Formation of Startups

From Frank Holmes, at Advisor Perspectives:

…American business startups have been steadily declining over the past 30 years. For the first time in 2008, the “death rate” of businesses crossed above the “birth rate.”

U.S. Business CLosings Hold Steady while Business Startups Decline
click to enlarge

Although Gallup says that “there has been no definitive answer as to why the rate of U.S. startups has declined so precipitously,” it seems likely that ever-expanding and restrictive government regulations play a huge role.

Now compare this to what’s happening in China:

China's Reduction of Red Tape Has Increased Busines Start-ups, Despite Slowing Growth
click to enlarge

Back in October, I pointed out that China has slashed hundreds of lines of red tape in an effort to jumpstart economic growth and encourage business startups. Even though its real GDP growth is slowing, the country has become much more efficient at fostering business activity.

Very interesting.  The assumption “that ever-expanding and restrictive government regulations play a huge role” in the US data is one that needs to be examined.  Hopefully someone will go to China to research why startups are occurring now rather than 5 years ago.  Or even 2 years ago.

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