Corporations are Disappearing
Third Way covers work by Jerry Davis. From the intro:
"“For the past 20 years, public corporations in the United States have been disappearing. The number of U.S.-based companies listed on Nasdaq and the New York Stock Exchange has dropped by over half since 1996.” And while the dot.com bust and the financial crisis had something to do with this, the trends have continued. “The number of new entrants,” Davis writes, “does not come close to matching the exits.” ...
Davis looks at the kinds of companies that have exited the stock market. The simple answer, over-regulation, cannot explain the decline. The more fundamental explanation is that there has been a change in the kind of businesses we are creating today; they have more access to other forms of capital, firms no longer need to build assets because they can rent them, and thus, “Scaling up and scaling down, are much simpler than they were in the heyday of the traditional corporation.” Davis concludes that “the public corporation was an ideal vehicle for the 20th-century economy, characterized by long-lived assets and economies of scale. But it is increasingly out of sync with the 21st-century economy.”
The disappearance of the corporation, however, is not without consequences. “The firms that have gone public since 2000 rarely create employment at a large scale; the median firm to IPO after 2000 created just 51 jobs globally.” “In 2015,” Davis writes, “the combined workforces of Facebook, Yelp, Zynga, LinkedIn, Zillow, Tableau, Zulily and Box were smaller than the number of people who lost their jobs when Circuit City was liquidated in 2009.”
Moreover, the old-fashioned corporation served a social purpose. It was the source of long career ladders and stability, of health care and retirement savings for millions. Davis doesn’t think the old corporation is coming back, which poses a big question for policymakers-- how do we promote economic security and mobility in a post-corporate economy?"
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