The boom in Silicon Valley gives an impression of a golden age of dynamism—in some industries, such as taxis, startups are indeed causing revolutions. Overall, however, American capitalism is more sluggish than it was. Small firms are being started at the slowest rate since the 1970s. Young firms’ weight has shrunk, measured by their number and share of employment. The labour market has become less dynamic.
Most industries are getting cosier. Of the 13 sectors in America (excluding farming), ten were more concentrated in 2007 than in 1997. Since Lehman Brothers folded in 2008, American firms have done $11 trillion of deals—worth 46% of their market value—whose main aim has been to increase market share and pricing power. Airlines, cable TV, telecoms, food and health care have all become less competitive. Giant tech firms with high market shares are making huge profits—tech firms together have 41% of all the cash held by non-financial firms.
Welcome to the postnormal: a great deal of scurrying, everybody is crazy busy, but innovation is down, fewer startups are starting up, and competition is waning.
What’s going on?
Risk can’t be effectively quantified, so people are wary of making bets. The result: the Dwindles.
from Stowe Boyd http://stoweboyd.com/post/134654874482
