Liberty Discussion is a program designed to engage and inform the core members on the ideas of market economy and classical liberal ideas. Discussions are made on contemporary issues (local or national) through open market perspective. The article is selected and shared within the members to prepare oneself for the program.
Bikalpa, an Alternative association with the Institute of Economic Affairs (IEA), organized a Liberty Discussion session on 14th December 2024 at Bikalpa office. The topic of discussion was “The Entrepreneurial Environment”, extracted from the Chapter 9 of book called “An Introduction to Entrepreneurship” by Eamonn Butler. Around 17 participants attended the program.
During the session, participants reflected on the importance of favorable environment for fostering entrepreneurship. The US, a highly entrepreneurial country, was taken as an example and various probable factors like education, market size, freedom of innovation and action, access to capital, taxation, regulations and management qualities that foster entrepreneurship were discussed upon. Participants highlighted those countries like the USA have better access to education, welfare networks, family support, savings and venture capitalists which ensures that majority of people have the skills and resources to start an enterprise. Similarly, the importance of personal, economic and regulatory freedom was highlighted as a driving force of entrepreneurship. Countries with cultural openness that highly value self-improvement, experimentation and innovation like the US is more likely to foster entrepreneurship than socialist countries with more stringent regulations and societal resistance.
The discussion led to the concept of taxation. Participants debated whether high taxation discourage entrepreneurs or not. The consensus was that taxation diminish the rewards that entrepreneurs receive for their efforts, discourage risk taking and reinvestment. Heavy taxation being the cause of immigration was also agreed upon. Discussion led to the topic of windfall tax which refers to a one-time tax imposed by the government on companies that made high profit due to unexpected circumstances. They agreed that such tax system create additional burden and discourage investments. Participants emphasized on predictable and fair taxation system rather than taxation system that penalize success. They also talked about how small increment in tax causes huge loss to businesses.
The discussion also covered the role of legal systems, legal systems that is built on common law, which is a bottom-up approach was thought to be good for innovation as it provided more freedom to individuals as compared to the top-down approach. Through this lens, participants agreed that bottom up approach evolves continuously over time to address unique demands of individuals and businesses enabling a more flexible environment.
The topic of business licensing, registrations and dissolution also emerged as an important factor for entrepreneurship development. Some participants stressed that lengthy regulatory requirements and bureaucratic red tapes create an unfavorable environment which poses challenge for entrepreneurs.
In conclusion, the session emphasized the importance of a supportive environment for the development of entrepreneurship. The discussion highlighted key factors like freedom of innovation, fair taxation systems, regulatory flexibility, access to capital, good education system for skill development and free market system to be the driving force for entrepreneurship development drawing on the example of US as a highly entrepreneurial country. Participants stressed that a vibrant entrepreneurial environment requires freedom as well as supportive regulatory system. Nations to generate more wealth and to excel in global economics needs entrepreneurship, for that more emphasis should be given to provide free environment rather than setting limitations.
