In it, he asserts that the conventional wisdom about entrepreneurship in our economy doesn’t align with reality:
“In our mind’s eye, the economy is swarming with entrepreneurs. Competition is intense. Old-line firms adapt, or die. Just the opposite may be happening: Evidence suggests that entrepreneurship is in decline and that U.S. firms are becoming older, more entrenched and less dynamic.”
Samuelson is right. While we are inundated by high-profile startup success stories, the hard truth is that new businesses are now being formed at historically low rates — with declines even in key sectors like life sciences and technology. Consider this: if startups comprised the same percentage of the U.S. businesses community as in 1987, there would be 240,000 more of them today. This statistic is particularly troubling in the context of slow GDP growth and ongoing employment crisis, because most net new jobs in the U.S. come from the startup community.
Policymakers at every level should be troubled by the decline in entrepreneurship. It’s time for fresh thinking on how to reverse this trend.