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Bob Meyer

Beyond The Limits Of Cash or Credit

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Scrappy Entrepreneurs Seek Capital Wherever It Can Be Found!

A few years ago a prominent New Jersey research firm issued a paper by David P. Goldman which took an ambitious new look at the economics of entrepreneurship. Right up front he pointed out one failure of conventional economic analysis � that of addressing the real world in which business people live.

According to Goldman, conventional economics diminishes the role of risk-taking entrepreneurs who are the key to creating economic growth, betting that their innovative idea or product will yield outside gains. In the language of conventional economics, these entrepreneurs are willing to accept the �uninsurable risk� that makes the established securities (stock markets) skittish.

Goldman concluded in his paper that mainstream economists put too much emphasis on the role of savings in their policy prescriptions. Savings are important to the relatively established companies that draw on organized capital markets, he argues, but scrappy entrepreneurs seek out capital wherever it can be found.

Some entrepreneurs, for example, use barter effectively in the form of trade credits extended by suppliers, or by persuading key employees to take uncertain equity stakes in lieu of salary. Yet others finance their start-ups by mortgaging their homes. In all of these endeavors they are drawing on untapped sources of capital.

Reinforcing Goldman�s thinking is the fact that the commercial barter industry continues to grow and prosper � largely because of these scrappy entrepreneurs � with billions-of-dollars in products and services traded worldwide annually.

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