Discovery Institute’s Center on Wealth, Poverty, and Morality, provides original reporting and analysis at the intersection of ethics, faith, and economics.

Wealth and Poverty
Free Enterprise
 

Why Wonder Why Entrepreneurship Is on the Decline?

A new study out of the left-leaning Brookings Institution by Ian Hathaway and Robert E. Litan reports that U.S. economy has reached a new low. Though entrepreneurship has been declining steadily for 30 years, the U.S. economy saw a new trend beginning in 2008: for the first time, more businesses are dying off than are being created. Small businesses are the lifeblood of our economy, the primary job providers--and they're disappearing.

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Hathaway and Litan's conclusion offers little practical advice. They note:

Our findings stop short of demonstrating why these trends are occurring and perhaps more importantly, what can be done about it. Doing so requires a more complete knowledge about what drives dynamism, and especially entrepreneurship, than currently exists.

The problem at hand really isn't so mysterious. Starting a business comes at a great personal and financial risk, and with an uncertain economic climate, it's a risk that fewer are willing to take. At the same time, new policies and regulations are creating a climate that is increasingly unfriendly to small businesses.

We see examples of higher regulatory barriers and heavier financial burdens everywhere. Here in Seattle, coalition groups are fighting against--and for--a city ordinance that would drive ride-sharing companies like Uber, Lyft, and Sidecar out of the city. And recently, our Mayor famously signed an Executive Order to raise Seattle's minimum wage to $15 an hour, making it the highest in the country world, and placing an unprecedented burden on businesses in the city. On a larger scale, small businesses nationwide are concerned about the unaffordable costs imposed by Obamacare. The Dodd-Frank Act presents yet another roadblock for entrepreneurs, limiting access to crucial start-up funds.

Every individual story of how times are harder than ever for businesses points to a grander narrative taking root in our culture: business is evil, greedy, exploitative, and unwelcome. And as U.S. entrepreneurship fades away in spirit, it fades in practice as well.


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