A Start-Up Slump Is a Drag on the Economy. Big Business May Be to Blame.<br />“Obviously the recession had a lot to do with it, but then you’re left with the conundrum: Why hasn’t there been any recovery?”<br />Many economists say the answer could lie in the rising power of the biggest corporations, which they argue is stifling entrepreneurship<br />by making it easier for incumbent businesses to swat away challengers — or else to swallow them before they become a serious threat.<br />Economists say the answer, to some degree, can be found in a start-up slump — a decline<br />in the creation of new businesses — and a growing understanding of what’s behind it.<br />A recent working paper from economists at Princeton and University College London found<br />that American companies are increasingly able to demand prices well above their costs — which according to standard economic theory would lead new companies to enter the market.<br />That decline has coincided with a period of weak productivity growth in the United States as a whole, a trend<br />that has in turn been implicated in the patterns of fitful wage gains and sluggish economic growth since the recession.<br />“We’ve got lots of pieces now that say dynamism has gone down a lot since 2000,” said John Haltiwanger,<br />a University of Maryland economist who has done much of the pioneering work in the field.<br />Polling data from Gallup and other organizations shows a long-running decline in confidence in banks<br />and other big businesses — a concern not likely to abate after high-profile data breaches at Equifax and other companies.
