A Nation of Entrepreneurs?

September 25, 2012
Posted by Jay Livingston

To hear the Republicans tell it, the only people in the US worth mentioning are entrepreneurs (and maybe soldiers). Those who get a paycheck rather than a P/L sheet were absent from the speeches in Tampa. The same is true for the Romney and Ryan campaign talk since then. 

We hear the stories of the successes, the people who put in 70-100 hour weeks, risk their savings, and follow their dream. The trouble with that picture is that most business start-ups fail, even though those entrepreneurs too put in the long hours and take financial risks. Very few new businesses survive ten years. That’s capitalism’s famous creative destruction, which is fine as long as you’re not the one being creatively destroyed. (Dean Baker in yesterday’s Guardian has more on the “we built it” myth.)

Still, the image we get is that the US is just teeming with entrepreneurs.  Now I know I shouldn’t go making comparisons with other countries. As Marco Rubio told us in his speech at the GOP convention, other countries should be more like the US, not the other way round.  But I couldn’t resist taking a peek at the statistics on self-employment in the OECD factbook.  

I expected that the US, with lots of people working for themselves, would be way out ahead, followed, at a distance, by some of the stronger European economies. After all, independent entrepreneurship is what builds a great economy. 

(Click on the chart for a larger view.  Or go to the original spreadsheet.)
The green bar shows the 2010 rate.  The diamond shows the rate in 2000.

There must be problems of definition – not all self-employed people are what we think of as entrepreneurs.  Still, the differences are striking.  The US rate is less than half the OECD average.  And most of the countries with high rates of self-employment are the weaker economies.  Even among the wealthy countries, the US trails all but Luxembourg, which also has the highest income.  Independent work seems to be related to national wealth (and perhaps personal wealth), but not in the way I expected.

(HT: Ceterus Paribus (@imparibus) via Xavier Molénat.)

No comments: