Fifty years ago, in April 1975, some of the biggest names in American business included Texaco, ITT Industries, and IBM. These companies were at the top of the Fortune 500 list, known to everyone who followed business news. Today, however, many young people may not even recognize these brands.
In contrast, Microsoft is a name that stands out to the current generation. It was founded in April 1975 by childhood friends Bill Gates and Paul Allen in a garage in Albuquerque, New Mexico. They aimed to sell software for personal computers, a market that was just beginning to grow. Fast forward to today, Microsoft generates about $211 billion in annual revenue, making it one of the largest companies in the U.S.
The rise of Microsoft is not an isolated case. In the American economy, change is constant. Out of the twenty largest companies today, only four were around when Microsoft started: Ford, General Motors, and two oil and gas companies. Looking back even further, less than 10 percent of the companies from the 1955 Fortune 500 list are still in business today. Many have either gone bankrupt, merged, or simply faded away as the economy evolved.
The U.S. economy has changed significantly since the 1960s. Back then, consumers spent about half of their money on goods. Now, that figure has dropped to 34 percent, with most spending going towards services like consulting and haircuts. This shift has forced companies to adapt. While manufacturing jobs made up 25 percent of the workforce in the 1970s, that number has plummeted to just 8 percent today. Despite this, manufacturing output is at a record high, and over 80 percent of Americans now work in service-related jobs.
This shift has benefited the economy. The U.S. has become a leader globally, with 11 of the 20 largest companies in the world based here, including five of the top ten. In 2008, the U.S. economy was about the same size as the European Union’s. Today, it is nearly double that size. Average incomes in the U.S. are 74 percent higher than in Japan and 37 percent higher than in the European Union.
The American economic system thrives on competition and innovation. It encourages entrepreneurship and allows for creative destruction, which means that while some companies fail, new ones emerge. This has made the U.S. economy a model for others, even as countries like China rise as competitors.
However, the future is not guaranteed. With the current administration’s focus on tariffs and the growing national debt, it’s important to remember the principles that have driven American success. Just as Microsoft emerged from a garage, the next big company could be starting today. If the U.S. continues to support a free market, future entrepreneurs will have the chance to innovate and shape the economy for years to come.