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> The source of the decline in startup dynamism isn’t yet known Please... massive redistribution of wealth to the already wealthy strangles both potential entr

> The source of the decline in startup dynamism isn’t yet known Please... massive redistribution of wealth to the already wealthy strangles both potential entrepreneurship and the customer base it would have attracted since they don't have disposable income. Let's not play stupid here.

fnwx17 8y ago
brilliant comment. I literally just hit the reply button to tell you that
zappo2938 8y ago
Yes. The concentration of wealth is like a virus killing its host.
weeksie 8y ago
The fact that we have any activity at all shows the indomitable spirit of American entrepreneurialism. Further, the fact that so many Americans ever start businesses without the safety net of healthcare goes to show that we are a nation of optimistic maniacs. The wasted potential economic energy in this country is a tragedy of colossal proportions.
- brightball 8y ago
  Startups supported my married couples are generally the path to success, assuming investors are absent. One of you works a job that provides income and benefits for both of you, while the other works on a startup. Assuming most of what you need is a time investment, this is an approach that works for a lot of households to bootstrap. Higher startup costs make it tougher though.
  - fma 8y ago
    Can confirm...wife started a franchise with a brick and mortar presence. I hold down the stable income. Also have the help of parents to look after our baby, as sometimes I need to help her on nights/weekends. The same is true for other franchisee's we've met (1 remains the breadwinner). If you bought into an existing one that already generates revenue, then sometimes both spouses work there full time. But that means you need to have had $$$ in the first place. We know of one franchisee who's wife is a stay at home mom. He quit his job to start one...less than a year with slow growth, he closed the center and went back to a traditional salaried job. He didn't pick a good location for exponential growth, but IMHO he had enough steady growth and would have been profitable if he could stick around for another few months.
- TAForObvReasons 8y ago
  Plenty of people were born into wealth or have enough saved up that they could afford to take a risk. The safety net enabled people in lower socioeconomic classes, who didn't have the birthright benefits to survive a tumble, to take the same type of risks that the upper classes could. The erosion of the net effectively killed the bottom of the ladder The extreme downvoting probably reflect the affluent upbringing of a large portion of the HN community.
  - fzeroracer 8y ago
    As someone who was raised in the bottom of the socioeconomic classes it's interesting and a bit frustrating talking to people who don't understand what risk taking meant for us versus people with more money and a safety net. For me, many of the risks I took to get to this point would've involved either bankruptcy or my death if they had failed. When I talked to my coworkers on how they feel people should rise up the ladder, they didn't seem to get that the people that made it simply had a good roll of the dice.
    - TAForObvReasons 8y ago
      This is an underreported and unfortunately minimized part of the story of most successes. For example, Bill Gates had a solid financial backing when he left Harvard: http://philip.greenspun.com/bg/ http://philip.greenspun.com/bg/ > [Bill Gates' Great-Grandfather] Maxwell founded Seattle's National City Bank in 1906. His son, James Willard Maxwell was also a banker and established a million-dollar trust fund for William (Bill) Henry Gates III. Bezos' parents kicked money into what would become Amazon: > The first initial start-up capital for Amazon.com came primarily from my parents, and they invested a large fraction of their life savings in what became Amazon.com
      - TangoTrotFox 8y ago
        And Musk started with very little - at one point seeing if could get by on a dollar a day if it came to that. Or Kalanick who things went bad enough for that he was forced to move back in with his parents as an adult, and then later to Thailand for a lower cost of living. Or Dell who worked as a dish washer and newspaper boy - eventually using those funds to drop out of college to focus on his booming computer assembly/upgrade 'business' he was running out of his dorm room.
- EliRivers 8y ago
  I think the US is middle of the pack in terms of entrepreneurialism [1], but it's a hard thing to define and measure and there are a lot of confounding factors and other such around these measures. I suspect it's impossible to get a meaningful comparison unless the countries being compared are very similar. [1] https://blog.approvedindex.co.uk/2015/06/25/map-entrepreneurship-around-the-world/ https://blog.approvedindex.co.uk/2015/06/25/map-entrepreneur...
- wozniacki 8y ago
  The wasted potential economic energy in this country is a tragedy of colossal proportions. Interesting observation. Now hypothetically lets imagine for the sake of argument we've a safety net of the likes of somewhere on the spectrum between France and one of the Scandinavian countries. All else equal, do you think the American entrepreneurial dynamism you see now would still be around if we had one such welfare state-lite? Or do you think people would grow lackadaisical? Have there been studies on this sort of thing? I'm not implying that its necessarily bad but this comes up a lot in discussions of UBI and such. Tangentially, just last week there was a discussion on how labor laws make life difficult for startups in France.[1] The discussion there makes you wonder perhaps the issues surrounding what actually spurs the indomitable entrepreneurial instinct is more complex than it seems on the surface.[2] [1] Macron Vowed to Make France a ‘Startup Nation.’ Is It Getting There? (nytimes.com) https://news.ycombinator.com/item?id=17169314 https://news.ycombinator.com/item?id=17169314 [2] https://news.ycombinator.com/item?id=17169740 https://news.ycombinator.com/item?id=17169740
  - yawz 8y ago
    It's interesting to see the differences in the difficulties in starting a business in the US vs. Europe. It is "easier" to start a business in the US, but it is riskier because of the general weakness of the social safety net (healthcare, social helps, free childcare, etc.).
- hnisgroupthink 8y ago
  Yes exactly. People harp on cryptocurrencies for their rampant scams and problems. They are correct. But it's still competitive because our current system is embroiled with significant corruption.
snikeris 8y ago
I'm an average software developer in the USA. Would you please provide some examples of how my wealth is being redistributed to the already wealthy?
- protonimitate 8y ago
  How much do you pay for rent? Who does that rent go to? How much do you pay for your car payment? Who does that go to? How much of your paycheck goes to health care 'insurance'? Who does that go to? How much do you spend on frivolous items/entertainment that is owned by a mega-corp? How much did you pay for college tuition? How much of any of that do you think goes into lining the pockets of the highest person in the corporate food chain? If you don't see the issue you are being willfully ignorant. Stop it.
- organsnyder 8y ago
  What does the CEO of your company make?
  - influx 8y ago
    A lot, but he also provides a lot more value than I do.
    - Drakim 8y ago
      But does he provide x200 more value than you? Think of it this way, if there was two hundred of you all working together, would he still be adding more value than you?
      - artificial 8y ago
        Why not work on starting a company instead of working for people you consider unfair?
        organsnyder 8y ago
        Many of us have families to support, and can't afford to take the risk (especially with the poor social safety nets in the United States).
mhneu 8y ago
The anti-immigration campaign doesn’t help startups either. The majority of startup founders are immigrants[1], benefiting from the longtime American ideal that America welcomes immigrants. Smart potential immigrants can start companies in other countries. [1]https://www.statista.com/chart/14065/countries-of-origin-of-immigrant-founders-of-billion-dollar-startups/ https://www.statista.com/chart/14065/countries-of-origin-of-...
- frgtpsswrdlame 8y ago
  I think there's a difference between the sort of high-skill and/or wealthy immigrants that create billion dollar tech companies and the low-skill immigrants that americans are mostly mad about.
  - fzeroracer 8y ago
    There seems to be very little distinction though when those high-skilled immigrants are being chased out of the country all the same, or start to avoid America because of that fear.
    - ihsw2 8y ago
      There is wide and abundant distinction that the left seems to willfully ignore with immense effort -- the distinction between legal and illegal immigrants. The argument was never anti-immigration, it was always anti-illegal immigration and anti-unrestrained immigration. This nuance is important.
      - pwinnski 8y ago
        This nuance has been erased by an administration that has canceled programs for legal immigration, then used that retroactively-illegal status to deport people who have been here for decades. Perhaps for you the distinction is important, but in terms of policy, there is no difference at all.
        8y ago
etherael 8y ago
Redistribution of wealth is bad enough to begin with, but redistributing it to pad the coffers of political patrons and harebrained unproductive finance that destroys rather than produces wealth really shows you how messed up the system can get. It seems the productive end up paying immense tax and rent burdens to the unproductive tending moats and establishing political capture and networks, for the supremely undesirable service of making everything worse.
thosakwe 8y ago
To add to this, competition with the already wealthy is hard enough as-is, but when large, well-known companies have FREE offshoots in your domain, it’s almost impossible for a company to survive. Can Snapchat compete with Facebook/Instagram stories? Can a startup compete with Google Analytics? Can OfferUp compete with eBay? The list goes on...
- fragmede 8y ago
  Competing with free is challenging, but maybe there are other examples to choose from. Snapchat doesn't cost money for consumers to use it, same as Facebook. That's not due to competition with Facebook, and arguably it's not competing with a Facebook offshoot either. There are a number of analytics platforms depending on what you're looking for (eg Mixpanel and New Relic) that come to mind readily. eBay faces competition from a little company called Amazon.
- tluyben2 8y ago
  I think that might be a different mindset I have often observed between my EU ans my US friends; US friends keep talking about competition and becoming market leader etc, my EU friends just want to run long term companies. I know many people here who run sites for 15-20 years that make enough every year since inception for a comfortable (meaning building pension and saving) 3-4 people company. Even with free offshoots in the domain that were already there sometimes when they started. You definitely can compete with huge companies that have no or automated support; you probably cannot beat them, but you can sustain a good profitable company for a long time and they might buy you in the end if they see you grow in your region while they do not.
sgregnt 8y ago
Can you give any model to explain cause and effect, how what you say effects startup? IMHO, If anything, then abundance of free capital should stimulates startups through avaliable capital investment, easy money. So I'd tribute the change in startups due to information technology becoming more mature and having less opportunities.
Jdam 8y ago
Question: What do the wealthy people do with their fortunes? Hint: They’re not letting it sit idle in their savings account.
- Clubber 8y ago
  The more important question is how did the wealthy get their fortunes. I think the last I checked, 2/3rds of them inherited it. Some hard work there. https://www.cnbc.com/id/49167533 https://www.cnbc.com/id/49167533
  - briandear 8y ago
    So what. Should we lobotomize ultra high IQ children in order to level the playing field? Genetics and finances are unfair. However, some janitor’s kid could become a millionaire if he can execute on good ideas. Some milkionaire’s kid can become broke if she doesn’t manage the money well. Stop being jealous— what someone else has doesn’t affect you. You can still create your own wealth.
    - Clubber 8y ago
      >lobotomize ultra high IQ children Who said anything about high IQ? You think kids who inherit their parent's money have high IQs? >However, some janitor’s kid could become a millionaire if he can execute on good ideas. He could win the lottery too. >Some milkionaire’s kid Freudian slip. >what someone else has doesn’t affect you. Maybe so, maybe not, but if I have something a rich kid wants, like say a software idea, they can easily ruin me through lawsuits. >can become broke if she doesn’t manage the money well. Yes, but I'll bet bad choices from a millionaire's kid has a less likelihood of ruin than bad choices from a janitor's kid.
    - maccard 8y ago
      The odds are stacked against both in those scenarios. Some janitors kid is unlikely to execute on good ideas, as he has nothing to fall back on if things go wrong, so he is unlikely to take the risk in the first place. Meanwhile, some millionaire's kid is also unlikely to end up broke even if they criminally mismanage (see current POTUS as a prime example)
thanatropism 8y ago
Are you one of those people who think that's a fresh insight that The Atlantic or New Yorker or Piketty came up with recently? Or are you aware of Marx's concept of dialectical contradictions in capitalism eventually leading to its downfall? https://en.wikipedia.org/wiki/Immiseration_thesis https://en.wikipedia.org/wiki/Immiseration_thesis
WhompingWindows 8y ago
Is it playing stupid or is it careful journalism? Causality is quite hard to prove in a case such as this. While we do have a correlation between lack of broad wealth distribution and lack of entrepreneurial dynamism, it seems to me that such a broad category of economics as "# of young firms" is going to be beholden to numerous variables, including legal climate, taxes, new platforms to innovate upon, anti-competitive practices by the big 5, and a general misallocation of talent where our brightest minds are working on how to increase ad revenue, not increase society's overall well-being.
TangoTrotFox 8y ago
Your comment would imply that there would be a correlation between high entrepreneurship and high income equality, but the exact opposite seems to be the case. And I think there's even a simple reason for this. The fact people can raise tens of millions of dollars for ideas as stupid as a DRM'd fruit juice packet opener machine is a result of the fact that there's a lot of people with a lot of money looking to invest in pretty much anything. Maybe there's an argument to be made that they're investing these stupid ideas in lieu of other options that could be more desirable by one metric or another, but the excess of money is I think, without question, what drove the meteoric rise in entrepreneurship. When nobody has the surplus of money to invest in ideas, it's tough to get the capital to go out and try to make them happen.
snappyTertle 8y ago
The wealthy get handouts? What redistribution?
ramen-san 8y ago
The share of young high tech companies seems pretty consistent over the decades, with the exception of dot com, which was no doubt an aberration. Not the norm. Also, it has ALWAYS been a tremendous risk and challenge starting your own venture. Likely always will be, because there is also tremendous rewards for making it happen. If anything, right now seems like one of the easiest / best times to start a high tech venture in history. Plentiful angel and VC capital. Incredible resources and examples teaching you how to do it (YC, incubators, internet). Flexible tools that can scale up and down depending on company size / need (AWS, open source technologies, facebook / google ads). To put things in context, I just finished Shoe Dog - the story of Phil Knight / Nike - back in the 60's they didn't even have the concept of VC. His biggest challenge was just getting someone to loan him a little cash so he could finance his inventory which was flying off the shelf! The point is that entrepreneurship is destined to be about tackling a very hard problem that nobody else has solved before - in the 60's that was simply getting financing to fund expansion. Today it's something different. In both cases though, it requires being on the edge and pushing the boundary. I would rather be alive today, playing this game. While the gatekeepers are still around, they have much less power than they used to.
jandrewrogers 8y ago
The lack of disposable income is greatly overstated. In the US, the median disposable income is ~$1000 per month. This is the money left over after all normal middle class expenses are accounted for i.e. money you can save or spend on luxuries. And the average disposable income is twice the median. While it is true that there are many Americans with little or no disposable income, that does not apply to the majority of Americans.

fnwx17 8y ago

brilliant comment. I literally just hit the reply button to tell you that

zappo2938 8y ago

Yes. The concentration of wealth is like a virus killing its host.

weeksie 8y ago

The fact that we have any activity at all shows the indomitable spirit of American entrepreneurialism. Further, the fact that so many Americans ever start businesses without the safety net of healthcare goes to show that we are a nation of optimistic maniacs. The wasted potential economic energy in this country is a tragedy of colossal proportions.

brightball 8y ago
Startups supported my married couples are generally the path to success, assuming investors are absent. One of you works a job that provides income and benefits for both of you, while the other works on a startup. Assuming most of what you need is a time investment, this is an approach that works for a lot of households to bootstrap. Higher startup costs make it tougher though.
- fma 8y ago
  Can confirm...wife started a franchise with a brick and mortar presence. I hold down the stable income. Also have the help of parents to look after our baby, as sometimes I need to help her on nights/weekends. The same is true for other franchisee's we've met (1 remains the breadwinner). If you bought into an existing one that already generates revenue, then sometimes both spouses work there full time. But that means you need to have had $$$ in the first place. We know of one franchisee who's wife is a stay at home mom. He quit his job to start one...less than a year with slow growth, he closed the center and went back to a traditional salaried job. He didn't pick a good location for exponential growth, but IMHO he had enough steady growth and would have been profitable if he could stick around for another few months.
TAForObvReasons 8y ago
Plenty of people were born into wealth or have enough saved up that they could afford to take a risk. The safety net enabled people in lower socioeconomic classes, who didn't have the birthright benefits to survive a tumble, to take the same type of risks that the upper classes could. The erosion of the net effectively killed the bottom of the ladder The extreme downvoting probably reflect the affluent upbringing of a large portion of the HN community.
- fzeroracer 8y ago
  As someone who was raised in the bottom of the socioeconomic classes it's interesting and a bit frustrating talking to people who don't understand what risk taking meant for us versus people with more money and a safety net. For me, many of the risks I took to get to this point would've involved either bankruptcy or my death if they had failed. When I talked to my coworkers on how they feel people should rise up the ladder, they didn't seem to get that the people that made it simply had a good roll of the dice.
  - TAForObvReasons 8y ago
    This is an underreported and unfortunately minimized part of the story of most successes. For example, Bill Gates had a solid financial backing when he left Harvard: http://philip.greenspun.com/bg/ http://philip.greenspun.com/bg/ > [Bill Gates' Great-Grandfather] Maxwell founded Seattle's National City Bank in 1906. His son, James Willard Maxwell was also a banker and established a million-dollar trust fund for William (Bill) Henry Gates III. Bezos' parents kicked money into what would become Amazon: > The first initial start-up capital for Amazon.com came primarily from my parents, and they invested a large fraction of their life savings in what became Amazon.com
    - TangoTrotFox 8y ago
      And Musk started with very little - at one point seeing if could get by on a dollar a day if it came to that. Or Kalanick who things went bad enough for that he was forced to move back in with his parents as an adult, and then later to Thailand for a lower cost of living. Or Dell who worked as a dish washer and newspaper boy - eventually using those funds to drop out of college to focus on his booming computer assembly/upgrade 'business' he was running out of his dorm room.
EliRivers 8y ago
I think the US is middle of the pack in terms of entrepreneurialism [1], but it's a hard thing to define and measure and there are a lot of confounding factors and other such around these measures. I suspect it's impossible to get a meaningful comparison unless the countries being compared are very similar. [1] https://blog.approvedindex.co.uk/2015/06/25/map-entrepreneurship-around-the-world/ https://blog.approvedindex.co.uk/2015/06/25/map-entrepreneur...
wozniacki 8y ago
The wasted potential economic energy in this country is a tragedy of colossal proportions. Interesting observation. Now hypothetically lets imagine for the sake of argument we've a safety net of the likes of somewhere on the spectrum between France and one of the Scandinavian countries. All else equal, do you think the American entrepreneurial dynamism you see now would still be around if we had one such welfare state-lite? Or do you think people would grow lackadaisical? Have there been studies on this sort of thing? I'm not implying that its necessarily bad but this comes up a lot in discussions of UBI and such. Tangentially, just last week there was a discussion on how labor laws make life difficult for startups in France.[1] The discussion there makes you wonder perhaps the issues surrounding what actually spurs the indomitable entrepreneurial instinct is more complex than it seems on the surface.[2] [1] Macron Vowed to Make France a ‘Startup Nation.’ Is It Getting There? (nytimes.com) https://news.ycombinator.com/item?id=17169314 https://news.ycombinator.com/item?id=17169314 [2] https://news.ycombinator.com/item?id=17169740 https://news.ycombinator.com/item?id=17169740
- yawz 8y ago
  It's interesting to see the differences in the difficulties in starting a business in the US vs. Europe. It is "easier" to start a business in the US, but it is riskier because of the general weakness of the social safety net (healthcare, social helps, free childcare, etc.).
hnisgroupthink 8y ago
Yes exactly. People harp on cryptocurrencies for their rampant scams and problems. They are correct. But it's still competitive because our current system is embroiled with significant corruption.

snikeris 8y ago

I'm an average software developer in the USA. Would you please provide some examples of how my wealth is being redistributed to the already wealthy?

protonimitate 8y ago
How much do you pay for rent? Who does that rent go to? How much do you pay for your car payment? Who does that go to? How much of your paycheck goes to health care 'insurance'? Who does that go to? How much do you spend on frivolous items/entertainment that is owned by a mega-corp? How much did you pay for college tuition? How much of any of that do you think goes into lining the pockets of the highest person in the corporate food chain? If you don't see the issue you are being willfully ignorant. Stop it.
organsnyder 8y ago
What does the CEO of your company make?
- influx 8y ago
  A lot, but he also provides a lot more value than I do.
  - Drakim 8y ago
    But does he provide x200 more value than you? Think of it this way, if there was two hundred of you all working together, would he still be adding more value than you?
    - artificial 8y ago
      Why not work on starting a company instead of working for people you consider unfair?
      - organsnyder 8y ago
        Many of us have families to support, and can't afford to take the risk (especially with the poor social safety nets in the United States).

mhneu 8y ago

The anti-immigration campaign doesn’t help startups either. The majority of startup founders are immigrants[1], benefiting from the longtime American ideal that America welcomes immigrants. Smart potential immigrants can start companies in other countries. [1]https://www.statista.com/chart/14065/countries-of-origin-of-immigrant-founders-of-billion-dollar-startups/ https://www.statista.com/chart/14065/countries-of-origin-of-...

frgtpsswrdlame 8y ago
I think there's a difference between the sort of high-skill and/or wealthy immigrants that create billion dollar tech companies and the low-skill immigrants that americans are mostly mad about.
- fzeroracer 8y ago
  There seems to be very little distinction though when those high-skilled immigrants are being chased out of the country all the same, or start to avoid America because of that fear.
  - ihsw2 8y ago
    There is wide and abundant distinction that the left seems to willfully ignore with immense effort -- the distinction between legal and illegal immigrants. The argument was never anti-immigration, it was always anti-illegal immigration and anti-unrestrained immigration. This nuance is important.
    - pwinnski 8y ago
      This nuance has been erased by an administration that has canceled programs for legal immigration, then used that retroactively-illegal status to deport people who have been here for decades. Perhaps for you the distinction is important, but in terms of policy, there is no difference at all.
      - 8y ago

etherael 8y ago

Redistribution of wealth is bad enough to begin with, but redistributing it to pad the coffers of political patrons and harebrained unproductive finance that destroys rather than produces wealth really shows you how messed up the system can get. It seems the productive end up paying immense tax and rent burdens to the unproductive tending moats and establishing political capture and networks, for the supremely undesirable service of making everything worse.

thosakwe 8y ago

To add to this, competition with the already wealthy is hard enough as-is, but when large, well-known companies have FREE offshoots in your domain, it’s almost impossible for a company to survive. Can Snapchat compete with Facebook/Instagram stories? Can a startup compete with Google Analytics? Can OfferUp compete with eBay? The list goes on...

fragmede 8y ago
Competing with free is challenging, but maybe there are other examples to choose from. Snapchat doesn't cost money for consumers to use it, same as Facebook. That's not due to competition with Facebook, and arguably it's not competing with a Facebook offshoot either. There are a number of analytics platforms depending on what you're looking for (eg Mixpanel and New Relic) that come to mind readily. eBay faces competition from a little company called Amazon.
tluyben2 8y ago
I think that might be a different mindset I have often observed between my EU ans my US friends; US friends keep talking about competition and becoming market leader etc, my EU friends just want to run long term companies. I know many people here who run sites for 15-20 years that make enough every year since inception for a comfortable (meaning building pension and saving) 3-4 people company. Even with free offshoots in the domain that were already there sometimes when they started. You definitely can compete with huge companies that have no or automated support; you probably cannot beat them, but you can sustain a good profitable company for a long time and they might buy you in the end if they see you grow in your region while they do not.

sgregnt 8y ago

Can you give any model to explain cause and effect, how what you say effects startup? IMHO, If anything, then abundance of free capital should stimulates startups through avaliable capital investment, easy money. So I'd tribute the change in startups due to information technology becoming more mature and having less opportunities.

Jdam 8y ago

Question: What do the wealthy people do with their fortunes? Hint: They’re not letting it sit idle in their savings account.

Clubber 8y ago
The more important question is how did the wealthy get their fortunes. I think the last I checked, 2/3rds of them inherited it. Some hard work there. https://www.cnbc.com/id/49167533 https://www.cnbc.com/id/49167533
- briandear 8y ago
  So what. Should we lobotomize ultra high IQ children in order to level the playing field? Genetics and finances are unfair. However, some janitor’s kid could become a millionaire if he can execute on good ideas. Some milkionaire’s kid can become broke if she doesn’t manage the money well. Stop being jealous— what someone else has doesn’t affect you. You can still create your own wealth.
  - Clubber 8y ago
    >lobotomize ultra high IQ children Who said anything about high IQ? You think kids who inherit their parent's money have high IQs? >However, some janitor’s kid could become a millionaire if he can execute on good ideas. He could win the lottery too. >Some milkionaire’s kid Freudian slip. >what someone else has doesn’t affect you. Maybe so, maybe not, but if I have something a rich kid wants, like say a software idea, they can easily ruin me through lawsuits. >can become broke if she doesn’t manage the money well. Yes, but I'll bet bad choices from a millionaire's kid has a less likelihood of ruin than bad choices from a janitor's kid.
  - maccard 8y ago
    The odds are stacked against both in those scenarios. Some janitors kid is unlikely to execute on good ideas, as he has nothing to fall back on if things go wrong, so he is unlikely to take the risk in the first place. Meanwhile, some millionaire's kid is also unlikely to end up broke even if they criminally mismanage (see current POTUS as a prime example)

thanatropism 8y ago

Are you one of those people who think that's a fresh insight that The Atlantic or New Yorker or Piketty came up with recently? Or are you aware of Marx's concept of dialectical contradictions in capitalism eventually leading to its downfall? https://en.wikipedia.org/wiki/Immiseration_thesis https://en.wikipedia.org/wiki/Immiseration_thesis

WhompingWindows 8y ago

Is it playing stupid or is it careful journalism? Causality is quite hard to prove in a case such as this. While we do have a correlation between lack of broad wealth distribution and lack of entrepreneurial dynamism, it seems to me that such a broad category of economics as "# of young firms" is going to be beholden to numerous variables, including legal climate, taxes, new platforms to innovate upon, anti-competitive practices by the big 5, and a general misallocation of talent where our brightest minds are working on how to increase ad revenue, not increase society's overall well-being.

TangoTrotFox 8y ago

Your comment would imply that there would be a correlation between high entrepreneurship and high income equality, but the exact opposite seems to be the case. And I think there's even a simple reason for this. The fact people can raise tens of millions of dollars for ideas as stupid as a DRM'd fruit juice packet opener machine is a result of the fact that there's a lot of people with a lot of money looking to invest in pretty much anything. Maybe there's an argument to be made that they're investing these stupid ideas in lieu of other options that could be more desirable by one metric or another, but the excess of money is I think, without question, what drove the meteoric rise in entrepreneurship. When nobody has the surplus of money to invest in ideas, it's tough to get the capital to go out and try to make them happen.

snappyTertle 8y ago

The wealthy get handouts? What redistribution?

ramen-san 8y ago

The share of young high tech companies seems pretty consistent over the decades, with the exception of dot com, which was no doubt an aberration. Not the norm. Also, it has ALWAYS been a tremendous risk and challenge starting your own venture. Likely always will be, because there is also tremendous rewards for making it happen. If anything, right now seems like one of the easiest / best times to start a high tech venture in history. Plentiful angel and VC capital. Incredible resources and examples teaching you how to do it (YC, incubators, internet). Flexible tools that can scale up and down depending on company size / need (AWS, open source technologies, facebook / google ads). To put things in context, I just finished Shoe Dog - the story of Phil Knight / Nike - back in the 60's they didn't even have the concept of VC. His biggest challenge was just getting someone to loan him a little cash so he could finance his inventory which was flying off the shelf! The point is that entrepreneurship is destined to be about tackling a very hard problem that nobody else has solved before - in the 60's that was simply getting financing to fund expansion. Today it's something different. In both cases though, it requires being on the edge and pushing the boundary. I would rather be alive today, playing this game. While the gatekeepers are still around, they have much less power than they used to.

jandrewrogers 8y ago

The lack of disposable income is greatly overstated. In the US, the median disposable income is ~$1000 per month. This is the money left over after all normal middle class expenses are accounted for i.e. money you can save or spend on luxuries. And the average disposable income is twice the median. While it is true that there are many Americans with little or no disposable income, that does not apply to the majority of Americans.