There is no question that a competitive economy needs an appetite for risk. But outside of the mantra of more tax cuts for those at the top and less "regulation" -- a perennially vague enemy whose opponents rarely define it more specifically -- he did not offer a strong argument on behalf of policies and rules that would make it more likely for people to identify and take risks that become thriving businesses. If business relies on customers above all, the primary concern for entrepreneurs should be the great stagnation of their most important customer base: the American middle class.
The president's speech explicitly pointed to a variety of ways that government could encourage strong economic growth by supporting a strong middle class and how these investments would enable more risk-taking, support economic demand, and create profitable opportunities.
Let's start with demand. The president argued that we should raise the minimum wage from $7.75 to $9.00 an hour because "for businesses across the country, it would mean customers with more money in their pockets." There is a strong theoretical economic argument that higher minimum wages eliminate cheap work that might have been done below minimum wage. But the weight of economic evidence from decades of intensive study finds that raising the minimum wage doesn't raise unemployment. Instead, the principle effect is to make low-income workers richer.
If you're deficit hawk, you might consider becoming a higher-minimum-wage hawk. Richer low-income workers would decrease government spending on food or other assistance, and it would increase tax revenues.
THE MOST IMPORTANT CAPITAL IS HUMAN
Another way policymakers can support profitability and risk-taking is by making investments in the kinds of "public goods"--goods that benefit us all--that provide a foundation for businesses to grow. We can build that foundation on a bargain today, because there are so unemployed workers, especially in the trades, and interest rates are low, making projects more affordable than they would be in a stronger economy. "The CEO of Siemens America - a company that brought hundreds of new jobs to North Carolina - has said that if we upgrade our infrastructure, they'll bring even more jobs," the president said.
There is a similar argument for investments in education. The lowest taxes in the world might let businesses keep more of their earnings, but they can't magically create a skilled workforce. We know where talented workers come from. They come from schools. What economists call "human capital" is fundamental to economic growth, and there is accumulating evidence that since so many children are falling behind before they even get to middle school, policymakers should expand their focus from higher education to early childhood education. The president's proposal of universal pre-K would be a game-changer.