The following paragraph came from an article in the Wall Street Journal by E. Prescott and L. Ohanian. It is shocking:
“…. productivity since 2005 has declined by more than 8% relative to its long-run trend. This means that business output is nearly $1 trillion less today than what it would be had productivity continued to grow at its average rate of about 2.5% per year.
Lagging productivity growth is an enormous problem because virtually all of the increase in Americans' standard of living is made possible by rising worker productivity. In our view, an important factor contributing to declining productivity growth is the large decline in the creation of new businesses. The creation rate of new businesses, as well as new plants built by existing firms, was about 30% lower in 2011 (the most recent year of data) compared with the annual average rate for the 1980s. (The data is the Census Bureau's Business Dynamic Statistics.) The decline affected nearly all business sectors.”
The authors rightly attribute this decline in productivity to a parallel decline in the number of startup businesses.
Startup business is a field in which I am one of the rare experts. To my knowledge I have been involved, on a hands-on basis, with the start up of many thousands of small businesses; no one else on the planet can make such a claim.
In the 1970’s I founded a network of startups called the Briarpatch. We had a simple formula for all of the hippies who wanted to start a new business or who had already started one and needed help. They joined the Briarpatch Network and had access to the support of every other business both in knowledge and services. That meant they got accurate and reliable information from people who had similar problems to theirs and they could find suppliers, including insurance and legal aid as well as banking, that they knew to be honest and reliable.
At any one point the Briarpatch had more than 600 businesses as members in the San Francisco Bay Area. Over a decade there were several thousand. The Briarpatch created, through its milieu, magazines, word-of-mouth and books, tens of thousands of start up businesses in America.
This is not an exaggeration.
I was invited, with my Briarpatch team in the late 1970’s, to Sweden where I helped set up a similar network to the Briarpatch to encourage and develop small startup businesses. Sweden went from a nation with only dozens of new startups, a year, to a country with 4000 new startups in the three years after I set up the methodology.
I suspect that the economic vitality that America experienced in the 80’s and 90’s was partially the result of the start up businesses that I encouraged and promoted.
Could the same thing be done again? Could we have the kind of vitality in business that the hippies generated?
(Note: the founders of Apple were hippies and connected to the Briarpatch and the founders of Google modeled their company and its anti-advertising graphics on the principles from my Marketing Without Advertising.
The current national milieu of business hatred that the Left has created does not leave me optimistic about commercial vitality. When the Republican Party envigorated with the Tea Party enthusiasm and the Reagan perspective finally arrives in America we may have the milieu for a new start up environment.
Right now the country is in a depressed Leftie mood; they believe that everything belongs to the government (“You didn’t start that business”) and success is considered a measure of 'evil greed'. That is not the environment for startups.