Institutional longevity

I was recently reading John Mauldin's Outside the Box newsletter in which he had an excerpt of an upcoming book by Larry Kotlikoff and Scott Burns The Clash of Generations.  The excerpt made an excellent  and somewhat contrarian point: the temporary nature of our institutions.

We often view institutions, both public and private, as permanent fixtures in our lives.  The reality is often quite different.  The US is a relatively young country with the Declaration of Independence  approved by congress in 1776.  The US Social Security Act was signed into law in 1935.  Hawaii only became a state in 1959.The preceding examples were obviously US focused and while there are some countries that have been around much longer than the US there also have been many countries formed and dissolved since the time the US came into existence.  History books are full of the rise and fall of governments throughout the ages.

On the business front we see the same transitory nature.  While Wikipedia does list the oldest company in the world as Nisiyama Onsen Keiunkan (founded amazingly in 705 in Japan) the reality is most companies do not stay in business for anywhere near that length of time.  The average company in the S&P 500 has only been publicly traded for 25 years.   According to Business Dynamics Statistics a part of the US Census Bureau of the 5 million firms in the US in 2010 36% have been around for 5 years or less.  421K or 8% are listed as 26 years or older. 

One thing that has been permanent through all of this is people.  I know I am guilty of thinking of institutional permanence.  The excerpt of The Clash of Generations was a great reminder that our frame of reference should not be upon reliance of the government or even of business because these institutions come and go.  Where to we tend to put our faith?