I haven't read your whole essay, but iirc 2005 was the year the bush tax cuts were passed. In 2017, further tax cuts were passed. If anything, that should stimulate risk-taking, but seems not to.
In an efficient market, risk and return are proportionate. Which means if you decrease potential returns, people will take less risk. I wrote this in 2005, but it seems particularly topical now: http://paulgraham.com/inequality.html
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Tax cuts don't directly affect startup risk calculus as strongly as they empower rent-seekers & gatekeepers. As Paul notes, driving transparency is necessary to get the right mix here
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Part of this is barriers to exit. If I'm in the US and want to start a startup but live in Florida, I'll probably move to somewhere in the US that's better. If I live in Sweden, the choice is much different.
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How much do you believe in efficient market hypothesis as a thing that's still relevant?
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Startup folks don't tend to believe in strong EMH, because they're all about finding those bills on the sidewalk (which are clearly there). There's a big difference between believing that incentives matter and believing that real markets are totally efficient.
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In an efficient market.
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"Incentives matter" doesn't require an efficient market to be true. Yes, the relationship is perfect in an efficient market, but it doesn't disappear just because the market is not perfectly efficient.
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Also, if entrepreneurs see recurring government intervention they are less likely to take the risk and create something regardless of the actual financial cost of the intervention. Regulatory uncertainty has a cost in and of itself.
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