They say necessity is the mother of invention. Plato is credited with first espousing this principle over 2,300 years ago. The pandemic has proven the wisdom of it for our time.
For the past year, we’ve had to rethink almost the entirety of our lives, from work and school to social interactions and faith practices. Very few things were left unscathed by the pandemic.
We witnessed the shortages created by anti-gouging laws as many scrambled to acquire essentials, such as masks, hand sanitizer, and, yes, toilet paper. We also had a front row seat to the elasticity of supply chains as manufacturers created new channels for resources to flow.
Despite the many physical and emotional pains both the virus and poorly constructed government policies have had on us, Americans have once again proven their entrepreneurial spirit. We’re not ones to sit on the sidelines when challenges arise and the number of new businesses created during this tumultuous year is another testament to our tenacity.
The map below (I love maps) shows that men and women in the South have felt especially entrepreneurial. North Carolina saw a 93.8% increase in applications from January 2020-January 2021.
So, what is the most popular type of new business? At the top of the list is retail, primarily online retail. Hello Amazon competition. The fewest business applications were for finance and insurance-related enterprises. That’s also not very surprising, given our reluctance to make long-term financial commitments during periods of uncertainty.
What makes Americans, both natural born and immigrants, so remarkably entrepreneurial? We are an aspirational people. Even our founding documents attest to our desire to “form a more perfect union.” We’re willing to strive for improvement. As a result, both our public and private institutions provide sufficient latitude for something called “creative destruction,” a term coined by Harvard economist Joseph Schumpeter in 1943.
According to Schumpeter, creative destruction is the process of “industrial mutation…that incessantly revolutionizes the economic structure from within…” It is the regular reassessment of old processes and products and improving upon them when necessary. It is innovation. And, it is essential in a capitalist economy.
Although the past twelve months have presented many difficulties in the labor market, they’ve also created numerous opportunities. As new necessities have become apparent, from masks to ventilators to increased streaming options, American enterprise has risen to the task, reminding us that human capital is the most reliable supply chain we can have and serving as proof that we are willing to creatively destroy–in order to rebuild better–when needed.