Back in 2007 the Chamber’s bi-partisan Commission on the Regulation of U.S. Capital Markets in the 21st Century publicly mused that our inefficient financial regulatory structure was not only inhibiting our long-term economic growth, but that it was becoming increasingly unlikely that we could see small businesses boom into big ones, such as Microsoft. Unfortunately, a special report, A Wakeup Call for America, released last week by Grant Thornton is provides further evidence that this is the case and that the situation may in fact be even worse than we anticipated. As study co-author David Weild noted last month:

"By killing the IPO goose that laid the golden egg of U.S. economic growth, the combination of technology, legislation and regulation undermined investment in small cap stocks, drove speculation and killed the best IPO market on earth."

Initial Public Offerings (IPOs) are the point in time when a company grows from a small business into a growing and larger company. A nation that has many IPOs has a thriving and growing economy and the standard of living and jobs that go with it. A nation that has a dearth of IPOs has a stagnant or shrinking economy that has a declining standard of living and a scarcity of jobs.

From the late 1970’s to the start of this decade, the United States had a steady annual number of IPOs, far outstripping the rest of the World. Since 2000, that number has steadily declined from 360 to 54 in 2008. This collapse of IPOs and the delisting of companies from American stock exchanges have created a one-two punch that has harmed the economy in the United States. The Grant Thornton report estimates that the collapse of the IPOs has cost the American economy 22 million jobs. If these statistics are true our economy is failing to grow and it can’t even fulfill simple replacement functions just to keep pace.

I wrote on Friday that law makers and regulators are missing the point that our capital markets are our job creators. If we stifle those markets, the job losses will follow. We should give great thanks to David Weild and Edward Kim for producing the Grant Thronton report. Hopefully, policy makers in the Administration and Congress will take a few minutes and read this sobering tale. Clearly, if there isn’t a wake-up call in Washington, the sandman is going to hit Main Street pretty hard.