Edward Conard

Top Ten New York Times Bestselling Author

  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences

AI Summary. The US has seen a decline in business startups and employment dynamism, with the share of employment at young firms falling by nearly 30% over 30 years. The authors argue this indicates weakened incentives to start new firms and supports policies that encourage entrepreneurship.

Ryan Decker, John Haltiwanger, Ron Jarmin, and Javier Miranda Journal of Economic Perspectives
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US business startups and employment dynamism have declined, with the share of employment by young firms decreasing by nearly 30% over the last 30 years

Has US startup activity and employment at young firms declined?

Core argument: The share of US employment at young firms has fallen by nearly 30% over the past 30 years, indicating a reduced role for dynamic young businesses in the economy.

The US has experienced a notable decline in business startups and employment dynamism, with the trend accelerating post-2000. Over the last 30 years, the share of employment by young firms has decreased by nearly 30%, indicating a reduced role for dynamic young businesses in the economy. This decline suggests that incentives for entrepreneurs to start new firms have diminished, impacting economic growth and productivity. While the optimal pace of business dynamics is complex to define, the evidence points to a need for policies that encourage entrepreneurship to revitalize job creation and economic dynamism.

Takeaways by Macro Roundup® AI

  1. The share of US employment at young firms has fallen by nearly 30% over the past 30 years, indicating a reduced role for dynamic young businesses in the economy.
  2. US business startups and employment dynamism have declined, with the trend accelerating after 2000, suggesting that incentives for entrepreneurs to found new firms have diminished.
  3. Although the optimal pace of business dynamics is difficult to define, the evidence points to a need for policies encouraging entrepreneurship to revitalize job creation and economic dynamism.

“…An optimal pace of business dynamics—encompassing the processes of entry, exit, expansion, and contraction—would balance the benefits of productivity and economic growth against the costs to firms and workers associated with reallocation of productive resources. It is difficult to prescribe what the optimal pace should be, but evidence accumulating from multiple datasets and methodologies suggests that the rate of business startups and the pace of employment dynamism in the US economy has fallen over recent decades and that this downward trend accelerated after 2000. A critical factor in accounting for the decline in business dynamics is a lower rate of business startups and the related decreasing role of dynamic young businesses in the economy. For example, the share of US employment accounted for by young firms has declined by almost 30 percent over the last 30 years.These trends suggest that incentives for entrepreneurs to start new firms in the United States have diminished over time. We do not identify all the factors underlying these trends in this paper but offer some clues based on the empirical patterns for specific sectors and geographic regions….”

Decker, Ryan, John Haltiwanger, Ron Jarmin, and Javier Miranda. Summer 2014. “The Role of Entrepreneurship in US Job Creation and Economic Dynamism.”Journal of Economic Perspectives.https://www.aeaweb.org/articles

AI Summary. The total number of US startups has declined while the number of high-potential startups has approached its prior peak, indicating a shift in entrepreneurial quality rather than quantity. Quality-adjusted measures of entrepreneurship followed a cyclical pattern associated with economic and capital market conditions.

Jorge Guzman and Scott Stern National Bureau of Economic Research
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High-potential US startups have approached their 2000 peak, despite a decline in total startup numbers, according to @ScottStern @nberpub.

Has US entrepreneurship declined in quantity but not quality?

Core argument: Across 15 US states from 1988–2014, the total number of American startups declined while high-potential startups approached their 2000 peak, indicating a shift in entrepreneurial quality rather than a uniform decline.

While the total number of American startups has declined, high-potential US startups have approached their 2000 peak, indicating a shift in entrepreneurial quality. From 1988-2014, quality-adjusted measures of entrepreneurship followed a cyclical pattern influenced by economic and capital market conditions. This suggests that investment cycles significantly impact high-growth entrepreneurship, with economic and institutional conditions driving both the initial quality and scaling of new ventures. The data underscores the importance of focusing on the quality of startups rather than just their quantity, as high-potential ventures are crucial for economic dynamism and innovation. This trend highlights the resilience and adaptability of the US entrepreneurial landscape, even amid broader declines in startup numbers.

Takeaways by Macro Roundup® AI

  1. Across 15 US states from 1988–2014, the total number of American startups declined while high-potential startups approached their 2000 peak, indicating a shift in entrepreneurial quality rather than a uniform decline.
  2. Quality-adjusted measures of entrepreneurship followed a cyclical pattern tied to economic and capital market conditions, suggesting that investment cycles affect high-growth entrepreneurship.
  3. Economic and institutional conditions appear to shape both the initial quality of new ventures and their subsequent scaling, supporting the case for measuring startup quality rather than counts alone.

"....Assessing the state of American entrepreneurship requires not simply counting the quantity but also the initial quality of new ventures. Combining comprehensive business registries and predictive analytics, we present estimates of entrepreneurial quantity and quality from 1988-2014. Rather than a secular pattern of declining business dynamism, our quality-adjusted measures follow a cyclical pattern sensitive to economic and capital market conditions. Consistent with the role of investment cycles as a driver of high-growth entrepreneurship, our results highlight the role of economic and institutional conditions as a driver of both initial entrepreneurial quality and the scaling of new ventures over time….”

Jorge Guzman and Scott Stern, “The State of American Entrepreneurship: New Estimates of the Quantity and Quality of Entrepreneurship for 15 US States, 1988-2014.” National Bureau Of Economic Research, July 2019, https://www.nber.org/papers/w22095