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America’s Declining Entrepeneurial Spirit

Is the continuous growth of government destroying America’s entrepreneurial spirit? Physicists inform us that for every action, there is an equal but opposite reaction.

Over the past several decades, the federal government has grown increasing large.  During that same time period, according to a study by the Brookings Institute, the number of new business enterprises getting started has declined, and the number of businesses going out of existence has risen.

According to the vital but worrisome study, “declines in business dynamism in the U.S. overall are a pervasive force throughout the country geographically…”  The Brookings study notes that this decline is seen “in all fifty states and in all but a handful of the more than three hundred and sixty U.S. metropolitan areas during the last three decades.”

The Brookings study does not provide a specific reason for this unwanted trend, but the New York Analysis believes that the growth of government has clearly absorbed funds and energy away from the private sector.

According to a study by usagovpending.com,“Government spending at the start of the 20th century was less than 7 percent of GDP… The 1950s began a steady spending increase to about 36 percent of GDP by 1982. In the 1990s and 2000s government spending stayed about constant at 33-35 percent of GDP, but in the aftermath of the Crash of 2008 spending has jogged up to 40 percent of GDP.”
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There have been some government expenditures that are laudatory and absolutely necessary.  Defending the nation from foreign threats is vital, and Washington has done a commendable job in fighting wars. The development of the interstate highway system was essential for the growth of the economy, and funds spent on advanced scientific research are the groundwork for future economic success.

But far less successful have been the many expenditures on areas not traditionally under federal jurisdiction.  There is no indication, to cite one example,  that the numerous anti-poverty programs developed since the 1960s have noticeably decreased the poverty rate, but they have cost the taxpayers vast sums, draining cash that could have been used more productively by the private sector to increase employment, which would have achieved a more salutary effect on poverty.

The vast increase in Washington’s regulatory role, and those of states and municipalities as well,  can reasonably be noted as a disincentive to the creation of small businesses.  The creation of a new enterprise can be daunting and costly enough, but when an array of bureaucratic hurdles are added to the challenge, the effort my appear sufficiently daunting to discourage would-be entrepreneurs, and provide an obstacle to the continued existence of current firms.

Unfortunately, the increased regulatory trend appears to have accelerated during the past five years.