This story originally appeared in USA Today
Entrepreneurism is going extinct in rural areas. Our livelihood as a business-friendly state is at risk, compounding the threat to the pioneering mindset which inspires our economy. In an era of negative innovation, political activism is more important than ever for business survival.
Whatever happened to the Great Recovery after the Great Recession? It is well documented that this recovery is the worst on record since World War II. Overall growth trickles along at a snail’s pace – two percent – since the bottom in 2009. Productivity remains hobbled. From 2007 to 2015, productivity decreased by 50 percent, hovering around less than two percent of where it stood. Wages also continue to be a problem. Last year, Americans saw the first increase in real median wages since 2007.
We have entered an era of negative innovation marked by key indicators including a decrease in entrepreneurship and business investment combined with an increase in regulation and business consolidation.
Innovation is key to a productive capitalist society. The great Austrian American Economist Joseph Schumpeter marked this in his theory of “creative destruction.” He theorized that capitalism can only survive if it continues to destroy itself through innovation. Take, for example, the fall of Blockbuster due to Netflix and the rise of Uber threatening the existence of the taxi industry. Innovation drives productivity, which drives higher paying jobs. It is vital to a healthy economy.
So what does the opposite of innovation look like?
Since the late 1970s, entrepreneurship dropped by half. There is now a trend of more business closures than starts. Business investment is at an all-time low and consolidation is at an all-time high. Since 2008, U.S. companies consolidated at unprecedented rates with $10 trillion in mergers and acquisitions.
What is driving the trend? That is debatable but we cannot ignore staggering regulation squeezing entrepreneurs. Since 2009 federal agencies issued 20,642 new regulations, 566 of which are major rules with nearly no reductions. This increase in regulations costs taxpayers an additional $100 billion each year.
We have a choice as a state to steer clear of this path of negative innovation. For many years, Nevada was considered a business-friendly state. We cannot lose sight of our values. However, recent proposed legislation is more representative of California than Carson City.
A bill to thwart companies like Uber and Lyft by imposing 15-minute delays on their services in order to give taxis a chance to compete taxes innovation and deters creative competition. Thankfully this bill died a quick death. Similarly, microbreweries face harsh resistance from major distributors.
There is hope in the bills that support new technologies like blockchain or legislation to break up the waste management monopoly. In an era of negative innovation, we must be thoughtful about how we support entrepreneurship in the Silver State. We must strike a balance so we can reverse this trend and revitalize our economy.