Listening
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- Aug 27, 2011
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Government Did Not Build Your Business - Reason.com
The 2012 study found that while new business startups created 2.3 million jobs between March 2009 and March 2010, the net job creation from all U.S. private sector firms was minus 1.8 million jobs. The U.S. unemployment rate was then 9.7 percent. The number of business startups has dropped from 554,109 in 1987 to 394,632 in 2010. The 2012 Kaufmann report notes that the share of job creation from young firms has fallen from more than 40 percent in the 1980s to 30 percent now. While acknowledging that the severity of the Great Recession no doubt contributes to this decline in entrepreneurial activity, it is important to note that startups were a major factor in lifting the U.S. economy out of previous economic downturns. Why is new firm creation lagging now? Perhaps it has something to do with the Obama administrations idea of governance.
First, numerous studies find that higher tax and regulatory burdens impede entrepreneurial activity which in turn slow economic growth and job creation. For example, a 2010 study, "The Economic Effects of the Regulatory Burden," done for the Swedish Agency for Growth Policy Analysis (of all places), found that while some rules are necessary for entrepreneurs and markets to function that countries with a light regulatory burden show more rapid economic growth in GDP per capita. A 2008 study, "Government Size, Composition, Volatility, and Economic Growth," done for the European Central Bank examined the effect of government size and fiscal volatility on economic growth for developed countries between 1970 and 2004. The study finds that the bigger government and the slower the growth rate. Every percentage point increase in the share of total revenue going to government decreases overall economic output by more than a tenth of a percent. The report further noted, Public capital formation may indeed turn out to be less productive if devoted to inefficient projects, or if it crowds out private investment. Other words, despite the impression that Obama gives, not every government expenditure on infrastructure or a business subsidy is an investment.
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Just fitting the narrative that our beloved Bozo-In-Chief really should be retired in Jan 2013 and someone brought in who would be less of a Bozo.
Bozo vs. Less Bozo.
The 2012 study found that while new business startups created 2.3 million jobs between March 2009 and March 2010, the net job creation from all U.S. private sector firms was minus 1.8 million jobs. The U.S. unemployment rate was then 9.7 percent. The number of business startups has dropped from 554,109 in 1987 to 394,632 in 2010. The 2012 Kaufmann report notes that the share of job creation from young firms has fallen from more than 40 percent in the 1980s to 30 percent now. While acknowledging that the severity of the Great Recession no doubt contributes to this decline in entrepreneurial activity, it is important to note that startups were a major factor in lifting the U.S. economy out of previous economic downturns. Why is new firm creation lagging now? Perhaps it has something to do with the Obama administrations idea of governance.
First, numerous studies find that higher tax and regulatory burdens impede entrepreneurial activity which in turn slow economic growth and job creation. For example, a 2010 study, "The Economic Effects of the Regulatory Burden," done for the Swedish Agency for Growth Policy Analysis (of all places), found that while some rules are necessary for entrepreneurs and markets to function that countries with a light regulatory burden show more rapid economic growth in GDP per capita. A 2008 study, "Government Size, Composition, Volatility, and Economic Growth," done for the European Central Bank examined the effect of government size and fiscal volatility on economic growth for developed countries between 1970 and 2004. The study finds that the bigger government and the slower the growth rate. Every percentage point increase in the share of total revenue going to government decreases overall economic output by more than a tenth of a percent. The report further noted, Public capital formation may indeed turn out to be less productive if devoted to inefficient projects, or if it crowds out private investment. Other words, despite the impression that Obama gives, not every government expenditure on infrastructure or a business subsidy is an investment.
*****************************
Just fitting the narrative that our beloved Bozo-In-Chief really should be retired in Jan 2013 and someone brought in who would be less of a Bozo.
Bozo vs. Less Bozo.
