Beneath the hood, the once powerful American engine of mass prosperity is malfunctioning
When 10 percent of the American population owns 80 percent of equities, a 35 percent gain in the Nasdaq is a vanity metric rather than a true indicator of system performance. Similarly, low unemployment rates mask the neo-serfdom of the sharing economy — and thus tell only part of the story.
Matt Stoller’s (author of Goliath: The 100-Year War Between Monopoly Power and Democracy) central assertion is that to understand why our economy distributes its fruits so unevenly, you must recognize what many elites and policymakers struggle to see: The present-day prevalence of monopolies and other significant concentrations of economic power is unprecedented in American history.
For all of the bleating about innovation at business schools and elsewhere, American entrepreneurship is in a perilous state. Despite a ten-year bull market, annual small business formation is still at only two thirds of its pre-recession levels. Over a longer horizon the picture only grows bleaker. In the 1970s new firms (defined as those less than one year old) accounted for approximately 15 percent of all American businesses. Forty years later that percentage hovers in the mid-single digits. Our winner-take-all economy is creating fewer businesses and, as a result, inferior investment opportunities. Our business culture now seems purpose-built to celebrate founders and companies whose entire business model can be described as seeking monopoly, while avoiding mention of the collateral damage to other sectors of the economy.
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