From the WSJ on the plummeting business ownership rate among the young:

Roughly 3.6% of households headed by adults younger than 30 owned stakes in private companies, according to an analysis by The Wall Street Journal of recently released Federal Reserve data from 2013. That compares with 10.6% in 1989—when the central bank began collecting standard data on Americans’ incomes and net worth—and 6.1% in 2010.

There are perhaps some other factors at work not mentioned by this article. I can suggest some reasons as to why this has happened.

Number one, there are not enough qualified customers for anyone, anywhere.

Number two, there is a lot of competition to deal with, either international or domestic.

Number three, the entrepreneurial community, perhaps with the exception of institutions like the Kauffman foundation, are excessively focused on the world of venture capital rather than the more common world of more conventional startup companies that have no intention of climbing up to the public markets.

Number four, millennials are terrible.

Additionally, Sarbanes-Oxley, held as the usual culprit, really does a lot of damage to the ability of companies to access the big capital markets without a lot of private investment to get there. Jim has written frequently about how much damage that Sarbanes-Oxley has has done to accounting standards in the US.

Low interest rates also greatly damage the ability of people to save and re-invest those savings into new businesses.

The Journal’s findings run counter to the widely held stereotype of 20-somethings as entrepreneurial risk-takers.

The stereotype exists because PR people created it, because it dazzles people, because it fills movie seats, but not because it’s actually true in most situations. The average successful entrepreneur is a mid-to-late career professional with extensive connections in both the financial world and the corporate world in their area of expertise.

Even the famous Gilded Age entrepreneurs tended to take some number of years before really starting a company. The romance of the 20-something entrepreneur is a relatively new one, and it does tend to be a romance rather than a work of nonfiction.

Young entrepreneurs also often have extensive connections, through their family or their extended university network, which tend to never make it into the press releases, because that ruins the Horatio Alger narrative that amuses Americans so much. There is no level playing field. And that’s just fine. But Americans like to pretend that there is.

The WSJ and countless other publications like to focus on raising money or getting loans, but I would say that it’s all bullshit. You can’t act all google-eyed when entrepreneurs behave exactly as what Hayek would tell you that they would: savings must exist before investment can happen.

When you try to get around the saving process by printing money and handing it to investors, you create unsustainable booms that are followed by inevitable busts.

This has happened, will continue to happen, and will happen forever so long as the monetary policies advocated by the bums at the Journal continue to be pushed.

To finish up, the problem is less one of mindset, which is the typical advice (“just believe in yourself” / “come up with an idea and execute” / “build a prototype and raise money” / “buy lunch for one new person a day”) and is more one of some combination of inborn talent, skill, and financial means. Focusing instead on temperament (‘hard work’) flatters the egalitarian world-view.

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