In light of the trend towards declining public firms, few market watchers are optimistic about the future of this class of companies. Most predict that publicly traded companies (i.e., companies whose ownership stakes are dispersed across the public via shares traded on the stock market) will become an increasingly endangered species in American markets. Simultaneously, they cite this trend as a negative reflection upon the state of the American economy.  

The problem, rephrased in the economist's jargon: there is currently a "listings gap" in America. When experts compare the US's current number of listed companies against the projected number of listed companies for an economically developed country today, the former falls far short of expectations. Not only has the United States failed to meet a static threshold, but the number of listed companies is currently shrinking. This puts "the US on an opposite trajectory from every other developed economy in the world." 

Consider the statistics: In 1996, over 8,000 publicly listed companies existed. Nearly two decades later in 2012, there are only a little over 4,000--when, according to statistic models, there should be slightly more than 9,500. Hence, a gap of roughly 5,500. This finding reflects the exact opposite picture of what has been found in every other developed nation. 

Further investigations from an article on Business Insider point to one possible answer for this trend. There is an increasing tendency for public companies to merge with other companies--and as of recent times, this usually produces a merged company that is no longer listed publicly. Commentators that support this interpretation claim that private equity has not been the cause of these market changes. 

Despite these grim forecasts, some rare investors buck this trend. The technological and entrepreneurial pioneer Elon Musk opted to list two of his companies publicly. These companies are the car company, Tesla [NASDAQ: TSLA] and energy firm SolarCity [NASDAQ: SCTY]. However, his third company, SpaceX--often described as a kind of private NASA--is not listed. 

Musks's choice goes against the thrust of the current markets. But why? Upon closer observation, it is obvious that Musks's companies are an exception to the rule. Notoriously irregular in their management, his companies have been criticized for their unstable futures. Hence, the logic behind Musks's decision exists because of (and not in spite of) the riskiness of his companies. Put concretely: one article on The Economist Online describes Musks's companies as "exactly the kind of exhilarating gamble that stock markets are meant to be good at funding." In other words, while Musks's companies may appear to be exceptional, even niche companies today, their tumultuous activity and potentially hazardous risks renders them similar to the archetypally risky companies which, historically speaking, motivated the creation of a stock-market in the first place. 

Elon Musk's companies aside, there are nevertheless many testimonials to the status quo. Two examples are found in contemporary startups, Uber and AirBnB. Both companies have chosen to remain within the private sphere, preferring to obtain capital through fundraising via private channels, and soliciting venture capitalists.

All this is not to say that all publicly listed companies are floundering. In fact, some perpetually successful, listed companies (like Microsoft [NASDAQ: MSFT] and Johnson and Johnson [NYSE: JNJ]) have continued to perform very well. But commentators say that listed industry giants are exceptions to the rule. The total number of public firms have nearly halved, in the past 20 years. Furthermore, the amount of money IPOs (initial public offerings) can raise is estimated as roughly fifty to seventy five percent lower than a decade ago.

Nowadays, most companies choose private equity over public funding. Still others are bought out by The Carlyle Group

[NASDAQ: CG]. The Carlyle Group's sum company holdings constitute "America's second biggest employer after Walmart [NYSE: WMT]." Neither of these two types (private equity, or buy-out) count as listed companies. 

Though experts debate over reasons for the decline of public firms, some general consensus statements can be reached. For one, technological innovations may have resulted in a trend of less capital-intensive startup companies. This means a lower overall threshold in the amount of money required to start a company. Furthermore, listed companies of today are subject to more restrictions than unlisted companies. Public companies must deal with posting quarterly company results, in face of the perpetual threat that "Wall Street will punish even short-term slip-ups." Unlisted companies also benefit by paying fewer taxes. Private equity and venture capital managers have the option of using "carried interest" (a function that lowers their tax rates on certain income). This feature is uniquely available to unlisted companies.

Of course, there are also many drawbacks associated with private firms. First and foremost: The holdings of investors in private companies are far less liquid than those of investors in public companies. This can risk the former group of investors' ability to take back their cash investments under bad economic conditions. Private firms also solicit a greater social cost: because they are not available to everyone, there is prestige associated with investing in a privately owned startup. In fact, some commentators have argued that the rise of private firms correlates to a decline in the concept of a democratic, American capitalism.  

Now, some potential next steps for saving public firms. Many experts have pushed towards revising poorly pitched, overly complex government regulations. It is important that governments do not penalize public companies, as doing so would increase the number of companies that seek private status because it brings profit and diminished regulatory penalties. Concretely, this entails eliminating the carried-interest perk. In practice, discouraging "leveraged buy-outs" also evens out the tax advantages gained by debt-funded companies (but not equity-funded companies.) Redistributing the revenue through various similar maneuvers may allow regulators to lower the corporate tax-rate--a further boon for public firms. Currently, the fees faced by America's IPOs are almost twice those of their counterparts in similarly ranked nations. Commentators are also pushing to mandate annual progress reports from unlisted firms. Increased reportage from private firms may help reduce the element of secrecy, which comes at the expense of making it an exception to the generally competitive and open American economy. 

Finally, a note on how public companies are perceived in the public's eye. Now, it is increasingly more normalized for politicians to lambast public firms as they push their platforms. Two examples from the current presidential election: Bernie Sanders's criticism of General Electric [NYSE: GE], and Donald Trump's criticism of Ford Motors [NYSE: F]. In spring 2016, Bernie Sanders stated that a number of public companies including JPMorgan Chase [NYSE: JPM] and "virtually every other major bank in this country" are destroying the moral fabric of America. Sanders's rationale hinged on these companies' "greed, recklessness and illegal behavior on Wall Street." In response to these criticisms, General Electric has fallen back on its ability to "create wealth and jobs, instead of just calling for them in speeches." In the same response, GE's CEO Jeff Immelt mentioned the 125,000 American jobs that GE has created. Similarly, Trump's criticisms of Ford Motors rests on Trump's belief that the company is "moving jobs south of the [United States] border." In response to these criticisms, automakers and automobile companies alike have discussed the increasing pressures of globalization on today's auto industry.