We pride ourselves on our entreprenurial spirit, and we have data that indicates we engage in start-ups constantly. In truth, starting a business as a proprietor is much easier than starting a corporation. It is naturally much easier, of course, and government provides some infrastucture and incentives to assist the start-up of proprietors further.
Yet staying in business is a different matter entirely from starting in business. In this case government tips the scales heavily towards the advantage of the corporation, by some of the means mentioned in the previous post.
This explains the both sides of high rates of starting new businesses, mergers and bankruptcies (which have increased by over 300% since the seventies). It also explains the trend since the seventies of a decrease in the percentage of productivity by proprietors.
If you took away the government interventions that benefit either proprietor or corporation, the net result would be to increase the competitive advantage of the proprietor, as they can more easily start up on their own to begin with.
So the next time you hear some think tanks trumpeting our approach to “free enterprise” keep this in perspective.
Tags: Free Market Merit
