SCARY NEW DATA ON BUSINESS FORMATIONS …
Frightening new data on the state of American entrepreneurship has been uncovered by a Brookings Institution report released earlier this week.
According to the data – which explored the creation and destruction of U.S. businesses over the past three-and-a-half decades – American “dynamism” is on the wane.
“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,” the report states.
How subdued? From 2009-11, businesses folded faster than they were created – the first time that’s ever happened.
The Brookings’ researchers refer to economic dynamism as “the process by which firms continually are born, fail, expand, and contract.” It’s a key measurement of innovation – which obviously includes creative destruction as part of the cycle.
“Research has firmly established that this dynamic process is vital to productivity and sustained economic growth,” they note. “Entrepreneurs play a critical role in this process, and in net job creation.”
Duh … which is why we’ve specifically advocated for tax relief that benefits entrepreneurs, most of whom are incorporated as sole proprietorships, partnerships or limited liability corporations (meaning they pay the federal government’s oppressive individual income tax).
We’ve long argued that such relief is much better for the economy than government doling out corporate bailouts and other targeted taxpayer-funded incentives to select corporations.
This is further evidence that we were (and are) right …