By Steve Ranger in European Technology, July 2, 2014, The next 30 years of innovation risk being wasted unless society does a better job of educating people about the potential - and downsides - of technology.
At its confidence and renown as a hotpot grows, the London start-up scene is getting more comfortable about asking - and occasionally answering - some big questions about the future of tech.
This time around, as part of an event organised by Virgin Business, groups of start-ups and more established businesses were asked come up with some of the ways technology would change various sectors of the economy, from retail to healthcare, over the next 30 years.
To give the conversation a new spin they did this in an hour, in pods on the London Eye, the 135m tall ferris wheel just by the Thames. This high-flown wisdom was then distilled down into some big ideas and presented back to a larger group; rather inevitably this lead, alas, to the standard stream of consciousness you often hear at such events (intelligent fridge, cloud, smart fabric, nanotechnology, social enterprise, hyper-connection, personalisation, co-creation, big data, disruption).
None of this in itself was especially profound, or surprising, of course. In tech it's hard enough to predict 30 days ahead, never mind 30 years, especially when you are cruising through the sky in the London Eye.
But rather than this self-congratulatory froth of techno optimism, it was the barriers to this digital utopia that turned out to be the most interesting element of the event. Many of the speakers agreed that tech can be pressed into service to tackle problems as varied as obesity and fixing the food supply chain to the future of health - but also that education is at least as important. It's something we almost always overlook in the race to find the next big thing in tech.
Without smart consumers you can't have smart retail. Without smart citizens you can't have smart cities (or smart fridges). Without smart patients you can't have smart healthcare. We're not talking about how to raise the next generation of coders; that's a big but separate problem. This is about giving the next generation a better understanding of the implications and abilities of the technology we use (creating a few smart politicians along the way wouldn't hurt either).
That might mean, at one level, helping them to parse the obscure terms and services of Facebook, or understand the implications of living in a filter bubble. At another, it's giving young people a better understanding of the data around them; it's all very well having an app that monitors calories or carbs but less use if you don't know why those things need monitoring.
There's been much talk about the use of big data to help businesses make better decisions, much less about helping the general public to understand and act on their own little data. Perhaps that's the biggest breakthough we should be hoping for over the next 30 years - not smarter devices, but smarter citizens. Further reading Here are 63 million reasons why politicians need to take technology seriously
About Steve Ranger Steve Ranger is the UK editor of TechRepublic, and has been writing about the impact of technology on people, business and culture for more than a decade. Before joining TechRepublic he was the editor of silicon.com.
Vietnam is finally getting some allies in its long war with the U.S. over catfish. For years it has been able to do little more than complain as farmers from Mississippi, Alabama, and other Southern states pressured lawmakers to tighten regulation oflow-priced imported fish. Dissatisfied with the way the Food and Drug Administration was regulating foreign catfish, Congress in 2008 required the Department of Agriculture to set up a new office specifically for catfish imports.
Not much happened after that, though, so in a rare example of actual lawmaking this year, Congress set deadlines for the Agriculture Department to implementinspection rules for catfish from overseas. Among the leaders in the fight: Senator Thad Cochran, the Mississippi Republican who just survived a Tea Party primary challenge. Imports from Southeast Asia “have been found to contain dangerous chemicals and substances banned for use in the United States,” his office said in a statement, and it called on the Obama administration to take action against “underpriced frozen fish fillets from Vietnam.”
Until now, Vietnam hasn’t had much leverage. But with President Obama eager to finalize a new trans-Pacific free-trade bloc, suddenly the Vietnamese have some bargaining power and they’re ready to use it. The Vietnam Association of Seafood Exporters and Producers has hired a high-profile lobbyist, James Bacchus, a former Democratic congressman from Florida and ex-chairman of the appellate body of the World Trade Organization, the association says. Nine other countries have also joined Vietnam pointing to the catfish regime as an example of the sort of U.S. protectionism that could scupper any agreement for the Trans-Pacific Partnership, the New York Times reported.
In addition to enlisting other countries to protest moves against foreign fish, Vietnam’s government is fighting back in other ways. In a change that could help defang complaints about safety, on June 20 it put into effect a rule to raise quality and safety standards for locally raised catfish, also known as pangasius. Exporters now have to register their contracts with the Vietnam Pangasius Association, and according to the state-run Vietnamese media, many are not happy with the idea of telling regulators about their business. The new requirement, known as Decree 36, is “absurd,” according to an exporter quoted in VietnamNet. “We don’t want to report our business contracts to any individual or institution because this is a business secret,” griped another.
Some farmers worry registering their export contract will open the door to the catfish association regulating prices, VietnamNet reported:
Since all businesses have to register their export contracts with the association, it will know the export prices of every enterprise, which allows it to calculate the input material price. If so, it will put pressure on enterprises if it finds that they buy materials from farmers at prices deemed too low, and force them to raise the prices. In other words, businesses understand that VN Pangasius will have the power to set up the input material floor prices.
Still, not everybody’s angry at the government in Hanoi for trying to exercise more control over the catfish exporters. Lam Van Ho, a fish farmer in the Mekong Delta, Vietnam’s major catfish region, says the new decree creates much-needed standards for quality and food safety in catfish production. Vietnam’s aquaculture has “struggled a lot due to bad practices of several farmers,” Ho says. The low-quality fish from those farmers tarnishes the reputation of the whole industry, risking bans in overseas markets. Decree 36, he argues, “helps stabilize the industry’s brand and in turn will protect the Vietnam catfish exports.”
The "PayPal Mafia" is no mafia at all. It's a diaspora.
That's how David Sacks, former COO of PayPal and current CEO of Yammer, described it. The ominous "they" in this story is eBay, and eBay is is partly responsible for both the success of PayPal and why the founders walked away from it."Basically, we were kicked out of our homeland and they burned down our temple. So, we were scattered to the four corners of the globe, and we had to make new homes."
It's a pretty rare occurrence that a startup will make it from inception to exit. What is decidedly less common is that startup reaching an exit upwards of $1 billion dollars. Yet even more extraordinary is that exit becoming the catalyst for a revitalization of a local economy and a specific type of investing.
Despite astronomical odds, this is what happened when PayPal sold to eBay in the summer of 2002 and the PayPal team members went on to found some of the most important startups -- and make some of the most strategic investments -- of all time.
The PayPal Mafia -- a term that's used with affection and awe in Silicon Valley -- is defined as the Mountain View PayPal team either pre-IPO or pre-acquisition, depending on which founding member you ask. While those may seem like vastly different stages in a company's life, it's more like splitting hairs as PayPal's IPO happened only a few months before it was acquired. Former PayPal CEO Peter Thiel estimates the PayPal Mafia to be around 220 people. The PayPal Mafia does not include 700 person customer service operation that was running in Omaha, Nebraska at the time.
"Basically, we were kicked out of our homeland and they burned down our temple."
David Sacks
That group of 220 people went on to create seven distinct "unicorn" companies. Unicorns are companies with a valuation of more than $1 billion. Two of those seven companies were valued at north of $10 billion. Those companies are:
1. Tesla Motors - $27.5 billion market cap
2. LinkedIn - $20.4 billion market cap
3. Palantir - $9 billion value (private company, estimate)
4. SpaceX - $7 billion value (private company, estimate)
5. Yelp - $5.26 billion market cap
6. YouTube - $1.65 billion acquisition
7. Yammer - $1.2 billion acquisition
For comparison's sake, the Google employee equivalent number would be around 20,000 or 30,000. Of those Google employees, the number of unicorn companies is harder to pinpoint. Thiel estimates that only one to three unicorn companies have been produced, with none close to a $10 billion valuation.
If Google's unicorn companies are estimated at two, that means that PayPal got 3.5 times the result with 1/100 of the people. In other words, PayPal's success rate relative to billion-dollar companies is 350x that of Google.
So, what was in the water at PayPal?
First steps
In late 1998, Max Levchin, Peter Thiel, and Luke Nosek founded Confinity (formerly FieldLink, Inc.). Thiel and Levchin met at Stanford University after Thiel gave a guest lecture and the two began to work together on the concept of a digital wallet. The company initially focused on mobile payments sent from Palm Pilots and other PDAs, but a Confinity employee eventually developed a way to send money transfers through email. That service became PayPal in 1999.
After gaining traction and taking its first few steps on the eBay platform, Confinity merged with Elon Musk's X.com, taking the parent company's name. Eventually, after proving its success as a product, the company adopted the name PayPal, Inc. in the summer of 2001.
Part of the IPO day festivities included Peter Thiel (right) taking on multiple PayPal employees in simultaneous chess matches. David Sacks (center) was the only one who beat him.
Image: David Sacks/PayPal
PayPal's early story was unique in many ways, but especially with respect to the people behind it.
"When we started PayPal, I remember one of the early conversations I had with Max [Levchin] was that I wanted to build a company where everybody would be really great friends and, no matter what happened with the company, the friendships would survive," former PayPal CEO Peter Thiel said. "In some ways that was very utopian. We didn't only hire our friends, but we did hire people that we thought we could become really good friends with."
Many of those friendships began at Stanford. Keith Rabois, David O. Sacks, Reid Hoffman, and Ken Howery all attended Stanford around the same time and most were subsequently recruited by Thiel to work for PayPal. Max Levchin recruited some developers and former classmates from the University of Illinois at Urbana-Champaign as well.
What's unique is that the majority of the early PayPal employees, and the PayPal Mafia in general, were all recruited through a friendship network and not by a headhunter. Sacks said that these people were "cut from the same cloth." This, he said, explained how they all had such a strong entrepreneurial focus to begin with.
Having a top shelf team didn't keep the PayPal team from running into problems, however. In fact, PayPal's story, and the success of its employees can, in part, be traced back to a certain set of problems and solutions that were faced by the team early on. Some of the main problems it faced included:
- Consumer adoption
- Fraud
- Regulatory problems
- Hostility from Visa and Mastercard
- Competition from eBay
"You could almost say that we saw every major problem that a startup would encounter, so people got experience dealing with all the types of you would run into," Thiel said. "They weren't easy to solve, but we figured out ways to solve them."
Those problems produced pressure, and the team had to respond to that pressure. Instead of allowing it to crush them, the PayPal team used the pressure as leverage to maintain what former executive vice president of business development Keith Rabois called "maniacal focus."
"We didn't only hire our friends, but we did hire people that we thought we could become really good friends with."
Peter Thiel
"It was a very intense environment, so there wasn't a lot of time and energy devoted to thinking about the future; as opposed to making sure our ship didn't sink, and defending the ship," Rabois said.
That pressure also produced diamonds. Sacks said that PayPal became the first to implement many features that are now commonly included in new startups:
1. One of the first viral apps: PayPal users were able to send money to someone without an account, forcing them to open an account to claim their money.
2. One of the first companies to use a platform strategy:Sacks said that PayPal was "essentially an app on top of eBay."
3. One of the first companies to offer an embeddable widget: Users could put the PayPal payment logo onto an eBay auction. Embeddable content later became key for YouTube and was a big part of how it grew.
4. One of the first companies to rely on an iterative product strategy: Features were released whenever they were finished, not at the mercy of product cycles.
PayPal also differentiated itself in its company culture. Rabois described the culture as "confrontational" and said that ideas for the company were allowed to rise through informed debate.
Outside management hires were rarely brought in. Instead, employees were promoted from within and often the leading employee of a department became the head of that department. For example, the designers would all report to the lead designer, who was thought of as the best designer. Job candidates with newly-acquired MBAs were often rejected for job positions because they didn't seem flexible enough to handle the iterations.
"I think, in many ways, PayPal was the template for the modern Silicon Valley startup," Sacks said.
For example, the infamous original Facebook developer motto was "move fast and break things," which shows that the concept of agility and an iterative product strategy have permeated startups in the Valley.
While many of these practices may now seem commonplace, it's important to remember how different a place Silicon Valley was roughly 15 years ago. Rabois said that he often interacts with people now who assume that the way Silicon Valley is now is the way that it has always been.
"The most important thing to highlight, because I think a lot of people who are newer or younger don't understand, is how absolutely removed from all of the traditional establishment we were back in the time," Rabois said. "We were a bunch of misfits. We were farther removed from the core of Silicon Valley as you could be -- ideologically, culturally, no connections whatsoever. And, what's interesting, is how, in a very short period of time, we went from extreme outliers to being the received official crowd in many ways."
PayPal was definitely a product of the dot-com bubble in some aspects. The company once boasted a burn rate of $10 million dollars a month. However, the way that the PayPal team conducted business and ran their organization was like nothing the Valley had seen before.
Doing things in their own way payed off for the PayPal team as they were able to file for an initial public offering (IPO) in late 2001, later completing the IPO in February 2002. According to PayPal's website the stock rose at more than 54% on the first day and closed at $20.09 a share.
After the IPO, eBay users wore PayPal shirts to an eBay user conference in June 2002 to show the support of PayPal integrating with eBay. One month later, in July 2002, PayPal agreed to sell to eBay and the deal was closed that year.
Summary: By manipulating Internet traffic to push American data outside of the country, the NSA can vacuum up vast amounts of US citizen data for intelligence purposes, a new report warns. By Zack Whittaker for Between the Lines |
Director of National Intelligence James Clapper with the President in 2011 (Image: Pete Souza/White House)
Secret loopholes exist that allow the National Security Agency to bypass Fourth Amendment protections to conduct massive domestic surveillance on US citizens, according to leading legal academics.
The research paper released Monday by academics at Harvard University and Boston University details how the US government can "conduct largely unrestrained surveillance on Americans by collecting their network traffic abroad," despite constitutional protections against warrantless searches.
One of the paper's authors, Axel Arnbak at Harvard University's Berkman Center for Internet & Society, told CNET that US surveillance laws presume Internet traffic is non-American when it is collected from overseas.
"The loopholes in current surveillance laws and today's Internet technology may leave American communications as vulnerable to surveillance, and as unprotected as the internet traffic of foreigners," Arnbak said.
Although Americans are afforded constitutional protections against the US government from unwarranted searches of their emails, documents, social networking data, and other cloud-stored data while it's stored or in-transit on US soil, the researchers suggest these protections do not exist when American data leaves the country.
By manipulating Internet traffic to push American data outside of the country, the NSA can vacuum up vast amounts of US citizen data for intelligence purposes, thus "circumventing constitutional and statutory safeguards seeking to protect the privacy of Americans," they warned.
The academic paper lands just over a year since the Edward Snowden revelations first came to light, outlining the massive scope of U.S. government surveillance -- under the justification of preventing terrorism. Although the classified programs that make up the NSA's data acquisition arsenal have only recently been disclosed over the past year, the laws have been under close scrutiny for years. The paper only adds fuel to the fire of the intelligence agency's potential spying capabilities, which have been heavily criticized by civil liberties and privacy groups alike.
"The fix has to come from the law -- the same laws that apply to Internet traffic collected domestically should also apply to traffic that is collected abroad," the paper's co-author Sharon Goldberg at Boston University's Computer Science Department, said.
While the researchers do not speculate as to whether or not these loopholes are being actively exploited, aiming solely to broaden the understanding of the current legal framework as disclosed, the current legislation as it stands "opens the door" for unrestrained spying capabilities.
Patrick Toomey, staff attorney at the American Civil Liberties Union's National Security Project, said: "Today, Americans' communications increasingly travel the globe -- and privacy protections must reliably follow. This report raises key questions about whether our current legal regime meets that standard, or whether it allows the NSA to vacuum up Americans' private data simply by moving its operations offshore."
"The loopholes in current surveillance laws and today's Internet technology may leave U.S. communications as vulnerable to surveillance, and as unprotected as the internet traffic of foreigners."
He added that there should be a uniform set of laws that protect Americans' privacy regardless of where they are in the world, and that Congressional oversight of all rules governing surveillance is needed for comprehensive reforms.
Since the Sept. 11 terrorist attacks in New York, the subsequent introduction of the Patriot Act allowed certain kinds of data to be collected for the prevention of terrorism -- so-called "metadata," such as the time and date of phone calls and emails sent, including phone numbers and email addresses themselves. But the contents of those phone calls or emails require a warrant.
The classified documents leaked by Snowden showed that while the public laws have been in effect for years or even decades, the US government has used secret and classified interpretations of these laws for wider intelligence gathering outside the statute's text.
The Obama administration previously said there had been Congressional and Judicial oversight of these surveillance laws -- notably Section 215 of the Patriot Act, which authorized the collection of Americans' phone records; and Section 702 of the Foreign Intelligence Surveillance Act (FISA), which authorized the controversial PRISM program, to access non-US residents' emails, social networking, and cloud-stored data.
But the researchers say that the lesser-known Executive Order (EO) 12333, which remains solely the domain of the Executive Branch -- along with USSID 18, designed to regulate the collection of American's data from surveillance conducted on foreign soil -- can be used as a legal basis for vast and near-unrestricted domestic surveillance on Americans.
The legal provisions offered under EO 12333, which the researchers say "explicitly allows for intentional targeting of US persons" for surveillance purposes when FISA protections do not apply, was the basis of the authority that allowed the NSA to tap into the fiber cables that connected Google and Yahoo's overseas to US datacenters. The program was authorized because the collection was carried out overseas and not on US soil -- including attacking a US-based company that has a physical presence in other jurisdictions, the researchers say.
An estimated 180 million user records, regardless of citizenship, were collected from Google and Yahoo datacenters each month, according to the leaked documents.
The paper also said surveillance can also be carried out across the wider Internet by routing network traffic overseas so it no longer falls within the protection of the Fourth Amendment.
The report highlights a fundamental yet widely known issue with the Internet. Data takes the quickest route possible rather than staying solely within a country's borders. Data between two US servers located within the US can still sometimes be routed outside of the US.
Although this is normal, the researchers warn data can be deliberately routed abroad by manipulating the Internet's core protocols -- notably the Border Gateway Protocol (BGP), which determines how Internet traffic is routed between individual networks; and the Domain Name Service (DNS), which converts website addresses to numerical network addresses -- Internet traffic can be pushed outside of the United States.
By deliberately pushing Internet traffic outside of the US, the NSA would have enough time to capture the data while it is outside the reach of constitutional protection.
An NSA spokesperson denied that either EO 12333 or USSID 18 "authorizes targeting of US persons for electronic surveillance by routing their communications outside of the US.," in an emailed statement.
"Absent limited exception (for example, in an emergency), the Foreign Intelligence Surveillance Act requires that we get a court order to target any US person anywhere in the world for electronic surveillance. In order to get such an order, we have to establish, to the satisfaction of a federal judge, probable cause to believe that the US person is an agent of a foreign power," the spokesperson added.
The researchers rebuffed the NSA's statement in an email: "We argue that these loopholes exist when surveillance is conducted abroad and when the authorities don't 'intentionally target a 'US person'. There are several situations in which you don't 'target a US person', but Internet traffic of many Americans can in fact be affected."
"We cannot tell whether these loopholes are exploited on a large scale, but operation MUSCULAR seems to find its legal and technical basis in them."
Mark M. Jaycox, a legislative analyst at the Electronic Frontier Foundation, said: "If you are intentionally spying on a US person, the government must go to the FISA Court," he said. "That's the way the law is supposed to operate."
Describing how the NSA says it never "intentionally collects" U.S. information, he warned the foreign data dragnet would inevitably include U.S. data.
"The NSA is an intelligence organization -- it's going to be targeting foreigners. But it's the way that it's targeting millions of foreigners, and millions of foreign communications that will eventually pick up U.S. persons' data and information. And once that data has been collected, it must be destroyed."
"It's a question the NSA can't reconcile, so they lean heavily on saying they never 'intentionally collect' the U.S. person information," he said.
A recent primer on EO 12333 written by the privacy group said the order "mandates rules for spying... on anyone within the United States." The group also notes because the order remains inside the Executive Branch, the Obama administration could "repeal or modify" the order immediately.
"This report raises key questions about whether our current legal regime meets that standard, or whether it allows the NSA to vacuum up Americans' private data simply by moving its operations offshore."
The American Civil Liberties Union said in a post on its website that the US government interprets USSID 18 to "permit it to sweep up Americans' international communications without any court order and with little oversight."
The privacy group has also filed a Freedom of Information lawsuit with a federal court in New York, questioning "whether it appropriately accommodates the constitutional rights of American citizens and residents whose communications are intercepted in the course of that surveillance."
Although there is no direct evidence yet to suggest the NSA has exploited this loophole, network monitoring firm Renesys observed two "route hijacking" events in June and November 2013 that led Internet traffic to be invisibly routed through Belarus and Iceland on separate occasions. These events are almost unnoticeable to the ordinary Internet user, but the side effect is that data may be readable by foreign governments travelling through their country's infrastructure. It also allows the NSA to capture that data by treating it as foreign data.
These legal and technical loopholes can allow "largely-unrestrained surveillance on Americans communications," the researchers wrote.
The NSA, whose job it is to produce intelligence from overseas targets, said for the first time in August 2013 that it derives much of its "foundational authority" for its operations from EO 12333. Recent Snowden disclosures shed new light on understanding the capabilities of the executive order.
It was also recently revealed that Snowden himself questioned the legal authority of EO 12333, according to one declassified email exchange released by Director of National Intelligence James Clapper.
According to John Schindler, a former NSA chief analyst, speaking to The Washington Post in October, the sole aim of the NSA's "platoon" of lawyers' is to figure out "how to stay within the law and maximize collection by exploiting every loophole."
"It's fair to say the rules are less restrictive under [EO] 12333 than they are under FISA," he added.
FISA expanded the NSA's powers allowing it to obtain foreign intelligence -- including economic and political surveillance of foreign governments, companies, news outlets, and citizens. But the amended law in 2008 also restricted what can be collected on US citizens.
The so-called "targeting" and "minimization" procedures, which remain classified but were reported as a result of the Snowden leaks, were introduced to ensure any data inadvertently collected on US citizens from overseas would not be used in investigations. These were later criticized following subsequent leaks which suggested the rules on collecting US persons' data were more relaxed than the statute led the public to believe.
US intelligence agencies can only do so much with US data, therefore they have a "strong incentive to conduct surveillance abroad," the researchers say, which includes individuals and companies, because legal protections under the Fourth Amendment and FISA do not apply outside US territory.
"Programs under EO 12333 may collect startling amounts of sensitive data on both foreigners and Americans," the paper summarizes, because it presumes by default that "targets and communications are non-Americans, precisely because their operations are conducted abroad."
Zack Whittaker writes for ZDNet, CNET, and CBS News. He is based in New York City.
It’s 2 a.m. at the La Factoria bar in Puerto Rico’s Old San Juan, a hipster joint with a sagging couch, tile floors, and Christmas lights that wouldn’t be out of place in Brooklyn’s Williamsburg. While Get Lucky plays, tipsy couples slink out the doors onto the colonial city’s cobblestone streets and into this warm April night. At the bar, a 28-year-old hedge fund trader—the type of person who posts his SAT results on his LinkedIn page—is ranting about the tax code. He’s obsessed with it, complaining that the U.S. is the only major country taxing citizens on their worldwide income, no matter where they reside. That’s why he moved here.
Struggling to emerge from an almost decadelong economic slump, the Puerto Rican government signed a law 18 months ago that creates a tax haven for U.S. citizens. If they live on the island for at least 183 days a year, they pay minimal or no taxes, and unlike with a move to Singapore or Bermuda, Americans don’t have to turn in their passports. (Puerto Ricans are U.S. citizens but cannot vote in federal elections.) About 200 traders, private equity moguls, and entrepreneurs have already moved or committed to moving, according to Puerto Rico’s Department of Economic Development and Commerce, and billionaire John Paulson is spearheading a drive to entice others to join them.
Photograph by Harry Gould Harvey IVPaulson says the island will become “the Singapore of the Caribbean”
Schiff, who runs Westport (Conn.)-based brokerage Euro Pacific Capital, relocated his $900 million asset management arm from Newport Beach, Calif., to San Juan in 2013. He plans to move to the island within the next several years. (For now, a son from a first marriage is keeping him in Connecticut.)
Under Puerto Rico’s new rules, an individual who moves to the island pays no local or federal capital gains tax (capital gains are charged based on your tax home rather than where you earn them) and no local taxes on dividend or interest income for 20 years. Even someone working for a mainland company who is a resident of the island would be exempt from paying U.S. federal taxes on his salary. Moving to the island won’t kill all taxes: U.S. citizens still have to pay federal taxes on dividend or interest income from stateside companies. But the savings can be extraordinary, especially if considering the compounding effects, says Alex Daley, chief technology investment strategist at Casey Research, a firm that publishes reports for investors. Late last year, Daley moved from Stowe, Vt., to Palmas del Mar, about 45 minutes from San Juan. Say you put $100,000 in a 5 percent certificate of deposit that compounds annually and reinvest the proceeds every year. If you lived in Puerto Rico, you’d earn $165,000 in interest over two decades, Daley calculates. If you lived in California, your state and federal taxes could reduce that to as little as $64,000.
Paulson, who made $15 billion for himself and his investors betting against U.S. mortgages during the financial crisis, helped start the wave of transplants last year, when he considered moving to the island. Paulson cited excessive media attention as his reason for staying put in the States. The press reports had an unintended consequence, though: Word quickly spread to other wealthy individuals that Puerto Rico wanted them.
The new leader of the House Republicans, California Representative Kevin McCarthy, is one of dozens of members of Congress with a small business background (he once used $5,000 in lottery winnings to open a deli in Bakersfield). That representation hasn’t satisfied Main Street business owners: Only 4 percent said Washington served them well in a new poll, and 35 percent said it served them “moderately well.”
The country as a whole gives Congress a 16 percent approval rating right now, according to Gallup. It’s hard to compare questions from two different surveys. But it’s clear that small business owners have a dim view of their elected officials, according to the survey published today by the National Small Business Association.
There are about 28 million small businesses in the U.S., and according to the NSBA survey, their owners all vote. Or, almost all of the people the NSBA surveyed: 95 percent of the 1,800 business owners in the poll said they pull a lever in national elections. Small business owners are also good for campaign cash: 63 percent of respondents said they made donations to a political candidate.
No surprise, then, that candidates such as McCarthy play up their small business pedigrees. In 2010 alone, Americans sent 33 small business owners and entrepreneurs to Congress—a count that excluded those with professional practices such as doctors and lawyers, as well as those who sold or left their businesses more than five years before their election. Small business is second only to the military in institutions that most Americans trust, according to Gallup. (Congress’s rating on that front: 7 percent have a lot of confidence in it.)
The NSBA survey, conducted online in May with a sample that included both members and non-members, found Republicans were less satisfied than Democrats, but neither group gave government high marks.
That’s likely because Beltway gridlock has prevented Congress from enacting tax reform and reining in health-care costs, write NSBA Chair Jeff Van Winkle and CEO Todd McCracken in an introduction to the survey. “These actions are far more important than a hat-tip to small business during a stump-speech,” they write. Or, for that matter, more important than any elected official’s past experience on Main Street.
