So 2,344 Chilean workers will waste 40% of their working lives this year to pay the taxes to fund these 300 startups.
We pay taxes and that's not going to change.
This money goes to government which then allocates in various ways to provide services to people of the country.
Part of this money can be thought of as an investment i.e. government spends money (e.g. on infrastructure like building roads) in hopes that this will generate more economic activity which will enrich the country as a whole.
The only important question is: is this program a better investment that others?
That is hard to tell, but at least to me it appears to be a great one. The cost (on the scale that governments operate) is puny and potential upside (companies that keep operating in Chile, hire Chilean people, pay Chilean taxes) huge.
This is command economics with a Web 2.0 veneer.
If that were true, Paul Graham would be giving out handred dollar bills to random people instead of investing in startups that he personally vetted.
If the politicians and bureaucrats are so good at investing, why don't they do it privately instead of working for the government?
You are assuming that government is better at allocating resources than the market. If the government is better at investing than private capital, why even have a market economy? Why not have a command economy like in the Soviet Union?
If you believe in markets you should realize the Chilean government is doing something innovative and pro-entrepreneur at very low initial cost and likely negative cost in aggregate. I'd put it in the same boat as the matching funds programs run by Hong Kong and Singapore, with the major difference that the individual sums invested are much smaller and there is less bureaucracy involved.
First because some companies are already generating revenues and spending that cash locally. Add those inflows to the matching funds participants are expected to provide (most end up spending more) and it's clear Chile's exposure per startup is lot less than $40,000. And that's without considering the multiplier effect all this spending has on the local economy.
How the exact numbers run will depend on how they pick the teams, but I'm guessing that if two to three percent of the participants take investment or stay on permanently the program will be a net plus. Which makes it an income transfer if it works - but one from other parts of the world to Chile. And it's a good deal for entrepreneurs too so what is not to love?
He said that due to the cost of living, he was able to employ some very smart individuals who he wouldn't be able to afford to pay if he lived, say, here in Ireland. And mentioned that other startups were doing the same.
So even if it's not a requirement it happily happens anyway due to economics/cost-of-living/etc which sounds great.
If even one of these startups is really successful, it will pay for the programme on its own.