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This is one of the underappreciated benefits of the Nordic-style welfare state: everybody can afford to fail. Unfortunately it's rarely discussed in society as

• ETH_start 4y ago
  My intuition is that effective entrepreneurs generally have a strong conviction that they won't fail, and in any case wouldn't want to fall back on taxpayers if they did. They will also disproportionately be averse to paying social democratic tax rates once they, in their mind, inevitably succeed.
  • Lutger 4y ago
    This doesn't strike me as something inherently part of entrepreneurship in a world-wide context, but rather something particular to anglo saxon countries, and especially Americans which are big on neoliberal ideology. Americans are also the most anti-government of any people I know. The Netherlands is split in this I think, but the entrepreneurs I know are nothing like this. They appreciate the safety net and often happily pax taxes, its more that they hate the labour involved. And everybody I speak to has acutely aware of the possibility of failure. Maybe its my circle though, there are also more radical libertarians in my country, but they are a rarity.
    • czbond 4y ago
      My view, from the U.S., is that most founders want to make it on their own and keep the returns close to the vest (aka "low taxes). The risks are too high to found a company for little payoff.... and most founders that exit already pay a significant tax on exits (even when they are structured to reduce tax). Entrepreneurship is too hard of a game to put up with the mental and work grinding for a decade for small returns. Everyone focuses on the "money" a founder may make (with heavy survivorship bias) - but don't focus on the high probability of losing years, or a decade, of lost revenue and social life if a company fails. HN is filled with want-trapreneurs who are mis-guided about the game they're entering.
  • pavlov 4y ago
    Is "my intuition" a euphemism for "I've read an Ayn Rand novel"?
    • flir 4y ago
      It's funny, I read that as a retelling of John Steinbeck's "temporarily embarrassed millionaires" quote, not as a Randian Just So story. Being averse to paying tax isn't a desirable quality in a person.
      • deleted 4y ago
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      • ETH_start 4y ago
        I personally think being opposed to high rates of taxation is a desireable quality in a person but that was orthogonal to my hunch, which I was trying to present as neutrally as possible, with no value judgment. The parent comment is unnecessarily inflammatory.
  • romeros 4y ago
    Travis Kalanick (Uber's founder) collected unemployment while working on his startup.
    • flir 4y ago
      Oasis (and lots of other British bands) got dole money while honing their craft. I think it's one of the reasons Britain tended to hit above it's weight in the 80s/90s.
• drstewart 4y ago
  [flagged]
  • fsloth 4y ago
    Name a big UK startup? Nordic countries have the safety net countered with a mentality that is borderline entrepreneur-hostile and the law of Jante on top of that so safety nets may be the few pro-entrepreneurship things they have. Finland of the lot is also capital poor so no huge investor funds or such.
    • rahoulb 4y ago
      Off the top of my head; UK startups that have grown and been successful (although many have now been bought out - which I guess is the exit plan for many founders anyway) Just Eat, Deliveroo and The Hut Group; Monzo, Starling and Revolut, from another era, there's ARM. I'm sure there's fintech ones (not a sector I know much about) and the guy who sits near me in the office, who has an AI-healthcare startup, says the Britain is very good at those too.
      • saxelsen 4y ago
        Just Eat was founded in Denmark.
      • sebzim4500 4y ago
        >I'm sure there's fintech ones (not a sector I know much about) and the guy who sits near me in the office, who has an AI-healthcare startup, says the Britain is very good at those too. The UK has an advantage here over the US in that the tech and finance sectors are both based in London whereas in the US they are split between California and New York.
      • simondanerd 4y ago
        Not to mention the Raspberry Pi foundation...
  • jusssi 4y ago
    Conveniently forgetting some decently sized ones that actually came from the Nordics. At least in Finland, most of the stuff that would be big is sold early, the founders take the 10M and retire to their cottages in the middle of nowhere (edit: I don't mean this the bad way, I'd probably do it too).
• koobe 4y ago
  Flip side of the welfare state is the heavy tax burden. Heavily progressive income tax makes it harder for individuals to accumulate capital for enterprenial endeavours, be it their own or investing in others'. This limits early stage investments and growth. Also, there are limited incentives in investing in careers and productivity as net income is surprisingly similar in lowest 10% and highest 10% income earners.
  • jliptzin 4y ago
    Their tax rates are only a few percentage points different from ours. I think the difference is that we funnel 20% of it to the military (2% for Norway) and their tax code probably has fewer loopholes for the rich to exploit.
    • pclmulqdq 4y ago
      Their total tax burdens are much higher than US citizens' tax burdens unless you're making 7 figures of W-2 income. The top marginal tax rate kicks in an order of magnitude lower in those countries, and hits most of the middle class. In the US, it hits very few people. Also, the military is 20% of the discretionary budget, but 10% or less of the total budget.
      • defrost 4y ago
        For a full picture factor in outgoings for world class health and education per person (and other benefits that are free | much cheaper than US); these are very low cost for individuals and offset higher taxes by offering better value for money.
        • koobe 4y ago
          If this is indeed the case, shouldn't there be an influx of skilled professional and entrepreneur immigrants into all of these nordic welfare states? Something doesn't quite add up, as there's appears to be a constant shortage of such talent.
• throwawaybbq1 4y ago
  The issue is who pays for the welfare state. Finland got a lot of its wealth through off sea oil I think. Not easy to replicate in almost every part of the world. If you make the population pay for the welfare state, you are essentially robbing Peter to pay Paul. The people you rob (the ones paying the bulk of taxes) have a lower incentive to produce. This is one reason the energy Windfall taxes being proposed everywhere seem ludicrous to me. If you tax energy producers at a high marginal rate, they will actually be disincentivized from producing a lot of energy. This is basic economics/human nature.
  • Scarblac 4y ago
    Norway got rich off oil, Finland isn't especially rich afaik.
  • KptMarchewa 4y ago
    Norway, not Finland. >The people you rob (the ones paying the bulk of taxes) have a lower incentive to produce. Sure, the thought of being worth only 150 billion dollars rather than 300 would stop Bezos from starting Amazon.
    • xvector 4y ago
      Bezos would not have kept Amazon in the US if it adopted Nordic welfare levels of taxation. The fact of the matter is that the EU has a staggeringly low output when it comes to tech innovation compared to the US. Their policies and regulations shape this.
      • jimnotgym 4y ago
        ...and lots of other factors, like access to risk capital.
      • chrischen 4y ago
        The US is prized because of its large market… not because it’s a tax dodge. The US dan cut off access to any company unwilling to pay local taxes just like how China forces any foreign company wanting to tap into its large market to give majority control to a local entity.
• bumby 4y ago
  https://www.theatlantic.com/politics/archive/2015/03/welfare-makes-america-more-entrepreneurial/388598/ https://www.theatlantic.com/politics/archive/2015/03/welfare...
• bentt 4y ago
  I come from the game development world and this is one of the reasons (in my opinion) why there are so many solid independent game makers that come from the Nordics.
• mnky9800n 4y ago
  Unfortunately another component of the Nordic model that makes it work is that everybody trusts the government. This is what makes the Nordic model hard to translate to other settings in my opinion.
  • weakfortress 4y ago
    Don't forget the other reason: a homogenous society.
  • Mountain_Skies 4y ago
    They're high trust societies in general, partially because they're small monocultures. As Robert Putnam's research shows, in multicultural societies, especially large ones, trust rapidly declines, surprisingly even within cultural groups. Trust in government falls even more rapidly as each group starts to perceive those in power as being more favorable to one group or another, even if those in power are from their own cultural group.
    • arghwhat 4y ago
      "High trust" seems entirely contradictory to Danish society. Universal skepticism and a universal dislike for every other human in existence are the core ideologies here. Maybe a tendency to not interfere with tasks assigned to others to avoid having to deal with people is being misinterpreted as trust?
      • deleted 4y ago
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      • karencarits 4y ago
        The data suggest that the Danes are very trusting, but they may not be measuring what you experience: https://ourworldindata.org/trust https://ourworldindata.org/trust
      • mnky9800n 4y ago
        No. My Norwegian colleagues trust that they will receive healthcare. They trust that their representatives in the government are acting more or less in good faith. They trust that money in the government is going towards protections and services and infrastructure. And if you look around in Norway, you can generally get the feeling that the government is taking care of things. Go to America and it seems like the country is a decayed husk wrapped in gold. Roads are barely functional. Schools do not educate children. Each day there is a new story about a politician who is corrupt either through insider trading, being a pedo, or whatever. The government of America does not appear to do things for Americans. Thus, it's easy to see why you can trust the government in Norway but not in America to me.
• chiefalchemist 4y ago
  And that is why, in the USA, health care is not a given (or at least extremely affordable). As long as that is then - especially if you have a family - taking risk that might lead to failure is a no go. Instead, the no risk route is to assimilate into the status quo, become a cog in The System's wheel. Providing foundational First World "human rights" would allow more professional / career freedom.
  • czbond 4y ago
    > taking risk that might lead to failure is a no go. For certain personality types. Let's say with some high conviction, the typical technology / engineering personality is already highly risk adverse. Thus - they need all the risk avoidance as possible. Entrepreneurship is a risk game. It is defined by risk; those that won't start without safety nets will probably never start at all. I know enough family men who built startups for years with young kids - earning nothing. It's not the situation, it's the person.
    • chiefalchemist 4y ago
      Not to get off-topic but startups are risky. On the other hand - at least in my book - entrepreneurs are actual risk-adverse. That is, where others see too much risk, entrepreneurs see opportunity. They are actually risk blind to some extent. But like I said, this another discussion for another day :)
• vidarh 4y ago
  I started my first couple of companies in Norway, and it certainly makes a difference to the feeling of risk to live in a place where the risk of failing just didn't enter my mind at all. In fact, I'd almost certainly have gotten more a month in welfare support if I'd been unable to find a new job if we'd closed my first company down than what we paid ourselves.
  • starkd 4y ago
    There's a flip side to this argument in that more failing endeavors would be allowed to exist for longer, thus draining productive resources from more worthy endeavors.
    • vidarh 4y ago
      I don't think so. It's not cheaper to run a company in Norway than the US, and cost of living is high, and the fact we could've shut the company down and get more money meant we only kept running it because we were hoping to make more money rather than out of fear of where we'd be if it failed. The benefits if anything serves as an incentive to give up failing ventures sooner.
• kgantchev 4y ago
  Interestingly, the US still ranks #1 in the world in Entrepreneurship and Switzerland is #2. Source: https://thegedi.org/global-entrepreneurship-and-development-index/ https://thegedi.org/global-entrepreneurship-and-development-... I think the reason why welfare is irrelevant here is because the people going into entrepreneurship tend to be skilled enough to find a good-paying job even if their startup fails. Suppose that you're a good product manager or a good developer that's going into the startup world and you don't get lucky with your startup, you'd still be able to find a good job as soon as you're done... in fact, you might even get a higher-paying job because of this experience you've had.
  • neon_electro 4y ago
    Except in years like 2022 when it seems harder than ever to get a job, even with a solid 10 year working history. I'm convinced it's a more competitive market than ever, and that means more rejections. I'm being sort of picky, focused on quality over quantity of opportunities, but it doesn't mean your statement is true.
    • starkd 4y ago
      And you have the Federal Reserve right now with that as their stated objective to try to keep a lid on inflation. Not saying this is the right more or not, but that's the unfortunate position we are now in.
  • starkd 4y ago
    But those skills are still getting diverted from more productive means. Those pursuits are allowed to exist for longer for the dream that they will someday be massively productive. Look at the blockchain space to see all the companies that are about to go under, if they haven't already.
• hcks 4y ago
  Absolutely, and this explains largely why most of the massively successful startups we all know comes from the Nordics and not from places with poor social security like the USA
  • api 4y ago
    I think it’s cultural. The US places a lot of value on striving out and doing new things. It’s a frontier culture. Older cultures tend to be more conservative. You can see this effect inside the US. The most “business friendly” states often do not lead in entrepreneurship because they’re culturally more conservative.
    • starkd 4y ago
      I disagree. Texas has been one of the fastest growing economies in the states. With a lot of technology companies.
      • api 4y ago
        Texas isn't the lowest tax or lowest regulation state, though it's a bit lower than California. I also think the cultural thing is obvious there. Texas is very pro-entrepreneurship generally.
        • kortilla 4y ago
          Texas has no income tax, very little government owned land, no zoning in some places, etc. It’s laughable that you try to put it in the “bit lower than California” category. Texas is basically the opposite approach to governance than California.
  • jacooper 4y ago
    Missing the /s here mate
  • JohnBooty 4y ago
    Sarcasm noted. Seriously, though, this is somewhat easy to explain. Much of America does have an amazing "safety net": generational wealth. There's a reason why startups tend to spring from elite schools like Stanford, MIT, Yale, etc. Those kids have the brains, yes, but also the family connections and the parental safety nets and the connections to capital investment. These kids don't have to worry about food security or having healthcare. If you're from that upper 10%/5%/1% or so of American society, that's GREAT! It's an incredible primordial soup from which startups can spring. We are a big country, so we are still talking about perhaps 30,000,000+ people in this lucky category. That's more than all of Scandinavia's population combined. Goes a long way toward explaining why so many "big" startups come from the USA. However, if you don't come from one of these blessed demographics in the USA, you have a much harder road. If you didn't go to an "elite" school and don't have a parental safety net it's very difficult... I fall into this category and simply didn't have access to healthcare for five years while I pursued my tiny indie business. It made money, but not enough to buy healthcare for a family, so I had to ditch it.
• didip 4y ago
  The problem with Nordic model is that they are too successful in taking care of the people. Very few are “hungry” and “hunger” is an important ingredient to startups
  • epolanski 4y ago
    Cool, I guess less hunger for less startups is a good deal.
  • tracker1 4y ago
    I don't know that I agree. As much as I lean towards a Libertarian, anti-establishment PoV for the US, I do think social systems can work in smaller communities/countries. It's much harder with a more diverse (distance and politic) country because there's much more "other" that will disagree and see favoritism and corruption. It also becomes a cycle. I've worked in/around govt that I'm not a no government mindset, but definitely feel that more government tends to be worse than a very limited one at the scale of the US... and would favor letting states/counties have more independent creativity in solutions.
• l5870uoo9y 4y ago
  > This is one of the underappreciated benefits of the Nordic-style welfare state: everybody can afford to fail. That is a false romantization. The reality is if you live in Copenhagen you need a full time job to to pay for expensive rent, food, and of course tax. That is not true in Berlin where rent, food, and taxes are cheaper. On average the price level in Berlin is half of that of Copenhagen.
  • tracker1 4y ago
    Not to mention a social norm that prides work ethic.
• tracker1 4y ago
  It's also easier with a largely mono-culture in a relatively small population/area that is inclined, socially and historically, to work. Contrasted by say USSR, China or other communist societies where it's largely forced and the people are largely, effectively slaves. Although that work first culture is coming at the cost, to an extent, of a waning family unit. It's a bit of a mixed bag that's much harder to implement at a larger scale. If the US split up into separate states, much more loosely joined like the EU or original confederate structure before the constitution, each state would stand a better chance at such a system.
• pembrook 4y ago
  As someone living in Finland, I would argue the cons balance out the pros. The welfare state also creates massive disincentives for entrepreneurs. There is no free lunch. In addition to the psychological aspects mentioned below (why try so hard when you’ll be fine either way), there are bigger reasons. While the safety net makes it less dangerous to fail, it also makes it harder to succeed. The barrier you need to clear before the business can be successful is much higher, due to: - 15-20% higher taxes than the US at every level. Cut your profit margin by 15% and you need roughly double the amount of revenue you’d need in the US to pay yourself a good salary. - high cost of living (like living in NYC/SF but without all the opportunities) - inability to hire full time employees until you get much bigger (they literally cannot be fired and if one goes on maternity leave you can be stuck paying someone without getting their labor for a year+) -lack of funding/financing and risk capital (Europe is starting to catch up, but nowhere near the US, especially at the small business levels). There’s nothing like the SBA loans the US has. -more severe penalties for failure in the form of bankruptcy, you cannot walk away relatively unscathed in the same you can in the US -impossibility of building wealth by working a job to fund the business yourself (salaries are extremely low due to the massive social benefits overhead)
  • hiAndrewQuinn 4y ago
    >less dangerous to fail [...] harder to succeed Alternatively: Finland has a low skill floor and a high skill ceiling.
  • pavlov 4y ago
    I recently moved back to Finland after a couple of years in New York, and I strongly disagree with this: > “high cost of living (like living in NYC/SF but without all the opportunities)” My fixed monthly expenses were over 3x higher in Manhattan than in Helsinki. Housing, child care, etc.
    • xboxnolifes 4y ago
      Were the local salaries 3x higher in Manhattan?
• dmitrygr 4y ago
  > This is one of the underappreciated benefits of the Nordic-style welfare state: everybody can afford to fail. So then the Nordics are the startup capitals of the world, far surpassing all other countries, right? Right?
• trimethylpurine 4y ago
  It's easy enough to get SMB loans in the US without risking anything. Banks are asking to sell $100,000 loans without people even applying! Not to mention grants, and yes, literally welfare is available in the US to pretty much everyone. What exactly are you afraid of? I think the bigger issue with entrepreneurship here is that most people aren't willing to put in the effort to solve a problem that people need solved. Instead they put in the effort to solve a problem that they feel like solving and then blame "the system" when their attempt at entrepreneurship doesn't pan out.