[ricpic]

The greatest need of small businesses and especially start up ventures is capital. The source of that capital is "the rich." The thing that discourages the rich from providing start up or venture capital is the high capital gains tax which discourages them from taking what is after all a gamble on someone elses idea and industry. Let's not forget that hundreds if not thousands of ventures that started in someone's garage ended up as corporations employing tens of thousands of workers. It's all well and good to sound the class warfare trumpet. But it's only when you make it worthwhile for the rich to gamble their surplus capital that you have a growing economy. Cut the capital gains tax to zero and watch the economy explode!

[FITZ]

The greatest need of small businesses and especially start up ventures is capital. The source of that capital is "the rich."

No. Just try asking Bill Gates to give you some money. The source of that capital is the banks ---where other middle class people have invested a portion of their left-over pay.

[Regulator]

The source of that capital is "the rich."

Not really. Most venture capital in this country comes from the major pension funds, which see speculative ventures as a small part of their immense portfolios (like about 1%). The rest goes into things like municipal bonds and high grade corporate debt. By the way, some of the biggest pension funds that do this are the union funds. You'd be surprised what the Teamsters own.

The point about corporate debt is worth talking about. That's one of the largest sources of risk capital for the corporations. Their operating funds usually are from short term notes through the big merchant banks. And where do they get their money? Why, from Mr. Greenspan and his buddies over at the Fed. And they don't need a lot of deposits to do it (that's why it's called "fractional reserve banking").

So Fitz is right - a lot of the ordinary capital comes from banks. But a lot comes from giant pension funds, and in the last 15 years, from diversified stock funds supplied with money from ordinary Americans.

As far as corporations that started in a garage, they are far outnumbered by the ones that were started by an infusion of investment capital from a bank or venture fund that was investing money from all over the map. Like, for example, Intel when Arthur Rock sported them the startup capital. And as far as "the Rich" being motivated to invest, the Angel capital network is quite small and also insignificant. There aren't any Angels out there the size of CALPERS.

But there is one bottom line. Unless you're one of the gang, you can forget about access to this capital. Having done many presentations of my own up at Sand Hill Road, I can safely tell you that you only get to do that if you talk to the right people. If not...well, they might take your idea (they think Non-Disclosure Agreements are a joke; whattya gonna do, sue them?) and just give it to someone else. It's big bad world, they're the sharks...and you look like food to them.

Keep thinking that the whole game ain't rigged against ya. That way you won't end up bitter.

But that doesn't mean it isn't true.

[Army Air Corps]

Also, I have seen news stories that indicate that we are on the receiving end of outsourcing to a high degree. Many european and asian companies are locating and relocating factories in the US. Some companies, like Kyocera-Mita, also require that their US factories use parts from US suppliers.