Without Startups, the US Economy Grows Senile
|August 20, 2014||Posted by Staff under Economic Principles|
This 2014 excerpt of the Washington Post, Aug 6, is by Robert J. Samuelson.
Like the population, the business sector of the U.S. economy is aging. The trend “has occurred in every state and metropolitan area, every firm size category, and in each broad industrial sector.”
From 1978 to 2011, startups fell from about 15 percent of all firms to 8 percent; the slide was gradual until the 2008-09 financial crisis, when it accelerated.
Since 2000, the decline in startups has spread to high-tech sectors.
Productivity is measured as output per hour worked. Competition among firms raises productivity. 35 percent of productivity gains result from “churning” of firms; the fall in startups dampens these gains.
One theory is that the cumulative effect of regulations discriminates against new businesses and favors established firms that have the experience and resources to deal with it.
Ed. Notes: Regulations deliver an excess burden but so do high costs for locations. Startups need a spot of land to stand on. Yet wherever entrepreneurs congregate, site values rise.
Another big problem is the stockpiling of patents and copyrights by older firms, preventing newbies from exploring those staked out fields of knowledge.
Furthermore, regulations mean jobs for the regulators and for the compliers who fill out the forms. Jobs are about the only way most people can get any income, so meaningless work proliferates. But such jobs are a waste of life.
We could lose regulations and those jobs if we could replace that income from labor (however useless) with an income from land. That is, all of society’s spending for sites (in mortgages and leases) and for natural resources could be redirected in the public treasury via taxes and fees then back out again as dividends, a la Alaska’s oil dividend and Singapore’s land dividend. And as the tax on land goes up, the price for land goes down.
Just as we would charge the full annual rental value for a deed to land, so would we charge the full market value for a patent on an invention or idea. To afford this fee, both inventors and businesses would quit sitting on their assets and rush good new products to market. Firms would relinquish the patents and copyrights that they’re not putting to good use.
Unbarred fields for exploration, coupled with affordable urban parcels, plus an extra income from recovered “rents”, all would liberate the basement inventor and the penny investor; startups would go through the roof!
Of course, to figure all this out, one’s brain could not be senile, either, but as agile as that of entrepreneur launching a startup.