The US and the "Thinking Man" Economy
- William Laraque, Managing Director at US-International Trade Services
- 04.01.2016 07:30 am undisclosed
It is a myth that the US leads in the post-industrial "Thinking Man" Economy. In fact, US government regulatory institutions, lawyers and entrepreneurship education institutions lag in these all too critical areas:
1. Corporate attorneys in the US kill startups which represent potential competition to their existing clientele.
2. Pharmaceutical companies in the US use small changes to apply for and enforce 20 year patent protection to the basic pharmaceutical patent. In this way pharmaceutical innovations are squelched.
3. Network effects: the slower modalities of cable companies result in the US having a slower Internet than S.Korea. Our own technology and "network effects" are used to trump progress.
4.The combination of oligopoly and monopoly and the reduced enforcement of regulatory anti-trust provisions while maximizing the political influence of multinationals does much to create a plutocracy where there should be a more democratic or republican US. Republican used to stand for anti-aristocratic. So much for that.
5. Princeton University studies have concluded that the US is a plutocracy.
6. As per Thomas Piketty in Capital in the Twenty-First Century, "a growing inequality leads to the loss of faith in our political institutions which in turn leads to instability."The resulting ecosystem does not encourage entrepreneurship.
7. 24% of the new businesses in the US, in2014, were started by immigrants, many of them Latinas. We need to think about this as we consider a rising anti-immigrant bias in the US.
8. Finally, the Brookings Institute has found that new business starts declined significantly in the last several decades in the US. To quote;
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.
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.
The factors listed above all contributed in this decline in startups. I would like to add that it has been found and elaborated by Wharton University Press that critical to the growth of startups is the nurturing that older, wisened and experienced entrepreneurs provide.This is popularly called coaching.The millennials and young technological whipper-snappers of today do not value age and its attendant wisdom. As a result, a lot of startups do not benefit from the wisdom and nurturing of the experienced and die.
