On the Nature of Things | Forum

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In the 1950s, 25% of Americans were business owners.
Today, just 7.8% own a business.

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Less than 10% of Americans are pursuing one of the greatest freedoms we have: The ability to be our own bosses.

Statistics like this could imply the majority of us would rather work for someone else. But, we know that's not true! A recent Gallup poll shows 70%+ of Americans don't like their jobs. In fact, plenty of studies over the last 10 years support the rising rate of employee dissatisfaction.The number one reason given? Employees don't like their manager. But, could it be that no manager will ever be good enough and the real problem lies in people not stepping up to business ownership?

Is the death of small business to blame?

We know part of the problem lies with the rapid growth of mega-stores like Wal-mart and other large companies that crushed local businesses, i.e. "mom and pop" hardware stores couldn't compete with the Home Depot and Lowe's down the road.

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Red tape has become too onerous but it does not explain this trend. Low business ownership is the expected outcome when labor is specialized. Economies of scale have rendered most of the types of small businesses that were around in the 1950s and earlier unprofitable. There are virtually no sectors of the economy left that are unaffected by automation and Internet-level economies of scale. What small business continue to thrive -- restaurants, laundry services, plumbers, construction and landscaping, etc. -- are constrained by limited demand. The same case can be made for creative services. There isn't enough variety both in consumer tastes and artist output to justify an economy where everyone is selling art, music, and literature to each other.

Starting a business is difficult and out of reach for the vast majority of society not because of regulation but because individuals rarely have access to the capital and know-how required to compete with established enterprises. Business is little more than buying (or producing) cheap and selling high. Try and think of how you can do that or how to add enough value to an existing product/service that would justify sales at a higher price. You probably can't think of anything because otherwise, you'd be in business yourself. It's a sort of generalized 'no arbitrage theorem' at work.

I couldn't quickly find much good data on self-employment in countries with a more favorable regulatory environment than ours (i.e., Singapore and Hong Kong) but a cursory search seems to indicate that Singapore's self-employment rate is a paltry 14%, supporting the argument that advanced economies with specialized work forces will become dominated by larger enterprises. This has certainly been the trend in East Asia for the past 100+ years.

14% is nearly double 7.8% and a significant amount of people in populations of many millions.

you are perfectly correct that modern scaling efficiency and specialization is responsible for a lot of the job destruction but their is no need for government to make it even worse.

This was all predicted as Obama and Democrats rolled out anti small business policy in 2009. The predictions came true.

noddy: True, but without knowing exactly how that number was assessed, it's hard to infer much from it. In the United States, self-employment varies considerably by state (and has little to do with politics) and presumably within states by metro area.

Mr. Perfect: let's hear about self-employment opportunities that were snatched away by big bad government.

We've spent nearly 5 years detailing them, little late now to start paying attention.

death by a million cuts and every single cut has some horror story of worst case scenario that caused the rules to change.

a true (?!) cost benefit analysis on the legal response versus the original problem it tried to fix is impossible because we dont have, and will never have holistic metrics that cover the entire of society and its chaotic interactions.

so we are left with shouting at each other over preferences, god bless authoritarian conformity and scared people.

noddy wrote:death by a million cuts and every single cut has some horror story of worst case scenario that caused the rules to change.

a true (?!) cost benefit analysis on the legal response versus the original problem it tried to fix is impossible because we dont have, and will never have holistic metrics that cover the entire of society and its chaotic interactions.

so we are left with shouting at each other over preferences, god bless authoritarian conformity and scared people.

Good point

you say chaotic..... I say complex... toe-may-toe.... toe-mat-oh

the surest outcome of observing complex systems with thousands or millions of participants, is that each observer can find thousands of datapoints that prove they are right and anyone who disagrees with them is wrong.

....people..... they're all like that!

Simple Minded wrote: the surest outcome of observing complex systems with thousands or millions of participants, is that each observer can find thousands of datapoints that prove they are right and anyone who disagrees with them is wrong.

And yet some people are right while others are wrong. How would we determine that I wonder.

Mr. Perfect wrote:

Simple Minded wrote: the surest outcome of observing complex systems with thousands or millions of participants, is that each observer can find thousands of datapoints that prove they are right and anyone who disagrees with them is wrong.

And yet some people are right while others are wrong. How would we determine that I wonder.

same as ever, the hard way.

noddy wrote:

Mr. Perfect wrote:

Simple Minded wrote: the surest outcome of observing complex systems with thousands or millions of participants, is that each observer can find thousands of datapoints that prove they are right and anyone who disagrees with them is wrong.

And yet some people are right while others are wrong. How would we determine that I wonder.

same as ever, the hard way.

Me thinketh that the person who can't discern the "hard" way from the "easy" way, would have a tough (hard?) time determining "right" from "wrong."

Typhoon wrote:Global "Ease of doing business"

"Paying Taxes :64" Particularly employment taxes. There are so many of them.