The Vanishing Entrepreneur

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.

Read more: http://www.washingtonmonthly.com/political-animal-a/2012_07/weve_all_heard_it_so038465.php#