Gas station without pumps

2011 November 21

USA not the home of startups

Filed under: Uncategorized — gasstationwithoutpumps @ 00:37
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It has long been a staple of American beliefs that the USA is the home of the entrepreneur—that we create more new businesses than anyone else, thanks to our tradition of rugged individualism.

I recently saw a short table in the post  Start-ups and Safety Nets of Sociological Images that thoroughly debunks this notion.

Note that in 2007 (before the banks had crashed the world economy), the United States was 23rd in startups per capita. Sure we had a lot, but only because we’re a big country.

The explanation by Jay Livingston (which he attributes to James Wimberly) is appealing in its simplicity, though not necessarily correct.  Basically, they point out that Americans are locked into corporate jobs by things like health insurance (either unavailable in US start-ups or crushingly expensive), college debt (other nations subsidize education much more effectively), childcare costs, and other expenses that are routinely covered by governments in developed countries. In the USA, it is no longer feasible for many people to take the high risks associated with starting a business.  The personal risks are much lower in other countries, so people are more willing to try out ideas they have.

There are other possible explanations (like differences in the availability of credit), but the suggestion that businesses are fostered not by minimizing taxes, but by using taxes to create safety nets that encourage people to take the risk of starting their own businesses is an intriguing one.

Of course, this idea will never fly with the 1% of the population that controls the wealth (and the politicians) in the USA, since they don’t want ordinary people starting new businesses that will compete with their huge corporations.  Their goal is for everyone else to be enslaved to their corporations by debt and fear, so they will do everything in their power to dismantle any safety nets or public education that would allow independence.

 

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5 Comments »

  1. Very interesting table, and the idea that taxes support the necessary risks of entrepreneurship rather than burden them needs broader distribution. Thanks!

    Comment by Tamara Lichtenstein — 2011 November 21 @ 06:59 | Reply

  2. You sound paranoid about the 1%.

    Comment by VR — 2011 November 21 @ 07:56 | Reply

    • Please be more specific. In what what way am I showing “unfounded or exaggerated distrust of others, sometimes reaching delusional proportions”?

      I think that mild distrust of those who have amassed large amounts of wealth is currently well founded. Why do you believe that I should trust them more?

      Comment by gasstationwithoutpumps — 2011 November 21 @ 08:46 | Reply

  3. Beautifully succinct.

    Comment by Andy — 2011 November 21 @ 08:51 | Reply

  4. I emailed a link to this post to a woman who writes a great blog on finance. She just posted about it: http://mathbabe.org/2011/11/22/who-takes-risks/

    Comment by Sue VanHattum — 2011 November 22 @ 14:28 | Reply


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