US Economy: Big Business Is Killing Innovation in the U.S. -

Botanists define a rheophyte as an aquatic plant that thrives in swift-moving water. Coming from the Greek word rhéos, meaning a flow or stream, the term describes plants with wide roots and flexible stalks, well adapted to strong currents rather than a pond’s or pasture’s stillness. For most of the 20th century, U.S. lawmakers worked to maintain just these sorts of conditions for the U.S. economy—a dynamic system, briskly flowing, that forced firms to adapt to the unpredictable currents of the free market or be washed away.

In the past few decades, however, the economy has come to resemble something more like a stagnant pool. Entrepreneurship, as measured by the rate of new-business formation, has declined in each decade since the 1970s, and adults under 35 (a?k?a Millennials) are on track to be the least entrepreneurial generation on record.

This decline in dynamism has coincided with the rise of extraordinarily large and profitable firms that look discomfortingly like the monopolies and oligopolies of the 19th century. American strip malls and yellow pages used to brim with new small businesses. But today, in a lot where several mom-and-pop shops might once have opened, Walmart spawns another superstore. In almost every sector of the economy—including manufacturing, construction, retail, and the entire service sector—the big companies are getting bigger.

In the US the share of all businesses that are new firms, meanwhile, has fallen by 50 percent since 1978. According to the Roosevelt Institute, a liberal think tank dedicated to advancing the ideals of Franklin and Eleanor Roosevelt, “markets are now more concentrated and less competitive than at any point since the Gilded Age.”

Read more: Big Business Is Killing Innovation in the U.S. - The Atlantic

Spain Hits A New Low In Its Fight Against Entrepreneurship - by John Greathouse

One of my top former students, Fredi Fernandez, recently sent me a compelling email. After studying at UC Santa Barbara’s entrepreneurial program, he returned to Spain, excited to start a venture and make a positive impact on his homeland.

He founded Alpha Origins in 2011. Although he has helped a number of startups gain traction, he is now questioning if he should flee Spain, given the recent passage of the unprecedented Exit Tax, which seeks to tax potential, unrealized wealth.

Fredi’s email is worth reading, as it reinforces how lucky American entrepreneurs truly are. It is difficult to not be moved by his passionate desire for his country to share the entrepreneurial spirit that he experienced during his stay in California.

One could certainly argue that the US government could be more business friendly. However, when compared to the anti-startup environment prevalent in Spain, the relative degree to which entrepreneurship is an indelible aspect of American society is undeniable.

Geographically, the distance between Spain and the US is about 4,715 miles. However, from an entrepreneur’s viewpoint, the philosophical distance can be measured in light years

Imagine a country with a massive unemployment problem, recently over 24%, yet still with a great capacity to attract international talent, amazing weather and infrastructures. As a government, would you give incentives to build an entrepreneurial ecosystem or would you try to squeeze it?


If you were part of the current Spanish government, the very same government struggling with a huge unemployment problem, you might have a different answer. There have been many examples of Spain’s anti-entrepreneurial efforts, including forbidding Airbnb and Uber activities.

 Even Google News decided to close in Spain due, to a new law designed to protect legacy businesses. We can understand how disruptive companies affect entire industries. Change hurts, disruption hurts and it’s not easy to keep everyone happy. Got it!
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Read more: Spain Hits A New Low In Its Fight Against Entrepreneurship

US Economy: Declining Business Dynamism in the United States: A Look at States and Metros - by Ian Hathaway and Robert E. Litan

Business dynamism is the process by which firms continually are born, fail, expand, and contract, as some jobs are created, others are destroyed, and others still are turned over. Research has firmly established that this dynamic process is vital to productivity and sustained economic growth. Entrepreneurs play a critical role in this process, and in net job creation

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But recent research shows that dynamism is slowing down. Business churning and new firm formations have been on a persistent decline during the last few decades, and the pace of net job creation has been subdued.

This decline has been documented across a broad range of sectors in the U.S. economy, even in high-tech.
Here, the geographic aspects of business dynamism are analyzed. In particular, we look at how these trends have applied to the states and metropolitan areas throughout the United States. In short, we confirm that the previously documented declines in business dynamism in the U.S. overall are a pervasive force throughout the country geographically.

In fact, we show that dynamism has declined in all fifty states and in all but a handful of the more than three hundred and sixty U.S. metropolitan areas during the last three decades. Moreover, the performance of business dynamism across the states and metros has become increasingly similar over time. In other words, the national decline in business dynamism has been a widely shared experience.

While the reasons explaining this decline are still unknown, if it persists, it implies a continuation of slow growth for the indefinite future, unless for equally unknown reasons or by virtue of entrepreneurshipenhancing policies (such as liberalized entry of high-skilled immigrants), these trends are reversed.

Read more: Declining Business Dynamism in the United States: A Look at States and Metros | Brookings Institution