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262 CONCLUSION: THE ENTREPRENEURIAL SOCIETY

be considered too circuitous a way to escape the dilemma of modern
society: the conflict between the need for capital formation at a high rate
and the popular condemnation of interest and dividends as “unearned
income” and “capitalist,” if not as sinful and wicked. But one way or
another any country that wants to remain competitive in an entrepre-
neurial era will have to develop tax policies which do what the Japanese
do by means of semi-official hypocrisy: encourage capital formation.

Just as important as tax and fiscal policies that encourage entre-
preneurship—or at least do not penalize it—is protection of the new
venture against the growing burden of governmental regulations,
restrictions, reports, and paperwork. My own prescription, though I
have no illusion of its ever being accepted, would be to allow the
new venture, whether an independent enterprise or part of an exist-
ing one, to charge the government for the costs of regulations,
reports, and paperwork that exceed a certain proportion (say 5 per-
cent) of the new venture’s gross revenues. This would be particu-
larly helpful to new ventures in the public-service sector—for
example, a freestanding clinic for ambulatory surgery. In developed
countries public-service institutions are even more heavily bur-
dened by governmental red tape, and even more loaded down with
doing chores for the government than are businesses. And they are
even less able, as a rule, to shoulder the burden whether in money
or in people.
Such a policy, by the way, would be the best—perhaps the
only—remedy for that dangerous and insidious disease of devel-
oped countries: the steady growth in the invisible cost of govern-
ment. It is a real cost in money and, even more, in capable people,
their time, and their efforts. The cost is invisible, however, since it
does not show in governmental budgets but is hidden in the
accounts of the physician whose nurse spends half her time filling
out governmental forms and reports, in the budget of the university
where sixteen high-level administrators work on “compliance” with
governmental mandates and regulations, or in the profit-and-loss
statement of the small business nineteen of whose 275 employees,
while being paid by the company, actually work as tax collectors for
the government, deducting taxes and Social Security contributions
from the pay of their fellow workers, collecting tax-identification
numbers of suppliers and customers and reporting them to the gov-
ernment, or, as in Europe, collecting value-added-tax (VAT).