The title of today’s post is the mantra of the founding director of the entrepreneurship program at Miami University.   We will be honoring him on May 15 when the program is re-branded as the John W. Altman Institute for Entrepreneurship in recognition of his contribution of time, talent and treasure to educate future generations about the risks, rewards and challenges of starting and growing new ventures.

For John, the concept of “skin in the game” is the glue that unites diverse interests to pursue a common goal.  In business, it means that everyone associated with an enterprise from the founders on down have a personal stake in its success.  The most common manifestation of this tenet for start-ups, when cash is at a premium, is when employees are offered a share of the company in lieu of salary or when contractors are offered a percentage of future revenue rather than a fixed price for their work.

Several current events over the past week led me to contemplate whether “skin in the game” might be the defining principle which helps Americans move past the divisions which characterize politics and culture today.  It may also provide a road map which reconciles the tension between those who see pure socialism as an inherent threat to a capitalist-based economy and those who view pure capitalism as antithetical to the public welfare.  Consider the following examples.

Tuition-free college for all is gaining support among the Democratic base and, to a lesser extent, independents.  That is understandable when one sees how the cost of an undergraduate education has grown at 2.5 times the rate of general inflation over the past 17 years. (Source: EdVisors)  As a result, college debt now exceeds $1.3 trillion affecting approximately 44 million Americans with an average outstanding loan of over $37,000.  At the same time students are told a college education is essential to economic survival as the workforce becomes more dependent on brains than brawn.

Clearly, affordable higher education regardless of economic status is a desirable goal.  But that is different from “free.”  Take the most extreme case in the news, Lori Loughlin and her daughter Olivia Jade.  Ms. Jade, by virtue of having been born into a wealthy family, had the equivalent of a “tuition-free” education.  I doubt she ever had to pay for her own room and board or books.  And she would have had no debt upon graduation from the University of Southern California. And how did she respond to this totally subsidized undergraduate education?  By spending her time building her brand and reputation as a celebrity “influencer” on social media.  In response to one follower’s question about her college experience, Jade replied, “I don’t know how much of school I’m gonna attend…But I do want the experience of like game days, partying…I don’t really care about school, as you guys all know.”  If only her followers did not really care about her.

Rather than free tuition, why not create a subsidy which still requires every individual to invest some of their own resources?  Government does that with the Section 8 housing program.  Residents pay 30 percent of their monthly income while the HUD subsidy covers the rest.  Occupants of Section 8 housing have “skin in the game.”  A similar approach where families would pay even a minimal percentage of their monthly household income would ensure students had a stake in their post-secondary educations.

The same principle could apply to national security.  According to FiveThirtyEight.com, only 0.4 percent of Americans presently serve in the military.  I know most of us pay taxes to support the armed services, but a payroll deduction and being in harm’s way are two entirely different things.  It is much like the role of a chicken and a pig in the making of a bacon omelet.  The chicken participates.  The pig literally has “skin in the game.”  I oppose a universal military draft for several reasons, but mandatory national service is one way of leveling the playing field.

And finally, how can anyone not question the fairness of companies such as Amazon or Netflix not paying any income taxes for 2018?  According to CBS News, it was even worse.  These tech giants received tax rebates totaling $4.3 billion.  Meanwhile, the American Society of Civil Engineers reports the U.S. needs to spend in excess of $2 trillion over the next 10 years just to bring roads and bridges up to standard.  Shouldn’t the 60 major domestic companies which paid no taxes for 2018 have some “skin in THIS game?”

Remember how often we hear government needs to run more like a business?  What if government ran more like a start-up?  There are several proposals for an infrastructure bank capitalized through corporate equity rather than taxes similar to the equity versus salary approach for the employees of new ventures.  Every U.S. corporation would contribute a small percentage (proposals range from one to three percent) of non-voting shares to the infrastructure bank.  Such an arrangement would have a dual effect.  Business would want to know they are getting their money’s worth and the public infrastructure bank would have a vested interest in the success of the companies which make up its broad port folio.

As suggested above,  “skin in the game” can be an overarching philosophy which supports a balanced approach to many of the issues which currently divide us.  I am sure, with a little creativity, the ones presented above are just the beginning.  Just ask John Altman.

For what it’s worth.
Dr. ESP