Saturday, March 29, 2014

Noah Smith — "Land of the brave" no more?

Noah Smith speculates on reasons for the decline in entrepreneurship in the US implying an increase in risk aversion. They are all correct in my view. 

What he leaves out is the tightening of bankruptcy law, the purpose of which is to offset consequences of failure in addition to providing recourse for creditors. Now it is skewed toward creditors thanks to creditors' lobbying efforts.

Another reason may be concentration of capital in dominant players, leaving only relatively minor niche markets available for modest startups. Before Walmart and the big box stores, and now Amazon and the Internet, it used to be less difficult to carve out a niche in retail, for instance.

"Land of the brave" no more?
Noah Smith | Assistant Professor of Finance, Stony Brook University

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