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Business Dissolution/Creation Rate

Started by john c, May 06, 2014, 10:24:04 am

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john c

Found this to be an interesting brief article.  Opens the door to lots of questions including finance, risk aversion and regulation increase.

http://www.washingtonpost.com/blogs/wonkblog/wp/2014/05/05/u-s-businesses-are-being-destroyed-faster-than-theyre-being-created/

Full article here:

http://www.brookings.edu/~/media/research/files/papers/2014/05/declining%20business%20dynamism%20litan/declining_business_dynamism_hathaway_litan.pdf

HawgWild

Interesting article. So, there's no correlation between taxing the "job creators" and business creation? Is that what this says?

"There was no significant relationship one way or the other. For example, New York, which showed the lowest decrease in new businesses, actually scored dead last in the Tax Foundation's ranking. Wyoming had one of the largest declines, even though it ranked first in the Tax Foundation's report."

Robert Reich's documentary "Inequality for All" has some interesting things to say about this. Have you seen it? It's available on Netflix or here  http://inequalityforall.com/




 

john c

No, I haven't watched Reich's film.  Maybe you could just provide the thesis.

Regarding the tax question, my first thought is that entrepreneurs are both highly optimistic and local.  They don't really consider taxes as a problem until they are making enough money that it stings or they have time to give that part of the cash flow some time.  While I can't prove the "local" thought it could be proved if the stats showed if the founders had started in a particular state because of the tax structure there.

On the other hand, we are seeing established businesses leaving California and heading for states like Texas.  Kansas and Oklahoma are reducing taxes to lure business and it appears to have some fruit.  However, is it only an income tax consideration driving the decisions?  Probably not.

That said, your statement, on its face, appears to either be valid or beg for a more interesting question.

Old Tusk

It might be the availability of capital. Low population states and poor states lack local capital.
The Democrats are the party that says government can make you richer, smarter, taller and get the crabgrass out of our lawn. Republicans are the party that says government doesn't work, and then they get elected and prove it....P.J. O'Rourke

john c


HawgWild

Quote from: john c on May 06, 2014, 12:42:32 pm
No, I haven't watched Reich's film.  Maybe you could just provide the thesis.

He makes several points. Here are a couple: He questions the amount of jobs that the "job creators" actually create and the likelihood that reducing their taxes creates more jobs. He reminds us that the "free market" isn't in essence free but instead has playing rules which more and more are being refined by the "job creators" through their lobbying and influence on the rule makers.

john c

I'm assuming Reich presented more detail than questioning the "amount" of jobs created.  Was he saying that "job creators" didn't create a relevant number of jobs (in ?'s opinion)?  Was he saying that there is a remarkable break in the curve of tax level/job creation?  Is Reich offering government action as the base line for job creation and that interference by the influence of "job creators" actually diminishes the number of jobs created.  If so, I would deduce that the core of his argument is socialism.  Gee, if Reich tried to wow anyone by saying that the markets aren't totally free his intended audience must be a bunch of freshmen coming into Berkeley.

Not dishing on your synopsis question reply, thank you for providing, just trying to avoid watching Reich wax on, entertaining as he may be.

HawgWild

Not a Reich fan? I understand so I'll bow out as the middle man on this.

john c

Good reply.  Guess I'll have to go watch the film now.  ;)