Tuesday, May 13, 2014

May 13 2014: American entrepreneurship—like so much else in this awesome country-- is in decline. This, folks, is not good.

“I can honestly say that I have never gone into any business purely to make money. If that is the sole motive then I believe you are better off not doing it. A business has to be involving, it has to be fun, and it has to exercise your creative instincts.”

Richard Branson, Losing My Virginity: How I've Survived, Had Fun, and Made a Fortune Doing Business My Way

REALITY UNAMERICAN. I hate to say this—though I’m going to—but Americans are so well brainwashed (conditioned) into a particular mental image of this Great Country that facing up to reality is considered to be virtually un-American.

FATALISM. It’s a great pity, because we’re not going to change until we see the need for change—and, more to the point—agitate for change. What does agitate mean? It means getting attention by every legal means necessary including million person marches. It means doing a great deal more than we’re doing now (which wouldn’t be hard because currently we seem sunk in a swamp of fatalism). That, by the way, is un-American. We are supposed to be a can-do nation—and once we were.

We were Americans once—and young. And then, starting in the Seventies, the ultra-rich got going and seized back the power they though they had lost as a consequence of the New Deal. In the process, they learned to rig the system in their favor—and, since it worked, they went on rigging it so much that the income of the rest of us started to decline—and it is still declining. No, that’s not fiction. It’s a well document fact.

NOT A DEMOCRACY ANY MORE. The core problem is that our politicians no longer listen to the average American any more. They listen almost exclusively 0nly to those who support them financially. And most of that money comes, in one way or another, from the ultra rich. That makes us a plutocracy. We are supposed to be  a representative democracy—which means those we elect should represent our interests. Clearly, they do not.

Mind you, where reality is concerned, I’m in no position to lecture. I’m so reluctant to face up to reality myself that I write fiction for a living. Where my fiction is concerned, reality is no more or less than what I choose to make it. How cool is that!

JOINER OF DOTS. But, I digress. Actually, I am also a trained economist, researcher, keen observer, analyst, and joiner of dots—and that side of me zeroes in on reality with the zeal of a Sherlock Homes. Confusing? Be glad you are not my subconscious. I am a great believer in the notion that my subconscious does all the work.

MYTHS. Here are just a few of the American myths:

  • The U.S. is the greatest country in the world.
  • The U.S. is the richest county in the world
  • The American Business Model is the best in the world.
  • The U.S. is the most innovative country in the world.
  • The U.S. is the most socially mobile country in the world.
  • The U.S. has the most prosperous middle-class in the world.
  • The U.S. has the best infrastructure in the world.
  • The U.S. has the best healthcare system in the world.
  • The U.S. is the most entrepreneurial country in the world.

Whether the U.S. is the greatest country in the world or not is really a subjective judgment. However, where countries are assessed across a range of criteria, we do not fare well. As for being the richest country in the world, we are—but most of the wealthy is owned by a tiny minority. Where the other headings are concerned, suffice to say that they are myths. Our healthcare system is an overpriced, deeply corrupt, extortion racket.  We pay nearly twice as much for it as other developed nations and yet we get an inferior service,

ENTREPRENEURSHIP. Here, I’m going to focus on entrepreneurship. Sadly it’s in decline. Let me quote from Brookings:

Business dynamism is the process by which firms continually are born, fail, expand, and contract, as some jobs are created, others are destroyed, and others still are turned over. Research has firmly established that this dynamic process is vital to productivity and sustained economic growth. Entrepreneurs play a critical role in this process, and in net job creation.

But recent research shows that dynamism is slowing down. Business churning and new firm formations have been on a persistent decline during the last few decades, and the pace of net job creation has been subdued. This decline has been documented across a broad range of sectors in the U.S. economy, even in high-tech.

Here, the geographic aspects of business dynamism are analyzed. In particular, we look at how these trends have applied to the states and metropolitan areas throughout the United States. In short, we confirm that the previously documented declines in business dynamism in the U.S. overall are a pervasive force throughout the country geographically.

In fact, we show that dynamism has declined in all fifty states and in all but a handful of the more than three hundred and sixty U.S. metropolitan areas during the last three decades. Moreover, the performance of business dynamism across the states and metros has become increasingly similar over time. In other words, the national decline in business dynamism has been a widely shared experience.

While the reasons explaining this decline are still unknown, if it persists, it implies a continuation of slow growth for the indefinite future, unless for equally unknown reasons or by virtue of entrepreneurship enhancing policies (such as liberalized entry of high-skilled immigrants), these trends are reversed.

1 comment:

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