Declining Business Dynamism: A Visual Guide

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Americans often view their economy as increasingly fast-paced, competitive, and entrepreneurial, full of disruption and accelerating turnover: Just look at the overnight success of Facebook and Airbnb, or the sudden demise of Toys R Us and The Limited.

Let’s define “business dynamism” as the process of Smithian or Schumpeterian creative destruction by which jobs, firms, and ideas are reshuffled to their most productive uses. By that measure, most Americans probably think their economy is doing pretty well. To wit, they are likely to believe the following:

• Spurred by huge technological gains and an ongoing economic recovery, productivity growth is surging.
• Jobs and firms are being created and destroyed at an unprecedented rate to meet the new needs of our innovation-driven economy.
• More Americans are being matched with better jobs thanks to mobile IT and online networking, leading to higher rates of job churn and geographic mobility.
• Creative disruption has turned the market into a revolving door. The average U.S. firm has gotten younger and leaner.
• The rise of billion-dollar IPOs is evidence of higher turnover at the very top of the market.
• Most industries are becoming more competitive due…