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As a counterpoint, countries that already have this are far behind the US in small business creation. Despite this supposed handicap, the United States has the

As a counterpoint, countries that already have this are far behind the US in small business creation. Despite this supposed handicap, the United States has the most dynamic large economy in the world. It turns out that the government soaking up a large portion of the GDP to pay for expensive public benefits diverts capital away from financing private ventures, and this has a detrimental effect on entrepreneurship. If universal health care were really that important to entrepreneurship, why isn't Silicon Valley in Europe?

jeremymcanally 17y ago
This sort of economic handwaving makes a lot of assumptions. Silicon Valley isn't in Europe for a lot of reasons, American engineers being the driving force behind it notwithstanding. We have such a strong small business unit because (a) a lot of our economy has always been driven by small business (that "American ingenuity" people always talk about and (b) U.S. laws are very friendly to the small business. And since when does our government really get involved with "financing private ventures"? Banks aren't paying out for insurance (and will probably pay slightly less under this reform), and most VC's will have to pay about 2% more in tax. So maybe 5-10 useless web startups a year won't happen, but I don't think it's going to slow down small businesses at all. Many of the people I know who would start one or join an existing one can't because of health insurance.
- ErrantX 17y ago
  r.e. your first paragraph. I think that is partly Our Country bias - because people here (UK) will say the same about the UK. We are generally small business friendly (I've had one, my parents have 2 going strong) but I don't expect we are particularly better, in reality, than anyone else :)
wisty 17y ago
That's debatable. Is it the tax (as a proportion of GDP), OH&S regulations, other work regulations (i.e. ease of hiring and firing), immigration policy, education system, red-tape for businesses, pump-priming (from lucrative defense contracts), resources (good soil, some oil, lots of mines), federal-state-local structure, the number of states (which means other states can cherry-pick regulations that work from their neighbors), or what? As I see it, the US spends a fortune on health, and gets a dodgy system. It's not quite the caricature Michael Moore paints, but he doesn't seem too far from the mark. Whether that is funded by companies (health benefits for employees - more red tape than in countries with universal health) or by individuals (which lowers individual risk tolerance) is immaterial. Public health works better than private health, according to all the numbers I've seen.
- Xichekolas 17y ago
  > As I see it, the US spends a fortune on health, and gets a dodgy system. Too true. One of my favorite infographics regarding health care: http://www.fastcompany.com/blog/cliff-kuang/design-innovation/infographic-day-how-bad-us-healthcare http://www.fastcompany.com/blog/cliff-kuang/design-innovatio... We see doctors less, spend more than twice the average anyway, and have below average life expectancy.
  - anamax 17y ago
    > We see doctors less, spend more than twice the average anyway, and have below average life expectancy. And we have a very different population. Obesity is only the most obvious example. And no, healthcare doesn't address obesity, even if your argument requires that it do so. And we spend more on end-of-life. Unless govt death panels are going to be more frugal than private ones, that cost-differential will persist. And we pay for a huge fraction of the world's drug development. Are you planning to cut back there? Well over $150B of existing medicare/medicaid spending is fraudulent, which is significantly more than the "excess overhead and profits" of private insurance. Will that go up or down?
    - Xichekolas 17y ago
      I agree with all your explicit points, and I realize that graph is a very crude indicator. Also, I agree with the implicit point I think you are making, which is that this reform really does nothing to address these issues. (Although I would also say that I'm fine paying for the drug development. We shouldn't stop doing something that benefits us just because others can take advantage.) So yeah, I really don't have a rebuttal because I agree with you. I wanted much more out of reform, but at this point I'm happy with anything that might get us a bit closer, especially if it makes it easier to reform in the future (which may be wishful thinking).
gte910h 17y ago
>If universal health care were really that important to entrepreneurship, why isn't Silicon Valley in Europe? Lots of people with health problems and families can't work for startups at the moment who will be able to once this happens. That's why this matters. I'd say the business regulations are the huge difference between those countries and the US as far as silicon valley goes.
credo 17y ago
>>As a counterpoint, countries that already have this are far behind the US in small business creation. Do you have any data to back up your assertion ? According to http://www.cepr.net/documents/publications/small-business-2009-08.pdf http://www.cepr.net/documents/publications/small-business-20... "By every measure of small-business employment, the United States has among the world’s smallest small-business sectors (as a proportion of total national employment)."
- jacoblyles 17y ago
  That's certainly an interesting link. I knew that over 99% of US businesses are considered "small" employing half the population, but I didn't know that Europe had such a vibrant entrepreneurial society. I'll admit, I'm in middle of a Programming Languages final so I didn't do a lot of statistical digging and relied on anecdote instead. Still the authors of that study do appear to have an ideological axe to grind. I would be interested in researching the matter further from a less ideological source. I'm curious why we think of the United States having such a large share of the world's startups and invention if it isn't true.
  - netcan 17y ago
    Unfortunately, if you want to pursue anything on topics such as these, you will need to live with the existence biases including your own. For what it's worth it seems to me like the abstract ideological debate between state and private control tends to be vibrant in The States and therefore breeds more "ideological" positions.
  - jacoblyles 17y ago
    And it does strike me as weird that I have a lot of friends from third world countries that come here because they view America as the land of entrepreneurial opportunity, when this study shows that they would be much better off in Germany.
    - bluedanieru 17y ago
      You probably haven't met the ones that moved to Germany instead.
ericd 17y ago
I would imagine a big part of that is attributable to how friendly US laws are to the formation of new businesses. One of the most interesting things in the recent DHH interview by Calacanis was when DHH mentioned that in Europe, founders are personally liable for the money they're spending on their new business. The business he was working for went under, and the guys in charge spent years paying back the money they had taken.
- Kliment 17y ago
  This is very much not true. You are liable up to the amount of capital invested in the typical company in most European countries. The minimum capital investment varies by country, but you are never liable for more than that in that form of company. There are other company forms where you are liable, but if you are going into a risky field you should not be using those. The way I understood it, the guys DHH was working for took credit in their own name to finance the company, which is generally a bad idea.
  - noverloop 17y ago
    it's a bad idea, but there isn't a culture to invest in startups around here so they probably didn't have an option.
jstevens85 17y ago
I believe part of the reason for the existence of Silicon Valley in the US is Stanford and Berekely. You have two great schools that attract the smartest engineers from all over the country. That doesn't exist in Europe. Firstly, there is an economic disadvantage to studying in a different EU country, and most importantly there are cultural and language barriers. Instead of having a concentration of the smartest engineers studying within a couple of colleges, you have smart people being distributed rather sparsely over quite a large area.
- izendejas 17y ago
  i agree. but the chicken or egg had to come from somewhere. where the talent came from is, i bet, a good story in itself. i think David Packard and Bill Hewlett (arguably the original silicon valley founders to have great success) set a great tone. at the time, very few employees had no stake in a company and stuff like flex-time didn't even exist. all these perks, i'm sure also played a role in attracting great talent (you can see it with Google and others today). i currently work for hp, so i know this story and would like to share it (despite being a bit off-topic): http://www.stanfordalumni.org/news/magazine/1998/julaug/articles/founding_fathers/founding_fathers.html http://www.stanfordalumni.org/news/magazine/1998/julaug/arti...
davidw 17y ago
> If universal health care were really that important to entrepreneurship, why isn't Silicon Valley in Europe? Because what makes Silicon Valley is a whole mix of factors? After all, why can't other US states copy Silicon Valley, even though a number of them dearly want to?
wlievens 17y ago
Because in the (European) country where I live, entrepreneurship is not part of the culture. Not once in my entire education did it occur to me that people actually start businesses (despite both my parents being self-employed). Education focuses on skills, society and some culture, but not at all on economics or entrepreneurship. This counts for any level of schooling, including University. The number of IT spinoffs from my alma mater in the past decade can be counted on one hand.
ajju 17y ago
>If universal health care were really that important to entrepreneurship, why isn't Silicon Valley in Europe? Because universal health care is not a sufficient condition for entrepreneurship, only an important one. I might go so far as to call it semi-necessary, but obviously if you have a spouse with corporate health care (as I do), or are less risk averse, you can make do without universal health care. Silicon Valley has other things which beat the pants-off of Europe in terms of encouraging entrepreneurship (fewer roadblocks, easier access to capital, easy access to large markets, a culture where entrepreneurs are looked up to)
tptacek 17y ago
* Because it's much harder to incorporate in EU. * Because it's much harder to fire employees in EU, which makes employing people much riskier. * Because the rules for employing people (working hours, vacation, etc) are much stricter. * Because entrepreneurship is stigmatized in EU. * Because insolvency in the EU involves years of trusteeship and significant legal hardship. * Because selling in the EU and elsewhere abroad involves more border crossings and different regulatory regimes. * Because taxes in EU are spectacularly high, not just for the top earners but all the way down through the middle class. You could fix all of these today (bk reform is apparently a major theme in Europe) and it might still be a generation before the region becomes competitive with the US.
- MartinCron 17y ago
  Thanks for that comment. So many arguments break things down into simple one-dimensional reductionist perspectives. There are so many material differences between the US and the EU that it's impossible to predict exactly how incremental regulatory changes in either place will change things. I remember a joke I heard a few years ago about how by law German offices must have windows and German garages must not have windows, so you can't ever start a company in your garage.

jeremymcanally 17y ago

This sort of economic handwaving makes a lot of assumptions. Silicon Valley isn't in Europe for a lot of reasons, American engineers being the driving force behind it notwithstanding. We have such a strong small business unit because (a) a lot of our economy has always been driven by small business (that "American ingenuity" people always talk about and (b) U.S. laws are very friendly to the small business. And since when does our government really get involved with "financing private ventures"? Banks aren't paying out for insurance (and will probably pay slightly less under this reform), and most VC's will have to pay about 2% more in tax. So maybe 5-10 useless web startups a year won't happen, but I don't think it's going to slow down small businesses at all. Many of the people I know who would start one or join an existing one can't because of health insurance.

ErrantX 17y ago
r.e. your first paragraph. I think that is partly Our Country bias - because people here (UK) will say the same about the UK. We are generally small business friendly (I've had one, my parents have 2 going strong) but I don't expect we are particularly better, in reality, than anyone else :)

wisty 17y ago

That's debatable. Is it the tax (as a proportion of GDP), OH&S regulations, other work regulations (i.e. ease of hiring and firing), immigration policy, education system, red-tape for businesses, pump-priming (from lucrative defense contracts), resources (good soil, some oil, lots of mines), federal-state-local structure, the number of states (which means other states can cherry-pick regulations that work from their neighbors), or what? As I see it, the US spends a fortune on health, and gets a dodgy system. It's not quite the caricature Michael Moore paints, but he doesn't seem too far from the mark. Whether that is funded by companies (health benefits for employees - more red tape than in countries with universal health) or by individuals (which lowers individual risk tolerance) is immaterial. Public health works better than private health, according to all the numbers I've seen.

Xichekolas 17y ago
> As I see it, the US spends a fortune on health, and gets a dodgy system. Too true. One of my favorite infographics regarding health care: http://www.fastcompany.com/blog/cliff-kuang/design-innovation/infographic-day-how-bad-us-healthcare http://www.fastcompany.com/blog/cliff-kuang/design-innovatio... We see doctors less, spend more than twice the average anyway, and have below average life expectancy.
- anamax 17y ago
  > We see doctors less, spend more than twice the average anyway, and have below average life expectancy. And we have a very different population. Obesity is only the most obvious example. And no, healthcare doesn't address obesity, even if your argument requires that it do so. And we spend more on end-of-life. Unless govt death panels are going to be more frugal than private ones, that cost-differential will persist. And we pay for a huge fraction of the world's drug development. Are you planning to cut back there? Well over $150B of existing medicare/medicaid spending is fraudulent, which is significantly more than the "excess overhead and profits" of private insurance. Will that go up or down?
  - Xichekolas 17y ago
    I agree with all your explicit points, and I realize that graph is a very crude indicator. Also, I agree with the implicit point I think you are making, which is that this reform really does nothing to address these issues. (Although I would also say that I'm fine paying for the drug development. We shouldn't stop doing something that benefits us just because others can take advantage.) So yeah, I really don't have a rebuttal because I agree with you. I wanted much more out of reform, but at this point I'm happy with anything that might get us a bit closer, especially if it makes it easier to reform in the future (which may be wishful thinking).

gte910h 17y ago

>If universal health care were really that important to entrepreneurship, why isn't Silicon Valley in Europe? Lots of people with health problems and families can't work for startups at the moment who will be able to once this happens. That's why this matters. I'd say the business regulations are the huge difference between those countries and the US as far as silicon valley goes.

credo 17y ago

>>As a counterpoint, countries that already have this are far behind the US in small business creation. Do you have any data to back up your assertion ? According to http://www.cepr.net/documents/publications/small-business-2009-08.pdf http://www.cepr.net/documents/publications/small-business-20... "By every measure of small-business employment, the United States has among the world’s smallest small-business sectors (as a proportion of total national employment)."

jacoblyles 17y ago
That's certainly an interesting link. I knew that over 99% of US businesses are considered "small" employing half the population, but I didn't know that Europe had such a vibrant entrepreneurial society. I'll admit, I'm in middle of a Programming Languages final so I didn't do a lot of statistical digging and relied on anecdote instead. Still the authors of that study do appear to have an ideological axe to grind. I would be interested in researching the matter further from a less ideological source. I'm curious why we think of the United States having such a large share of the world's startups and invention if it isn't true.
- netcan 17y ago
  Unfortunately, if you want to pursue anything on topics such as these, you will need to live with the existence biases including your own. For what it's worth it seems to me like the abstract ideological debate between state and private control tends to be vibrant in The States and therefore breeds more "ideological" positions.
- jacoblyles 17y ago
  And it does strike me as weird that I have a lot of friends from third world countries that come here because they view America as the land of entrepreneurial opportunity, when this study shows that they would be much better off in Germany.
  - bluedanieru 17y ago
    You probably haven't met the ones that moved to Germany instead.

ericd 17y ago

I would imagine a big part of that is attributable to how friendly US laws are to the formation of new businesses. One of the most interesting things in the recent DHH interview by Calacanis was when DHH mentioned that in Europe, founders are personally liable for the money they're spending on their new business. The business he was working for went under, and the guys in charge spent years paying back the money they had taken.

Kliment 17y ago
This is very much not true. You are liable up to the amount of capital invested in the typical company in most European countries. The minimum capital investment varies by country, but you are never liable for more than that in that form of company. There are other company forms where you are liable, but if you are going into a risky field you should not be using those. The way I understood it, the guys DHH was working for took credit in their own name to finance the company, which is generally a bad idea.
- noverloop 17y ago
  it's a bad idea, but there isn't a culture to invest in startups around here so they probably didn't have an option.

jstevens85 17y ago

I believe part of the reason for the existence of Silicon Valley in the US is Stanford and Berekely. You have two great schools that attract the smartest engineers from all over the country. That doesn't exist in Europe. Firstly, there is an economic disadvantage to studying in a different EU country, and most importantly there are cultural and language barriers. Instead of having a concentration of the smartest engineers studying within a couple of colleges, you have smart people being distributed rather sparsely over quite a large area.

izendejas 17y ago
i agree. but the chicken or egg had to come from somewhere. where the talent came from is, i bet, a good story in itself. i think David Packard and Bill Hewlett (arguably the original silicon valley founders to have great success) set a great tone. at the time, very few employees had no stake in a company and stuff like flex-time didn't even exist. all these perks, i'm sure also played a role in attracting great talent (you can see it with Google and others today). i currently work for hp, so i know this story and would like to share it (despite being a bit off-topic): http://www.stanfordalumni.org/news/magazine/1998/julaug/articles/founding_fathers/founding_fathers.html http://www.stanfordalumni.org/news/magazine/1998/julaug/arti...

davidw 17y ago

> If universal health care were really that important to entrepreneurship, why isn't Silicon Valley in Europe? Because what makes Silicon Valley is a whole mix of factors? After all, why can't other US states copy Silicon Valley, even though a number of them dearly want to?

wlievens 17y ago

Because in the (European) country where I live, entrepreneurship is not part of the culture. Not once in my entire education did it occur to me that people actually start businesses (despite both my parents being self-employed). Education focuses on skills, society and some culture, but not at all on economics or entrepreneurship. This counts for any level of schooling, including University. The number of IT spinoffs from my alma mater in the past decade can be counted on one hand.

ajju 17y ago

>If universal health care were really that important to entrepreneurship, why isn't Silicon Valley in Europe? Because universal health care is not a sufficient condition for entrepreneurship, only an important one. I might go so far as to call it semi-necessary, but obviously if you have a spouse with corporate health care (as I do), or are less risk averse, you can make do without universal health care. Silicon Valley has other things which beat the pants-off of Europe in terms of encouraging entrepreneurship (fewer roadblocks, easier access to capital, easy access to large markets, a culture where entrepreneurs are looked up to)

tptacek 17y ago

* Because it's much harder to incorporate in EU. * Because it's much harder to fire employees in EU, which makes employing people much riskier. * Because the rules for employing people (working hours, vacation, etc) are much stricter. * Because entrepreneurship is stigmatized in EU. * Because insolvency in the EU involves years of trusteeship and significant legal hardship. * Because selling in the EU and elsewhere abroad involves more border crossings and different regulatory regimes. * Because taxes in EU are spectacularly high, not just for the top earners but all the way down through the middle class. You could fix all of these today (bk reform is apparently a major theme in Europe) and it might still be a generation before the region becomes competitive with the US.

MartinCron 17y ago
Thanks for that comment. So many arguments break things down into simple one-dimensional reductionist perspectives. There are so many material differences between the US and the EU that it's impossible to predict exactly how incremental regulatory changes in either place will change things. I remember a joke I heard a few years ago about how by law German offices must have windows and German garages must not have windows, so you can't ever start a company in your garage.