A Boom in Entrepreneurship?

[Michael]

Old and in the Fray: The Coming Entrepreneurship Boom

It’s no secret the population of the United States is aging rapidly. The country may be on the cusp of an entrepreneurship boom—not in spite of this aging population but because of it.

The United States will eventually recover from the current deep recession and then the overriding concern will become the resumption of growth. Will we return to the high growth and productivity rates of the post-1995 decade? Or, in a gloomier scenario, are we in for a sustained period of sluggish growth like what afflicted most developed countries from the early 1970s to the mid-1990s?

The primary determinant of which path we take is our level of entrepreneurial activity. In terms of job creation, innovation, and productivity, entrepreneurs drive growth. A major worry is that the basic demographics of the United States will inexorably tilt the country toward a stagnant growth path. An aging country, with the baby boom generation moving into retirement, does not strike many as an entrepreneurial society—and yet it should.

Several facts have emerged from Kauffman Foundation research that indicate the United States might be on the cusp of an entrepreneurship boom—not in spite of an aging population but because of it. And, to the extent that entrepreneurship is a key driver of economic growth, this could bode well for America’s growth potential.

Article (http://www.american.com/archive/2009/june/old-and-in-the-fray-the-coming-entrepreneurship-boom)

It would appear that the argument here is entirely predicated upon the changing demographic patterns associated with the 'boomer' generation.

Now I'm normally a huge fan of arguments based on demographic data as I've found them to be remarkably good tools of analysis that can explain many complex phenomena. I've previously advanced arguments about how 'peace' in Northern Ireland as well as the 'failure' of Quebec's separatist movement have both been driven in part by changing demographic patterns - 'facts on the ground' as it were.

However, in this particular case, I'm going to take the opposite argument - that the prediction of a 'boom' in entrepeneurship is not likely to materialize in the way that the demographic data appears to suggest that it will.

I have two arguments in support. 1) The data is 'skewed' by the disporportionately high number of older and experienced workers that have been 'downsized' over the last two decades and then flipping over to become 'consultants' on contract to the same companies they used to work for before. The data 'assumes' that these are 'entrepreneurs' when in fact, they are nothing of the sort (though some of them might be 'real' entrepreneurs, the majority of this type are not). 2) I have long argued that economic entrepreneurship is in terminal decline in capitalist economies - a slight uptick in actual entrepreneurialism may in fact materialize from demographic numbers alone, but this is only a temporary 'blip' in the longer term trend where entrepeneurship comprises an increasingly smaller portion of the capitalist pie (comparatively speaking).

Between these two factors, I think that's probably more than sufficient to eliminate the expected demographic 'bump' in older entrepreneurs.

Anyone else have any thoughts on this topic or the related issue of entrepreneurship? ;)

[Americano]

Article (http://www.american.com/archive/2009/june/old-and-in-the-fray-the-coming-entrepreneurship-boom)

It would appear that the argument here is entirely predicated upon the changing demographic patterns associated with the 'boomer' generation.

Now I'm normally a huge fan of arguments based on demographic data as I've found them to be remarkably good tools of analysis that can explain many complex phenomena. I've previously advanced arguments about how 'peace' in Northern Ireland as well as the 'failure' of Quebec's separatist movement have both been driven in part by changing demographic patterns - 'facts on the ground' as it were.

However, in this particular case, I'm going to take the opposite argument - that the prediction of a 'boom' in entrepeneurship is not likely to materialize in the way that the demographic data appears to suggest that it will.

I don't see how the source could take any other stance due to the nature of their information.

I have two arguments in support. 1) The data is 'skewed' by the disporportionately high number of older and experienced workers that have been 'downsized' over the last two decades and then flipping over to become 'consultants' on contract to the same companies they used to work for before. The data 'assumes' that these are 'entrepreneurs' when in fact, they are nothing of the sort (though some of them might be 'real' entrepreneurs, the majority of this type are not). 2) I have long argued that economic entrepreneurship is in terminal decline in capitalist economies - a slight uptick in actual entrepreneurialism may in fact materialize from demographic numbers alone, but this is only a temporary 'blip' in the longer term trend where entrepeneurship comprises an increasingly smaller portion of the capitalist pie (comparatively speaking).

Between these two factors, I think that's probably more than sufficient to eliminate the expected demographic 'bump' in older entrepreneurs.

Anyone else have any thoughts on this topic or the related issue of entrepreneurship? ;)

I agree with your analysis.

Capital is required for any degree of success by any new venture. With current and medium future term economic circumstances capital is staying liquid and I just don't see it migrating to new business ventures without security assurance by government contracts (which will be statistically heralded as new businesses) or to complement existing business interests. I view a very small niche for 'entrepreneurship' other than increased scams.

[drgoodtrips]

I read the same prediction in Money Magazine today, though they didn't specifically mention the boomers and they trended it out over a longer period of time. Their argument was more tied into the technological aspects of the consideration - easier telecommuting, in particular.

And, I don't mean that in the sense of telecommuting where I'm employed by corporation X in California while living in Chicago, but rather the increasing ability to work in distributed fashion, in increasingly numerous fields, without actual travel.

It was also tied into the current desire of both workers and employers (again, not necessarily boomers) to view labor as more of a variable cost than a long standing relationship between employee and employer.

Now, whether Money Magazine is right or not, I dunno. Given my professional work and the high percentage of early adopters and envelope pushers I encounter, I'm probably not in a very good position to forecast broader trends here.

[Michael]

I read the same prediction in Money Magazine today, though they didn't specifically mention the boomers and they trended it out over a longer period of time. Their argument was more tied into the technological aspects of the consideration - easier telecommuting, in particular.

And, I don't mean that in the sense of telecommuting where I'm employed by corporation X in California while living in Chicago, but rather the increasing ability to work in distributed fashion, in increasingly numerous fields, without actual travel.
That trend is far more likely to favor the larger company with the wide networks than entrepreneurs with limited personal contacts. Entrepreneurialism thrives most when contacts are personal and problems are close at hand. Telecommuting is much more likely to be the 'savior' of the mass corporation allowing them to decrease their labor costs (to make up for their ever-growing and bloated management systems).

I think this study is a classic case of the authors searching/seeking to construct a plausible explanation for their fervent ideological desire. There is no 'boom' in entrepreneurialism here. But there is lots of people who desperately want to see one.

Reality is that entrepreneurialism is in decline and has been for quite a while now. Those who worship capitalism (per se) as the solution to every problem are apparently in denial over this.

A perfect example of this is the "Young Entrepreneurs" organizations that abound in North America (every city or state has a chapter). Check out their memberships and/or who they give awards to. Seems that these organizations have translated the term "entrepreneur" to mean anyone who owns a business - and thus the majority of these "entrepreneurs" in such organizations either inherited the ownership of their companies or purchased existing companies (neither of which makes them entrepreneurs).

In my line of work, I encounter lots people who inherited or purchased their company and they ALWAYS identify themselves as entrepreneurs. Their ignorance makes me laugh.