Death of American Entrepreneur?

David Goldman reports that “From 1977 t0 2005, business startups accounted for almost all economic growth and all net job creation. Established firms shrank and new firms grew. After the Great Recession of 2008, the opposite occurred: established firms accounted for all the recovery in employment, and startups contributed nothing to net employment growth. Under the Obama administration, America changed from the world’s most innovative economy to the most static and cartelized.”

Why? Goldman identifies several factors: “Economists offer as many reasons for the decline of the American entrepreneur as historians offer for the fall of the Roman Empire. Regulatory strangulation is probably the most important: Obamacare, environmental regulations, Dodd-Frank disclosures and other encroachment on entrepreneurs’ time, energy and capital are killers. The Congressional Budget Office estimates that Obamacare alone will stifle the creation of 2.3 million new jobs by 2021. What used to be a disruptive, innovative technology sector has turned into a small number of monopolies run by patent trolls rather than engineers. That kills investment in startups. A decline in federal support for cutting-edge research and development has also reduced the backlog of prospective inventions.” There have been success stories, especially “the shale oil boom, now a fading memory in a world of $30/barrel oil.”

None of the candidates are talking about what Goldman considers the biggest economic problem facing American. He thinks it’s ignored because few people have seen benefits from innovation: “Americans under the age of 40 haven’t seen much benefit from entrepreneurs. The last three waves of entrepreneurs–the dot.com bubblers of the 1990s, the mortgage subprimers of the 2000s, and the shale oil drillers of the past five years–all were carried out in body bags. The one innovation that affected daily life in the past ten years was the smartphone, and that came from an established monopoly, namely Apple.”

Without innovation and innovators, the US “economy will decay, like Britain’s before it.” We all need “the disruptive, obnoxious, driven visionaries who take the risks that transform economic life.”

In a column on the results of Super Tuesday, he returned to this theme, arguing that downward mobility explains Trumpism: “Americans are shrewd. You can’t spit on them and tell them it’s raining. They know the game is rigged against them. They know it’s rigged the same way that they know a lottery is rigged: There aren’t any winners. They know that they are downwardly mobile because they aren’t upwardly mobile. Americans don’t mind playing against bad odds–they play the lottery all the time–but they think that they are playing against zero odds. Ordinary Americans had an outside chance to get rich until 2008. Now they have no chance at all.”

Goldman thinks “Americans tolerate a wealthy elite if and only if they can get in on the action, too. The cartelized, corrupted, closed wealth-creating mechanism of the past eight years shuts them out.” As a result, “the Republican base is out for blood.”

It looks as if they’ll get it.