On April Fools’ Day of 1976, two very different businesses were launched:
Perhaps no day illustrates the rate that varying institutions change better than April Fool’s Day 1976, when two divergent businesses began operation. The government-funded, rustbelt-oriented Conrail began operations on the same day that a corporation called Apple Computer was formed by three young Californians: Steve Jobs, Steve Wozniak, and Ronald Wayne (who left shortly thereafter, becoming the computer industry’s equivalent of The Beatles’ Pete Best). And it’s been the computer that has transformed how wealth is created in the last 40 years, just as the railroad did in the 19th century.
Besides tremendous changes in the economy and wealth creation, the 1970s was a decade full of fuzzyheaded thinking, and a load of doomsday books predicting economic and environmental doomsday. The Tofflers’ 1980 book, The Third Wave (the concepts of which Revolutionary Wealth builds on) bucked this trend. In the midst of the hyperinflation, astronomical interest rates, and rampant unemployment of the Carter-era 1970s, the Tofflers were able to look past that to see the actual long-term causes of many of these trends: much of the free world was making the transition from what a rustbelt mass-production assembly line economy of heavy manufacturing to a high-tech, on demand, service-oriented economy.
That’s from my Tech Central Station review of Alvin Toffler’s most recent book to date, Revolutionary Wealth, published in 2006, when it seemed like the mid-20th century smokestack era was finally bested by high-tech demassified Internet-based entrepreneurialism.
So much for that idea. Two years after Toffler’s book hit the streets, America would elect a president whose mindset is trapped somewhere between 1933 and 1968. Or as Michael Barone wrote last year, Obama offers “Industrial Age Solutions to Information Age Challenges.”
Which is but one reason why Glenn Reynolds is asking this week in USA Today, “Where are the start-ups?”
A new report from JPMorgan economist Mike Feroli indicates that employment in start-ups is plunging. New jobs in the economy tend to come from new businesses, but we’re getting fewer new businesses. That doesn’t bode well.
In fact, it is yet another sign of a United States that is looking more like Europe: A society in which big businesses have cozy relationships with big government, while unemployment remains comparatively high. If you’re fortunate enough to have a job at one of those government-connected businesses, GE, for example, your situation is pretty good. If you’re a recent college graduate looking for work, your situation is not so great. If you’re a low-skilled worker, your situation is dreadful.
So what’s to blame for this change? A lot of things, probably. One reason, I suspect, for a job market that looks more like Europe is a regulatory and legal environment that looks more like Europe’s. High regulatory loads — the product of ObamaCare and numerous other laws — systematically harm small businesses, which can’t afford the personnel needed for compliance, to the benefit of large corporations, which can.
Likewise, higher taxes reduce the rewards for success, making people less likely to invest their money (or time) into new businesses. And local regulatory bodies, too, make starting new businesses harder.
But I wonder if the biggest problem isn’t cultural. Since 2008, this country hasn’t celebrated achievement or entrepreneurialism. Instead, we’ve heard talk about the evils of the “1%” ” about the rapaciousness of capitalism, and the importance of spreading the wealth around. We’ve even heard that work in the public sector is somehow nobler than work in the private sector.
If, as Glenn writes, the US is looking more like Europe, it’s worth looking back at a snapshot of Europe’s business community at the start of the 21st century, focusing on its own lack of entrepreneurial start-ups.
As Orson Welles said in 1941′s Citizen Kane, “How did I find business conditions in Europe? With great difficulty!” Six decades later, based on this Steven Den Beste post from December of 2002, very little had changed there to alter that formula; “Europe is a high-tech disaster area,” he wrote:
It’s a desert pock-marked with occasional oases. For an area with the kind of overall education level Europe has, and the kind of industrialization Europe has, and the overall average wealth that Europe has, and the transportation and communication infrastructure that Europe has, the amount of ground-breaking work in science and technology happening on the continent is embarrassingly small.
It’s not that they cannot do it. There are significant examples which demonstrate otherwise. The Ariane program has been a substantial technical success. Airbus is the only company in the world which is even challenging Boeing in the passenger jet business (though Airbus only was able to get going through substantial subsidies by the French and British governments). Philips has been creating cutting edge technology for years. At least three major pharmaceutical companies are headquartered in Switzerland. CERN is doing good work, and has one of the world’s best particle accelerators. And I have only the highest regard for the engineering which is being done by the European Southern Observatory for its sites in Paranal and La Silla, (not to mention their full intention of creating a telescope with a one hundred meter main mirror).
But what these few successes show is that the potential is there and that it is not being realized very broadly. The Europeans can do this stuff, but it seems as if they mostly don’t bother. You have a small number of companies which are competitive in production of high technology, but most of Europe’s companies seem to produce rather prosaic me-toos, using fundamental technology developed elsewhere (usually the US).
If you ask someone with any kind of technical background to list high-tech Japanese companies, they’ll have no trouble at all reeling off several names immediately (often brandnames chosen for the American market, like Pioneer), and several more after a few seconds of thought: Sony, Toshiba, Matsushita; the only reason there aren’t more names on the list is because of the Japanese zaibatsu system. Ask pretty much anyone to list American high tech companies and they may come up with 50 names before they have to slow down.
But ask people to list high-tech companies from continental Europe, and I think most people would have to think hard to list even one. I, myself, having been in the industry for 25 years can only list a few: Nokia, Ericsson, Siemens, Alcatel, Philips and then I run out, and honestly can’t think of any more right now. And among them, Philips as the only one actually doing cutting-edge research. (They developed the laserdisc, which led to the CD and DVD, among other interesting things.)
What the Europeans seem to spend most of their time doing is to refine or develop or apply basic technology coming from other places. Americans created the transistor, the laser, the MOSFET, the integrated circuit, the LED, the first computer built out of transistors, the first microprocessor, the hard disk, television, wide area networks, cell phones. Europe uses computers, but the only major contribution from Europe in my field is the development of the first block-structured programming language, ALGOL, which influence later languages like C but which itself was too bloated to really be very useful. And in general, I’m really pretty hard pressed to think of anything (except the laserdisc) which has come from the continent which ranks the same as that long list of American innovations, which is far from complete.
Where is Europe’s Intel? Where is Europe’s Microsoft? Where is their IBM? Their Dell? Their Applied Material?
On the next page, some thoughts on what Europe does export all too well.
Europe may not have a high-tech industry worth of importation into the US, but over the last 125 years or so, its elites sure could crank out socialist memes which found their way here in bulk. In the Closing of the American Mind a quarter century ago, Allan Bloom discussed how America intellectual elites spent the entirety of the 20th century importing a European worldview, particularly via our college campuses. And that trend seemed to accelerate exponentially in the last decade. Or as Jonah Goldberg wrote in 2005:
According to the Pew Center, the less you like to fly the American flag, the more likely it is you are Democrat. The more you think hard work and personal initiative aren’t the ticket to the good life, the more likely you are to be a Democrat. The more you believe the United Nations is a better steward of international relations, while America is a negative actor on the world stage, the more likely you are to be a Democrat. The more you believe that the government is there to help, the more likely it is you are Democrat. The less seriously you take religion, the more likely you are to be a Democrat. Flip all of these values around and the more likely it is you are a Republican — or that you vote that way.
Of course, I’m speaking in terms of statistical generalities. Obviously, there are a great many flag-waving, God-fearing, government-mistrusting, U.N.-hating Democrats out there. But they are the exceptions to the rule.
Perhaps the most interesting aspect of this study is what it says about class and ideology in America. And what it says is that they don’t have that much to do with each other, which runs contrary to generations of leftish stereotypes. Poor Americans who believe in the American ideal of by-your-bootstraps success are likely to vote Republican. And rich Americans who cringe at the idea of hanging a flag from their porch vote Democrat. Wealth has become a poor predictor of political affiliation. The richest blocs in the GOP and Democratic parties — Pew calls them “Enterprisers” and “Liberals” — are roughly equally affluent. Forty-one percent of both groups make more than $75,000 per year (though there are nearly twice as many “Liberals” as there are “Enterprisers”). The largest segment of the Republican base — “Social Conservatives” — make less than Liberals.
So what does all of this have to do with body-snatching Europhiles? Well, basically, everything. The ideas, assumptions and prejudices held by the statistically typical Democratic voter, according to the Pew study, are quite simply, European. Europeans believe in a strong social welfare state, for rich and poor alike. Europeans are cynical. They look askance — these days — on patriotic sentiment (hence the rush to form a new European nation). The church pews of Europe would make a great hideout for bank robbers since they’re always empty. The United Nations is, in the typical European’s worldview, the last best hope for mankind. From the death penalty to gay marriage, the more similar you are to a typical European in your political and social outlook, the more likely you are to be a Democrat.
So, how’s that working out for the students on the receiving end of all that imported intellectual wisdom? Perhaps this headline at the liberal Huffington Post Website this weekend answers that: “America’s Youth Unemployment Rate Is One Of The Worst Of Wealthy, Large Economies”:
In the constant race to be the best America is falling behind other large, wealthy nations in at least one major category: Employing the nation’s youth.
In 2000, the United States had the lowest unemployment rate for 25- to 34-year-olds among countries with large, wealthy economies. By 2011, America had one of the highest youth unemployment rates compared to its peers, according to a New York Times op-ed by David Leonhardt, the paper’s Washington bureau chief.
How did the table’s turn on America’s youth? As unemployment soared during the Great Recession, young people — with and without college degrees — were forced to compete with more experienced candidates suddenly out of a job for very few openings. The result: Nearly half of the nation’s unemployed are under the age of 34, according to a report last month from public policy organization Demos.
Really, you mean can’t over-regulate businesses, promise to bankrupt them, tax them into the ground, demonize them, punish success and expect them to crank out new jobs? Somebody should alert Occupy Wall Street and the president they support.
Glenn discounts the role of culture in his USA Today article, but I’d say it’s a key part of America’s entrepreneurial collapse. If America’s regulatory environment is seeming more and more like Europe, as he wrote, it’s because America’s people are seeming more and more like Europeans.
Will that trend continue? Survey says…maybe.
Update: This Photoshop from last summer dovetails rather well with the above discussion, I think:
(Thumbnail image on PJM homepage by Shutterstock.com.)