We've all heard it so many times
the words have practically lost meaning: small businesses are the source
of most new jobs, entrepreneurship is the secret sauce that makes
America special, "creative destruction" and economic dynamism require a
constant flow of new business start-ups, most of them very small.
Republicans in particular like to justify all their attacks on big
government as attacks on small business, as though Fortune 500 companies
and their executives and shareholders don't matter to them at all.
But
the idea that entrepreneurship is a steadily recurring or even rising
phenomenon is rarely examined. That's what makes an article from
the Washington Monthly's July/August issue, "The Slow-Motion Collapse of
American Entrepreneurship," by New America Foundation's Barry Lynn and
Lina Khan, particularly valuable (it's available now as a Sneak Preview).
By using more careful definitions than those often deployed, Lynn and
Khan establish that we are actually in a period of significant and
steady decline in the formation of new enterprises:
In 1977, Americans created more than thirty-five new employer businesses for every 10,000 citizens age sixteen and over. By 2009, however, Americans were annually creating fewer than eighteen such businesses, a 50 percent drop. While the Great Recession clearly cut into new business creation, the decline was clear well before 2007. The averages across decades capture that decline: between 1977 and 1989 Americans created more than twenty-seven new businesses for every 10,000 working-age citizens. This compares to fewer than twenty-five in the 1990s and around twenty-two in the 2000s.
Nor are single-person businesses--the building blocks of the so-called "free agent nation"--picking up the slack: READ MORE
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