Another Grim Milestone

James Freeman, assistant editor for the WSJ Ed Page, has a guest editorial on the, um, WSJ editorial page. It starts with some stark news:

Is the great American financial engine that gave the world Intel and Google grinding to a halt? Last quarter marked the first time in 30 years that not a single company backed by venture capital went public in the U.S.

He admits that markets are off and that there are other, exogenous factors. But a drought is a drought, and I find this a brutal reminder that while the market system is extremely durable, individual markets can be quite fragile. America's dominant capital markets have plenty of competition. And these competitors lack SarbOx and Spitzerism.

This is bad news for the U.S. economy. Does anyone think that we would be better off if Bill Gates and Michael Dell had sold out to corporate behemoths early in their careers, instead of leading their firms for years as public companies? Would consumers enjoy the same vibrant market in Web services if Yahoo had gobbled up a nascent Google? How powerful would our computers be if Intel had become an IBM subsidiary, instead of going public in 1971?

That golden goose is not immortal. This long without a venture IPO is a bad sign. A worse sign is that the American government is talking about more punishment: cutting back on Golden Goose Chow® when we need eggs, and [this metaphor has been terminated by the Editors]

I'm not sure more taxes, additional regulation, higher energy costs, and a Rube Goldberg cap and trade plan will bring capital back to the markets.

Economics and Markets Posted by jk at July 18, 2008 1:41 PM