Earlier this month, I wrote a column laying out my misgivings about Uber and other ride-sharing services, as well as the “sharing economy.” It provoked a passionate response from readers on both sides of the issue. Uber drivers on duty are understandably reluctant to say much. But I did have a conversation with one that…More
The Great Recession and its financial crisis put a big dent in the ability of entrepreneurs to raise start-up capital. But the problem runs deeper than the damage caused by the downturn, according to studies by the Ewing Marion Kauffman Foundation. According to Washington Monthly, one report last summer the number of “business births” peaked before the recession before dropping 27 percent in three years. Then:
This spring Kauffman followed with a second report that was in many ways even more dire. Compared to a generation ago, the report said, it is now much harder to start a business in America and keep it running. In 1980 “young firms”– those less than five years old — accounted for almost half of all going concerns. By 2010, their share of the total had collapsed to less than 35 percent. And as the Kauffman authors made clear, this doesn’t only mean less opportunity for America’s entrepreneurs. It also means millions fewer jobs every year, and much less economic growth.
In reality, it appears the situation is even worse, missed or distorted by conventional measures, and business formation has dropped dramatically over the past generation. According to authors Barry Lynn and Lina Khan, “America really is undergoing a radical change in the structure of our political economy. And yet this revolutionary shift of power, control, and wealth has remained all but unrecognized and unstudied by the mainstream media, Capitol Hill, the White House, state legislatures, and both party machines.”More
Apple’s Steve Jobs represented the best of American capitalism. He built and rescued a company rather than setting up a quick outfit meant to be sold for an early profit. He was driven by a desire to serve customers, make their lives better, and not to merely please the bean-counters and Wall Street. He wasn’t a financial swindler. Much of the Occupy Wall Street debate is over whether we will continue to have the country he grew up and thrived in, or an oligarchy that benefits the few. Be sure to check out the wonderful conversation between Jobs and Bill Gates at the All Things D conference, and Walt Mossberg’s appreciation.
All that said, the Jobs story threatens to suck all the oxygen out of the media chamber. Here are a few other important stories:
1. The eurozone crisis is getting worse, as shown by trouble at the Franco-Belgian bank Dexia. It’s turning into a bank run and there’s talk of nationalization. Dexia, a big lender to local governments, has $771 billion in assets. The GDP of Belgium is $471 billion. No wonder the European Central Bank is trying to turn on the liquidity fire hose.More
Whether the government shuts down or not, a major event will happen in D.C. on Monday. The Brookings Institution will roll out its “metropolitan business planning” concept for three pilot areas: Northeast Ohio, the Twin Cities and Seattle. According to Brookings’ Mark Muro, “metro business planning is all about local regions taking the lead in deciding how they want to grow, and what investments they need to make it happen. In short, the plans reflect a new era of more assertive ‘bottom up’ economic development practice.”
The Prosperity Partnership, the region’s coalition of 350 business, government and labor groups, has taken the lead here. The “Puget Sound Prospectus” focuses on building the next major business cluster in clean technology and energy efficiency. The energy efficiency market alone is projected to be worth $700 billion by 2030 and will be a major export market (China is already trying to corner this lucrative niche). It proposes a Building Energy Efficiency and Testing Integration Center where entrepreneurs can test, evaluate and integrate promising products and services before bringing them to market.More
Top of the News: If trouble at Elliott Bay Book Co. doesn’t light a fire under city leaders, we’re witnessing more than a crisis at an iconic Seattle retailer.
Small-business woes are often opaque. One never knows what management missteps were taken, what risks blew up with no safety net, what eccentricities dragged a company to the brink. Elliott Bay already lives in a world of predators — the big chains and (cue irony music) Amazon.com. It is facing the worst recession since the Great Depression, and one marked by a historic consumer pullback.
And, like many small- and mid-sized businesses, it is finding the credit markets still frozen, however much Goldman Sachs has profited from your tax dollars. They aren’t listed on the Dow. They gain no benefit from the return of leverage to the private equity market in its ongoing fire sale of America’s productive wealth.More
Top of the News: Seattle’s Georgetown neighborhood is losing a beloved fixture as Jack Cordova closes the Georgetown Pharmacy. He’s turning 80 and couldn’t find a younger person who would take the business on.
This is more than a sad story, well-told by reporter Mark Rahner. It points to an ongoing erosion of Seattle’s small, home-owned, neighborhood retailers. Not only do they provide the city with a unique treasure that has been lost in most of malled-up, chain-stored, big-box America, but the owners tend to be good neighborhood stewards and leaders.
Much is at work here, from generational change — who wants to run a small pharmacy when you can make much more elsewhere? — to the recession and the ongoing debate over the proper balance of regulation and taxes, to the unfair advantages of giant consolidated corporations. But I’d hate to see Seattle on the downslope to become, say, Tulsa on Puget Sound, with better restaurants. Maybe this is an issue for mayoral candidates to talk about besides the tunnel.More
Top of the News: An entrepreneurial reader asks what kind of business might prosper if we’re headed into a period of inflation.
Historically, the answer is fairly easy: Something connected to real estate, energy, precious metals and certain commodities. Stuff that will keep its value, or even rise, as prices increase and the dollar has less purchasing power.
But that might be advice that’s so ’70s. For example, given the huge distortions left over from the housing bubble, real estate investing is only for the well-capitalized and very patient. And inflation in the 1970s occurred in a world without China as a big player — this time China’s actions will change the game, especially if the Chinese bail out of dollar assets.More