Both in the U.S. and elsewhere, most education systems aren't churning out the kinds of people start-ups need to hire. The problem is not just a lack of engineers, but also of people with the necessary business, financial, and communication skills.
Many large companies in emerging markets such as Russia and India train their own employees, because college graduates often lack the requisite skills. That's good for large companies, but it leaves behind smaller companies that can't afford to train the middle ranks or compete for the best. This misalignment of incentives stifles many economies.
Countries that want to be successful overall, rather than merely to play host to a couple of billionaire entrepreneurs who eventually will decamp to a tax haven, must focus on building a strong educational system for all their citizens. That is where the notion of the entrepreneur as hero can be helpful – by inducing more young people to study math and science, which will help them in many ways even if they pursue a nontechnical career.
How to encourage entrepreneurs? Instead of subsidizing start-ups directly, governments should become good customers for them. The U.S. government is a huge customer for all kinds of software companies, just as it helped to build the airline industry long ago by contracting out postal service transportation.
Entrepreneurs tend to go where the money is, but their companies stay and provide value (and jobs) where they can find good customers and good employees. It is the well-educated who can get the best jobs—and thus earn the money to buy the kinds of goods and services that they and their fellows produce.
This article comes from Project Syndicate.