JAMES PETHOKOUKIS: Explaining the decline in US entrepreneurship.
From Axios reporter Kim Hart: “The birth rate of new companies collapsed with the Great Recession, and the number of firms that opened during the recovery period is lower than that of any other post-recession period.”
I should note the piece uses analysis from the Economic Innovation Group (EIG). Its analysis from earlier this year, “Dynamism in Retreat,” speculates the startup decline stems from “declining population growth, a sharp decline in startup capital (notably home equity) during the recession, and changes to the regulatory environment,” according to Hart.
Now as it happens, the San Francisco Fed is out with a report on this issue of falling US business formation. It finds that in recent decades “the number of businesses in the United States has moved much more closely with workforce size” and that “[increasing] the labor supply and hence the supply of potential entrepreneurs can stimulate business formation by increasing demand without raising costs.” And now this bit: “Possible strategies could include encouraging more immigration, later retirement, or higher labor participation among women.”
I’m skeptical, to say the least, of any centralized effort to fine-tune national policy to somehow encourage entrepreneurship.
Instead, Washington could follow the wise man’s advice and just “Get the hell out of my way!”