Economic Engines

Where’s America’s Entrepreneurial Economy?

In many ways, it seems like this would be a golden age for freelancing and entrepreneurship: The Web, after all, makes it easy to market yourself and your firm. The growth of co-working space reduces the cost of an office. Open-source data and the cloud make it inexpensive to start a tech company, compared to the millions of dollars in startup capital needed during the dot-com era. “Makerspaces” provide low-cost access to expensive equipment to design and manufacture products. Obamacare ensures that health insurance is always available. And the job losses of recent years have produced incentives for self-employment, for transitional purposes if nothing else.

Yet despite our perceptions, entrepreneurship has trended downward in recent decades. The Brookings Institution found that so-called “firm entry rates” have declined since the 1970s and that they suffered a steep fall post-2005. And though millennials are often seen as an entrepreneurial generation, The Wall Street Journal reports that business ownership among those under the age of 30 recently hit a 24-year low. Self-employment has seen a similar downward trend. A study by Economic Modeling Specialists International found that both the total number of self-employed and their share of jobs have fallen since 2006. READ MORE

NYC’s Plan for Free, Citywide Wi-Fi

What is a phone booth without a phone? In general, it’s an eyesore. But not in New York City, where beginning this year old phone booths will be transformed into about 10,000 sleek metal slabs that will provide high-speed digital access throughout the entire city.

The plan is called LinkNYC, and it’s important for two reasons. One, it may be a plan other cities can copy -- there are certainly plenty of old public pay phones around. Two, it’s an example of reimagining old assets and connecting citizens to what is increasingly a vital and life-enhancing service: the Internet. READ MORE

The Myths of Municipal Mergers

In the wake of the events in Ferguson, Mo., much of the media coverage focused on the geopolitical fragmentation of the St. Louis area, and the abuses it has engendered. In some circles, it led to talk of government consolidation, or “big box” government, as a possible solution.

St. Louis County has 90 municipalities. (This doesn’t include the city of St. Louis, which is technically an “independent city.”) Believe it or not, with 22,000 residents, Ferguson is one of the biggest. A number of the municipalities have fewer than 1,000 people. This proliferation of small cities has created perverse incentives to bad and abusive governance. But while there may be clear benefits to consolidation, is it really the answer here? READ MORE

The Real Root of Broken Infrastructure: Broken Governance

When a pothole snags your car or a broken rail halts your morning train, it’s natural to blame the crumbly asphalt or twisted steel. But as I’ve said for many years, physical infrastructure reflects political infrastructure. And fractured infrastructure usually reflects fractured political infrastructure.

MORE: Read the rest of the December issue. READ MORE

Lessons from Kokomo on How to Spend Responsibly

There’s a debate raging about whether governments should spend more money on economic development and infrastructure, or whether they should cut spending to bring finances under control, a strategy often dubbed “austerity” by critics.

In reality, the two are inseparable. Until you have a firm handle on your finances, you can’t afford to invest on any sort of sustainable basis. This is the logic underpinning what Bruce Katz at the Brookings Institution calls “cut to invest.” That is, there’s no new magic pot of money arriving, so everyone from the federal government to cities needs to make some cuts in order to free up cash to spend on higher-priority items. An unlikely poster child for this philosophy is the small industrial city of Kokomo, Ind. With a population of 57,000 about 45 miles north of Indianapolis, Kokomo made national news as the center of the auto industry collapse, even prompting a visit from President Obama. At its bleakest moment, Kokomo’s unemployment rate hit 20 percent and it faced a near-cataclysmic fiscal crisis when bankrupt Chrysler, the city’s largest employer, didn’t pay its property tax bill. READ MORE