America Losing Its Entrepreneurial Edge? Increasing Dependency, Punishing Risk Taking
A key competitive advantage of the U.S. in the global economy is entrepreneurship. Since the birth of this nation, our entrepreneurial spirit has been deep in our cultural and economic DNA.
But are we losing that entrepreneurial edge? Unfortunately, reasons exist to be concerned.
We currently are suffering through a disturbing drop off in self-employment. Unincorporated self-employed (seasonally adjusted) declined in May, from 9.423 million in April to 9.39 million. From the six-plus-decades high of 10.860 million set in December 2006, unincorporated self-employment has been on a relentless decline. It’s been the worst stretch over the past four-and-a-half decades.
In addition, incorporated self-employment (with data only going back to 2000 and not seasonally adjusted) showed that the May’s 5.305 million level was down from 5.419 million from the same month of last year. Incorporated self-employment also declined from May 2008 to May 2011, with some growth from 2011 to 2012. The May 2013 level is just slightly above where it was in May 2004.
The numbers are not pretty, to say the least. At the same time, government, of course, has been working to subsidize dependency and punish risk taking.
So, for example, the number of food stamp recipients moved from 26.4 million in December 2006 to 47.7 million in March 2013. Also, the number of people receiving payments from the Social Security Disability Insurance Trust Fund registered 8.8 million in 2012, up from 6.8 million in 2006 and 4.7 million in 1998. NPR did a recent report making clear that disability for many has become the new welfare.
On the flip side, 2013 has been the year of tax increases that punish risk taking and success. The top personal income tax rate for individuals earning more than $400,000 ($450,000 for married filers) went from 35 percent to 39.6 percent. Toss in the ObamaCare Medicare income tax increase, and the total top tax rate went from 37.9 percent to 43.4 percent. And the capital gains and dividends tax rate went from 15 percent to 20 percent, with the ObamaCare tax increase pushing the top rate to 23.8 percent. And finally, the death tax rate climbed from 35 percent to 40 percent.
If the U.S. continues to punish risk taking and reward non-work, our under-performance in terms of entrepreneurship and economic growth threaten to persist.