American business could use some more pep here or there—who couldn’t. But it does not scream sclerosis, either
All this paints a picture of America Inc that looks stodgier, more parochial and monopolistic. If true, that would be bad news for the spiritual home of free-market capitalism. But is it?set out to test all three hypotheses about American business: that it is less dynamic, less global and more concentrated. The results appear nowhere near as bleak as the doom-sayers would have you believe.
Some of the ferment comes out of necessity. A survey by the Kauffman Foundation, a think-tank, finds that the share of new entrepreneurs who are starting businesses because they spy an opportunity rather than because they lost their jobs dropped from 87% in 2019 to 70% in 2020. But the “physiological shock” of the pandemic may also have led people to re-evaluate their lives, says Kenan Fikri of the Economic Innovation Group, another think-tank.
If dynamism was ever in retreat, then, it no longer appears to be. Even Mr Cowen has all but declared the great stagnation over. What about American firms’ global stature? World trade as a share of planetarypeaked in 2008. In America imports and exports as a proportion of output have declined from an all-time high of 31% in 2011 to 26%. Mr Biden’s policies show a preference for jobs at home over free trade.
More recent census data will not be published for years. So we looked at the market share of the top four firms in the Russell 3000. In seven of the ten sectors, the revenue-weighted market concentration was a bit higher in the past 12 months than in 2019. Similarly, Bank of America, which has tracked the Herfindahl-Hirschman index, a gauge of market concentration, for firms in the Russell 3000 since 1986, reports that it hit a new high in 2020.
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