involved? If it’s a 300 million dollar deal you would get to keep 30 million. But that’s almost nothing compared to your worth, so is it worth it? It might be… it might not be. What if it was 30% instead? Now we’re talking about a chance to make some actual money. So, somewhere in there the difference in tax rates was the actual deciding factor that made it became worth your time to get involved with a project.

    Comment by sirahlst -

  15. @4topnotch: If you make a bunch of people millionaires by simply adding money to the system the result will be the same. That result is that the actual value of the existing dollars will decrease. It doesn’t matter how “rich” you make them. Give them billinos, millions, thousands, hundreds, etc and the result is always the same. But lets talk about your example. Your 901 new millionaires are going to want to spend some of that if not all of it… that’s your whole idea. Now, what are they going to want to buy? Houses, cars, boats, land? It doesn’t matter the answer. There will now be competition for whatever they want to buy. Competition that was not there before. The supply will be constant, but since more people can afford it the demand will be higher. Prices will move in the same direction as the demand. Things get more expensive… What really stinks is that all the people that didn’t win the sweepstakes have dollars in their bank accounts that will buy them less than before the sweepstakes. I understand the concept of what you’re talking about, but if you look at it over the long haul it just does more damage. One simply cannot inject money out of nowhere into a system and expect the money’s buying power to remain the same. Not unless you introduce price controls and then you REALLY have issues, but i won’t even go down that road.

    They say practice makes perfect, but we all know that isn’t true. Go and out practice shooting free throws with bad form over and over and all you do is instill those bad habits. Perfect practice makes perfect. The same is true with the bank. You say people used to be able to just walk into a bank with a business plan and get a loan. You say that like it can’t happen anymore. It still can. It’s just as likely that they would seek VC money instead, but banks still loan money for businesses. I have an aunt that worked for a vending company. The owner was wanting to retire and sell. The aunt took her business plan, the books from the business, etc to her bank and got a loan to buy the business. She also got a small business loan from the SBA. People need to walk in with a GOOD business plan. They need to be able to show it will work. Banks love lending money to good risks. But, since they are for profit and are supposed to protect their share holders (this includes your local credit unions – not just big banks) they do not like lending to bad risks… no matter how nice their handshake may be. Walk in with a business plan, and walk out frustrated. Walk in with a perfect business plan and walk out with a loan or a good lead on one.

    As for those too big to fail businesses needing to go broke. I totally agree with you there. I don’t believe all the doomsday mumbo jumbo they were trying to sell about how if they failed it would have brought the system down forever. Companies who had done it right would have been poised to pick up where those that should have failed would have fallen. There would have been a changing of who the names were, but the strong and smart, or maybe the wise, would have survived and shown that the market does work – that doing the right thing can pay off.

    Comment by sirahlst -

  16. I have some questions… What would happen if we
    1. went back to the barter system (well actually part barter part money)?
    2. Made everyone retire with a hefty million in pocket at age 55 or so? Would that make jobs come available?
    3. Why don’t we look at what worked in the past or what is working in other countries or even our own small communities and apply what they did/ or are doing what works?

    I do agree that jobs need to be created right now but most folks don’t know how or even want the jobs that are available.

    Comment by lisarlee101 -

  17. @sirahlst it would take trillions of years to make everyone a billionaire or billions of dirks as you put it i only proposed 1 per week or 52 new ones per year plus 90% must be given away so they would hardly be billionaires anymore, just 901 new millionaires, 1 billion a week is less than 1% of the budget not to mention probably lost every week, 4 times that is spent on war/destruction, it is taxpayers money, im just saying lets see what regular folk do with it, can’t be worse what the harvard mbas did with it, sure lots of coke and whores, frivolousness spending but 1 community every week will go up, jobs will be created, business’ will be started, cars, will be bought, houses will be bought, spending will occur…….by no means did i say it would solve any problems far from that.

    as for the payday loans, its too many restrictions and higher than 20% last time i checked it shouldnt be a job or mountains of paperwork to get a simple loan, in the past you could go to a bank wih a business plan and a hand shake most people wont even bother no more, now of the too big to fail comes the to small to succeed

    if i remember correct only 1 airline made a profit last year, gm hasnt turned a profit to 10 years if i lose 2,000 a month for a few months im out on the street but these companies can loses billions per year and stay in business because they will be bailed out by taxpayers, sorry but these companies needed to fail its survival of the fittest not subsidize failing business models

    adapt or go extinct, i mean google just spent 12 billion on a company that lost 56 million dollars last year for even if motorala mobility made 50 million it would take 400 years to make that a reasonable investment so instead of innovating google has to buy patents instead to protect themselves in lawsuits, how many jobs could 12 billion provide or what could they come up with if 12 billion was spent on r&d

    america is just in bizarro land right now out of the box radical ideas need to happen

    Comment by 4topnotch -

  18. There is around 900 billion in credit card debt, and another trillion in student loan debt. Neither of these debts are helping consumers anymore. PAYING DOWN these credit card debts, at a severely reduced interest rate, would put more spending power in each consumer’s wallet while still paying back existing debt.

    NOBODY discusses this, and I find that strange.

    Comment by alexlogic -

  19. The truth of the matter is really quite simple…. They do what they do (the powers that be) because they can. I may not like it – I am old enough to vote. One vote may not make a difference in the beginning of a race. It makes all the difference at the end. :)

    Comment by lisarlee101 -

  20. Re: Cutting taxes: “The theory being that more money in the pocket of individuals will cause people to spend more money in the economy thereby creating more jobs.” -Mark Cuban

    I don’t think you have accurately characterized the theory here.

    It’s not only about people keeping to keep more money to spend (or save it so that banks can then lend it to others to make investments). That’s a part.

    The bigger part is the incentive effect. If I get to keep 70% of every extra dollar that I earn instead of 50% or 60%, then I’m more likely to take opportunities to earn that extra dollar, or create value, which in turn creates jobs.

    It’s also principle. Lower taxes equates to more economic freedom. More economic freedom correlates with higher widespread prosperity.

    Comment by Seth -

    • disagree. 90pct of the country’s adults have no idea what their marginal tax rate is. You take on new opportunities because they generate more cash and they make you feel good about yourself.

      Comment by markcuban -

  21. Interesting plan but it puts too much control into the government’s hands. I have very little faith that they would be able to successfully pull this off. I also don’t like that it cuts out the small businesses who create over 65% of the jobs. Here is another solution to solve our unemployment problem http://www.gosmart4u.com/blog/solution-to-solve-our-unemployment-problem/752/. This plan empowers businesses to create the jobs and would reduce our unemployment to 5% within a year.

    Comment by gosmart4u -

  22. While I don’t agree with the must have 100 employees part, the rest of the idea seems wonderful to me. Watching large companies get large sums of stimulus money for job creation and then creating little to no jobs kind of makes a person ill. My company creates lots of jobs but because of limited available funds we are unable to step in and lend to the companies that are creating the jobs, which is what the banks were supposed to do with the money, rather than buy a bunch of banks. Until the government does something similar to what you are suggesting, job creation left in the hands of the fat cats is going to do nothing for this country, except make the fat cats fatter.

    Comment by rydad21 -

  23. Pingback: Mark Cuban for Treasury Secretary or jobs czar

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  25. It may be that I am not in the business field, so my view is very different than the other people who posted comments.

    The manner in which people would be awarded funds in your post seems similar to one used at a current, well-established Federal funding entity: the National Institutes of Health (NIH) Extramural Research Grants Process. http://grants.nih.gov/grants/grants_process.htm#process

    As in the NIH, it will require people who are prominent in their field and conscientious about business, country and people (among other things) to be the drivers for the idea to work successfully and long-term.

    The concept can be scaled for small business, as well, as seen on another area of the NIH Extramural website.

    http://grants.nih.gov/grants/funding/funding_program.htm

    It is an idea worth exploring. I hope it does get traction. We need something the positively blends business, government and people to make changes that we will get us out of our situation.

    Thank you so much for the post.

    Comment by mcervania -

  26. As some have alluded to in previous comments, why not leave government, corporations and Wall Street out of the equation? Set up an online exchange that facilitates the matching of money, ideas, and skills. It should be noted that something similar was suggested by Ivan Illich in *Deschooling Society* (Harper and Row, 1971)

    Comment by Matt Holbert -

  27. @mc – I posted two responses here last week in response to other people’s replies. One was about why I thought “millionaires” getting into the unsecured loan business was a non-starter. The other was about how creating more and more replicas of things of value actually brings down their value. The second one was in response to someone’s weekly billion dollar lottery concept. I was looking forward to reading the replies from the other readers, but both responses seem to be gone. I’m curious if I broke some rule of your blog with those posts. My apologies if I did.

    Comment by sirahlst -

  28. The most important part of it is that you are not indifferent, you worry, you think and provide the best solution to the best of your knowledge and experience. Thank you for that.
    Plus, it is a great idea. As a political scientist though I have to repeat a fact that everyone already knows, became a cliche, but couldn’t have been emphasized enough: the problem is political. More than ever. That’s why brilliant engineering projects have very little chance to be realized. Politicians simply won’t listen.
    What to do then? To me, there are both short term and long term sources of the problem of unemployment in the US. Long term source: demonization of hard, pure, physical labor. Look at those Hollywood movies. Typically, a father who works in a factory or a physical job tells his son: “Son, go to college and try everything possible not to be like me, meaning work in physically demanding jobs.” Even colleges in this country are based on that idea: to have a “nice” job, meaning not have to do anything physical. then those who do are suckers? Absolutely not. Labor is what makes us human. “Smart labor,” perhaps? I would agree with that. Till this negative attitudes towards labor changes, problems will remain.
    Shorter term problems such as why companies do not choose to hire and what could be done about it are presented by Mark very well. I do not have much to add at this point.

    Comment by Perviz Soltanov -

  29. I can agree with some of this. I0 years is way too long. I owned my own business for 10 years and was ready to sell by then, there was no expansion at that point. But someone with 2 years of positive cash flow would be the ones growing. I could have used a loan in my second year for the expansion of buying a roaster (I owned a coffee house) and installing a bakery. I added jobs and I added health insurance. I would not recreate a wheel by creating regional boards, perhaps regional oversight but put them into city governments or county governments where they know what is happening at the local level. But I think the government could do a lot more right now by buying up all the real estate it can, short sales, foreclosures, invest and hold them. HUD could rent them out. They could be sold instead of languishing. It would be a good investment by the government in a down market. With security. The banks aren’t really modifying they are trying to just make their bonuses. Give Americans a chance after a couple years of renting to have an option to buy. Finance it. The government then still has security with low interest and the real estate market could begin to recover. Doing these two things alone would give the American people a chance to grow and reinvent their businesses and get back on their feet. We’re cut to the bone already.

    Comment by ftlbobby305 -

  30. Mark,

    I’ve been a Mavs fan for a long time! But it is only recently that I’ve been plugged into your blog and your keen observations of politics, policy and market dynamics. Keep sharing your ideas. Hopefully together we can change this country!

    Comment by aspfl -

  31. Have to say that, though this is a more efficient use of tax dollars, it is rare that any government really knows how to spend these dollars wisely. The appointment of a committee to oversee disbursements, will then become a political football respecting appointments and priorities.

    Comment by rwcipod -

  32. Mark – I never thought you are a Keynesian.

    I love this idea, I think it is one side of the coin, where the other needs to be investment in (not spending on) physical and human infrastructure. Investment in improved transportation, smarter grid, and similar projects all can have positive returns, except that return is never in the lifetime of a single election, so politicians shy away from them. Putting money in people’s pockets does not work since even if they buy stuff with it (as opposed to paying back loans or saving it, which are essentially the same), it will most likely be made in China or elsewhere.

    Comment by Haim Toeg -

  33. The government kind of works likes this now. The problem is the insane paperwork and lack of interal project auditors to keep the external companies honest.

    Comment by roboticker -

  34. There are 30 million small businesses who employ over half of the workforce. 35 thousand companies qualify for your program; 2/3 of those companies have between 100 and 500 employees. We need 9 million jobs to be back to even. So, that’s 300 employees on average for every qualifying company. Even if you try to weight the average based on company size, it’s asking too much of too few companies.

    Why don’t you suggest that somebody suspend their campaign.

    Or vote for a nincompoop for ridiculous reasons.

    Your idea sucks on political, philosophical, practical, and economic levels.

    Comment by connectedeclectic -

  35. Pingback: Samplings from August 11th | Sample the Web

  36. Good idea, i’d use SCORE the service corp of retired executives to assist in criteria for qualification to the program and perhaps as a source for the 5 person regional committees. SCORE has offices all over the country have amazing business experience and exist to give back and they work for free… I used SCORE and the SBA in Plano, great experience.

    d3d

    Comment by d3diesel -

  37. There is certainly some merit to the idea–you would need to make sure that the loan/equity investment doesn’t exceed the cost needed to pay the employees to make sure there is some co-invest by the company in the idea…or else you end up with malinvestment everywhere.

    I would fund this through a new idea…create a 100-year US Treasury at an ultra-low rate (2%). I’d get the 2% by making any such bonds exempt from estate tax by the original purchaser and first transferee only. Lots of people will see this as a tax dodge, and it is, but wealthy are doing all sorts of fun structuring of their estates anyway to avoid taxes. This is a way for some wealthy person to pass on some wealth, and the US Government can essentially collect their estate tax early by virtue of the low, long-term rate. By taking away the tax-exempt status of the bond after the first transferee, it ensures that the tax avoidance is limited to one generation, and the bonds can’t be continually transferred to perpetually avoid estate tax.

    The Democrats would have cover for the estate tax dodge because the money was going solely to create jobs; and

    The Republicans would have cover because this would diminish the “death tax” for those who bought the treasuries.

    Either way, this is effectively the wealthy paying estate tax early by virtue of lending money at a low rate for a century to the government, and the money going to create jobs now.

    Comment by ajobst -

  38. Government tying anything to ROI or performance is utopia.

    Challenge is government would add all kinds of social requirements for eligibility in this program–minority businesses only, women owned, must support whacked out social/party causes, must have a carbon footprint of zero, and the list could go on. (no different than grant requirements)

    Plus, do we want the government to manage another program–since when has the government been successful at that? USPS, SocialSecurity, Bailouts, Grants, unemployment benefits, the list goes on.

    BTW, you could beat Trump if he ran…kick his ass sea bass.

    Comment by jgthomp -

  39. Pingback: Mark Cuban’s Plan To Create More Jobs | Bear Flag League

  40. Dirk is a valueable asset. Let’s say there was some technology that we could utilize to take any player of any skill level and give them Dirk’s size, atheltic ability, raw talent, etc. Every week we’ll “improve” several individuals. After a few years we will have made thousands of dirks and every team can have one. Hell there are only about 450 players in the NBA so each team can fill their entire roster with dirks and they’ll still be some left over. What do you think these new dirks are worth on the freeagent market now? There is nothing special about them. So now every player on every team will be dirk-ish. We know the average player would have to be atleast Dirk’s skill level or you’d just go sign another Dirk instead. So now everyone has a whole team of Dirks. And noone has gained a competitive advantage. Not only that, but you can’t even get rid of your Dirk’s anymore. Noone will want to take him in a trade. They’ve already got a bunch and what are they going to do with him? They can’t trade him. They’ll be trading Dirks for washing machines eventually. Anyway, now it will cost you many Dirks to get the same LeBron or Jordan that you could have gotten for 1 or 2 dirks before. Eventually, the value of all of these dirks goes to zero (sorry, dirk) because we need something better if everyone else has plenty of dirks themselves. I know what we’ll do! It’s not fair I’m stuck with dirks and you have a jordan. I think we should create something so that EVERYONE can become Jordan. Give it some time and guess what happens… the cycle repeats itself. Hopefully you see why you can’t just manipulate the system by adding quantity without affecting the value of the item. Supply and Demand.

    That little lottery idea is the same thing. Only in USD instead of Dirks. Over time, as the supply of dollars goes up, the demand for them will go down until the dollar will become near worthless and the billion dollars you won will buy you a hamburger or two. Yes, inflation is real and it gets really real when you start making everyone billionaires overnight by just “making it so”.

    Comment by sirahlst -

  41. Mark- This is a great idea which gets straight to the objective, however, I believe something similar to what you are recommending already exits. It is the SBIC program (Small Business Investment Company), administered by the SBA. SBICs were created to bridge the gap between entrepreneurs’ need for capital and traditional financing sources. SBICs are managed by investment professionals, are partially funded by the government and essentially provide capital for domestic businesses in order to grow the economy and stimulate job creation.

    Comment by bicycle21 -

  42. @4topnotch. First, you realize that you are basically requesting more payday lenders? Maybe they fulfill a need, but mostly they take advantage of people who don’t know any better through monstrous interest rates / fees. I might think your idea was okay if part of the requirements for participation required that you also prove via a test or something that you have some given amount of financial literacy and that you do infact understand that you’re being ripped off. Second, people that can afford to pay $200 per month can prove to a bank that they are able to do so and get a loan at a reasonable interest rate (great rate these days actually)… which makes our millionaire’s nothing more than loan sharks for those with truly low financial means. Further, I bet the interest rate would have to be higher than 20% for the people who put their own money at risk (we’ll call them investors instead of millionaires) in order to break even. It would take charging 25% interest to make it so that if even 1 out of 5 borrows doesn’t repay the investor still breaks even. You seriously believe 4 out of 5 people that have to resort to borrowing by this means will pay back on time (if at all)? And that’s just breaking even – If the investors want to actually make money they’ll have to charge even more interest… at what point do you think they’re ripping people off? Or they could do credit checks, background checks, etc in order to lower their risk so they can charge lower rates / fees. But then it’s moving towards one of the main things you said you didn’t want.

    Comment by sirahlst -

  43. and since the banks aren’t lending how bout some of these millionaires/billionaires become banks.

    No credit check, just dump a million into a paypal account. Since we’re talking about tech.

    $1,000 loans payment schedule $100 a month for 12 months that’s 20% as long as you make your payments you can re-apply at the end for a 5,000 loan payment schedule $200 per month meet those terms you can reply for $10,000 loan etc. Don’t pay back you can’t participate any longer.

    Do it as an experiment yes it’s risky but I think you’ll find the vast majority will pay on time

    It’s the middlemen that need to go.

    Comment by 4topnotch -

  44. @montsamu I picked that amount as a marketing statement the publicity would be so great because most of the new millionaires like most people would blow thru their million but they would buy houses, buy cars etc which would stimulate the economy but you would still have 1 left over most likely a regular joe/jane with 100 million who knows what they woul do with the left over blessing but there is such a small amount of people at that level it would be nice to add a regular person to that mix weekly.

    As far as the $100 for poorest 10 million households with 20% of people unemployed(real number) and almost 40 million people on food stamps I think that’s already happening.

    Plus that 10 million people would fill up quick, but I do believe every person has a right to food water and shelter a lot of crime is because of poverty and education.

    It is cheaper to supply a person with a 2 bedroom condo,$10 of food, ALL utilities including cable, internet, & cell phone plus a used car then to lock a non violent person in a 6′ by 8ft cell and feed him 3 bologna sandwiches a day. Prisons are big business.

    I know people will cry socialism but again it costs more to lock a person up then to provide them the basics and I don’t think there would be much crime and a much safer country if a man or woman had a home to got to and food on the table, you know the basics.

    I don’t pull these numbers out of thin air it costs 30,000-50,000 to house an inmate annually.

    30,000 / 365 is $82 per day is 2500 per month

    I personally lived in a 2 bedroom condo, ate decent meals, had a cell phone, cable, internet, cell phone, used car payment for less than 1100 per month so it can be done.

    Truth is there will always be people who don’t want to work or don’t believe they have to and there will always be people that want more out of life then the basics.

    What the wealthy need to realize eventually the numbers of have nots gets so high that the only outcome is whats going on in the UK.

    Give people the basics without having to be slaves for it or give them enough for the basics so they dont storm the capitol with torches screaming off with their heads.

    It’s not like back in the day you can’t just find a piece of land plant your flag, build a cabin and live off the land its’s all “owned” by someone trying to make a profit. Most people have to go to a store to buy food they can’t grow it anymore. They have MREs every citizen should qualify for a years supply if they want fast food or steak they have to work to get it if they are content on the basics they should be left alone

    The jobs are never coming back to what they were no matter how many projects get started, what used to take a 100 humans now takes a robot, forklifts drive themselves, robots, etc, a whole factory can run 24/7 with just a few people that’s just going to increase the world has just become more efficient.

    Everyone deserves food, water, & shelter and not just in America these shouldn’t be for profit things.

    Comment by 4topnotch -

  45. XLNT piece, and totally out of the box, constructive thinking, as it addresses a clear OUTCOME goal.

    Plus, by setting meaningful constraints, you avoid, or at least mitigate, the case where funding supply creates overly aggressive/unhealthy expansion models, as occurs in the case of credit bubbles (all of this stuff comes back to underwriting standards).

    Further, private lending entities would jump on this bandwagon once it was clear that this is an institutionally viable model. Although that eventuality would plant the seeds for the next bubble, as the market always over-reaches.

    The bottom line is that it goes back to the axiom that what you incent is what you reap. Focus on specific outcomes.

    Comment by marksigal -

  46. The current economic situation is not accidental, and we’ve not yet even come close to seeing its severity.

    History is a vast early-warning system of the future.

    Comment by 3ch370n -

  47. 4topnotch, I kind of like the idea, though I don’t see why you’d complicate things by giving a billion to one person with the requirement that they pick 900 new millionaires. Just have the lottery create 1000 new millionaires a week. Or a different 1,000,000 people get $1,000 every week. (Pretty close to a stimulus a week, that.) Or something in between.

    A problem with your idea is that, while it would create some cash stimulus, it doesn’t spur investment, really, in more lasting infrastructure or long-term jobs, not necessarily. Some lawyers would get rich, some banks would get additional capital to hold onto tight-fistedly, etc.

    A better idea imho is, if you’re committed to spending the money, just give the poorest 10,000,000 households $100 every week. This is pretty close to a citizen’s dividend, an idea favored by some bright conservative economists (Milton Friedman) and progressive social activists (MLK). Then you can do things like make reforms to welfare, cuts to the minimum wage, etc. because the people impacted will have a different kind of safety net. Though I don’t know if we can import enough cheap crap from abroad to fill the new demand.

    So! Give the poorest 10,000,000 households $100 weekly in “local bucks” which can be spent on locally made goods, or in locally owned stores. That would be something crazy, eh? That would change the face of the US in such a radically positive way that … it will never happen.

    Comment by montsamu -

  48. ——————————————————————————————————————————
    Warnings, please and words of wisdom that were ignored or forgotten:
    ——————————————————————————————————————————

    “If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.”

    — President Thomas Jefferson, Letter 1802 to Secretary of the Treasury, Albert Gallatin

    “The financial system has been turned over to the Federal Reserve Board. That board administers a finance system by authority of a purely profiteering group. That system is private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people’s money. This (Federal Reserve) Act establishes the most gigantic trust on Earth. When the president signs this bill, the invisible governments by the monetary power will be legalized. The worst legislatives crime of the ages perpetrated by this banking bill.”

    — Congressman Charles Lindbergh Sr., protesting the establishment of the Federal reserve before Congress

    “From now on depressions will be scientifically created.”

    — Congressman Charles A. Lindberg Sr., protesting the establishment of the Federal reserve before Congress

    “Mischief springs from the power which the moneyed interest derives from a paper currency which they are able to control, from the multitude of corporations with exclusive privileges… which are employed altogether for their benefit.”

    — President Andrew Jackson

    “Unless you become more watchful in your states and check the spirit of monopoly and thirst for exclusive privileges you will in the end find that… the control over your dearest interests has passed into the hands of these corporations.”

    — President Andrew Jackson

    “The issue which has swept down the centuries and which will have to be fought sooner or later is the People vs. The Banks.”

    — Lord Acton, Lord Chief Justice of England, 1875

    “I see in the near future a crisis approaching. It unnerves me and causes me to tremble for the safety of my country … the Money Power of the country will endeavor to prolong its reign by working upon the prejudices of the people, until the wealth is aggregated in a few hands and the Republic is destroyed.”

    — Abraham Lincoln, just after the passage of the National Banking Act of 1863

    “The eyes of our citizens are not sufficiently open to the true cause of our distress. They ascribe them to everything but their true cause, the banking system; a system, which if it could do good in any form, is yet so certain of leading to abuse as to be utterly incompatible with the public safety and prosperity.”

    — President Thomas Jefferson

    “A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world, no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men.”

    — President Woodrow Wilson, after signing the Federal Reserve into existence

    “Since I entered politics, I have chiefly had men’s views confided to me privately. Some of the biggest men in the U.S., in the field of commerce and manufacturing, are afraid of somebody, are afraid of something. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they had better not speak above their breath when they speak in condemnation of it.”

    — President Woodrow Wilson, after signing the Federal Reserve into existence

    “Give me control of a nation’s money and I care not who makes her laws.”

    — Baron Mayer Amschel Rothschild of the Rothschild banking dynasty

    “The real truth of the matter is, and you and I know, that a financial element in the large centers has owned the government of the U.S. since the days of Andrew Jackson. History depicts Andrew Jackson as the last truly honorable and incorruptible American president.”

    — President Franklin Delano Roosevelt, November 23, 1933 in a letter to Colonel Edward Mandell House

    “Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with a flick of the pen they will create enough money to buy it back again. However, take away from them the power to create money, and all the great fortunes like mine will disappear and they ought to disappear, for a better world to live in. But, if you wish to remain the slaves of bankers and pay the cost for your own slavery, let them continue to create money.”

    — Sir Jostah Stamp, President of the Bank of England in the 1920’s, the second richest man in Britain

    “The real menace of our Republic is the invisible government which, like a giant octopus, sprawls its slimy legs over our cities, states and nation. At the head is a small group of banking houses… This little coterie…run our government for their own selfish ends. It operates under cover of a self-created screen…seizes…our executive officers… legislative bodies… schools… courts… newspapers and every agency created for the public protection.”

    — John Hylan, N.Y. Mayor until 1926

    “It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

    — Henry Ford

    “Most Americans have no real understanding of the operation of the international money lenders. The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States.”

    — Senator Barry Goldwater

    “The few who understand the system will either be so interested from it’s profits or so dependent on it’s favors, that there will be no opposition from that class.”

    — Rothschild Brothers, of the Rothschild banking dynasty

    “All the perplexities, confusion and distress in America rise, not from defects in their Constitution or Confederation, not from want of honor or virtue, so much as from downright ignorance of the nature of coin, credit and circulation.”

    — President John Adams, in a letter to Thomas Jefferson

    “The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented.”

    — Major L.B. Angus

    “By this means government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft.”

    — Lord John Maynard Keynes, “Economic Consequences of Peace”

    “The liberties of a people never were, nor ever will be, secure, when the transactions of their rulers may be concealed from them.”

    — Patrick Henry

    “Whoever controls the volume of money in any country is absolute master of all industry and commerce.”

    — President James A. Garfield

    “Those who create and issue money and credit direct the policies of government and hold in the hollow of their hands the destiny of the people.”

    — Rt. Hon. Reginald McKenna, former Chancellor of Exchequer, England

    “It is a cruel thought, that, when we feel ourselves standing on the firmest ground in every respect, the cursed arts of our secret enemies, combining with other causes, should effect, by depreciating our money, what the open arms of a powerful enemy could not.”

    — President Thomas Jefferson to Richard Henry Lee

    ——————————————————————————————————————————
    A few words about the Fed (mostly from the Fed itself):
    ——————————————————————————————————————————

    “When you or I write a check there must be sufficient funds in our account to cover the check, but when the Federal Reserve writes a check there is no bank deposit on which that check is drawn. When the Federal Reserve writes a check, it is creating money.”

    — “Putting it simply”, Boston Federal Reserve Bank

    “Neither paper currency nor deposits have value as commodities, intrinsically, a ‘dollar’ bill is just a piece of paper. Deposits are merely book entries.”

    — Modern Money Mechanics Workbook, Federal Reserve Bank of Chicago, 1975

    “The Federal Reserve system pays the U.S. Treasury $20.60 per thousand notes — a little over 2 cents each — without regard to the face value of the note. Federal Reserve Notes, incidentally, are the only type of currency now produced for circulation. They are printed exclusively by the Treasury’s Bureau of Engraving and Printing, and the $20.60 per thousand price reflects the Bureau’s full cost of production. Federal Reserve Notes are printed in $1, $2, $5, $10, $20, $50, and $100 denominations only; notes of $500, $1000, $5000, and $10,000 denominations were last printed in 1945.”

    — Donald J. Winn, Assistant to the Board of Governors of the Federal Reserve system

    “If all the bank loans were paid up, no one would have a bank deposit, and there would not be a dollar of currency or coin in circulation. This is a staggering thought. We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system… It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon.”

    — Robert H. Hamphill, Atlanta Federal Reserve Bank

    “The Federal Reserve banks are one of the most corrupt institutions the world has ever seen. There is not a man within the sound of my voice who does not know that this nation is run by the International bankers.”

    — Congressman Louis T. McFadden (speaking on the floor)

    “The Federal Reserve Banks are not federal instrumentalities…”

    — Lewis vs. United States 9th Circuit 1992

    “The regional Federal Reserve banks are not government agencies. …but are independent, privately owned and locally controlled corporations.”

    — Lewis vs. United States, 680 F. 2d 1239 9th Circuit 1982

    “Every effort has been made by the Federal Reserve Board to conceal its powers, but the truth is that the Federal Reserve System has usurped the government. It controls everything in congress and it controls all our foreign relations. It makes and breaks governments at will.”

    — Louis T. McFadden, Chairman of the House Committee on Banking and Currency

    “Historically, the United States has been a hard money country. Only since 1913 [Federal Reserve Act] has the United States operated on a fiat money system. During this period, paper money has depreciated over 87%. During the preceding 140 year period, the hard currency of the United States had actually maintained its value. Wholesale prices in 1913 … were the same as in 1787.”

    — Kenneth Gerbino, former chairman of the American Economic Council

    “The decrease in purchasing power incurred by holders of money due to inflation imparts gains to the issuers of money…”

    — St. Louis Federal Reserve Bank in “Review”, Nov. 1975

    ——————————————————————————————————————————
    Banker’s Manifesto of 1892 ? Insight into Thought Processes:
    ——————————————————————————————————————————

    We [the bankers] must proceed with caution and guard every move made, for the lower order of people are already showing signs of restless commotion. Prudence will therefore show a policy of apparently yielding to the popular will until our plans are so far consummated that we can declare our designs without fear of any organized resistance.

    Organizations in the United States should be carefully watched by our trusted men, and we must take immediate steps to control these organizations in our interest or disrupt them.

    At the coming Omaha convention to be held July 4, 1892, our men must attend and direct its movement or else there will be set on foot such antagonism to our designs as may require force to overcome.

    This at the present time would be premature. We are not yet ready for such a crisis. Capital must protect itself in every possible manner through combination (conspiracy) and legislation.

    The courts must be called to our aid, debts must be collected, bonds and mortgages foreclosed as rapidly as possible.

    When, through the process of law, the common people have lost their homes, they will be more tractable and easily governed through the influence of the strong arm of the government applied to a central power of imperial wealth under the control of the leading financiers.

    People without homes will not quarrel with their leaders. History repeats itself in regular cycles. This truth is well known among our principal men who are engaged in forming an imperialism of the world. While they are doing this, the people must be kept in a state of political antagonism.

    The question of tariff reform must be urged through the organization known as the Democratic Party, and the question of protection with the reciprocity must be forced to view through the Republican Party.

    By thus dividing voters, we can get them to expend their energies in fighting over questions of no importance to us, except as teachers to the common herd. Thus, by discrete actions, we can secure all that has been so generously planned and successfully accomplished.

    Comment by 3ch370n -

  49. Don’t think companies that size need help didn’t we just bail those companies out anyway?

    I have a simple solution get the money to the people let it trickle up instead of down. The cost would be less than 1% of what the government wastes weekly.

    A National lottery.

    Every week a random citizen/soc sec # wins 1 billion dollars. Stipulations must give 90% of it to different people in 1 million dollar increments.

    Result 901 new millionaires created every week. 4 billion is wasted on war daily. Government loses or wastes that amount weekly. Annual budget would be 52 billion, 20 times that was given to bail out failing banks and corporations.

    This goes to the people directly and will stimulate many comunities one at a time. There are only approx 1000 billionaires on the planet let’s make a new one every week.

    Most lotteries are scams that prey on poor people. This one you don’t have to buy a ticket every 18 year old citizen with a valid soc sec number are only requirements.

    Give the people a shot to any high school drop out could of achieved what the MBAs of harvard did to the economy. Imagine the publicity?

    But as far as jobs, lots of building could be done an additional billion dollars a week could build how many new schools, how many high speed mag trains, how many solar farms, how many wind farms the hoover dam was built in 10 years, they used to give away 160 acres as long as you farmed on it, lots of stuff to be done.

    The powers that be would rather see people homeless and starving then clear their books of toxic assets.

    Things are to complicated.

    A person should be able to go to ford.com or gm.com and rent a car the $100 a month model, the $200 a month model, $300 month model $1000 a month model no questions asked. Instead lets have millions of cars just sit in a lot empty while people who can’t work because they can’t get there.

    Homes same thing rent out the foreclosed home or its just gonna be empty and rot. To many middlemen too many corrupt rules. America should be ashamed of themselves we complain about this and that yet were here with internet access, running water, empty rooms in our houses, extra cars in the driveway while billions around the globe slave for a hope of a clean glass of water and a meal.

    Mini rant over lol

    Comment by 4topnotch -

  50. Mark, brilliant.

    I also was thinking perhaps there would be a simple way to allow corporations and individuals to voluntarily donate ten percent of their wealth to a program that would directly offset the deficit. Some form of incentive other than a tax deduction could be created.

    Perhaps many of the cash rich individuals and companies would like an opportunity to step up and save America.

    Comment by 1stfirst -

  51. I think the idea is something that should be considered – it’s simple enough to understand and you don’t need a PhD to measure the cause and effect. I’m not convinced many elected officials (or would be’s) can find the on/off switch on a calculator but we can always hope.

    I wonder if Mark, with your capabilities, can package this idea and put it in a position to actually be considered. Or possibly put together a pilot program that could cut the incredible Federal program lead time down.

    We’ve seen that Washington can’t/won’t move to make things happen, especially in an election year, you’re next up!

    Comment by tourist1421 -

  52. Great Idea Mark, but it doesn’t help small entrepreneurial businesses with great ideas! There’s a huge barrier to entry for anyone who has a unique idea and wants to play in the same category as the big guy’s.

    We need to find a solution to help small businesses get capital, resolve our Real estate crisis and stop the ideological battle in Washington. Does anyone there care about doing the right thing or are they only concerned with getting re-elected and keeping someone else from getting elected?

    Comment by mwilson5 -

  53. Great idea, love the concept, but unless we have politicians who actually give a bleep it will never work. I find it highly refreshing for someone of your stature to share your ideas with us common folk. mavsfansunite.com

    Comment by moneyray82 -

  54. @bucfanpaka – Well it really boils down to this…

    The period where the U.S. went from being a brand new country to being the wealthiest country in the world… that happened in an environment of relatively high levels of freedom. Relative to our current government and relative to the rest of the countries in the world.

    Pretty much every area of the world that is poor has relatively low levels of freedom. Those poor countries may not use the same plan as what Mark suggested here, but they share the same view on central economic planning as Mark does.

    Could it be this obvious? If the U.S. is to be prosperous again, we need more real freedom again. For other areas of the world to be prosperous, they need more freedom too.

    And if one were to focus on decreasing unemployment, removing minimum wage laws would do it most directly :-)

    Comment by Jeff Nabers -

  55. Hey Mark, l agree with that ideology. I have a cutting edge mobile technology business that has been in dev for 2 years. I believe this concept can collapse Groupon as we are a true win-win.

    We can create thousands of new jobs. We recently tested it in a major metro area and it was a huge smash. Merchants love us as do consumers. We brought on hundreds businesses in just a few short weeks.

    I don’t want to present the business to anyone but you. How could I do this Mark? You are going to love this business and you are the perfect guy to see the vision of our soon to be global venture.

    Please allow me to present my business to you Mark. I promise you won’t be let down.

    John F

    Comment by bacardicokes -

  56. Hey Mark, l agree with that ideology. I have a cutting edge mobile technology business that has been in dev for 2 years. I believe this concept can collapse Groupon as we are a true win-win.

    We can create thousands of new jobs. We recently tested it in a major metro area and it was a huge smash. Merchants love us as do consumers. We brought on hundreds businesses in just a few short weeks.

    I don’t want to present the business to anyone but you. How could I do this Mark? You are going to love this business and you are the perfect guy to see the vision of our soon to be global venture.

    Please allow me to present my business to you Mark. I promise you won’t be let down.

    John F

    Comment by bacardicokes -

  57. And Mark, on a side note, the only reason I read your blog is because you have an interesting stance on Wall Street reform which I completely agree with. We can’t worry about fixing the economy until someone cleans up Wall Street, and that won’t happen until someone gets in office with enough balls to kick out the kingpins in the federal gov. that have been running the rules and regulationss for traders, and then puts in new blood, Can you work on that too?

    Comment by aeallentalks -

  58. I think its a good idea! Also there should be a way to add the same policy to small business’s and that would cover a larger market. Its small business that is the fuel for the motor.

    Comment by jimmythebuilder -

  59. Of course you have a wonderfully logic, easy to carry out plan that would solve many local problems in troubled economic communites throughout the US. The REAL problem, and the reason so many of us our frustrated with goverernment/politics, is the fact it doesnt’ really matter who we “vote” into office or support intellectually or financially. Not a single policitian will do anything to enact, to offer, to support, to even talk about in any basic fashion, a logical solution to any of the problems facing our country today. They bicker, they call each other names, they place a lot of of blame, but at the end of the day they do nothing to change the way our govenment acts or responds to our country’s real problems.

    In essence — they are ineffective. Completly and utterly ineffective!

    So come up with all the good ideas that you want…Nothing will change, either becuase it cannot, or no one cares enough to make it happen.

    Have you ever thought about getting into politics?
    Maybe you would care enough to make real difference?
    We need someone who is willing to go in and clean house, kick butt and take names.

    America needs a hero!

    Comment by aeallentalks -

  60. Your idea makes no sense, it is not realistic to our congress. How would a corrupt congressman wet their beak in your idea?

    If you add something like: for every job created the congressman representing the district gets greased by % of new salaries created or a similar form, the you’d have something.
    Your idea would not work with out this, and this idea would work, without yours.

    Comment by puppetmaster3 -

  61. I suppose the first step needs to state the problem and then the goal. Mark says – the goal is employment. The problem was assumed – We need more jobs to help the stalled economy. The problem though is that job losses are symptomatic of not just a bad economy, but of a shift in the labor force to the emerging market countries as well as shift to satisfying demand overseas.

    The US is viewed as a mature market with little growth opportunity and high overhead to operate. High Corporate taxes are blamed but the fundamental drivers are labor expense reduction and expanding markets elsewhere.

    It is an Empire model really in that we colonize these markets for labor and buyers. The empire prospers while those at home are left to fend for themselves by maintaining the minimal levels of sustenance or putting all their energy into building a better mousetrap.

    For those who say the markets will solve these problems, are ignorant of how incentives drive behavior. If it’s cheaper to focus on market growth where cheap labor is present to service them, then that’s where the money will go.

    What we’re seeing is the dark side of globalization playing itself out without thought of consequence or consideration of any “common good”. Greed is Good. Greed is the exercise of the heroic impulse. It separates the Gods from the Congregation. Adam Smith, Ayn Rand, Milton Friedman, Ronald Reagan are the voices of these sentiments. They may have been right in a contained economy but they are dead wrong in one that is interdependent and system sensitive as ours is today. One rumor sends the markets up by 500 points and another down 500 points.

    The point is, the goal may be jobs but the problem isn’t ideology splits, taxes, spending, too much or too little government. The problem is that our incentive system rewards a bad economy here except for those who manage to operate elsewhere.

    I’m not saying we need protectionism, I’m saying we need well thought out and implemented incentives to create the environment for growth Here and labor Here. Government has an absolute right to use levers to address dynamics the Private Sector does not see because they operating with “Profits at any Costs” blinders on.

    Please keep the incentive ideas coming because that’s the only thing people naturally seem to respond to.

    Comment by Steven Blonder -

  62. I’m up for almost anything and appreciate your focus on this Mark. Personally, as an entrepreneur, I’ve decided to take things into my own hands. Even when you do work for corporations, the expectations of the corporations on it’s employees and the associated compensation are out of whack. It’s an employers market, and they now it. If you are not willing to work 16 hours a day and do so for less than what history would tell us is fair, then they will keep looking for the person willing to do so. And more often than not the leadership in charge has no real world experience doing the job of the employee. The disconnect is dramatic. Doesn’t lead to a reasonably high quality of life. Not just monetarily, but just from a general happiness standpoint. And a lack of happiness effects family life and health. So in the past 6 months I’ve decided to start up my own show. It’s not easy running ones own show, but at least I don’t have to deal with a corporate agenda which is growing in it’s concern for what it does to people.

    I am a career salesman. As an example of what I’m speaking of above, about a year ago I made a $35M sale for the company I was working for and at very good margin. The largest transaction in the history of the US division of the company. My comp for the transaction…$18k. After taxes about $12,500. Pretax, the commission rate is 5 hundredths of one percent. A twelve month sales cycle to close and the comp is 5 hundredths of one percent on the largest transaction in the history of the division on a very profitable $35M deal. Oh, and I would have had to wait 8 months to receive the meager comp. I didn’t stick around for that. Too demoralizing.

    I don’t expect anyone who hasn’t been in situation to understand, but the point is that we not only need more jobs but we need better employment environments. Well, the later is unlikely to change and will actually likely get worse (see: union destruction across the US). So do your own thing, start your own business, or, to quote Tom Friedman, welcome to Hot, Flat and Crowded.

    Comment by hailguardian -

  63. Should read:

    I like the idea except that if demand for the company’s product(s) does not exist or has diminished due to less consumer spending it could be a short term impact. But, it is putting money in the hands of the people who can create jobs. So it is worth consideration.

    One observation:
    It seems to have the same goal as the Texas Emerging Technology Fund which has been highly criticized.

    Comment by txmaddawg -

  64. I like the idea except that if demand for the company’s product(s) it could be a short term impact. But, it is putting money in the hands of the people who can create jobs. So it is worth consideration.

    One observation:
    It seems to have the same goal as the Texas Emerging Technology Fund which has been highly criticized.

    Comment by txmaddawg -

  65. Pingback: links for 2011-08-11

  66. Can someone tell me why the American Federal Reserve Bank offers interest on the deposits from its member banks? The American government has flooded the market with $2.7 trillion in fiat dollars and velocity of money has tanked as has the money multiplier. US bankers have stashed $1.7 trillion of this “stimulus” money with the Fed for the interest payments rather than circulate through the economies lending channels. Member banks borrow from the Fed at zero interest rates and park the loan back at the Fed for a 2 risk-free loan. That’s one incentive. But there was a time when the Fed did not offer interest on its loans to its member banks. Why doesn’t America go back to not offering interest on its loans so that the member banks start circulating the money? Or, the Fed should distribute the money DIRECTLY to businesses and cut out the middlemen banks.

    Comment by Thomas Molitor -

  67. bucfanpaka, one reason the U.S. does not necessarily have to take a step down in their standard of living is that a huge infrastructure has already been built. The problem seems to be that most of the profits being made from non-renewable resources are going to purchase products that require non-renewable resources to operate.

    Comment by alexlogic -

  68. As a side note, I really like the concept, you suggested. But maybe their could be a startup or recent startup version as well. Here’s what i’m thinking. It should be a VC group or investors that utilize a system such as the one you described and maybe the government could be brought in as a partner in offerings that meet a certain set of employment related criteria. The govt has no say so in how the business runs. The VC basically gets to borrow govt money to fund startups that they believe will succeed. The govt will get a fixed rate of return (essentially insured by the VC if the startup goes under), and the VC will reap any windfalls in excess of the required govt percentagle. Payments the govt should receive as loan repayment can be offset by any taxes paid by the employees of the startup not including the founders and management team. This way it isn’t the government making decisions about what might be good and bad deals. Let folks that have their own money and have experience on their side recognizing good and bad concepts pick the players.

    Comment by sirahlst -

  69. I’m confused by a perceived inconsistency. I don’t know that the inconsistency is really there, but it is nagging at me that it is there… I’m hoping you’ll explain it away so I can understand. I just read in this blog entry that cutting taxes won’t create jobs because people (businesses) will just use the savings to pay down debt instead of hiring people. But in one of your recent posts you claim that changing patent rules (actually I believe the words were something like abolishing software and business process patents) would save businesses money and that then thet would be able to hire more people. You used your own companies as an example even. What’s the difference between how a business gets more money in their pockets that makes them spend in one case, but not in the other?

    Comment by sirahlst -

  70. I just don’t think there are that many companies out there, across the country, that could meet these parameters to really make a large impact. This is great for big cities (Dallas/LA/ATL/NY), but what about smaller towns that don’t boast ‘large corporations’ as their main employer.

    Overall though, it’s a great idea, it could definitely make a change and cause good things to happen in peoples lives….so, it will never happen. If Boehner or Pelosi or someone in congress had thought of it, it could happen…Mark Cuban think about it…terrible idea.

    Comment by zmrw55 -

  71. I think it is the beginning of a good idea! But this alone will not do more than be a good start. The over-riding problem is the epic and continuing failure of the top-down or “Olympus” economy. It has spent the last 30 years sucking out capital from the bottom 2/3 of the economy. What will work is a bottom-up or “Foundation” economy. An economy based on the small and everyday. In other words a more modern version of the cooperative of our grandparents. I have seen how well financed companies can fly along long enough to become viable, even when they are poorly run. As I have heard pilots say ” you can make a brick fly with enough power”. But most new and existing small business is like a glider – completely dependent on the economic winds.
    The need is for inexpensive and available capital for neighborhood and local business. I suggest a “master corporation” that owns a portion of the smaller business and supplies money as needed and training for employees as the master corporation grows. This corporation is completely owned by the members and a dividend is paid out for yearly profits.The goal is to create a circle of profit for the community and to create jobs. If you have members buying from the local business and the local business hiring local people and the master corporation making sure of security and capital you can build a repeatable economic model based on the power of the small. With enough small units making up a much larger “master corporation” a sustainable economy can be created that will continue to grow- well beyond our generation. The capital sucking “Olympus” or the “Economy of the gods” will very shortly put incredible pressure on our society and democracy. The incredible power of the small is our best hope!

    Comment by romine58 -

  72. Pingback: Ideas for economic growth | Equine Business News

  73. @ Jeff, some comments up – I definitely understand the point and principle, but is there any other way, in a world badly overpopulated with people willing (or in some cases forced) to work as virtual slave labor in horrible conditions, to have a hands-off approach or try to work with the current trend and still maintain even close to our standard of living in the U.S.? If not employment — which is very important to the well-being of many in itself, apart from the wages it provides — then what? Very serious question, as it is depressing when I try to think of real solutions to this mess. I WANT to agree; I would like to think we could do better by following the natural course of things, but in the end it all seems to boil down to resources and population, and that ratio on those is looking pretty dismal on this planet right now. The trend seems to be that those resources are being spread much more thinly overall, and some additional accumulation in the very highest strata. I know there are some who believe that our standard does need to come way down and that a correction is in order as we are living way beyond our means— but I don’t think that has to be. Self-preservation is also a right in nature… ok, ok, I’ll say it and probably speak for most of my countrymen when I do — I’m selfish and don’t want to give up those luxuries I have. There. ;-)

    Nature does eventually find a solution or balance, but she is also an incredible bitch on occasion, and cares nothing for any one individual. So despite my libertarian leanings, sometimes I think maybe we should step in and mess with the natural trend, at least, if that trend really has negative repercussions for us and we aren’t just making a futile gesture. I see a solution like Mark’s as a way of trying to better manage what resources we have, create and bring more in and keep them here. And as to another comment about the stimulus money, problem I see with that was also that so much of it wasn’t kept here — once again, pumped into other economies.

    And yep, fun discussion! :-)

    Comment by bucfanpaka -

  74. Cubes-It’s a great plan. This kind of program would work well with Americans Elect.

    http://www.americanselect.org/

    Comment by ehb3 -

  75. I think your wrong:

    In a sense, the government has already tried this with the stimulus money. Most stimulus funded projects required some sort of reporting on not only new jobs created but jobs retained as well. We are seeing the results of the stimulus spending as we speak. While it helped, it didn’t really do anything long term. Why, because stimulus money was spent on items that we wanted, but didn’t really need to have. They were nice projects, but we could have gotten by without them. They were projects driven by the need for jobs and not demand for the service or product they delivered.

    The private sector and to some degree the gov’t already (SBA, Stimulus, grants, etc) should be able to supply the needed capital for products that are truly going to drive the creation of jobs. The thing you need to do the most is stimulate demand. You quickly glossed over the consumer. The consumer who stimulates 70% of this economy and the consumer who is currently broke. Paying down debt is not a bad thing. Why not loan to the consumer at 2% to get out of debt quicker. For even responsible borrowers, their largest investment, their homes are worth 20% less than what they paid for it.

    Right now the main problems are healthcare and energy for both the cost of doing business and the individual. I will be spending over $8000 this year on healthcare without getting sick…that’s just insurance. Private employers are funding an out of control healthcare system that could be going to increased wages. Because of fuel prices, my discretionary income is down because it costs more to get anywhere and everything I purchase, mainly food, is rising faster than my wages. Businesses have cash, but they can’t keep up with the unknowns of healthcare and the cost to employ someone.

    Adding another layer of bureaucracy is never the solution. Creating jobs to create jobs is not the answer because if there was a need for the jobs, there are ways to get the resources for growth. Stop fleecing the consumer and businesses and things will turn around.

    Comment by joemeysenburg -

  76. Mr. Mark Cuban,

    All crap aside, I have been following your blog and you make more sense than a lot of people that are in the positions to make policy.

    I think that the biggest problem with our current politcal system is the lack of representation. There are too many loopholes for special interests to touch, fund and influence politicians. I know that this has always been the case, but it is more now than ever before. The american people hire representatives that are supposed to have their best interests at heart, but that politician doesn’t even draft his or her own legislation half of the time. For example, the American Bank Association has either directly or indirectly participated in the drafting of tons of the past financial laws. The representative in the house or senate is pretty much just the authorizing signature at the end of the day.

    I think that your idea is a great one, but frankly, our system is so corrupt at this particular moment that only the strong (or the “connected”) survive. What we are living in is no longer a democracy. Anyone who took Political Science 101 can clearly point out that this is Oligarchy. Ruled by the few in the interest of a few. The people have no lobby. The congress and the Senate were supposed to be our lobby. They are all bought and sold in one way or the other.

    Your thoughts are innovative and you are very straight forward. What would you propose we do to turn around the current unpoliced corruption and class warfare that has been plaguing this nation over the past three-to-four decades? There has to be a solution, or maybe even a middle road. But who has the balls to actually implement it and follow through with the execution of it?

    Comment by stanthinks -

  77. Cuban — your solution is to borrow more money?

    This has never worked (and never will). The only recent president whose policies ended a recession was Warren G. Harding (he drastically shrank spending). FDR bumbled along until he imposed rationing to rearm for WWII. It was the lack of things to buy that spurred savings and led to economic expansion in the postwar period.

    Government is overhead (like management). It is non-productive.

    The solution — obvious to simpletons like me — is to get the government out of our way. Reduce/eliminate obstacles to business. Reduce programs and regulations and slash taxes. Let people spend their own money — don’t take it from our pockets.

    Had Obama done nothing, things would have righted themselves.

    Comment by therealnormanrogers -

  78. The answer is not another corporate welfare program.
    If America is going to keep on top, it will not be because of the good intentions of the billion dollar corporations. It will be because of a small subgroup of the “dreamers and crazies” who will actually be successful and keep us ahead of the global marketplace. I don’t think any government program is likely to help. The best thing is to try hard to stay out of the way.

    Comment by Openivo -

  79. Definitely fun to discuss. I might quibble the 10 years requirement down to 5; the 100 employees down to 20; and the 100mm in revenue down to 1mm. (No, that doesn’t make it include my own tiny, tiny microbusiness.) And there has to be something to stop the shell game of “creating 10 jobs over here, look shiny!” vs. “… and meanwhile in this other part of the company, offshoring and firing!”

    But it’s all a little weird. It’s still thinking in supply-side goods and services. Company X can already get money (or has money) for more jobs if there is already demand for their product or service. If we’re borrowing to spend money, it still seems to make more sense to hire people to build infrastructure, Works Progress Administration style. The next is getting more money in people’s pockets by things like not making them pay so much for healthcare or transportation. Or, I don’t know, education. If you’re going to spend $1T on something, put more and better teachers to work and charge students less. The UNC system alone could employ 1000 more teachers and staff and maintenance workers in a near heartbeat, without having to build additional buildings, and every $1000 you cut tuition is $1000 more for families to spend on other stuff. (Or at least $1000 less student loan debt the student and economy will be strangled with later. And, no, I’m not a student, I don’t have serious loan debt I’m trying to peddle off, etc.)

    Comment by montsamu -

  80. Good stuff Mark. I’m on the same page with you, but I have a problem with the size requirements as you can imagine. Here’s the thing, I hear a lot of talk about programs to help the big companies, and programs to help the startups, both of which I am all for, but let’s talk about the little guy, i.e. everyone’s favorite topic, “ME”! Right now, there is nothing that exists out there to give money to the companies that could best use it, need it, and would require the least amount of it to make an impact!. I’m talking about companies 2 – 5 years old that have established a viable, profitable business with a proven market demand that just need a little bit of liquid capital in order to expand. I have a small C Corp in California, we own a franchise of a mobile party business (perhaps you heard of us Games2U, we were on Shark Tank last season). We’ve been in business 2.5 years now and doing well. We are up to $200,000 annual in revenues with a single unit operation. At this point, we are desperate to expand as our market demands it. Currently we are converting on 35% of all “party requests” that come through the system. While a portion of the remaining 65% are folks that are information searching and people that decide to go another route, a large percentage of those requests are folks that want to have a party with us on a certain date and time that we just can’t accommodate because we are already all booked up. Essentially for the $200,000 we earn in a year, there’s another $200,000 that is left out on the table just because we dont have enough equipment and staff to service them. To this point as you can imagine, I have invested every penny I ever earned to getting this business to where it is today, and as a self sustaining company, it is profitable and sustains 5 mostly part time employees. However the profits are not high enough to be able to re-invest large amounts of capital towards new equipment and facilities while also managing costs. With a small investment of $50,000, we could complete our expansion, thereby immediately generating an additional $200,000 in revenues within one year from a proven existing customer base, and add 3-4 new employees. Now I know it’s small potatoes on the grand scheme of things, but there are 100’s of companies like mine in a similar spot I am sure. Isn’t this a market worth identifying? Bank loans are next to impossible to obtain, and every loan possibility out there wants to see 5 – 10 years in business with significant assets as collateral. How is a company like this to get to the next step? We are the companies that have to compete with unemployment to hire our workforce. I can’t tell you how many employees we have lost to unemployment because let’s face it, $400 a week tax free to do nothing is pretty attractive to many folks as compared to working for your money!

    Comment by bmurtaugh -

  81. One problem with your premise is that you are looking at real interest rates, which is the nominal interest rate (a non-negative number) minus the *expected* inflation rate. If the *actual* inflation is less than you expect, or even negative, you could be in a world of hurt (assuming that you borrowed as much money as you could).

    Comment by jonawhite -

  82. The problem with this whole idea is you think the government is capable of taking on such an effort and not completely screwing it up. After congress gets ahold of this they would add loopholes for their friends and through those loopholes we would see fraud. Plus there is no way you’re going to get a committee of people to oversee this in the way that would be required to make it work.

    I just have to ask WHY would you delegate such a thing to the government? They have a job to do already and are doing poorly at it.

    WHY when the private sector (VC, investors) are able to do this better and you don’t have to worry about them screwing around, because it is their money that they lose.

    I think taxes are a HUGE issue, because the US is not competitive with our current tax codes and rates. The code itself is so big that no one understands it. Just because cutting taxes leads more towards paying off debt or increasing savings (according to you) doesn’t mean that it won’t be good for the economy in the long term. Less debt means that people would have more deposable income in the future. More savings mean that people could make bigger purchases in the future or be more prepared for their retirement. I think these are good things for everyone.

    Comment by Dustin -

  83. Mark isn’t this just tantamount to saying that the government should spend monies helping startups? Corporations tend to accrue cash and look for great M&A opps in recessions. They cut overhead — employees — and tighten their belts. Startups on the other hand create jobs. So why not fund the SBA budget and simply the processes to help fund startups? The SBA is fairly antiquated in my experience and are still brick-and-mortar company mind-set; not a lot of healthy risk taking mentality. Overhaul it, spruce it up and help startups innovate. Turn the SBA into a VC type of operation. More jobs everywhere.

    Comment by SunilatSifr -

  84. One note to my prior post: The previous incentive that expired in January as part of HIRE was too little and too short-term.

    Comment by michaelberrier -

  85. I like where you’re going, Mark, but I have a simpler idea: give a tax break to any company that sustains an increase of its roster of U.S. citizen employees, keeping the tax break in effect as long as increased employment is sustained, with a cutoff of 5 years from today. You’d have to create some definition around this to make sure the company isn’t jettisoning higher-paid employees to hire more who are lower paid (for example), but I like the idea of a cost offset more than a grant. What do you think?

    Comment by michaelberrier -

  86. BTW if this kind of “we just need jobs above all else” mentality would have won during the industrial revolution, we’d all be much less wealthy today as a result of having factory workers make everything instead of machines. We’d be paying higher prices for everything and thus be able to buy less stuff. Good thing that didn’t happen.

    We need people to move on to higher and more productive purposes, the same way they did during the Industrial Revolution.

    Back then, it seemed that we needed to save the factory workers’ jobs. Letting the transition happen allowed one of the biggest periods of wealth creation ever.

    The cool thing about natural systems is that they work regardless of whether anyone knows about them :-D

    Comment by Jeff Nabers -

  87. You know, one realization that might be missing…

    The mindset and perspective of many Americans now is one where their employment is a liability to their employer, rather than an asset.

    If we, as a country, as companies, and as individuals… largely can’t produce, then why fight nature and try to create new jobs at any cost?

    What if each contrived job creation was the creation of a liability and a reduction of productivity and wealth? Would job creation really be important then?

    The reason jobs are overseas is because their people and systems and markets are productive. If nature (“the market”) creates jobs for “them” and not for “us”… maybe it’s time we re-realize that natural systems can sometimes know better than contrived centralized power systems where some hero man’s ideas are forced onto the people?

    I’m all for spreading ideas, but I’m dumbstruck as to why nobody can come up with ideas that recognize that working WITH natural systems is far more effective than working against them.

    Comment by Jeff Nabers -

  88. In a sense, the government is already giving interest-free loans to large corporations. Corporate deferred tax liabilities have grown something like 50% – just since the beginning of 2009.

    Comment by dwkmusings -

  89. I’m shocked as I’m the first one calling you crazy. . .
    You aren’t the only one thinking about job creation. Here’s an article on House Democratic Caucus Chairman John Larson call for a jobs “supercommittee” (http://www.washingtonpost.com/blogs/2chambers/post/house-dem-chairman-how-about-a-jobs-supercommittee/2011/08/10/gIQApcEB7I_blog.html?wprss=2chambers)

    This is the way in which congress will go about it. Form a committee to come up with ideas, then figure out if the ideas get enough votes, then turn those into programs, then some members of congress who didn’t have enough votes to stop the program initially, will find some way to stop the program from getting funded. . .

    You are crazy thinking there’s no reason we can’t do this quickly. Our government isn’t set up to have things happen quickly. It’s designed to take away the empowerment of individuals to make decisions in fear that those who would have power would abuse it.

    Comment by psmcgarrity -

  90. It’s a solid idea and at least moving in the right direction. What you said about return on investment is very very true. The United States should use it’s money to plan for improved revenues in the future. One way that has always proven to do this is to invest in education. Education=better wages=more taxes. I’m not just talking about college degrees either, too much emphasis is put on going to a 4 year university when for many people just having access to trade and vocational schools at affordable rates can drastically improve their lives. The United States should encourage people to enter trades and professions that are in need or are projected to be in need in the near future through financial incentives and federal funding. That would invest that money in creating workers that companies need to make our country productive and hopefully prove to be a wise investment of capital.

    Comment by kingofthesofas -

  91. 100MM huh? As of April 2010 it looks like you are talking about 44 companies in the US (http://www.directsellingnews.com/index.php/entries_archive_display/the_100_million_club). Seems like a lot of work for very little payoff…I think this is a better strategy: http://www.businessweek.com/magazine/to-boost-the-economy-help-the-selfemployed-08042011.html.

    Comment by Bill -

  92. Pingback: Mark Cuban Has Another Big Idea for America | FrontBurner

  93. Love it as well, can’t add in much that others haven’t already said except that– though the post implies it would be the case anyways but wanted to add for extra emphasis– I would also want tight regulations stipulating that the jobs being created (or at least a damn high % of them!) had to be American jobs. No promising 100 American jobs, but then after getting the money creating 400 more overseas in addition, and positions created could not be outsourced later. Or maybe even consideration for those who aren’t creating new jobs but promising to bring old ones back with the funding.

    I agree with the reasoning behind limiting the size of the companies like that; and, the problem with those types are they seem to be most likely to send their jobs to other countries. If we could have a strong incentive for them to keep those jobs HERE or bring some back, which your solution does, we’d be working towards solving a big problem. Also, the quality of the jobs should be a consideration along with the #s; personally I think I’d give more consideration to a company creating 50 jobs at $12-$15 an hour vs. somewhat more at minimum wage.

    Comment by bucfanpaka -

  94. Pingback: An Idea for the Economy that will Freak Out a lot of People but could be Fun to Discuss. | fozbaca’s WordPress

  95. You got the economic situation nailed in terms of why the tax cuts won’t work and how the debt problem would undermine spending. The Stimulus though had half tax cuts and half infrastructure spending which took too much time and employed too few people.

    The government has been talking about offering incentives to employers to hire. If you re-swizzle this idea into Venture Loans where the interest is credited back for jobs created, that last X months or more, then you can create a self-funding “bank” that feeds the ecosystem. Other incentives could be offered to keep people on the payroll, such as deferments.

    Comment by Steven Blonder -

  96. I like the theory of the plan, and as a Democrat, I actually like the idea of job creation, without the overhead of government. History shows that you have to “prime the pump” when the economy dips, or you will have a really long depression/recession/recovery.

    However, I wonder if your plan loses out a little by not taking into account small businesses. I understand you want to keep our the startups and the dreamers (we can debate how Steve Jobs, and Bill Gates and you were startup dreamers at one time), bu there are plenty of established small companies out there that could use some money for an expansion, or new idea. Also, aren’t small businesses responsible for 50% of the work force? Why not let the established (10 years or more) small business reap a percentage of the money. In fact, shouldn’t the monies “loaned” to the businesses be limited to a % of revenues?

    Comment by greenerdrivenlife -

  97. The cost to administer such a program immediately impacts the return on the investment. Companies will likely not want to borrow too much from the federal government (for many reasons), so it could end up with very low investment/company ratio (this increases administrative costs).

    There have to be more simplistic answers that don’t require a new commission, agency or new regulations.

    What if a company creating new jobs in 2012 receive a full tax credit for the salary and FICA/Social Security costs of those new employees for the first year. Rather than ‘printing’ free money, companies are essentially hiring ‘free’ employees for the first year. Jobs get created, salaries drive consumer spending and the growth cycle gets back on track.

    Comment by chappydotcom -

  98. I think your post is coming from a flawed perspective. Because I don’t think the people in charge don’t want the United States to succeed. I think they want it to fail so it can be apart of a one world society. It is all being set up like pieces on a chess board. If the United States would succeed and thrive it would have no need to be part of a conglomerate One World society and would fight against it. Where do I get my ideas? It’s in the bible of Revelation that eventually all the worlds nations will do this under one man which will act like a savior, but he’s not. They call him the anti-Christ in the bible. He will make a treaty with Israel for 7 years, but break it in the midpoint. So like I said the powers that be want the USA to fail, so that’s why they spend paper money, while they have real money like gold and silver, etc. The dollar is doomed to fail, it’s just a matter of time before hyper inflation sets in. I am thankful for God that it hasn’t happened, yet. :)

    Comment by bondservant4jesuschrist -

  99. “The Republican/ Tea-Party approach to job creation is to cut taxes. The theory being that more money in the pocket of individuals will cause people to spend more money in the economy thereby creating more jobs. Nope. Not happening. Why ? Because individuals have too much debt. Any money they get goes to pay credit cards, student loans and for the smart and fortunate into savings.”

    The ONLY answer is individual responsibility. You can NOT assume everyone is putting every cent they have into debt or savings. I am certainly not, and I know you are not either.

    Comment by jwoods123 -

  100. Your last few posts have been really interesting. I have been thinking recently that we need signi

    I think there has to be some sort of consideration of the levels of jobs created, and this could be a political minefield. Is it the same thing to get $1,000,000 to hire 20 low-level employees as it is to get $1,000,000 to get one executive? I can think of some people that would say yes, the amount of money going into the systems is all that matters.

    OK, this system is

    Comment by mattnelsen -

  101. Mark,

    Isn’t this similar what the Government did with the ATVM (http://en.wikipedia.org/wiki/Advanced_Technology_Vehicles_Manufacturing_Loan_Program)? Tesla, which was in received a $450m loan which eventually went to pay for the NUMMI manufacturing plant. Retooling and starting up that plant to create the Tesla Model S guaranteed created lots of jobs.

    Comment by chadimoglou -

  102. Mark –
    Thanks for the post.
    Succinct analysis and great topic for discussion.

    My POV is that it can be done (perhaps should be) – and as for it being crazy, Its been done before.

    Several multilateral lending institutions (namely World Bank and Inter American Development Bank that I am aware of) offer money for private investment to existing firms -and for startups- under similar terms to those you are suggesting in developing countries. Premise being the same: growth can only come from productivity increasing and economies diversifying and offering more opportunities – and not from increases in govm’t spending.
    I am under the impression that in the previously mentioned case, they are for developing particular sectors – this could also be a fun variable to include for discussion: developing particular industries and sectors in areas of the country or states.

    I don’t think your concept necessarily has to exclude startups – by spurring the creation of business incubators. There is already a chunk of money -on state & federal level- going towards small business development, however not all entrepreneurs are aware these resources exist and its sad to say so many endeavors could be saved from doom with proper advice (as well as to actually get an ROI on spending).

    Comment by analuvg -

  103. Great Idea!

    I’d like to volunteer to serve on a regional committee. Qualifications: I don’t contribute to or follow any political party, I use common sense, I believe in accountability, I’ve been through the business funding cycle several times with different companies large and small and I believe in the people of the USA.

    Comment by otoolek -

  104. Pingback: Mark Cuban on Creating Jobs in America « Books I Read

  105. I think it’s an interesting idea, but I would add a couple of things;

    1) The company cannot have had a Reduction in Force within the last 12 months. I think we both know companies would lay off and then rehire just to get access to the funds, then rehire with zero actual job creation.

    2) I think you need to look at the revenue number because $100 million in one industry is not $100 million in another. I think you could make an argument that you need to look at either asset size or owner equity.

    3) I almost think there needs to be a cap on the size of companies as well. Let’s be frank. Many big companies are not not hiring because they can’t afford it. They are not hiring because they don’t need the workers to maintain profits. Huge companies do have the access to capital to be hiring in this market. Not hiring is a choice they make.

    4) You have to find a way to avoid the tendencies of government to increase bureaucracy and become too involved in the affairs of the recipients. Every year available funds are not claimed because the government simply makes it a pain in the ass to involve them.

    Comment by embracinggrey -

  106. I like the fresh thinking. I think these committees could get overwhelmed and slow things down. How about letting private equity groups follow a fast track by making a 2 to 1 or 3 to 1 pledge of their dollars for access to government dollars? This might get some action a little sooner.

    Comment by mjordan621 -

  107. Mark,

    Thanks for the great, fresh thinking and the clear thinking on where the two sides are getting it right and where they’re getting it wrong. I agree with Brian that the issue for businesses isn’t access to capital to hire employees, but lack of customers. They need customers with an income (steady income, not a yearly tax break). Customers, in other words, with jobs That’s what’s needed to get businesses to really start hiring. And unfortunately, the one entity around with cash that’s willing to hire right now is the guvment.

    So I’d tweak your analysis by saying, OK, despite all the rhetoric that we’re turning into Greece, the government can still borrow money at historically low interest rates (with negative real yield as you point out).

    So, let’s get a blue chip, non-political (or genuinely bi-partisan) commission to:

    – Determine where and how, historically, government spends–invests!–most effectively in infrastructure. As some of the comments point out, it HAS been done.

    – Of those, determine where the biggest, most important infrastructure needs are today (an earlier comment about emphasizing communications infrastructe such as fibre optics struck me as on the money)

    – (Very important) Determine which of those can be kicked off quickly, so we avoid investing in projects with so called “shovel ready jobs” that get bogged down in years of bureaucracy, as happened to Obama.

    Comment by wmgralee -

  108. Mark…re-employing (not even sure if that’s a real word) people is the answer to getting out of this funk our economy is in. You hit the nail right on the head. As an owner of a small manufacturer almost 100 year old company we are currently under staffed. Why are we understaffed, because business slowed, customers went out of business and our bank pulled our line of credit for no reason. So in return when cash flow got tight and we didn’t have a line of credit to draw on we had to lay people off. Four years ago we had 62 people working with us now we are down to 22. We are having difficulty producing what we have in the shop on time for our customers. Our biggest concern is adding to our payroll and increasing our overhead without the proper financial resources. We have gone to the bank and they tell us our credit is perfect and they would like to lend us the money but only if we personally guarantee the loans by putting our homes up for collateral. Honestly I would rather close up shop than put my home up for collateral in this economy. If we could got a cash infusion of $150K I would hire 10 people overnight and continue to add more employees as needed. Your idea is spot on but as a smaller than $100M company I would think opening an opportunity like this to any company that has been in business for more than 10 years would do wonders for the economy. Those larger than $100M companies have more resources and banks feel more comfortable lending them money. It’s the small companies in the range of $5M – $25M that really need the help. This economy will never turn unless we create more jobs, bottom line. Small businesses are what will get things going again and the government should stop ignoring us.

    Comment by schnew67 -

  109. Newsflash for morons everywhere. As one of the proprieters of the US gov. its my business what it does, and I choose not to make a profit. I choose to create money, (just like banks do) to fund projects I want done.

    Its only teaparty idiots like you that think you want nothing from gov. Thats really working out well in London right now isn’t it.

    Odious debt, look it up. Balance the budget. Ha! Tell a banker to balance the budget and watchem laugh in your face.

    Comment by babaoroody -

  110. Pingback: I love Mark Cuban, but this is just silly. « Ragnar’s Revenge

  111. Great idea for BigBiz economies like Germany Japan Korea who have a majority of employees in medium to large size companies and keeping them all employed and adding to that employment by 2-3% makes a massive difference to their economic success.

    Not such a good idea for your horse and cart system it will be F’up on delivery.

    Better idea would be to fund all successful 10 year business to expand and help create as many new successful businesses as possible.

    Let all your successful operators have a good look at all the defunct 20th century giants got to be some great opportunities in there.

    Note your all standing in a room with not only an elephant in it but an IED and a guy looking in the window with an RPG! So talking about whose got what job and which funding is pointless till you face facts your all F’ed unless you make big structural changes now.

    As for medicare and banking we have a pretty average system that everyone gets best healthcare 24/7 for about 2% in taxes and our banks are all posting record 5-6 billion profits.

    Comment by mistermuffy -

  112. Mark, LIke it a lot. Not a crazy idea at all- crazy is repeating the same failed tactics expecting a different outcome… I’d propose a slightly different incantation of your plan with less speculating/selection rigor up front and instead more empirical-driven meritocracy-style approach. Instead of selecting 100 winners and letting them run for x years, select 1000 winners and see what they can do in 6mos. Then double down on the top-performing 10%. Eliminate much of the subjectivity & finagling to win judge approval and base it on what people can truly achieve.

    Love this idea. Possible to do a small-scale proof-of-concept w/o waiting for government and then later cite that?

    Comment by scrollinondubs -

  113. “Plus our federal government loves to hire people.”

    This isn’t true. As this data set shows (and it’s similar to data I’ve seen in civics textbook, the number of non-Census federal employees has stayed more or less constant for decades.

    If you want to know the biggest portion of future federal debt, look for Medicare entitlement spending.

    Comment by Jake Seliger -

  114. I’m wondering, how this idea is revolutionary. The German government put quite the same idea into effect during the financial crisis in 2008, and nowadays our economy is stronger than ever. *And we are governed by conservatives,* that usually don’t mess with economic state of affairs. Try Googling for “German Stimulus Pact.”

    If Pres. Bush had looked a wee bit more on his own country and not tried naively to “spread freedom” in the near east by delivering money and weapons to corrupt locals, Pres. Obama would have been in a much better position (that is, it might have been Pres. McCain by now).

    Comment by Boldewyn -

  115. Canada (or maybe Ontario) did this about 15-20 years ago. I was in high school at the time. I was working for a big company that supplied car parts to Ford, GM, Chrysler.

    IIRC, I was already working when I was fired so that I could be re-hired by the same company under this program. I think some other companies hired each other’s workers and did other kinds of tricks by subcontracting work etc.

    We do need new institutions, and an efficient market / yardstick to select winning institutions. – raisingstation@gmail

    Comment by ricosec -

  116. I have another idea. We all know how inefficiently the government works. I have a friend who is a government contractor, who on his own time, wrote a program to help the government streamline its operations. He presented it to his client, who said “No way. This would eliminate like 10 jobs, we can do that.” It was too good, too efficient.

    Let’s have consultants and government contractors REALLY come tell the government how to run better. The process could be simple. Consultants review the government agencies (not the CIA or FBI, non-critical departments) and present options to save money/be more efficient. They would not be paid for this. A panel would review their suggestions, and award the contract to the company with the best combination of savings and making the agency work better. The government and said consultants would split the savings.

    Try this and watch how fast the deficit starts falling.

    Comment by bronxzou -

  117. Dude, this idea is neither viable nor good.

    It creates an incentive for companies to create jobs in order to get access to government funds. But if the goal is make-work jobs, the government is perfectly capable of creating those without the corporate intermediary (you dig this ditch and I fill it in.)

    What is needed from the private sector is investment in productive economic activity, not jobs for the sake of jobs. The program you propose would simply create a federally funded “bubble” in employment, but there is no reason to believe that new jobs would be productive uses of capital. On the contrary, I think such a program would divert capital into unproductive or at best marginally productive uses, much like the real estate bubble.

    The federal government could do any or all of 3 things to really help the employment situation:

    1) Make capital available, via loan guarantees or incentives, to small businesses. While large corporations are awash in cash and cheap debt, small businesses, unable to tap the capital markets, are struggling to get the money for investments in growth. Do not attach any strings, whether job creation or some other perceived social good, to this capital.

    2) Reduce the regulatory and bureaucratic burden on small businesses. This is probably better addressed at the state level, but the federal government could show some leadership or create incentives for state and local governments to reduce the regulatory burden on small businesses. This is a stealth tax on business, and it is extremely regressive, as compliance is far more onerous for small businesses without the resources to dedicate to dealing with state bureaucracies.

    3) Stimulate demand. Consumers are not buying as much as they used to, and given the over-leveraged, over-indebted condition of so many people, the majority of any short-term increase in personal income will go to savings and not consumption right now. It’s sort of sickening, but the government should stimulate demand with direct spending until the private sector is ready to step in. More borrowing in the short term to fund this stimulus would be good, although it should be balanced by long-term reductions in spending.

    Comment by jlai24 -

  118. Not sure about the details (it might sense to exclude or better filter companies that are old & successful as they tend to be suffering from Innovator’s Dilemma).

    Or really we should be doing all sorts of experiments. You hit on some key things like TRANSPARENCY. But if we have real METRICs we could do Champion / Challenger or A/B Testing and have some small percentage of REALLY CRAZY ideas and the majority “sensible” ideas. Then quickly discover ideas that are more successful successful than others and poor more money in those.

    Comment by rjberger -

  119. You make a lot of good points but I would like to add my own 2 cents:

    1)Government really should worry about building infrastructure as of right now. Like Mayor Bloomberg said, it’s cheap to do it and a lot of people can get involved. If anything, internet infrastructure (i.e. Fiber Optics ) and road infrastructure jobs should be generated in order to get the foundations laid for the next 10-20 years. If we would have had an extra amount of money dedicated specifically for this (on top of the TARP) at 2009 we would be about 35% of the way there (if not more). Of course some of these jobs would only be temporary, but once those infrastructures came in, specifically with the internet, private companies would fill in the void immediately and compete with better services and more stable jobs. As for maintenance, that’s where the private sector can come in and do their jobs since they can hire private contractors to do the repairs and even overhaul without having to spend deep. Kind of like how our land line phones work. Verizon is the example where their FIOS got stalled because of the expenses of actually doing the physical layout.

    2)Tax cuts. To me, the only area that could actually use the tax cuts is the educational sector. I would go far as to say let accredited educational institutions become tax exempt on the conditions that A) They are forced to lower tuition by at least half B) They run as profit neutral institutions (sans donations that would count towards endowments) C) Acting as profit neutral, high figures of said institutions get salary capped (which determining the salary cap would be up to debate).

    Getting these institutions to lower down the expense rate by half, though a large effort, would allow students to pay back their loans faster because they’re in less debt.

    3) What devbojackon said. If a stable small company has shown proper growth, let them hire. All of the major companies did not start up as big, rather with investors that believed in them, they when on to be modest small and middle companies that eventually became big. As much as it’s a bigger risk for smaller companies, these small businesses would have more incentive to hire within the states as to big multi-national groups.

    4) Finally, enacting your version of the stock circuit break (charging money on top of stocks that would be returned after a 5 year investment)except focusing on doing 20-25% of what the stock was valued as the payment, would help out since it would stop computer based trading from interfering with long term growth. Though this concept can be modified.

    Just my thoughts.

    Comment by kirielson -

  120. Familiar theme http://youtu.be/gIcqb9hHQ3E Although you said it with less emotion.

    Comment by denogginizer -

  121. I like the idea of the fed investing in profitable American companies to achieve a positive ROI, which as you have pointed out, the fed is terrible at, but like so many others have expressed, how can your 10/100/10 parameters help small business? As a young entrepreneur operating 2 profitable small businesses I want to create more jobs and expand my businesses, but I am forced to do this at a slower(but more sustainable) rate versus a large corporation with access to ample amounts of cash and capital. So, I like your idea but on the inverse. The parameters should be more along the lines of a company 3-5 years old with $500k in revenues and 5-10 employees. Proof you have the know how to start and operate a business but need an infusion of cash to grow and compete with the larger “established” business. This would also put more money directly into more neighborhoods instead of all of the money going to the silicone valley, redmond washington, and new york. I just don’t see the “trickle down” having the same impact as the smaller more direct infusion to small business.

    Comment by devbojackson -

  122. Interesting and bold idea. I do not think it is appropriate for any government to stimulate commercial activities most cases – either via subsidies, grants, stimulus or whatever. Governments should govern and provide security, stability and regulation.

    It is interesting that a lot of people think that spending money will make the economy grow or create jobs. This is only a temporary solution. I think the most effective solution is to increase the speed money flows through the system. Typically you see in a depression that the money flow speed decreases. People start saving, companies stop investing. As you said big corp USA has more than enough money in the bank but they are not spending it. Same applies for a lot of people. That is the reason people start paying of debts.

    As an alternative solution I would propose to make money available to the people who are actually going to spend it immediately. By lowering taxes or providing some other means to put money in the hands of the low incomes would help enormously. They tend to spend it as soon as they get it. Spending money generates income through taxes (sales tax, labor tax, etc.) basically putting a significant portion of the money right back in the hands of the government to spend AGAIN. When the spending starts again the jobs will follow automatically.

    Comment by rdschouw -

  123. there’s a lot of hyperbole in the setup that i’d love to have ezra klein or some other economy-oriented reporter fact check. in my view, governments can do a perfectly good job of investing public funds in worthwhile projects that generate a nice return on that investment. historically that’s been true. you just have to look at all the public power systems across the country, the highways, water and sewer systems, etc., etc., etc.

    republicans have done a great job of running down government in general. corruption and misguided politicians have certainly contributed their share. and the public? well, that’s where i lay most of the blame. we get the government we expect. and, man, do we expect very, very little!

    i’ve heard talk of an infrastructure bank. haven’t seen the details, but that’s an approach that i would favor over investing government funds in “random” private entities. there are experts in this area. one, the late great former new york governor hugh carey was such an expert, but so was felix rohatyn who worked with gov. carey to help bring new york back from the precipice in the 70s. the last time i saw felix was in an interview on charlie rose, and he was talking, surprise, surprise, about an infrastructure bank as a way to help stimulate the economy and return people to work.

    frankly, a lot of what we need to do has already been done, successfully in the past, starting with the response to the great depression. if only we had the will, the gumption, to update those ideas and do them again. and quite frankly, the republicans are following the same playbook that would have led, and for a time did lead, to an inadequate response to the depression. i know they want to destroy obama, but destroying the country in the process…

    Comment by bbebop -

  124. Pingback: The world is now paying the US government more to store their money. | mm

  125. Considering the companies meeting your qualifications (10 years/$100MM/100 employees): why is this system a better way for them to raise capital than a stock or bond offering?

    Comment by mayoff -

  126. Here’s an idea along the same lines as you’re proposing, but easier to implement. We use the IRS as the funding source for companies looking to expand (either by creating jobs or capital purchases). Companies that have at least 5 years of earnings and are current on their taxes could borrow money from the IRS at 200 basis points above the 10-year Treasury rate (currently 2.17% + 200 basis points). They could borrow up to 100% of their average annual tax obligation over the last 5 years and would be required to pay off the debt over the next 10 years as part of their future tax obligations. Only companies with US citizens that own at least 51% of the equity could participate and any owner with 10% or more ownership would have to back the loan personally.

    The infrastructure for processing cash distributions and payments is already in place, due diligence is solved by looking at the company’s last 5 year tax returns, and the personal guarantees helps cover the downside risk for the government. Who would have thought that the IRS is the answer to our problems :)

    Comment by cloudramp -

  127. Love the idea/concept but think you should widen the net. If you look at the fastest growing companies today, weren’t they started by 2 guys in a garage/dorm room? Some of these same companies haven’t even been around for 10 years. Think the Fortune 500,000 not 500.

    Comment by Greg Robertson -

  128. Well, Cuban, you passed the crazyness test: I’ve had a few glasses of some of my favorite red wine tonight and your ideas still do not sound crazy. Good news: you’re sane.

    I am an independent and I did vote for Obama because I thought change would happen. It didn’t. We got more debt along the way and bunch of other crap. I was in Africa last year and looking at it from outside in, I saw our country focused on the wrong things. At the end of the day, it is about job creation not healthcare reform and other crap.

    The problem with America today is that America forgot how we became great. Being a naturalized citizen, I realized that the biggest draw to this country was that anyone could work hard to achieve the American dream. And the American dream is based on entrepreneurship. Period.

    We (America) became great because of innovators like Henry Ford, Andrew Carnegie, Thomas Edison, Nikola Tesla and the rest of the great American entrepreneurs over the last 100 years — and that would include you.

    American economy is driven by entrepreneurs. I wish our government would get this simple fact. What is sad and pathetic is that entrepreneurs create the most jobs in this country but do not get the support of Uncle Sam like Fortune 1000. Obviously, small business is a fragmented marketplace so there lies part of the problem.

    What both parties are not getting is the simple fact that if we enable and support American entrepreneurs to innovate, America will come out of all this mess quicker. America is not short on innovation –the problem is capital.

    Raising capital is not easy for any entrepreneur unless you are in Silicon Valley and even then it’s not that easy. I lived there and I never saw money dropping down from the trees. And I have raised money there.

    I love you direction. Looking at it from a technology perspective is the right way. In addition to your idea, I think what is needed is a thousand more incubators and accelerators all over the country.

    In reality, what is really needed is 20 more major hubs in America that mimic Silicon Valley — strategically located across the country. It can be done. I have analyzed this for quite some time. They don’t have to be all focused on technology like Silicon Valley but you have to build hubs or you are not going to get the density of connections to create random, unpredictable events such as disruptive innovation. Just putting up incubators and accelerators will take longer and that has to be done a specific way. There has to be a sequence of building this massive ecosystem – just like in nature.

    It’s pathetic. The amount of money we spend on SBA and other B.S. programs and wars, we could use to replicate Silicon Valley hubs all over the country. Sure it takes billions of dollars to do this and there is s sequence of how it has to be done at a much lower cost, but it is a lot cheaper than fighting wars, putting money into wrong programs, blah, blah, blah.

    I like your direction but you also have to provide an infrastructure for startups as well because startups create a significant amount of innovation.

    Disclaimer: If I didn’t make sense here, blame it on the wine.

    Comment by damir perge | founder | entrepreneurdex -

  129. I think your brain is in the right spot, but in all truth. If the government get’s out of the way, small businesses will create jobs. They don’t need money from the government, at least not the ones you are listing that could qualify. The money would probably just be used to buy more assets, and not hire as many people.

    Also. The Republicans want to cut takes not to put in the hands of regular people. They want to cut taxes for everyone including the rich. Their hope is the rich people will take this money to add more people to their payrolls. Still, I don’t think this is enough.

    There is something like a trillion dollars sitting on the sidelines that businesses have put in reserve and not spent on hiring. Why is that? They have no idea with Obamacare is going to mean to their bottomline. They have no idea what this administration is going to do. They sit and are waiting for a clear path to profitability.

    Facts are stubborn things.

    Comment by gregkrajewski -

  130. i just wanted to say thank you for buying the mavericks and inspiring me to go into business. as for my input on your plan, isn’t there some other entity that would do this better than the government?

    Comment by andrewstriblings -

  131. I LOVE IT MARK!!!!!

    I think you hit the nail on the head, no political conflicts of interest. Unfortunately I feel that’s what the Problem with #StartupAmerica …

    I’d open parameters to any companies that have paid taxes. Have loans packaged through gov agency like real estate with fannie mae and student loans with sallie mae….

    There will be lots of wasted money, flops and failures, but there will be plenty of facebooks, googles, apples and amazons to create jobs.

    You are right, EMPLOYMENT IS KING to a strong economy.

    Another idea for the economy… Bring manufacturing back to the USA!!!!!

    Comment by tylerbeerman -

  132. If you have been in business for 10 years and have at least 100mm in revenues, you shouldn’t need a government loan to grow your business.

    Comment by grantcline -

  133. I think we are in a satellite technology versus brick and mortar battle right now. Satellite technology creates way to reduce the need for brick and mortar, which in turn reduces the need for brick and mortar type of employment.

    Instead of 3 brick and mortar employees, a company focuses on one satellite savvy tech person. Instead of three 40,000 dollar salaried jobs plus all the benefits, a company would rather hire one satellite savvy tech person at 80,000 to 100,000 dollars with benefits.

    There is also less liability. Actual brick and mortar jobs require people moving heavy objects, be it driving a truck, constructing a building, or re landscaping a property, and there is risk involved.

    The satellite savvy tech person just sits in their comfortable space and creates a way to increase communication efficiency so LESS brick and mortar trips are actually necessary in the real world, their gain is the loss of a brick and mortar job.

    There is a second part to this but this is enough for now.

    Comment by alexlogic -

  134. How can I volunteer to help spread this idea?!

    Comment by Hassan -

  135. Great idea, Mark! I love it. By attaching a real measurable goal to economic growth any company or individual has to become conscious and aware. Positive incentives nudges everyone with any sense of internal hustle to literally point to every function of a company from printing documents not a single person will ever read to buying another company.

    I just recently started my first “real” job, but one of things that struck me was how quickly even the most determined “Rudy”-like people around me just forget the recent past. I do not blame them though because we’re all human. Personally, I’ll never forget how this past January I worked on a legislative project and I had to beg my family and friends to print one page fact sheets! Everyday, even as I sit next to a printer (and its pretty much a glorified recycling machine) I force myself to make a conscious decision to never forget that “printer-hustle”. Your idea personalizes and makes this “printer-hustle” salient. It forces to stop and ask

    “Does ____ get me closer to ___ number of jobs? If not why bother?”

    The model brilliant because its built around positive self-fulfilling prophecies. Not only do qualifications screen for crazies and system cloggers, but honestly it would be hard for a qualifying company to consciously fail hit to hit their job creation goal.

    I LOVE your idea because it incentivizes a positive and specific target without complicating things or forcing a company to sacrifice what has worked in the past or pretend to be something it has never been. Factors such as longevity, smart booking, and the other things you mentioned are proven tennets you for creating jobs. It would be very difficult for companies and individuals to ignore positive incentives. I mean even a kid with a lemonade stand intrinsically knows that’s bad business!

    If there is one thing your idea tackels head on it’s reminding the government that the quickest way to economic growth is an efficiency-based reality the check. I mean lets be honest, if any country has the capacity to hustle into prosperity its Americans.

    Comment by Hassan -

  136. http://online.wsj.com/article/SB10001424052702303661904576452181063763332.html

    Comment by Brian Ritz -

  137. Your proposal does not help businesses at the relevant margin.

    Perhaps I am not understanding your proposal correctly, but I do not believe businesses would accept government loans for hiring employees because the return on investment from creating jobs is not positive at the moment. The current ROI of business investment in both labor and capital is very near zero because of depressed consumer demand.

    In other words, businesses are not constrained from investing by access to capital; they are constrained by consumer demand. You acknowledge that businesses are awash with cash, but they are not putting this to use. Why? Corporations would rather sit on the cash and wait for business conditions and consumer demand to improve before investing into expanding their business. There is no benefit to hiring new workers because businesses are not confident that they will be able to sell any extra product. A Wall Street Journal survey of economists released last month supports lack of demand as the primary reason businesses aren’t hiring more readily. I do not see how your proposal mitigates this concern.

    P.S.
    A link to the relevant WSJ article:

    Comment by Brian Ritz -

  138. “The theory being that [cutting taxes leaves] more money in the pocket of individuals will cause people to spend more money in the economy thereby creating more jobs. Nope. Not happening.”

    Any any extra money “saved” is also spent on gasoline, which goes overseas, or on fuel efficient cars, which pretty much goes overseas, or on LCD TVs which goes overseas, or clothing, which is made overseas…

    Get the idea?

    The Tea Party is right. Cutting taxes does create more jobs — they’re just not US jobs.

    Comment by whmlco -

  139. Mark you described a pipe dream.

    Unachievable.

    The free market always performs any task better than the government. If the government is still taking taxes by force and removing consent in economic transactions, it won’t be spent in any “right” way that causes a net benefit to any large group of people.

    At the end of the day, with mass money printing, everyone pays the highest tax in the form of inflation.

    You can’t “tax one group” to pay another when a huge percentage of the deficit is covered through money printing that puts a tax on all Americans through inflation… especially the poor.

    All ideas to try to solve any major problem while continuing government deficit spending are hair-brained plans tax the poor the hardest through inflation.

    Comment by Jeff Nabers -

  140. Mark you noted that the Govt fails when hiring because they hire fast and and never fire. Aren’t you risking the same when a company commits to a certain number in hiring? Who determines when they can release these workers if found unqualified or unnecessary? It’s red tape that will scare those companies.

    Comment by kevinredford -

  141. Mark,

    I am not sure why you think it’s a crazy idea or why you think that people would call you are crazy for proposing it. It’s a very common sense approach to boosting the economy and creating jobs. Unfortunately when it comes to management, the government has proven to be the least common sense group of people.

    I have a couple of issues which maybe you can help answer:

    1. The government has shown such incompetence in managing anything to do with money. Stimuli and bailouts have been trashed. Trillions sent to fight in Iraq and Afghanistan have become unaccounted for. 220+ million in foreclosed homes are now sitting in the governments lot with nothing but dilapidation going on. Millions of people are abusing the welfare, food stamps, unemployment etc. in this country (although every politician is too scared to talk about it). I love the idea in theory but with the governments we have seen in recent times, how can you be sure that this money will be truly spent wisely and projects managed properly unlike so many disaster programs currently and in the past?

    2. Do you think this will give the government even MORE power and control over private sector business, using loans, grants and investments as leverage to say “hey, I want you to do this and that and act like this…” Or will they just hand out this money and let the businesses do what they do best? Run businesses! If this were to go through it seems like we’d need a Libertarian administration managing a project like this so that it doesn’t get suffocated before day 1.

    3. Is there a clear and massive issue right now with businesses who are trying to expand not being able to get capital for an increase in r&d funds, functioning funds or employment? If they can’t get money from the banks or investors, should we question how competent their plans for growth really are? Where is their cash right now? If they have it then they technically don’t need government funds and if they don’t have the cash, then why don’t they?

    Wondering what you are your followers think.

    Comment by deemarg -

  142. 1. Government doesn’t need to earn a return on its investment in the way you suggest. It’ not a tit-for-tat deal. It’s an indirect line, and a long one. The investment in the interstate highway system wasn’t a big immediate revenue booster, but it allowed the free and fast movement of goods from market to market (as well as providing for greater movement of the military). See also: the Internet.

    There’s no way could those big spending, government-funded projects go forward today. We don’t do big things anymore.

    2. “The Dems are wrong that the government knows how to spend the money.” Not entirely true. The 1930s WPA is a great example of a program that put tons of people to work, and probably saved this country from the depression. We need people to work so they can buy things. Those purchases fuel growth, which in turn stimulates tax revenue. It’s a long game, but it’s been proven. How can we get a lot of people working quickly? Infrastructure projects. Many, many economists agree that the stimulus worked, but that it was too small. I know you must know this.

    Are there wasteful government programs? Does a bear shit in the Alaskan suburbs? But that doesn’t discount the many, many successful programs that do real good AND stimulate the business community (food stamps bring a return of $1.73 per dollar spent in terms of economic return, corporate tax cuts only 30 cents). The tea party wants to throw the baby out with the bathwater. It’s insanity.

    3. Your idea isn’t a bad one. It’s just a circuitous stimulus. Direct stimulus would be much more effective and more beneficial to the public in the form of improved highways, railroads, and schools.

    Comment by perilousp69 -

    • 1. Government doesn’t need to earn a return on its investment in the way you suggest. It’ not a tit-for-tat deal. It’s an indirect line, and a long one. The investment in the interstate highway system wasn’t a big immediate revenue booster, but it allowed the free and fast movement of goods from market to market (as well as providing for greater movement of the military). See also: the Internet.

      From MC>
      Actually it does. If it gets a negative return it keeps on taking from taxpayers. Im not arguing that government should never spend on infrastructure. What Im saying is that our current government doesnt do it well. Panama Canal. Roads where there were none. Great. Broadband to rural. Im ok with that. But we have picked off the obvious already and even made those huge money pits. The governments built big projects bad then to spread new technology where it wasnt. New electricity where it wasnt. Cars where they couldnt get to. Spreading of tech is good, hence broadband/spectrum investments. However infrastructure for the sake of infrastructure from the governments of this century dont provide the return the projects you mention did.

      2. “The Dems are wrong that the government knows how to spend the money.” Not entirely true. The 1930s WPA is a great example of a program that put tons of people to work, and probably saved this country from the depression. We need people to work so they can buy things. Those purchases fuel growth, which in turn stimulates tax revenue. It’s a long game, but it’s been proven. How can we get a lot of people working quickly? Infrastructure projects. Many, many economists agree that the stimulus worked, but that it was too small. I know you must know this.

      From MC>Different world. Back then make work jobs were the equivalent of welfare. If you didnt have a job you begged. that is not the same situation any more. Not only was it a replacement for welfare and social security, but the debt to income ratio back then was about 15pct. People didnt use credit cards, have student loans or even mortgages . So whatever money they got could go right to rent and consumer goods. Different world.

      Are there wasteful government programs? Does a bear shit in the Alaskan suburbs? But that doesn’t discount the many, many successful programs that do real good AND stimulate the business community (food stamps bring a return of $1.73 per dollar spent in terms of economic return, corporate tax cuts only 30 cents). The tea party wants to throw the baby out with the bathwater. It’s insanity.

      3. Your idea isn’t a bad one. It’s just a circuitous stimulus. Direct stimulus would be much more effective and more beneficial to the public in the form of improved highways, railroads, and schools.

      From MC:> The way government bids out work, most of the money paid goes over seas for materials , to the bottom line for companies and only to workers for a short period of time. The infrastructure, with some exceptions with schools , does provide the return of the past because there is no binary benefit. By that I mean… used to be no roads, now there are roads. Used to be no highway between the two towns, now there is. used to be no school, now there is. Used to be no railroad, now there is. MAYBE an argument could be made for high speed rail, but for whatever reason it hasnt worked out

      Comment by markcuban -

  143. sorry but the Banks got a TRILLION dollars for making loans. They didn’t make loans. There was ZERO oversight. ZERO accountability. If i’m any midsize company i just say i need $500 million for x amount of jobs. Then i hire x/1000 emplyees. and keep the rest. I know the gvt will never do anything about it. They have proven that.

    Comment by striike -

  144. Well thought through. Here are the flaws:
    1. Unions and Politicians would never stand for a dramatic support for privatization of anything. Unions will be your biggest fight
    2. I agree, the 10 year mark is a little far reaching. 5 years and a solid reputation in those five years makes it a little more realistic.

    Comment by kevinredford -

  145. I like this idea. I was reading an article earlier today that said we still had 100-150 Billion unspent stimulus money. http://www.propublica.org/article/could-unspent-stimulus-money-be-mobilized-to-fend-off-a-new-recession

    I wonder how many jobs we could create with that money?

    Comment by ericslept -

  146. I really like the idea. At the broadest level, the idea of creating an open forum for choosing our spending projects seems really intuitive/reasonable. Republicans and Democrats throw around assertions about the relationship between our debt and employment levels (and more broadly, the nation’s economic stability) all the damn time, right? This idea provides a very tangible way for the government to most wisely spend federal dollars.

    Perhaps better yet, I’m always a big fan of efforts to provide more clarity to the policy process to average, everyday citizens. This seems to do just that, utilizing pretty simple technology and web capabilities to open the public forum for these projects.

    Very cool idea, even if very skeletal at this point. @thedarkginger

    Comment by ldchamp09 -

  147. Hey Mark–unique idea..I think the stimulus did this to a certain degree..folks got grants..were required to hire new employees or save jobs that would have been cut..in return they had to create new projects. It worked to a certain degree, but it wasn’t a long-term program. This could be something that could become an SBA administered program or Commerce Dept. At least we know tax payers are expected to paid back and possibly make a return. This is definitely worth a try..maybe it can be tested in a couple of states as a trial.

    Comment by fuprez08 -

  148. Well done Mark! Always thinking outside the box. This is a really good idea. It could work well as long you can keep a clean and uncorrupted committee. Our government needs to cut the fat and bring in young, educated thinkers like you to run this country.

    Comment by andysellstampabay -

  149. I think this is the most feasible way to create jobs. Can you imagine if a company who would have ordinarily shipped their manufacturing overseas had the money to make the hires necessary to manufacture here in the United States?! That is how you make a dent in the unemployment and that is how you get this economy back on the right track.

    Comment by phdesimone -

  150. Great post Mark. My main concern is that certain markets will attract the most $ for job creation. If the point is to stabilize the economy by creating jobs, we need to create these jobs all over the country: Cleveland, Detroit, Middle America, New Orleans etc. Why not just have the government match VC funding, given certain stipulations, like the US did to Israeli Startups in the YOZMA fund. This is a very similar idea, but is based more on the notion of “if you can raise 50%, we’ll give you 50%” to build your company. Perhaps this would work as a supplement to your idea, to help grow businesses <10 years.

    Comment by dwize20 -

  151. i think the overall concept is genius. the biggest issue would be enforcing the employment. In order to make a dent in unemployment we are talking millions of jobs. Seems like it would be very difficult to make sure the money meant for jobs was actually going towards that. TARP comes to mind instantly. The Banks got a trillion dollars to make loans and then made no loans…

    Comment by striike -

  152. It’s simple, realistic, and achievable. I wouldn’t disagree with it.

    Comment by squirrelhandler -

  153. I love it. Getting nitpicky, ten years is a pretty long time (for a company to have to be in business to qualify) but I like this.

    Comment by Adam O'Kane -

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