The Freedom to Fail: Market Access as the Path to Overcoming Poverty and Inequality
UVA Law Faculty Affiliations
There are two views of markets. In one view of markets, held perhaps most famously by my former colleague Senator Warren, markets are a place where people are trapped, manipulated, and made worse off. (1) If they borrow money, they'll probably borrow too much that they won't be able to repay, and then they'll be out on the street. If they were allowed to choose their own school in a market system, they'd make the wrong choice, and so we have to make that choice for them. The other view of markets is that markets offer a chance. All real market choices involve risks. Sometimes people will fail, but sometimes they will win. They build businesses, their kids get better educations, and they escape poverty and move up the ladder economically.
I am an economist, a lawyer, and a law professor, so I'll address both law and economics. Economics has taught us that the ability to access credit markets is an absolute prerequisite to the formation of new businesses. (2) Most new jobs come from new small businesses. (3) For example, from 1980 to 2012--over a 30-year period--average net employment growth in big businesses hovered around zero. (4) Net employment growth was entirely in smaller and newer businesses. (5)