32 ms·

Europe is now a corporate also-ran. Can it recover its footing?

• N1H1L 5y ago
  Outline for those who are paywalled - https://outline.com/4Vk8VW https://outline.com/4Vk8VW
• RcouF1uZ4gsC 5y ago
  > These internal barriers mean Europe has many smaller firms operating at national, not continental, scale. Each country tends to have its own banks, utilities, airlines and supermarkets. (Europe has over 100 mobile operators, compared with a handful in America or China.) These lack the economies of scale and opportunities to grow quickly enjoyed by firms plying the American or Chinese markets. This is a huge advantage for US(and China). A company started in either has immediate access to a massive population with relatively common culture, language, laws, and infrastructure. A company can smoothly scale its reach to 100’s of millions. The EU, although it has a bigger population than the US, is divided into multiple much smaller countries, many times with their own language, culture, laws, and infrastructure.
  • PKop 5y ago
    And this is a good thing for those that care more about language, culture, laws, infrastructure, and having their own unique version of them, than they do about the success and profitability of multinational corporations. Diversity is destroyed if capital simply dissolves all differences and subsumes nations and entire regions, homogenizing everything.
• profunctor 5y ago
  Would have been nice if they had given a serious mention to some of the positives. Sure, Europe ahs hundreds of mobile operators but we also have cheaper plans than any I could find in America. We also have serious competition with our internet providers so I can actually switch to a better service. Anyway it is sad that we can't seem to grow as many new large companies. Hopefully we can improve at that while keeping worker protections and climate protections.
  • chrisseaton 5y ago
    > Hopefully we can improve at that while keeping worker protections This is how Europeans defend their system - better worker protections. But I get far better pay, conditions, and work-life balance at a North American company than I could possibly expect working for a local company. I'm not sure this defence really works anymore.
    • _s 5y ago
      If you’re a “professional” (engineers, lawyers, doctors etc) in any capacity; you will be given more - but for the majority of the workforce in retail, hospitality, services - you are much worse off; the European social support is geared towards a more even society.
      • alanbernstein 5y ago
        That aligns with the Steve jobs unicorn story; a more even society sacrifices the extreme high outliers like him. Interesting to think about it as trading social welfare for the chance at more successful moonshots. If you believe in always-increasing returns on technological progress, it probably sounds like a fair trade...
        • dv_dt 5y ago
          While it’s an easy concept, if you look at billionaires per capita, Norway and Sweden edge out the us. https://en.wikipedia.org/wiki/List_of_countries_by_number_of_billionaires https://en.wikipedia.org/wiki/List_of_countries_by_number_of...
          • oneplane 5y ago
            On the other hand, billionaires are just concentrations of wealth and power which hardly helps the masses. That is a general pattern in the USA anyhow, a few concentrations here and there but everyone else seems to be screwed in various ways (be it basics like healthcare, education, safety).
• mqus 5y ago
  The graphs seem to me like they were selectively showing data which makes europe look bad. E.g. only showing the market cap of big companies or showing the decline of the european share of gdp but not the US one (which I assume was also falling), etc. Of course they made it to support the argument but to me it made their case much less valid.
  • Camas 5y ago
    Fair. From ~40% share of global gdp in the 60s to ~25% now
    • tenuousemphasis 5y ago
      Seems a little meaningless without knowing if growth slowed, or if developing countries are just going the steep sections of their growth curves.
  • rsj_hn 5y ago
    East Asia industrializing does not somehow diminish Europe or the U.S., so measures like "global share of GDP" for the continent have nothing to do with the subject matter at hand, which is why Europe, with certainly a sufficiently large GDP, is not able to give birth to large corporations at the same rate as the U.S. Now we can argue whether being able to do this is a good thing or a bad thing. But for some reason companies in Europe tend to grow at a slower rate. Is this good? It's a tough call. But it has nothing to do with national GDP, and throwing in non-sequiturs comparing GDPs of nation states is not contributing to the discussion.
    • deleted 5y ago
      [deleted]
    • passerby1 5y ago
      Does the work-life balance shifted towards life just mean that people work less in Europe? Can it contribute to a lesser global GDP share?
• jellicle 5y ago
  > These internal barriers mean Europe has many smaller firms operating at national, not continental, scale. Each country tends to have its own banks, utilities, airlines and supermarkets. (Europe has over 100 mobile operators, compared with a handful in America or China.) But all of that is a tremendous bonus for Europeans, not a penalty.
  • chrisseaton 5y ago
    There's benefits to larger companies, such as being willing and able to fund bigger research and development projects. There's opportunities at companies like Google that just aren't available at any European company.
    • erhk 5y ago
      Why should research be private? OpenAI comes to mind. Also open source as a whole is in counter to this.
      • chrisseaton 5y ago
        > Why should research be private? Nobody said it should be so who are you asking this question to? Does Europe have a better way to do research that isn't private? Research output suggests that they do not.
        • disabled 5y ago
          I would give Europe a C- for scaling on R&D funding. The government that probably does the best is the US, and I would give them a B+, because R&D funding is always not enough for public and societal need. This is especially the case with respect to NIH (national institutes of health) research funds.
  • N1H1L 5y ago
    True. American tech and telecom is increasingly being looked at as being monopolistic. And this feeling is bipartisan, even if the starting arguments are different for each party.
• chrisseaton 5y ago
  Why are European companies so unambitious? My whole civilian career I've had to work for North American companies because the European alternatives aren't even attempting to be competitive.
  • passerby1 5y ago
    I'm not an economist, but in my opinion a progressive taxation (for employees wages) can be a main limiting factor to this. Ambitions needs motivated employees. They need better wages to work harder. But it's really a steep curve after mid-wage, because taxes are _very_ progressive. So ambitions are just not worth trying.
    • duped 5y ago
      California has some of the most progressive taxes in the US and yet is truly unrivaled in ambition and innovation in business. The taxes don't seem to be harming the ability of companies to pay competitively or citizens to be ambitious. The taxes aren't stopping European companies from paying competitive salaries
    • robocat 5y ago
      I don't buy that argument. As I increase my earnings, more and more is disposable income (beyond the costs of living for my social status). Extra dollars go towards things you want, not the things you need, so there is quite an incentive to earn more even if it is highly taxed. As you raise your income,
      • emptysongglass 5y ago
        Anecdata from myself here but I've recently hit top tax in Denmark. I'm ambitious but have started to feel like it's just not worth it scrabbling for an extra 2 or 3k a month when most of it disappears down the end of a hoover. I don't even know how millionaires who can afford their incredible estates in the countryside do it. My first thought was tax havens but I don't know if that's true. It seems like the entire system is set up to disembowel such ambitions.
• okareaman 5y ago
  The opening paragraph: In 1984 a besuited 20-something American executive on a visit to France offered Europeans a few tips for corporate success. Entrepreneurs needed to be given a second chance if they failed and government bureaucrats made for lousy investors, he told a television interviewer. His advice was sage. But European companies ruled the global corporate roost alongside those of America and, occasionally, Japan. Why should they take advice from this uppity Californian newcomer? Nearly four decades later the company founded by that young upstart, Steve Jobs, is worth more than the 30 firms in the German blue-chip dax index combined. As someone who grew up in the California Bay Area and programmed Macs and other computers my whole life, reading that gave me great enjoyment.
  • xwolfi 5y ago
    As someone who grew up in Normandy, it does little to me obviously. Except the part on what we lack and should do which is still so damn hard to convince people is the solution. People in France care so much more on raising their kids, having good friends, living somewhere fun or interesting, having time away from work than they forget us the little busy bees who have to pay for all that. I gave up after 3 years of work and taxes and being called "rich" by everyone around me for earning 40k usd/year. Moved to Hong Kong, tripled my salary and fuck these hedonists. Life is a purgatory where you must suffer away from your family to build great consumer objects, like California taught us. You can be proud.
    • chrisseaton 5y ago
      > People in France care so much more on raising their kids, having good friends, living somewhere fun or interesting, having time away from work Ironically, working for a North American company in Europe lets me do all this better than if I worked for a local company.
    • deleted 5y ago
      [deleted]
    • okareaman 5y ago
      > Life is a purgatory where you must suffer away from your family... I would amend your statement to "Young life is a purgatory..." Mark Zuckerberg famously said he wouldn't hire anyone over 30. Silicon Valley is built on young people trying to strike it rich, which befits a state that started because of a gold rush. It's also built on companies exploiting young people who want to make it big. The same is true of the film industry in Los Angeles. It's a bargain young people are eager to take. China seems to have become successful by copying everything about Silicon Valley, including IP, but they still have stifling control at the top. Let's hope Democrats in D.C. don't do something similar and kill the goose who laid the golden egg.
• wrnr 5y ago
  I live in a small EU country, sometimes it feels like I live in a total state. Government and universities glued together by big consulting firms following some innovation management framework with people that don't know what they are talking about ranking stuff by points scored on some technology readiness index. It just laks any soul, feels like i'm stuck here, would move if I could but where would I go.
  • passerby1 5y ago
    What country is it, mind sharing the name?
    • wrnr 5y ago
      Belgium, Flanders
      • smaug7 5y ago
        Curious - what's your profession? Depending on your skills, you could, ironically given the nature of this article, apply to come to the US and it would be valued.
      • TMWNN 5y ago
        >Belgium, Flanders Does pillarization help or hurt here? I'd have thought that having multiple universities when there might otherwise be just one (University of Leuven being one obvious example), for example, might encourage competition. Or does it just take away potential advantage of scale without compensating benefits?
        • wrnr 5y ago
          Pillarization isn't a thing anymore, politics is still a thing but doesn't revolve on party lines, if that makes any sense. More like hyper-politics, it isn't politics until it is. For research IMEC is huge, the people working their are generally good, mix tungsten with silicon and get better chips due to quantum effects. Non semiconductor stuff is a lot weaker, some stuff bordering on academic fraud. Semantic web this and that, sir Tim Burners Lee saving the internet again. Bureaucrats just love how consensus focused that stuff is, like catnip. When I have meetings with government officials they are lead by consultants from PwC that talk about the need for more competition. I'm better off working for EY that just gets the contract.
• octodog 5y ago
  This article doesn't do a good job of explaining why having many huge corporations is a boon. My guess is that many Europeans are perfectly fine with that.
  • N1H1L 5y ago
    I think while the average European is fine, as the article alludes to European politicians aren't. In fact the last tech darling from Europe ended up as a massive scam - Wirecard.
    • KptMarchewa 5y ago
      Well, it's main competitor, checkout.com is also from Europe.
  • erhk 5y ago
    Europe is extracting less value from its people than the U.S. is right now. Hardly a bad thing
    • BobbyJo 5y ago
      If you assume the value extracted leaves the system, the sure. That's a bad assumption though. When everyone makes more everyone gets more. I mean, if a lot of something gets made in the US, it's generally because the US people demand it with spending.
      • galgalesh 5y ago
        I think you misunderstood the original point. The idea is that there is more to life than consumption. Even if a higher extraction results in more consumption, that doesn't mean the end result is more valuable to the people. When you remove the assumption that more consumption equals more value to the consumer, then it doesn'tatter whether the value "leaves the system" or not.
    • passerby1 5y ago
      Do you mind sharing sources for this? I'm genuinely interested in this topic.
• roenxi 5y ago
  This article hasn't ruled out the easy answer - EU stocks might be taxed differently so the stock prices are lower. I'm personally sure there are problems with their policies, but this article is leaping ahead a little bit linking cause and effect.
• mustafa_pasi 5y ago
  A point not made in the article: American consumers are better at consuming and driving growth than European consumers: When the article mentioned Starbucks and Tesla, I immediately thought, those would never have taken off in Europe. Americans are just much better consumers. Americans spend more on luxury and value convenience to a greater deal. American consumers are also more adventurous and willing to try new things. If I spent $80k on a Tesla when their brand was still nothing, people would call me crazy. "Could have gotten a Porsche", would probably be, what they'd say. And if you notice, what is happening, luxury markets is where all the growth is, these days. Essentials are not growing much. This is probably another reason why Europe, with all its experience in these essentials markets is not capturing much of this growth. With the exception of clothing and apparel.
  • IfOnlyYouKnew 5y ago
    Europe has plenty of "luxury" brands, although few in the tech sector, admittedly. But consumer-facing brands aren't everything. Germany's industry is famously reliant on "hidden champions": specialist mid-sized companies you've never heard of, producing, say, industrial pumps, chewing-gum wrapping machines, or large curved glass panels.
    • Proven 5y ago
      Most luxury brands existed before socialism took hold and especially before the EU.
    • smaug7 5y ago
      The article points out that the industries that the European companies are in have slow growth rates. I can't imagine industrial pumps, chewing gum wrapping machines, large curved glass panels can have the same growth rates (or profit margins) as some of america's top mid sized companies. https://www.forbes.com/lists/best-mid-cap-companies/#66cd8f8b59e1 https://www.forbes.com/lists/best-mid-cap-companies/#66cd8f8... Here's a list to get a gauge of what's out there
    • TMWNN 5y ago
      >Germany's industry is famously reliant on "hidden champions": specialist mid-sized companies you've never heard of, producing, say, industrial pumps, chewing-gum wrapping machines, or large curved glass panels. Besides smaug7's point (which the article also makes), mittelstand is a German, not European, phenomenon.
• ferdowsi 5y ago
  Is it really so grim? This report has London, Stockholm, Amsterdam, Paris and Berlin in the top 20 startup global ecosystems. https://cdn.startupgenome.com/sites/5c98cab2fb6681000470c58c/content_entry5c98d00fa9239e000d566f7b/5ef3916b2775fe003e2be462/files/Global_Startup_Ecosystem_Report_2020.pdf?1620119566 https://cdn.startupgenome.com/sites/5c98cab2fb6681000470c58c...
  • chrisseaton 5y ago
    'in the top 20' sounds like scraping the barrel. London is second. There isn't an EU country until 10. There isn't really a lot of Europe on that list, is there? Europe is generally outperformed by regional US cities.
  • rkk3 5y ago
    It's a power law driven game. Also I'm skeptical of the Methodology... SLC has a performance ranking of 8 (which only the top 10 cities & 2 others have) yet is ranked 31st. It's better performance than Amsterdam, Paris and Berlin & Tied with Stockholm. Yet despite the performance SLC rates as a 1 for each; Funding, Connectedness, Knowledge and Talent. So I guess those other cities have 'very talented' 'low performers'?
• neonate 5y ago
  https://archive.is/goIlh https://archive.is/goIlh
• 238475235243 5y ago
  I've lived in a few different parts of the EU, and couldn't imagine a worse idea than starting a company there (which I did, once). Starting is hard enough without the general negative attitudes, the government insanities, the insane taxes, the low work ethic, the 8 weeks of vacation every month (I exaggerate, slightly). And I was in one of the two best EU countries, God only knows how bad it is in Spain or Italy or whatever where opening for business more than one day a week is seen as aggressive. (again, I exaggerate slightly). If anyone disagrees with this article who's in the US, I dare you to go and try and start something in the EU and report back. Not the UK, the EU. Glory to the US, and the ability to move States with little friction. Glory to the LLC. Glory to firing someone with less than six months notice (I'm looking at you, Belgium). Glory to sales tax below 20%. Glory to the country I chose as home, which so many natives seem to be delusional about how terrible it is. One day I hope the EU lives up to the dream of being a genuine federation of EU states, with zero friction movement of labor (this is completely laughable now compared to the US), defends its borders instead of giving up on them, allows free and fair competition and puts its citizens above the bizarre EU commission and its bonkers methods and plans.
  • analog31 5y ago
    Oddly enough I've struggled to find any data showing that the US is actually better for entrepreneurs. It's all anecdotal. I have a small business but it will stay small because I need my day job for health care. Granted, this is but one article: https://www.theatlantic.com/business/archive/2012/10/think-were-the-most-entrepreneurial-country-in-the-world-not-so-fast/263102/ https://www.theatlantic.com/business/archive/2012/10/think-w...
    • ransom1538 5y ago
      "Oddly enough I've struggled to find any data showing that the US is actually better for entrepreneurs" That literally was what the article was about. Tons of figures/facts in the article.
      • analog31 5y ago
• rdiddly 5y ago
  It's not a bug, it's a feature. Corporations in Europe have to pay taxes and follow laws and stuff, don't they? They'll never get to be huge, hypertrophic and out-of-control at that rate! This article talks as if having big corporations with big profits is the entire reason for life itself. In fact most people in America have to give up quite a lot, in order to enable such stellar gains for a few. I wouldn't chalk it up to any particular management brilliance, either; it's a "business friendly climate" shall we say. Meanwhile China accomplishes the same thing via active state repression. Nothing to emulate necessarily in either case.
  • everyone 5y ago
    90% of HN users wont understand this. Wanna-be 'titans of industry', 'changing the world' one CRUD app at a time. Poorly educated and naive. They will swallow wholesale whatever new-age pseudoscientific bullshit or Reaganomics that is currently popular in silicon valley.
  • oytis 5y ago
    > They'll never get to be huge, hypertrophic and out-of-control at that rate! Europe has enough out-of-control corporations, it's just hard to make a new one. Which means a) low social mobility b) economy gets rusty
• everyone 5y ago
  Wow a place with high quality of life, education, equality, human rights, individual empowerment etc. is also a bad environment for giant terrible corporations. Who'da thunk it.
  • leesalminen 5y ago
    I’m just an undereducated, naive American who built a CRUD app but I’ve never heard Europe described as valuing individual empowerment.
  • specialkfan 5y ago
    If you're White maybe. I'm Asian and the incessant, non-stop casual racism in Europe is just next level.
• nemo44x 5y ago
  It’s simple: Smart person in America: Amazing. Dumb person in America: Bad. Smart person in Europe: Good. Dumb person in Europe: Fine.
  • specialkfan 5y ago
    This is the most accurate thing I've read today.
• CryptoPunk 5y ago
  Europe is stagnating for the same reason the US is: the rise of social democracy. https://ourworldindata.org/grapher/social-spending-oecd-longrun https://ourworldindata.org/grapher/social-spending-oecd-long... There is a strong negative correlation between the size of government, as a percentage of GDP, and the rate of economic growth: https://web.archive.org/web/20170821004405/http://ime.bg/uploads/335309_OptimalSizeOfGovernment.pdf https://web.archive.org/web/20170821004405/http://ime.bg/upl... The data shows that the Scandinavian region, which is the poster child for social democracy, has suffered for it, in being surpassed by low-tax Hong Kong and Singapore in life expectancy, despite the latter coming from a position way behind them in the 1960s, and this is a result of the Scandinavian region's stagnation versus less social democratic economies: http://iea.org.uk/sites/default/files/publications/files/Sanandajinima-interactive.pdf http://iea.org.uk/sites/default/files/publications/files/San... • Scandinavia is often cited as having high life expectancy and good health outcomes in areas such as infant mortality. Again, this predates the expansion of the welfare state. In 1960, Norway had the highest life expectancy in the OECD, followed by Sweden, Iceland and Denmark in third, fourth and fifth positions. By 2005, the gap in life expectancy between Scandinavian countries and both the UK and the US had shrunk considerably. Iceland, with a moderately sized welfare sector, has over time outpaced the four major Scandinavian countries in terms of life expectancy and infant mortality. • Scandinavia’s more equal societies also developed well before the welfare states expanded. Income inequality reduced dramatically during the last three decades of the 19th century and during the first half of the 20th century. Indeed, most of the shift towards greater equality happened before the introduction of a large public sector and high taxes.
  • deleted 5y ago
    [deleted]
• brainless 5y ago
  I am from India and for the first 8-10 years of my post-college life I drank all the "glory" reporting of the American style of doing business. I tried doing it myself. I fell apart, suffered silently for years. Moved to Germany, went through counseling at the end of that period. Learnt that life is a lot more than silly startup games. No matter what anyone tells me, I have seen it myself first hand - I want a happier life, not a fatter paycheck. The average multi-million $ enterprise company creates CRUD apps and sell them like they are saving humanity. It is just sales all the way down. I came back to India and started thinking of my life in 10, 20, 30 year terms. I live in a village in the Himalayas and even though I still struggle as I get influenced by the media, I take steps back, look at the gorgeous mountains in front of me and smile. I am happy, happier than I even have been. I focus on what matters to me - empowering people, open source software, and building a sustainable business. I am never doing the crazy startup life again. Period.
  • systemvoltage 5y ago
    I am sorry you had such an experience. Startup life has pros and cons, and situationally varied. I've worked on several startup ventures of my own and nothing in the world is more satisfying than "skin in the game". It feels real and impactful. I didn't work more than 8-10 hours a day. People using your products and gratification of the fact that you/your-team built is so much more real to me. Friendships I've formed in these years are the strongest bonds of my life and have kept me mentally in better state than otherwise toiling in a FAANG job. > The average multi-million $ enterprise company creates CRUD apps and sell them like they are saving humanity. It is just sales all the way down. Perhaps, I suggest working on something else other than CRUD apps? That sounds horrible. Startups can vary from Space industry to biotech, from defense to green tech. > I am happy, happier than I even have been. I focus on what matters to me - empowering people, open source software, and building a sustainable business. I am never doing the crazy startup life again. Period. Not all startup lives are like this. I guess we have a different definition of startup life. Startups are empowering people, building open source software and building sustainable businesses. Overall, there is a huge spectrum of startups you can work on - from shitty CRUD apps to Boston Dynamics.
    • 5y ago
• Barrin92 5y ago
  As usual the article is almost exclusively concerned with market capitalization as an indicator of economic success. Countries like Germany are dominated by small and middle-class, family owned business. 'Big corporate' is indeed more successful in the US or China but it's just one model to manage an economy and I don't think it's that great. One of the most important points is also buried at the end of the article >"These internal barriers mean Europe has many smaller firms operating at national, not continental, scale. Each country tends to have its own banks, utilities, airlines and supermarkets. (Europe has over 100 mobile operators, compared with a handful in America or China.) These lack the economies of scale and opportunities to grow quickly enjoyed by firms plying the American or Chinese markets." Europe has no homogeneous consumer market for tech giants like the US or China which can propel tech firms to gigantic size. And honestly I consider this a feature instead of a bug. It seems like profits aside the major other thing they seem to promote is damaging competition, democracy and pushing surveillance. If it was up to me Europe should use the decline of business giants to double down on the idea of the 'Europe of regions'. Small, diverse and robust business that does well on international markets, pays attention to its stakeholders rather than just shareholders, and does not just pursue growth blindly.
  • wpasc 5y ago
    In defense of the article (not agreeing nor disagreeing), the article then includes reasons why it is concerned with market capitalization: >But if it continues, the waning of Europe’s business will bring consequences. Big firms invest in innovation, which boosts economic growth. Left to regulate only foreign groups, Europe’s ability to shape global business norms—on privacy, say, or the uses of artificial intelligence—will look weak. European policymakers’ cries for “strategic autonomy” will come to nothing without corporate backing. >Europe’s smaller firms now find themselves competing against global behemoths with inbuilt advantages. Large firms can afford to buy and try new technology, borrow at cheaper rates and absorb fixed costs more efficiently. They tend to spend relatively more on research and development. The dearth of big companies helps explain why European spending on research, at 2.1% of gdp, is below the average of the oecd, a group of mostly rich nations. I have no certainty about few, big corps vs. heterogenous medium sized corps, but I think the point has about Europe's ability to influence global norms/best practices has validity. Europes influence could be negatively affected without strong, global presence by local companies in sectors it cares about influencing.
• TMWNN 5y ago
  >The third, and most striking, reason Europe has fallen behind is the lack of newly created firms in its blue-chip indices. Many of the biggest companies in America, such as Amazon, Netflix, Tesla or Facebook, are young enough to be run by their founders. In Europe old names prevail. Harry Truman said in 1945 about the atomic bomb, "We thank God that it has come to us, instead of to our enemies". I feel the same way about FAANG and SpaceX/Tesla and Silicon Valley as a whole (and Wall Street, and Hollywood, and the Ivy League), that they are in the United States. That doesn't mean I approve of everything they do. That doesn't mean I can't or won't decry their putting thumbs on scales toward a certain type of bien-pensant ideology. That does mean that, overall, I am very, very glad that they are American instead of Russian, Chinese, or even British, French, or German.
• bww 5y ago
  It’s rather remarkable how many comments in this thread dismissively explain that, sure, the US has created far more super successful companies in recent years but, hey, who even cares about that and actually big companies are stupid anyway and Americans are all brainwashed. That’s interesting for its knee-jerk, defensive quality. But I’ll bite: the point of using huge companies as a proxy for economic performance is that globalization and the internet mean that increasingly you’ll have few (and often: one) winners in a given space that capture essentially all the value. If Europe isn’t a competitive player in creating these winners, they’re accepting that they simply aren’t going to capture any meaningful value in these emerging and ascendant industries. That, to me, implies a certain resignation to economic stagnation as a point of pride. I genuinely wonder how you can endorse that state of affairs without any concern for how, in the face of declining competitiveness, the comfortable status quo that is preferable to success continues to get paid for.
  • pm90 5y ago
    Big companies are notoriously poor at generating value. Most of their revenues come from a handful of products, and in general most of their resources are spent in ensuring that competitive threats are eliminated. They’re not a good proxy for economic performance; in fact their presence indicates the opposite. The American economy has succeeded because smaller firms were capable of growing rapidly and challenging and then replacing previous generations of titans. The inability of present or future firms to do this presents an existential threat to the competitiveness of the US economy.
• ouchithurtsma 5y ago
  Europe is doomed. Nobody in their right mind would start a company here, everybody I know who tried filed for bankruptcy and emigrated to the US. It's a business hostile environment. The only reason there are some big companies is because those have been started a hundred years ago, e.g. Germany is run by old industry and ex nobility families, everybody else is just a peasant pretty much, and those are heavily exploited. People think we Europeans have nice social nets, it's bullshit. I pay more monthly for health insurance than I'd pay in the US. I pay 1700eur/2069USD in social contributions alone per month and I am not even 'rich' in any sense, I can't even afford to buy an apartment in a big city. After that on top 48% tax (overall I earn after all taxes 30cents on the euro!). No wonder nobody wants to work and try to start a big business, there's nothing left. Same goes for companies...shit ton of taxes, regulations. I did the math, you net gain is negative. Europe will slowly die, at least I have some Shorts on it (which are taxed at 27.5%)
• vmception 5y ago
  > Half of Europe’s richest ten billionaires inherited fortunes spawned long ago; in America nine of the top ten are wealthy solely because of companies they founded. Note the two differences in these regions. Specifically, population size of the respective country. There is an old quip that suggests family fortunes are squandered by the third generation, but a greater force of this would simply be how many people are there to an inheritance? France, for example, only doubled in population size from 1790 to 2021. The United States, on the other hand, went from a population of 1,000,000 to a population of 330,000,000 from 1790 to 2021. Its more likely that people aren't irresponsible with fortunes en masse, and that it simply dilutes when people pop out too many babies. Maybe you would like to compare to the entire European subcontinent, be my guest. I don't think thats necessary as the United States region was basically empty as it expanded west. The people that were already there had already been undergoing a multi-century decimation by the time the union expanded.
• vmception 5y ago
  The EU and the Eurozone has revolutionized their corporate bond market more than anything. Obviously their primary shares market still sucks due to cultural roadblocks.
• xweb 5y ago
  The fucking Economist. Fuck these myopic fucking fuckers. Too blind to see that true success has nothing to do with numbers, and everything to do with humanity. If I had a nickel for every economist or “startup guru” who poohpoohed sustainable capitalism, I could buy and Apple with my pocket change. Blind assholes.
• christkv 5y ago
  It’s way harder to grow a business in a region dominated by tons of different languages and business cultures. Doing business in Germany or Greece are two completely different problems. This means most companies don’t escape local to be come multinationals. Lack of massive amounts of growth capital is another as well as a risk adverse culture in at least most of the EU countries.
• JohnJamesRambo 5y ago
  https://www.reddit.com/r/Bogleheads/comments/ikc6n0/so_you_want_to_buy_us_large_cap_tech_growth/ https://www.reddit.com/r/Bogleheads/comments/ikc6n0/so_you_w... I’ve always loved this summary of how the market goes back and forth and how the one constant is change.
• MperorM 5y ago
  If you remove the bay from the equation, the US starts looking much more like the rest of the world. I now live in Copenhagen Denmark but still maintain a decent network in the bay. The difference of culture is astounding. More than anything else the bay created a culture of innovation and excellence that cannot be found anywhere in Europe. That it happened to be the bay area that became this hub and not eg. Copenhagen, while not a coincidence, is still somewhat arbitrary. If the great minds of the bay collectively moved to Europe, I feel very certain they would be just as innovative in Copenhagen as they were in silicon valley. EU's most innovative and bright minds move elsewhere to be part of a culture where they feel at home. Until they decide to stay and help cultivate such a culture in Europe, there will be little innovation.
  • tasubotadas 5y ago
    >If the great minds of the bay collectively moved to Europe Why they don't move?
    • MperorM 5y ago
      coordination problem. Europe provides no competitive advantage to any first mover.
    • baq 5y ago
      Weather.
  • draw_down 5y ago
    If you take that time I murdered a guy out of the equation, I start looking like any other non-murderer.
• satellite2 5y ago
  This article is truly bizarre. The main point it makes is that the top 500 US companies grew faster than the top 500 European ones in the last decade or so. But then it quickly mention, without any further analysis, that both their GDP actually grew at a similar pace. So the entire EU economy grew at the same speed than the US one but not its 500 bigger companies. So all else being equals it means that the smaller US companies grew more slowly and that this article is simply mesuring increasing corporate inequalities (if there is such a thing). It then goes on to say, without much evidence, that this is actually good as economies of scale, supposedly more investment in R&D and increasing concentration should imply more innovation. If this article actually wants to discuss innovation, why don't it use recognised tools to do so? If you take the global innovation index, the number of Nobel price per 100'000 habitants, the number of registered patents per year or simply the size of the economy, all point to a very healthy European continent. I will even go further and say that the US should monitor much more closely increasing concentration as typically the ISPs or the energy distribution sectors show that concentration can be good for the shareholders but devastating for the consumer.
  • JumpCrisscross 5y ago
    > the entire EU economy grew at the same speed than the US one but not its 500 bigger companies This is literally the article’s point. Europe and the U.S. grew similarly. The U.S. and China produced more large companies. (The Continent’s larger companies also being older than the other two’s.) > supposedly more investment in R&D Not supposedly, factually. The article explicitly states this. It’s the Economist; if you need a source, they’re available on Google Scholar. > take the global innovation index, the number of Nobel price per 100'000 habitants, the number of registered patents per year or simply the size of the economy Nobel prizes and patents are measures of innovation, albeit not commercial ones. Leading product centres are another. The article measure the latter. Europe has constrained its big businesses and scale-oriented entrepreneurs. America and China have not. This is a tradeoff, and we’re seeing it play out. The Economist takes one side; it’s the side of iPhones, AWS, the Falcon 9, drones and other businesses with economies of scale. It’s against social sensibilities aligned against “big business.”
    • 5y ago
• cryptica 5y ago
  This idea of giving entrepreneurs second chances is idiotic. It makes no sense. They say it's because of learning/experience. That's total BS. You've learned 10 times as much when you've had to launch your business with 0 funding and struggled to compete against multi-million dollar VC-funded meme stocks and the corporate hivemind for 10 years. That's real learning/experience. I can tell you how the whole pyramid scheme works from beginning to end. Maybe the whole point of the 'second chances' mindset is that people who failed are more likely to become dishonest and engage in illegal activity or cover-up the second time to avoid failing again. They are more desperate the second time, but trust me, they're no wiser.
• pelasaco 5y ago
  I founded one company in Germany. We sold it to a big holding company. We developed network devices. We had a branch in US. If you are German and used to our bureaucracy, it was business as usual. It was quite ok to have 30 days holidays and see the office mostly empty in Summer. We used to have 10-20% of our engineering team as students, writing their degree thesis in our office, which used to bring a lot of innovation. We had some support from the State, when hiring people that were unemployed, where the State paid 50% of their salaries and we paid the rest. It was good specially to re-educate people without any job perspective. They got some basic training in facility management, QA and basic IT. Salaries are lower than in US, but people - specially in the software development branch, are kind of minimalistic, which is pretty different of our American colleagues, which almost all of them wanted expensive cars and their own House. Our devices used to compete with US and Chinese companies. We had our niche and our solution was considered more stable (but with less features) than the others. I think that's the main argument of buying something "made in Germany": Fair business conditions and stable product. Not the cheapest one. Not the one with more features. But rock solid, with long term support, etc.
  • dzonga 5y ago
    my bet, is in the long run the world will revert to this. just people, crafting with their heads down. and calling it a day. thanks for sharing your inspirational story.
• ramijames 5y ago
  Maybe having corporations grow as fast as possible shouldn't be a standard that countries strive for?
• suction 5y ago
  Europeans know all that, yet they don't see the US and the bigger is better mentality as a good example - more like a dystopia, especially since 2016. This has led to a state of mind in Europe which can be described as "let's do the opposite of whatever the US did, so we don't have to suffer through the same fate". The only company that is still somewhat of a shining example to Europeans is Apple. That's it. Facebook, Walmart, Starbucks, Tesla, and the others mentioned, are seen as dangerous trash. Apple is awesome though, and one company that wouldn't look out of place in Europe with its dedication to consumer privacy. And China can't be compared to any Western-style democratic system anyway.
• cryptica 5y ago
  A lot of US wealth is fake wealth in the stock market which is propped up by artificial money printing. EU wealth is real wealth, mostly outside of the stock market and hidden from view. Any stock could be artificially propped up to be worth 1 trillion dollars. Just issue 1 billion shares and trade a tiny subset of those shares (e.g. only 1000 shares) at $1000 per share each day; there you have your trillion dollar company (since market cap is price per share times number of shares). You only need $1 million in cash to pull off this scheme. You just need to make sure that the vast majority of shares are kept off the market. This is not as difficult to achieve as it seems. The reason it's fake wealth is because none of the billionaire shareholders can cash out more than 100k in a day without massively crashing their net worth unless the money printer comes to the rescue at just the right time.
• yawaworht1978 5y ago
  I am not sure the US has a better economy than the whole EU. I am also not sure that staff is less ambiguous in the US, I have worked in US companies and hybrid companies. I am sure however, that the song cats in the cradle was made in the US. Do not underestimate the european economy, average education, in Europe people simply chose to work to live instead of the other way around. One system cannot be simply given the attribute "better", there are too many factors to consider. Speak to people who have lived and worked in both. Best speak to people not from the EU nor US and make your mind up.
• j_wtf_all_taken 5y ago
  Its funny how the same people complaining about wealth concentration and how bad it is n the US will, in the next comment, say how awesome the US is for having these large companies ... where wealth is concentrated??2?
• dependsontheq 5y ago
  It’s important to see the time effect clearly the internet economy started mostly in The Valley and in that economic network most of the follow up growth happened. Chinas rise produced big companies. What happened is that there is no second or relevant third position in the internet economy and the US companies had a head start.
• streamofdigits 5y ago
  It is absurd to compare "Europe" with the US or China and I suppose in the future also India. Europe is a collection of nation states where a nationalist landmine always awaits to blow on our faces (See Brexit which deprived the European Union of one of its main economic powerhouses). Further, there are deep rooted linguistic barriers (See French attitude towards use of English as lingua franca - which diminishes the role of yet another powerhouse). Next, steps towards economic integration (like the introduction of the Euro) are sketchy. The financial system in Europe is in a half-baked (yet frozen) state of disrepair as there is no appetite to integrate further. It will unravel completely if a really serious economic crisis comes about. In any case it prevents the kind of rapid scaling that is enjoyed by entrepreneurs/private sector business activity in the US and China. Despite all those handicaps, European societies and economies are doing reasonably well. No Trumpista degeneration here, no oriental authoritarianism and oppression. A sane approach toward digital privacy and sovereignty (which any US citizen should really be thankful for as there is nobody else to carry the torch). Similarly ahead of the curve on environmental sustainability. Innovation is definitely happening (a rich and diverse cultural heritage and diversity almost guarantees that). Just a tiny example: several countries have digital banking systems significantly ahead of the US. What Europe must work out is how to organize its constituents so that they act more coherently without losing their identity. Any comparison and/or imitation of the aberrant mono-cultures of the East and the West is a waste of time.
• dalbasal 5y ago
  Especially viewed through a market cap lens, this could be rephrased from "corporate" to "software/tech." Interesting how different the article and comments go, If rephrased this way. The way these discussions go depends a lot on definitions, anchor points and framing. Framing around market cap, accounted value add, tax or number of employees yields a different article entirely... With totally different conclusions. Even the "EU" as a definition, isn't perfectly parallel to China and the US. There's no national pride or coherency to the EU. I'm Irish. Google, FB, Intel, dell, etc. employ almost everyone I know. We wouldn't see these as more "ours" if they were Dutch companies. They're just "MNCs." MNCs don't have homes, as it is seen here. Even Irish founded MNCs like Ryanair aren't really seen as Irish companies, and no one cares emotionally about EU founded companies. Belarus fighters recently grounded a Ryanair flight to arrest and torture dissident. It barely made the news, and there was no sense that this was a national issue. We don't have an air force, and the EU doesn't do geopolitics... so there's really no way of making it one. An American Airlines flight would have had totally different politics. I'm not sure which perspective is the operative one. Multinationals have employees, customers, regulators, and taxmen in arbitrary locations. Which do we care about? Facebook and Twitter, for example, a showing that cultural Americanness means something in itself. The policies and controversies are being built around American politics and culture. They're not scrambling to find an appropriate (or inappropriate) place in the Burmese or Sudanese info-political context. Whatever happens elsewhere will be derivative of decisions tailored to an American context. Not sure where I'm going with all this.
• krakatau1 5y ago
  This thread proves to me that every discussion on US/Europe comparison is the same. There are people from USA who always bash on it (Reddit Bernie Sanders socialist brigades) and Europeans who never visited and feel they have to explain/rationalize widening gap between US and Europe. I know it all anecdata, but my experience is completely different. I am from Croatia, I lived there until my late twenties when I got a job in Munich. For the next 6 years I lived (with wife and three children) and worked in Germany, Austria and Netherlands until we moved to USA. Almost everything is better here. Healthcare, while expensive, is much better. Houses are huge and luxurious, cars are cheaper and more comfortable. Eating out and groceries are also cheaper, even if you buy higher quality items. And of course, salaries are higher even if you don't work in tech like my wife. If you are in tech difference is huge, in Germany i was paid 80k € and here in States my first job was 190k $ and to add insult to injury taxes are lowar so my take home is higher. And I'm not in Bay area, this was in Nebraska. Later we moved to Colorado. People are very polite and always ready to help. I don't see if we would ever return to Europe.
  • RGamma 5y ago
    US seems more polarized (esp in politics). The good is better, the bad is worse, the sane are saner, the crazy crazier.
• pelorat 5y ago
  The successful companies are sold to the US (Spotify, Skype, etc). The struggling companies are sold to China (Volvo, etc).
• OwkwordGrom 5y ago
  Can someone explain to me the title of the article? This looks like weird English syntax to me.
  • OwkwordGrom 5y ago
    Or maybe I'm not used to that grammar?
  • CRConrad 5y ago
    "An also-ran" is an idiom that means, basically, "not a top performer". As I understand it, it's originally from listings of athletics (EDIT: Or horse racing?) event results: "Winner, blah; second place, blah; third place, blah; also ran: blah, blah, blah, blah, blah and blah". The second sentence, about "recover its footing", means to stop stumbling. This is a metaphor like "get back on track", meaning to start performing better. It was most probably chosen to extend the "running" theme from the first sentence.
• Bayart 5y ago
  Cheap capital and the corresponding large market valuations don't come out of thin air. The corollary is very loose monetary policies and the financialisation of every aspect of the economy to drive capital to the market, in particular pensions. I'm quite sure that's a game most people here are unwilling to play. The article has a point on the overly complex legislation, and while everybody would like things to be more straightforward in that respect, it'll be hard to convince people that trying to advance incrementally while disrupting as little of the existing legislation possible is the wrong way of doing things. We don't want to move fast and break things. We already did and it was terrible. One point that isn't addressed, and that I feel is quite relevant, is the concentration of business networks in particular social circles and particular areas. You have to be in London, Paris and so on to do business. But you can't get there because it's so expensive. I hope the new attitude towards remote working, as well as the wider deployment of fibre (which is now readily available in my cheap rural backwater) helps things out.
• ciguy 5y ago
  As a dual citizen of the US and an EU country, I have first hand experience with both systems. In the US if you want to start a new company you can basically start selling or offering your service and then sort out legal, accounting and registration later. In most countries in the EU you start by hiring a lawyer and accountant and then wait for months for various permits and registration before you can get anything meaningful done. This is the fundamental difference IMO, the barrier to getting started in the EU is way too high and the red tape is a full time job even for small businesses. Some EU countries do better at this than others of course, but it's a general trend amongst most.
• emdowling 5y ago
  It’s very telling that Europe, having largely failed to play on the same level as the US and China in big tech, now seeks to compete through regulation not innovation. I’m not a Brexit supporter, but the EU’s bungling of Covid and the subsequent vaccine rollout, and the ridiculous level of regulation it is trying to impose on firms it cannot produce itself, is making me more and more comfortable with Brexit.
• MomoXenosaga 5y ago
  Ah yes "Europe". The US is a country. So is China. Europe is a continent. Please don't worry about the Netherlands it is still capable of making money in satanically evil ways. The reports of our demise are exaggerated.
• mola 5y ago
  According to the article European mentality created a more healthy system where the economy grows without devolving to a set of cartels. So good job, carry on Europe.
• RGamma 5y ago
  Or maybe we all drop the act and focus on improving the human condition out of empathy and the old adage that you reap what you sow, not this vapid race to infinity that only strokes the egos of the overly powerful, pitting us against ourselves. Do we want to continue the endless cycle of power games and conflict or do we want to build on the hard-won knowledge, peace and prosperity to finally gain a stable outlook for everyone? Economists answer: mAxImIzE fInAnCiAlS. I don't see the point.
• mxschumacher 5y ago
  To balance financial returns with quality of life I've come up with a one line recommendation: "Live in Europe, invest in America" E.g. get rich owning shares in oligopolies like Comcast and charter and be a client of one of the many telecoms who have competed themselves into the ground. Looks at the share prices, it's clear where consumers are getting the better deal.
• kingsuper20 5y ago
  and yet I think that Germany runs a trade surplus and largely does it selling hard-to-make things rather than digging stuff out of the ground. Go figure.
• draw_down 5y ago
  Lots of cope here. Market cap isn't everything, being in business is stressful and it made me sad, there's more to life than money, etc. All true, just as long as you're ok with being gobbled up by Amazon. Amazon if you're lucky, otherwise some random inscrutable Chinese holding company. Then again, maybe not so much daylight between those in any case. On the bright side, you'll have even more time to reflect on how there's more to life than money!
• simonh 5y ago
  What grieves me most is the drain of talented software engineers from Europe to the US. There's a 'club' of Scottish engineers working is Seattle called the MicroScotts, and there's not a small number of them, but the are few opportunities for such people in Scotland itself. You can find top flight British, German and other European engineers at Google, Amazon, Facebook, Apple. The cream of British CS and Software Engineering graduates decamp to the US every year. There are good IT jobs here in the UK in finance, defence and the games industry. It's not exactly a desert of opportunities, but there's still a clear imbalance. My daughter is looking at doing a CS or Software Engineering degree and I'm worried if she'll stay in the UK when she graduates, or the opportunities she'd be giving up if she doesn't. California is nice to visit, I suppose.
  • foobiekr 5y ago
    From my experience a big part of it is just the absolutely dire comp. we have senior engineers in France, Italy and London who make about what a masters degree holder with 2yoe makes in a tier 2 like Dallas or Denver.
• aussiegreenie 5y ago
  I think I prefer Sustainability and Mittelstand than American oligarchy.
• mbrodersen 5y ago
  The more I read the Economist, the more I realise that it is not worth reading.