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Posted: April 11, 2010 12:00 a.m.

Grow the carrots

It's spring break week for my children, and this year we are joining others who are staycationing. We spent Monday morning at the Georgia Aquarium, and Tuesday we went to the Atlanta Zoo, where I learned something new and was reminded of something I already knew.

What was new? Pandas bleat to communicate.

The sound is similar to the noise goats or sheep make. When I first heard the soft, faint bleating I did not connect them to the 270-pound giant panda Yang Yang. Heather, a giant panda keeper, had been giving treats to Yang Yang, but she stopped to talk to us.

Evidently, Yang Yang wanted more treats. "I can't give him treats now," she said. "We reward positive behavior and ignore bad. Reinforcing positive behavior works best when training animals." The bleating was Yang Yang's way of letting us know that he was still around and ready for a treat.

This reminded me of what I already knew: Positive reinforcement works.

It made me wonder: Are we positively reinforcing the behavior we want in our economy?

What do we want? Jobs. Who creates jobs?

"Fast-growing young firms account for a disproportionate share of net job creation," according to Robert Litan, vice president of research and policy at the Kauffman Foundation. Who creates fast-growing young firms? Entrepreneurs.

So - pardon the redundancy - entrepreneurs create jobs.

In this week's New York Times article "Even Among Animals: Leaders, Followers and Schmoozers," Natalie Angier notes, "The only reliable predictor of goose leadership was boldness - the willingness to approach a new item like a scrap of carpet. ... The boldest birds also proved the most adept at finding new food patches."

Sound familiar? Those entrepreneurs who are willing to venture where no goose has gone before get the golden egg.

"Scientists suspect that small inherited predispositions are either enhanced or suppressed by experience," Angier wrote, "and computer models show that tiny discrepancies at the start can become enormous over time, through feedback loopings of positive reinforcement."

This might help explain where entrepreneurs come from. Those who took risks and were positively rewarded continue to take risks and reap more positive rewards.

Again, positive feedback works. The positive feedback entrepreneurs are working toward: financial reward, status and, in many cases, fulfilling what they believe to be of their life mission.

Two primary incentives can affect behavior: the carrot and the stick, positive and negative reinforcement.

In its report "High-Growth Firms and the Future of the American Economy," the Kaufmann Foundation lays out its belief that getting rid of the stick is as important as offering the carrot.

"In terms of the effect on future high-growth companies, even more important than taxation would seem to be the regulatory burden borne by firms. ... Regulatory burdens are easier to bear for larger, more established companies than for smaller and younger companies. Policies that sometimes are painted as ‘business-friendly' may, in fact, be market-unfriendly if they favor incumbents and discourage competition."

In its report "Jobs for America," the Milken Institute, an independent think tank, focuses on increasing the size of the carrot and concludes three changes could have an enormous impact on job creation by increasing positive reinforcements for entrepreneurs. They are: "reducing U.S. corporate income tax rates to the current average of OECD countries (from the current 35 percent to 22 percent) ... increasing the R&D tax credit by 25 percent" and "modernizing export controls on commercially available technology products," so U.S. firms could compete with firms from other countries.

All three changes would allow entrepreneurs and rapidly growing companies to increase their reward for being in business.

The Milken Institute estimates that these three changes combined would create about 2.8 million jobs over the next decade.

Last week, in "Start Ups, Not Bailouts," New York Times op-ed columnist Thomas Friedman provided us a glimpse into his weltanschauung. "We've got to get more Americans working again ... to generate the rising incomes and wealth we need to pay for existing entitlements, as well as all the new investments we'll need to make," he wrote. In his view of the world, more jobs are needed to pay for others' entitlements and needs -- not to provide benefit and positive reinforcement to those who are working.

Oh, my: a world where you work hard to give someone else a bigger carrot. Talk about a zoo.

We need to keep in mind that if we shrink the carrots and grow the sticks, the entrepreneurs might just give up and go away. Instead, let's grow the carrots and shrink the sticks.

Jackie Gingrich Cushman founded and is chairman of the board of the Learning Makes a Difference Foundation.


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