G.I. Bill–for Entepreneurship

I want to highlight a bill recently introduced in Congress designed to promote entrepreneurship among military veterans.

The bill would enable veterans to use the educational benefits earned under the existing GI Bills to start a new business.

I like the bill for several reasons.

First, the original GI Bills meant to help veterans transition back to civilian life and to succeed as civilians, but college education is no longer the clear path to success for everyone in today’s economy. The numbers are almost depressing.  Nearly 14% of college graduates from 2006-2010 can’t find full-time work. According to the comments posted on We Are the 99 Percent, many of the graduates who do have jobs can’t make ends meet and have little job security. Those writing at Balkinization, generally law professors, have discussed not college but legal education. The writers have noted the same problems–it’s expensive, many students land loans not legal jobs, and employment numbers are low (and lower than law schools suggest, as Brian Tamanaha has often noted).

Peter Thiel, former CEO of Paypal and Facebook’s first outside investor, has called our education system a “bubble” and he pays (some exceptional) young people essentially to drop out of college and do something else meaningful.

Second, at the same time, entrepreneurship and new businesses tend to account for much of the nation’s job growth and real economic growth. Successful new businesses benefit the tax base, the local community, and the nation generally. Other countries, notably Israel, have benefited from veterans applying the skills they learned in the military to new ventures. (See Start-Up Nation.) We can learn from them. And this bill will not just fund new businesses, it could importantly foster a culture of entrepreneurship nationally.

Third, I think veterans should be able to choose how to use their benefits. It’s not an additional benefit, costing the government extra. Constraining the use of a benefit sometimes makes sense (think food stamps rather than cash, perhaps for cigarettes). But a veteran should be allowed to determine whether to risk an earned benefit on starting a new business or to risk it on a college education. It’s a complex decision, involving the value of being in the job market now, and the risk aversion of the veteran. If we trust veterans with defending our country, we might trust them to make decisions about their civilian futures with benefits they have earned.

Finally, starting a business provides another kind of education, and one that people need. Americans aren’t taught much about managing our money, investing, creating businesses, or marketing. We have classes on history and physics from an early age, but little on managing money or creating a business. (After having received no education in high school about managing money, we’re then given credit cards and college loans.)  I think a veteran can “fall back” on the skills and contacts they’ve learned in a failed business (which are substantial) as much as they can fall back on many college educations.

The bill imposes some risks, of course. But there are always risks; the question is whether the risk is worth the reward. Everyone agrees we can’t just hand out money to every veteran business idea. And training and non-monetary support should complement the funds. And many businesses fail, and veterans should understand the risks. But the rewards seem to outweigh these risks.

The bill is called the Veterans Entrepreneurial Transition (VET) Act of 2011 and is available here. Sponsors are Jeff Fortenberry (R) and Bob Filner (D). The vision comes from a tiny group called the Patriot Enterprise Project.

Several veterans groups (and other groups) support the bill, several don’t. I’m open to being convinced that the bill is a bad idea, and am curious what others think. But my initial reaction is that our government should pursue this bill.

At the least, I commend the sponsors for starting a dialogue and introducing a creative and practical bill–one designed to address many issues, to directly affect the lives of veterans, and to promote entrepreneurship across the nation.

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