Building businesses and creating jobs in America during the twentieth century was like taking a test with an answer key. We had it all — strong capital markets, rich natural resources, unparalleled higher education, and geographic separation from two devastating wars. It was our not-so-secret formula for success. The problem with that formula is that it’s gone.

Today’s America will need to find a different formula for competitiveness and job creation. It’s our belief that the best path to sustainable competitive advantage will come from lowering the risk to entrepreneurship and encouraging its pursuit — not from reducing corporate tax rates and providing subsidies to the firms that already survived. We simply can’t legislate in a way that turns large, low-growth, earnings-driven businesses into job creators — tomorrow’s job creators will be found in the startups of today.

The only path to sustainable job creation in the States is to facilitate the formation of new, high-potential startups.

Entrepreneurs still have many reasons to build businesses here. The United States has a massive consumer population and many of the world’s most specialized industrial clusters, but those advantages are diminishing. To offset job losses, we must do better.

Policymakers have historically used subsidies — in the form of deductions, grants, and loans — as their tool of choice to encourage business creation. Although well-intentioned, these programs often have the unintended consequences of benefiting the wrong businesses, favoring sub-optimal technology, and creating market distortion.

More importantly, these sorts of market subsidies only increase the value of a firm that survives. They do not decrease the cost to the entrepreneur if his venture fails. It’s a bit like piling money at the end of an unstable tunnel; enticing to a few, but many people simply won’t enter for fear of collapse.

This collapsing-tunnel problem is particularly important today, as the Great Recession breeds a generation of risk-averse Americans. Because about 85% of startups fail within four years, increasing the potential returns to entrepreneurship to these risk-averse individuals seems like the wrong incentive.

So what does the solution look like? There are many variations, but they all focus on three basic goals:

1. Reduce the upfront costs of starting a high-potential business.

Starting high-potential businesses is expensive. Incorporation, patent, and licensing fees are just the beginning. Businesses seeking to scale need space, permits, access to capital, and more.

Instead of manipulating the tax code to encourage startups once they are profitable, we should do everything we can to remove these early costs in the system. Try envisioning a system where non-profits or government entities guided high-potential entrepreneurs through these legal, accounting, and licensing hurdles for high-potential businesses that meet certain qualifications, thereby minimizing those costs. It would greatly reduce the cost and risk of early failure.

2. Provide resources along the way.

Succeeding as an early-stage entrepreneur is still very much about who you know. While it’s easy to get meetings with VCs, clients, and advisors if an entrepreneur has a degree from Harvard, MIT, or Stanford, there are great ideas everywhere. We should enable anyone with a good idea to secure these opportunities.

Right now incubators such as Y Combinator and TechStars are performing this task for the best existing entrepreneurs. But imagine the impact non-profit or government facilities available to everyone could have by providing access to business plans, pro-forma templates, industry reports, and good, old-fashioned mentorship. Starting a complex business could seem accessible.

3. Lower the cost of failure.

Programs such as Steve Case‘s Startup America are attempting to complete this task by making entrepreneurship a profession. The belief is, if programs like this can reduce the negative connotations associated with entrepreneurship, it might be easier for unsuccessful founders to transition to the private sector.

But increasing public awareness of entrepreneurial skills isn’t all we can do. We should also be instituting programs in the public and private sectors that encourage individuals to start businesses. If entrepreneurs meet certain milestones, but their business still fails, they should be guaranteed placement in firms in need of entrepreneurial leadership.

Picture something like a rotational program for innovation. Entrepreneurs in the Clean Energy sector would make invaluable assets to the Department of Energy. Entrepreneurs building businesses in telecommunications could predict the next wave of disruption for the FCC. And Microsoft may have avoided disruption from Android and iOS if it had been bringing on entrepreneurs from the mobile space.

We need to find a way to get our best and brightest to consider entrepreneurship as a viable career option. It needs to be de-risked to the point that everyone can see it as a step along a path — not a leap of faith.

Would a program like this be expensive? Sure. Would it be effective? Definitely. Would it be far cheaper than our current policies addressing this issue? Absolutely. In the best-case scenario, it would create jobs by facilitating the growth of large new businesses. In the worst-case scenario, a program like this could get talented people into government and could revitalize stodgy, slow-growth firms.

There is one thing that’s certain: we can’t simply pile on more money at the end of the long, unstable, tunnel of entrepreneurship. What we need to be doing is making the tunnel structurally sound.