Where Are The Entrepreneurs? More Evidence The Very Heart Of The US Economy Is Failing (Demo)

On June 2, 2013, James Pethokoukis writes on AEUdeas.org:

America makes a grievous error if it dismisses the weak economic expansion — this month marks the fourth anniversary of the end of the Great Recession – as nothing more than the expected aftermath of a deep downturn and financial crisis. Sluggish GDP growth and yet another “jobless” recovery point to a secular problem rather than merely cyclical forces at work.

The US entrepreneurial spirit may be faltering. Check out these data points from The Wall Street Journal: a) In 1982, new companies made up roughly half of all US businesses, according to census data. By 2011, they accounted for just over a third; b) from 1982 through 2011, the share of the labor force working at new companies fell to 11 percent from more than 20 percent; c) Total venture capital invested in the US fell nearly 10 percent last year and is still below its prerecession peak, according to PricewaterhouseCoopers.

The reality is that America has six million corporations, but just 2,600 of them own more than 80 percent of all business assets. And the concentration of ownership is increasingly narrowing, which effectively denies the 99 percent, from a practical standpoint, from acquiring over time a viable individual ownership share in America’s  FUTURE wealth-creating, income-generating productive capital assets. The 1 percent are effectively accumulating the bulk of the money through monopolized productive capital ownership.

Increasingly entrepreneurs end up working for the 1 percent ownership class. Our scientists, engineers, and executive managers who are not owners themselves, except for those in the highest employed positions, are encouraged to work to destroy employment by making the capital owners’ assets work more productively. How much employment can be destroyed by substituting machines for people is a measure of their success––always focused on producing at the lowest cost. Only the people who already own productive capital are the beneficiaries of their work, as they systematically concentrate more and more capital ownership in their stationary 1 percent ranks. Yet the 1 percent are not the people who do the overwhelming consuming. The result is the consumer populous is not able to get the money to buy the products and services produced as a result of substituting machines for people. And yet you can’t have mass production without mass human consumption. It is the exponential disassociation of production and consumption that is the problem in the United States economy, and the reason that ordinary citizens must gain access to productive capital ownership to improve their economic well-being.

Without this necessary balance hopeless poverty, social alienation, and economic breakdown will persist, even though the American economy is ripe with the physical, technical, managerial, and engineering prerequisites for improving the lives of the 99 percent majority. Why? Because there is a crippling organizational malfunction that prevents making full use of the technological prowess that we have developed. The system does not fully facilitate connecting the majority of citizens, who have unsatisfied needs and wants, to the productive capital assets enabling productive efficiency and economic growth.

Once we reform the system to enable consumer earning power to be systematically acquired in the course of the normal operations of the economy by people who need and want more consumer goods and services, the production of products and services should rise to unprecedented levels, and entrepreneurship should flourish. Furthermore, the quality and craftsmanship of products and services, freed of the cornercutting imposed by the chronic shortage of consumer purchasing power, should return to their former high levels. Along with flourishing entrepreneurship, competition should be brisk. Cost should be deflationary and the purchasing power of money should remain stable year after year.