Obama likes famous entrepreneurs, just not the rest of them

by Ryan Streeter on June 10, 2012. Follow Ryan on Twitter.

This Investor’s Business Daily editorial covers a trend we’ve been hitting on here for awhile: declining startups means fewer jobs and slower growth.

President Obama, as the editorial notes, has done virtually nothing to show he’s on the side of the entrepreneurs who start new companies.

These numbers need more airtime, because they are one of the most important signals of the state of our economy:

According to the Census Bureau, the startup rate, measured as a share of all firms, has plunged to 7% from 9% in 2008 and from 11% in 2006. The pace, moreover, is almost half the 1980s’ peak of 13%.

Now, as I’ve noted before, the trend in declining new companies began before Obama and is driven by multiple factors. But it is startling how little one hears him or anyone in his administration talk about the value that new companies – and the people who create them – produce for America’s economy and way of life.

Obama likes entrepreneurs after they become rich and famous – like Mark Zuckerberg – but has little time or interest in the Zuckerbergs of tomorrow.

Here are a few other important data points in the piece:

  • The rate of business formations hit an all-time high of 13.02% in 1987 — nearly double today’s clip, the Census Bureau found. Entrepreneurs started 544,109 new firms in 1987 compared with 394,632 in 2010 — a drop of 28%.
  • Almost 50% of companies back then were young — in business five or fewer years — vs. only 35% today.
  • In the 1980s, these young entrepreneurial firms accounted for 20% of total private-sector U.S. employment vs. just 12% now.
  • Based on [an OECD]  ranking of regulations, it’s now easier to start a business in Slovenia, Estonia and Hungary — three former Iron Curtain countries — than in America.
  • Canada, our liberal northern neighbor, is now head and shoulders above America in entrepreneurial friendliness. It requires the least number of procedures to start a business of any of the OECD nations.
  • far more Chinese think starting their own firm is “a good career option” than Americans.
  • The Chinese also think they have more “opportunity” to start their own companies and have less “fear of failure” than Americans.