This isn’t good news. The number of businesses that opened in 2013, the most recent year for which we have information, is lower than the number of start-ups in 2012:
The level of new U.S. businesses being created has been stalled since the end of the recession, according to an analysis of recently released Census data by Arnobio Morelix, a senior research analyst at the Kauffman Foundation. Given the long-term decline in entrepreneurship activity, “what we may be looking at is a new normal for the U.S.,†he says.
From the standpoint of financing there probably hasn’t been a better time to start a new company in American history. Is the reason for the sluggishness not enough demand? It would be interesting to see the number of new businesses formed per dollar GDP over time. I may try to dredge that out.
I think it’s a combination of demand, the ability of big companies to beat down competitors, regulation (related to the former), and generational shift.
I don’t think that Gen-Xers are starting businesses at the rate that Boomers did. Elon Musk, Sergei Brin, and Larry Page are all Gen-Xers but that’s just three. Elon Musk is a South African and Sergei Brin is a Russian. If anything that supports the notion that the U. S. is a great place to start a business.
Lots of great graphics in the linked post.
I think this is a big thing, but I’ll be damned if I know how you’d measure it.
I was at a Mac World with my son maybe seven, eight years ago. We went through all the booths – this new company with such and such software, that new company with something else.
Then we went to the keynote and watched Apple basically obliterate all the little start-ups we’d just seen. Apple, Microsoft, Google. . . how do you beat those guys? Who puts their heart and soul into a business when the best you can hope for is that Google buys you up?
It’s been this way in restaurants for a long time. It’s very tough for a small operation to beat the chains which not only have deep pockets but have occupied all the good locations.
These are two big opportunities for entrepreneurs – you can create an app or a restaurant with 50k. But staying alive is all but impossible.
On a positive note, independent book stores are doing surprisingly well. Copperfields and Diesel, two Bay Area mini-chains recently opened new stores near me. Borders died and the Barnes and Noble business model is being crushed by Amazon. So in this case the mightiest are paradoxically making a space for the tiniest.
A bookend to the start-up stall is that More Businesses Are Closing Than Opening In U.S. From the POV of this article our free trade agreements have had a negative impact on business viability in this country, adversely effecting jobs and the overall economy. Perhaps this is why so many people don’t support Obama, with the cooperation of the republican congress, enacting the current TPP.
” If anything that supports the notion that the U. S. is a great place to start a business.”
However, it does not follow logically that it is as great as it used to be. Would you like to start a business in Illinois now, after years of Dem policy nirvana? Or North Carolina? I know my answer.
Generational shift is a very big, and worrisome, issue. We have created a government, (supporter/arbiter), large corporate (climb and manipulate) , “it’s all luck” and lottery (invent an app) mindset in this country. This is sucking the vibrancy out of western economies. Blood and guts product development and grind it out business performance is out of vogue.
Now, admittedly, I might say this as blood and guts etc is what we do. But I’ve got 50+ businesses that are thankful for it. Elon Musk is not who we should model on. He is a government (taxpayer) parasite who has played the game well for personal financial gain. Lavished with praise by NY and LA elites he may be. But the residents of Peoria, IL are no better off for the share of their tax dollars siphoned off to Mr Musk.
Part of that generational shift is something I’ve been feeling my way around for a while, without any data to back it up, and that’s the sense that there is a shift in the level of materialism. The current teen generation just isn’t that into acquiring things, and without greed and materialism to motivate ambition, I’d not be surprised to find them being both less entrepreneurial, and consuming less. I’d love to see a comparison of what a 14 year-old today spends vs. one 10 or 20 years ago.
I was talking to my son (well, texting) about the TPP and he raised objection to the life plus 70 provision on copyright. I pointed out to him that he’s playing with his own money now since he’s likely to inherit quite a few valuable copyrights. Didn’t affect his position, so either he’s a good person able to rise above his own interests, or he’s just not that concerned with money.
More broadly I just don’t hear kids talking about ‘things’ they want. I follow something like 2000 of them on Twitter and their talk is never about stuff with a cash value. Given that those 2000 are by definition readers who have access to the internet it’s a reasonable extrapolation to guess that they are somewhat above the average economically. Most of what they want is effectively free – apps, likes, followers, ‘friends.’ Rather than working to make money to buy X, they choose to spend their time acquiring virtual friends. You old people (I exempt myself) my sneer, but there are only so many hours in the day, and if you spend a significant amount of time Tweeting rather than flipping burgers, and if the top of your wish list is not a $30,000 car but a $400 phone, that shows up in the macro sooner or later.
Pinning down the possibility of changing traits/temperaments in youth is questionable. After all, when one is in their late teens and twenties it’s a time when roots and collecting “things” usually means very little, compared to exploration of the mind and the world beyond a parent’s reach. Little by little, though, lifestyle austerity tends to yield to “more things.” as more responsibilities of adulthood begin to accrue.
Jan:
Your argument rests on the assumption that acquisitiveness is universal (applies to all or nearly all humans) and consistent through history. That’s just not the case. Not every society is as materialistic or acquisitive as 1960’s America. We were trained to be materialistic by parents who’d been through the Depression or WW2 or even the post-war rush of sudden American wealth. Younger generations are being trained by parents who have already discovered the limits and emptiness of mere acquisition.
I suspect acquisitiveness will mimic religion, which waxes and wanes, like that older phenomenon, the tides. Asceticism has a long history, going back at least to ancient Greece. Comes and goes. The rising generations connect asceticism to environmentalism and make it a moral imperative with aesthetic dimensions as well. I have no idea how long it will last.
Michael,
Your comments above are reminiscent of The Fourth Turning book’s premise — something Dave discussed some time ago, and I read some time ago. While your points make sense, I also believe maturation has a great deal of influence on a person’s own turning points in life, as they go from “salad days” to ones that have a broader menu of options and creature comforts.
The younger generation (millennials, Gen-X tail end) are young, and they do not have to pay for the iPhone, iPad, MacBook, cellphone plan, internet service, rent, electric bill, water bill, gas bill, cable bill (maybe), car note, car insurance, health insurance, etc.
It is easy to be idealistic when somebody else is footing the bills, but when they start supporting themselves, give me a call. Oh, it is also easy to be post-racial when you have lived in an upscale gated community your whole life.
When liberals/progressives live around too many low income and poor black people, I have seen too many or them develop a split personality regarding racism. They spew the normal racial talking points, but the low income and poor black people around them are ni**ers. It is bizarre.
Bull. I have never, in my entire life, ever heard a progressive use that word. What’s bizarre is that accusation.
@michael reynolds
Move to a majority black city, and talk to a few progressives who cannot afford to live in the hip areas of town. Duct tape your head first because their logic will cause it to explode.
The black people around them are: ni**ers, g-d ni**ers, mother fu*king ni**ers, g-d, m-f ni**ers, and probably a few more. When asked if President Obama is a ni**er, they will answer, “no”, and when questioned why, they will answer, “because he is different.” They will call Republicans racists, and they do not consider themselves racist.
I have had this conversation too many times. Obviously, it is not scientific, and it could be that I attract the crazies. It could also be that I tend to keep my mouth shut about things, and people let their true feeling out. Whatever, it is bizarre.
“The younger generation (millennials, Gen-X tail end) are young, and they do not have to pay for the iPhone, iPad, MacBook, cellphone plan, internet service, rent, electric bill, water bill, gas bill, cable bill (maybe), car note, car insurance, health insurance, etc.”
True, many don’t, especially those categorized as “Trust Fund Babies,” in which there are quite a few sitting in cafes along the CA coastal areas intellectualizing about the state of the world.
As this has swerved more into philosophical musings, I think the social/economic marinade a person soaks in definitely influences their ideological perspectives. In fact, cultural studies, contrasting youth in different socioeconomic milieus, indicate definite maturation differences from hardscrabble 3rd world youth, when compared to their advantaged western hemisphere/European counterparts. The childhoods of the former group is driven by hard work to achieve the basics of food, shelter, clothing, access to health services etc., while the latter faces a whole different set of circumstances revolving more around finding the “meaning” of life.
@michael reynolds
They are not full time racists. I have known those, also. A few of my friends turned out to be racist, and after trying to get them to change, they are now ex-friends. I have had other run-ins with racists, and usually, it did not end well for them.
The odds of an actual (as opposed to imaginary) progressive using the ‘n’ word are about the same as the odds of a Texas Republican suddenly announcing a fondness for Lenin.
I live in the heart of progressive-world, Marin County, just across the bridge from the most progressive city in America, and trust me, anyone using that word would have to move to Bakersfield the next day. Now, that’s not to say some of these folks might not be racist, I’m confident that some are, but there is zero chance of any of them ever using that word.
@michael reynolds
They are all good little liberals/progressives. When Obama became the Democratic presidential candidate, they would have a problem, but they were all for him.
It could be some special combination of humidity and temperature, or the progressives from your area just have never had to live in a place where they are the minority or among poor and low income black people.
People in upscale areas do not have the problems that people in poor and low income area do. When middle class white progressives wind up living in a poor or low income black majority neighborhood, they have to deal with multiple shocks at once.
They now have the problems that everybody in poor and low income areas have, but they have never experienced them when they were growing up. Suddenly, their world is not as safe. Nobody really cares when anything happens in these areas, but now they have to experience it.
As an experiment, foot the bill for a few of Marion County’s finest young progressives to live in Oakland or Long Beach for a year or two, and they cannot get anything special – burglar alarms, off street parking, community living, etc. I suspect they will have special circumstances that allow them to hate the black people around them because, “they are different.”
A lot of people tell me things that they might not tell others. When somebody tells me something, I remain nonplussed, and I keep my mouth shut. It is a handy skill when you are trying to obtain information from people who do not want to rat out anybody or who will not do well if they are identified as a rat.
The people I have known would be no different if they could live next door to you. It is funny, but it is sad and pathetic, also. They are trapped in a world they do not understand, and nobody has prepared them to deal with the real world.
(Years ago, I used to get the “there’s ni**ers, and there’s blacks” spiel. I think it was from liberals, but it could have been conservatives trying to cover themselves. It was the same type of nonsense logic. They would equate ni**ers with white trash, and I would ask why not use black trash instead. Some of them got it.)