Economics

Americans Choosing Sides in the New Culture War

In his Washington Post commentary yesterday “America’s New Culture War: Free Enterprise vs. Government Control,” AEI President Arthur Brooks writes:

In one [vision], America will continue to be an exceptional nation organized around the principles of free enterprise—limited government, a reliance on entrepreneurship and rewards determined by market forces. In the other, America will move toward European-style statism grounded in expanding bureaucracies, a managed economy and large-scale income redistribution. These visions are not reconcilable. We must choose.

According to the “Kauffman Index of Entrepreneurial Activity,” a study released last Thursday by the Kauffman Foundation, there is some new evidence that many Americans are moving in the direction of the first vision. The Kauffman report finds that entrepreneurial activity in the United States reached a 14-year high in 2009, measured by the number of new businesses created. From the press release:

Rather than making history for its deep recession and record unemployment, 2009 might instead be remembered as the year business startups reached their highest level in 14 years—even exceeding the number of startups during the peak 1999-2000 technology boom (see chart below). In 2009, the 340 out of 100,000 adults who started businesses each month represent a 4 percent increase over 2008, or 27,000 more starts per month than in 2008 and 60,000 more starts per month than in 2007.

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Kauffman Foundation President Carl Schramm notes that “because entrepreneurs drive the economy, the growth in 2009 business startups is encouraging and hopefully points to a hopeful trend in terms of our economic recovery.”

Based on Arthur Brooks’s description of America’s new culture war, the significant increase in entrepreneurial activity in 2009 also provides some encouraging proof that thousands of Americans are moving in the direction of free enterprise by starting new businesses in record numbers. Let’s hope that this entrepreneurial trend suggests that Americans will increasingly choose the vision of free enterprise over European-style socialism.

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