Saturday, May 10, 2014

Noah Smith on declining dynamism

Should we be worried about [the trend toward large firms]? Many people over the years have bemoaned the death of the mom-and-pop store or the local restaurant, but I'm not sure we should be too concerned. Go visit a poor country, and you'll see that every other family has a food stand or little clothing stall, etc. That kind of "entrepreneurship" takes guts and ingenuity, but it's born out of hardship, not opportunity. The birth and death of small family businesses is one kind of "economic dynamism", but not really the kind that leads to increasing living standards or technological progress. In the U.S., it's not clear from Brookings' data how much high-growth entrepreneurship has changed. 

Read the whole thing, and links therein. See also my comment here.

2 comments:

  1. Certainly food stalls for every family is not the answer. Just the same, people need strong local economies for social reasons. And right now they don't have them, as there is less retail, manufacture and agriculture that rural America is personally involved in. As a baby boomer without work, that has meant a life of increasing loneliness for me, which is one of the primary reasons I am concerned about it.

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    1. I can understand your view and hope things improve for you.

      Part of the problem is that rural economies cannot always support the number of people who want to participate. I am from rural western Colorado but realized long ago that, much as I would prefer to, I would not be able to provide the kind of economic security my parents gave me if I stayed there. I left my hometown and will probably never be able to return during my working life. It is increasingly the case that avoiding the agglomeration benefits of cities is costly to the individual.

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