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March 20, 2008

General Motors is Bad for You

Fascinating results from a new research paper:

What is good for big business need not generally advance a country's overall economy. Big business turnover correlates with rising income, productivity, and (in high income countries) faster capital accumulation; consistent with Schumpeter's (1912) creative destruction and recent formalizations like Aghion and Howitt (1992). Turnover appears to "cause" growth; and disappearing behemoths, more than rising stars, drive our results. Stronger findings suggest more intense creative destruction in countries with higher incomes, as well as those with smaller governments. [Emphasis added]

More turnover among big companies is good for you. The sooner we kiss GM goodbye the better, apparently.

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