sourceWith all the tech startups flooding the market, it would seem that America is more entrepreneurial than ever. But just the opposite is true. According to a pair of reports from The Brookings Institution, American entrepreneurship has been declining since the 1970s.
Brookings' reports reveal that American business has become steadily less dynamic in the past three decades. Instead of creating new companies, would-be entrepreneurs are increasing going to work for established corporations. And the rate of corporate consolidation is only making the statistic worse.
Now, for the first time since Brookings began tracking the data, more businesses are dying than being born in America.
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As New York's Daily Intelligencer describes, all the media fanfare over startups is only masking the truth behind the state of entrepreneurship:
But the glitz, glamour, and big money of San Francisco — as well as the cultural potency of and media attention paid to start-ups — shroud a hard truth. The country is getting less entrepreneurial. In aggregate, firms are aging. People are starting fewer new businesses, and older businesses are doing better than their younger competitors. For all the talk of "disruption" in today's economy, it is better to be a big, old incumbent dinosaur than it is to be a lean, mean start-up.
This isn't just bad for potential founders, Brookings says. The trend curbing "creative destruction" has the potential to make the entire American workforce less productive:
Research has established that this process of "creative destruction" is essential to productivity gains by which more drive out less productive ones, new incumbents, and workers are better matched with firms. In other words, a dynamic economy constantly forces labor and capital to be put to better uses.
The problem isn't relegated to "The Paper Belt"—Silicon Valley's dismissive name for Middle America. Brookings reports that the entrepreneurial downturn transcends any particular state and region. The trend has been observed in all 50 states and "in all but a handful" of the 360 metropolitan areas tracked.
What's more? "This decline has been documented across a broad range of sectors in the U.S. economy, even in high-tech."
Brookings' reports are not all doom and gloom, however. The public policy organization notes that "business accelerators" are a "welcome development." And immigrants, being statistically twice as likely than native-born Americans to start businesses, could be allowed in the country in greater numbers to help reverse the trend.
America's Entrepreneurial Spirit is Dying
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It's being murdered.
88m3
Fast Money & Foreign Objects
Trollolololol
its much harder to penetrate the market with these huge conglomerates..sherman and clayton acts havent been enforced correctly.we need teddy roosevelt as prez right now
Are you blaming big business as we'll?
i think they are bad for mom and pop shops, start-ups and overall entrepreneurial spirit..they are so engrained in the economy and there arent many people who arent involved in one way or another to finance their own start up anyway (with decreased median household income) so its almost a moot point..but i think things overall for american citizens would have been better off if they were thwarted more over the years. small businesses getting strong armed into being bought out by the big guys has been happening for years and its created a bigger income gap and allowed for prices of goods to rise due to less competition. they are doing whats best for themselves and their shareholders so i dont blame them..but i think the supreme court and overall justice system has failed by letting this spiral out of control and by them and the govt not tightening up their use of loopholes in tax codes by having some faux HQ in ireland etc ( i wrote a paper on it last year so this isnt just regurgitated rhetoric from this issue being publicized more recently)
the HHI is bullshyt and there hasnt been an amendment in anti trust since 1914. the FTC hasnt been doing enough work and the exemption for utilities and infrastructure makes no sense. if Comcast-TWC merger passes antitrust then you know things are really fukked up.
"The DOJ commonly uses the Herfindahl index (HHI) to measure market concentration, designating markets between 1,500 points and 2,500 points as "moderately concentrated" and those above 2,500 points as "highly concentrated".[43] By some rough estimates, the merger would increase the HHI of the US television industry from 1,815 to 2,454, or an increase in 639 points.The merger would increase the national wired broadband HHI from roughly 1,455 to 2,130. However, the DOJ traditionally considers the effects of transactions on concentration in individual markets, in which Comcast and Time Warner do not compete, and ignores transactions' effects on the national market as a whole"
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BlackAchilles
Veteran
People are afraid of getting ko'd by the big companies, which is understandable especially considering healthcare costs and America's lack of a social safety net in that area and others.
Julius Skrrvin
I be winkin' through the scope
entrepreneurship needs capital, and the american people don't have much laying around these days 
and don't you dare quote me with some chicken shyt tidbit about libruls and taxes, dead7.
and don't you dare quote me with some chicken shyt tidbit about libruls and taxes, dead7.
How about inflation, and corporatism?entrepreneurship needs capital, and the american people don't have much laying around these days
and don't you dare quote me with some chicken shyt tidbit about libruls and taxes, dead7.
Julius Skrrvin
I be winkin' through the scope
I'm going to disregard what you said about inflation and agree with your second point
all branches of government, especially the legislative branch are culpable.
global u.s. companies would rather let their profits sit offshore than put it to work here.
Corporate 1% in U.S. Gets Wealthier While Cash Piles Up
http://www.businessweek.com/news/20...ot-gets-richer-while-cash-gathers-dust-abroad
Income inequality has company -- make that companies. A new wealth gap is opening among U.S. corporations, where cash holdings are growing more concentrated as the rich get richer.
Eighteen American businesses held 36 percent of corporate wealth in 2013, up from 27 percent in 2009, according to a report from Standard & Poor’s, a credit rating firm in New York. The bottom 80 percent have lost ground, with just 11 percent.
The top 1 percent is a Who’s Who of multinationals, including Microsoft Corp. (MSFT:US), Google Inc. (GOOG:US), Coca-Cola Co (KO:US)., Apple Inc. (AAPL:US) and Ford Motor Co (F:US)., that reap a big share of profits from non-U.S. sales. Because tax law discourages moving that money back to the U.S., cash is piling up abroad and companies are taking novel steps to adapt, including borrowing against those assets to finance operations at home.
global u.s. companies would rather let their profits sit offshore than put it to work here.
Corporate 1% in U.S. Gets Wealthier While Cash Piles Up
http://www.businessweek.com/news/20...ot-gets-richer-while-cash-gathers-dust-abroad
Income inequality has company -- make that companies. A new wealth gap is opening among U.S. corporations, where cash holdings are growing more concentrated as the rich get richer.
Eighteen American businesses held 36 percent of corporate wealth in 2013, up from 27 percent in 2009, according to a report from Standard & Poor’s, a credit rating firm in New York. The bottom 80 percent have lost ground, with just 11 percent.
The top 1 percent is a Who’s Who of multinationals, including Microsoft Corp. (MSFT:US), Google Inc. (GOOG:US), Coca-Cola Co (KO:US)., Apple Inc. (AAPL:US) and Ford Motor Co (F:US)., that reap a big share of profits from non-U.S. sales. Because tax law discourages moving that money back to the U.S., cash is piling up abroad and companies are taking novel steps to adapt, including borrowing against those assets to finance operations at home.
Taxes are not the answer.