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If you’re worried America is no longer great — excluding US Olympic prowess, of course — the above chart might neatly encapsulate those concerns. Looks like the Startup Nation is in the midst of an entrepreneurial crisis. Since the late 1970s, startups as a share of all firms have fallen by more than half, while the share of workers employed at new firms has fallen by three fourths.
This seems troubling on two levels. First, entrepreneurship of all kinds can provide employment and upward mobility. Second, high-growth or “transformational” startups are big drivers of high-wage job creation, innovation, and competition. As the Financial Times (source of the above chart) recently put it: “The suggestion that the US has a problem in the entrepreneurship department has come as a jolt for a country that prides itself in the red-blooded capitalist spirit that spawned the likes of Henry Ford, Ray Kroc and Steve Jobs.”
Theories to explain this chart include (a) the rise of big box retailers in the 1980s and 1990s, (b) a growing cronyist, regulatory state that favors big incumbent firms, and (c) access to capital, whether due to tougher post-financial crisis lending standards, the decline in housing wealth, or 80% of venture capital being concentrated in just a few states.