You don’t need an advanced degree in economics to know that the America economy is in difficulty. Just ask your local taxi cab driver or beauty shop owner or software developer. They and 26 million other Americans have much in common, not least of which is that they are all entrepreneurs, small business owners trying to compete, to innovate, and to survive.

Entrepreneurs are forgotten Americans, forgotten by much of Wall Street if not by their neighbors on Broadway, Queens Boulevard, and Flatbush Avenue. Chief executive officers of investment banks all too often focus on big government solutions to help big companies, ignoring the small entrepreneurs of America.

Earlier this month the federal government intervened in the financial services sector to arrange the sale of Bear Stearns. That is well and good and almost certainly better than the alternative of doing nothing and risking a chain reaction that might have taken down other institutions. But it does not help entrepreneurs. Do entrepreneurs need help from Washington in the present troubled economy?

Entrepreneurs usually benefit from benign neglect. The more government does, the less well off are entrepreneurs. Entrepreneurs need readily-available and affordable health insurance policies, additional visas for potential employees, and less government red tape. But Congress has not moved on these issues. With our government, it is not easy to be an entrepreneur.

Why should we care about this? What difference does it make if an economy is populated and propelled by a few large, regulated firms, or by a broad base of entrepreneurial activity that rises and falls on its own merits? Why does the composition of firms in the economy matter, as long as there’s enough income and jobs for all?

The key word is innovation. Often, innovation also enhances efficiency and greater output with any given level of employment and capital. Innovation is perhaps the most important influence on sustained economic growth.

Those most responsible for innovating are entrepreneurs, determined men and women with ambition, imagination, and the courage to take risks. Some of their new ideas, if allowed to develop, lead to greater wealth and economic growth.

Indeed, the greatest innovations of our time were the products of new ideas by entrepreneurs. Air conditioners, airplanes, automobiles, personal computers and their operating systems, digital technology, and telephone service all were commercialized by entrepreneurs — not by large corporations and certainly not by government bureaucracies.

Of course, not all imaginative ideas are economically feasible. The beauty of our economic system is that it allows productive ideas to flourish.

This can be contrasted with more regulated economies, where bureaucrats judge productive ideas. This means that some good ideas may perish, and some poor ideas may reach the market, doomed to fail after the government has spent millions — or even billions — of taxpayers’ dollars. The European Galileo global positioning system is one such example of a failed government-directed enterprise. In America, entrepreneurs are major drivers of the economy. They came to the rescue during the economic slowdown in the early 1990s when many Americans lost jobs. Instead of collecting generous unemployment checks for years and years, as do the unemployed in some other industrialized countries, Americans with insurmountable determination started new enterprises, building on new ideas. This attitude led to one of the longest bull markets in American history.

But despite the generally hospitable conditions that entrepreneurs enjoy in America, there remain challenges, some perceived and some real, which we must overcome.

Take health insurance, for instance. Right now most Americans’ health insurance comes through employers, and it’s time-consuming and expensive both for individuals and for small businesses to buy policies. Congress should delink health insurance from employment and encourage more insurance companies to offer coverage to individuals.

Additional immigration would help entrepreneurs to fill gaps in their workforce. At a time when few Americans choose to go into science and engineering, we need to offer visas for scientists and technicians who want to come here to work.

The current uncertainty over taxes isn’t helpful either. Most entrepreneurs pay income taxes as individuals, and rates are set to rise across the board on January 1, 2011, to 15% from 10% at the lowest end and to 40% from 35% at the highest. What Congress will do with the taxes depends on the November elections. Senator McCain promises to keep taxes low and Senators Clinton and Obama have said they would let them rise.

We have no way of knowing what auspicious innovations the future holds. But if the past is any guide, one thing is certain — most of these innovations will come from entrepreneurs, and America needs more of them, not fewer.

Ms. Furchtgott-Roth, dfr@hudson.org, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. She is the editor of “Overcoming Barriers to Entrepreneurship in the United States,” to be published on March 28 by Rowman and Littlefield.