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> the EU keeps people poor. Please elaborate, that's a wild claim.

AnthonyMouse 2y ago
The general premise is that they favor large institutions over small businesses, e.g. by having more and more complicated rules that require more overhead to comply with. As a result people are less able to start their own business, which is one of the major checks on the need for large employers to pay higher wages (competition for labor) or charge lower prices (competition for customers). High levels of government assistance also tend to create poverty traps, because paying net benefits to high earning people is uneconomical but avoiding this when the base level of benefits is higher requires higher benefit phase out rates, which is equivalent to a higher marginal tax rate, in addition to the higher formal tax rates to pay for the benefits. The result is less incentive for individuals to try their hand at entrepreneurship, because the higher risk is still there (you could still go several years without making any money) but the higher reward is blunted.
- p_l 2y ago
  The reality is more that USA built up VC and the like by having lots of capital (often government capital - Silicon Valley, Boston route 128, etc being built heavily on military funding), ridiculous demand (only western industrial country that didn't have its industry heavily damaged), lots of workforce (returning soldiers, considerably low losses). Hell, Marshall Plan essentially fueled demand for american goods, because funds provided in US Dollars pretty much translated to purchasing things that could be sold for USD. The network effects were huge and paved the way for dot com boom and later cycles, especially with zero interest rates combined with huge 401k funds looking for any return.
  - scrollaway 2y ago
    I’m extremely pro EU but GP has a point. The field advantages the US had doesn’t change the fact that the EU as a whole is less friendly to small businesses. Where I will disagree however is that it’s not an EU thing, it’s a country thing. The Netherlands for example is extremely SMB friendly. Yes EU has more regulations but most of the ones that matter, US SMBs also have to deal with them so it doesn’t change the playing field.
    - p_l 2y ago
      To me, the way it simply doesn't align with reality because of differences between countries in EU, makes the whole argument even more detached from reality. Unfortunately, small companies when facing level playing field are also easier to be destroyed by bigger ones, and EU did level the playing field quite a bit...
      - AnthonyMouse 2y ago
        > differences between countries in EU We're talking about overall trends, not to mention EU-level rules like GDPR. > Unfortunately, small companies when facing level playing field are also easier to be destroyed by bigger ones That's not what a level playing field is. Large companies destroy small ones through regulations. The rules impose fixed costs, which the large company pays once and the small company pays once, but the large company has more money. Then large companies lobby for "uniformity", i.e. national/international rather than local rules, which helps only them because local businesses with local customers don't have to be concerned with foreign laws, but further harms the smaller businesses because the "uniform" rules are naturally more complicated since they end up just being the intersection of all the local rules that anybody wanted anywhere.
        p_l 2y ago
        > We're talking about overall trends, not to mention EU-level rules like GDPR. GDPR actually reduced complexity of rules you had to deal with, some of them imposed since 1998 if not earlier. It's just that companies happily operated as if the rules didn't apply. Then GDPR changed one crucial bit of the equation by making fines for breaking the law actually be impactful (see also how NIS2 introducing personal financial responsibility for company boards started putting up a fire into them regarding security). In my experience, the uniform rules are actually simpler than what came before often. Pre-unification you often had to deal with them anyway because otherwise you had smaller market... where the big corporation could easily just deal with the rules just as well as you. A small company is not going to have considerable win from more rules to deal with, unless it's a subcontractor to a big corp (and that's a precarious situation often) or where it's going to deal with possibly ever-smaller niche.

The general premise is that they favor large institutions over small businesses, e.g. by having more and more complicated rules that require more overhead to comply with. As a result people are less able to start their own business, which is one of the major checks on the need for large employers to pay higher wages (competition for labor) or charge lower prices (competition for customers). High levels of government assistance also tend to create poverty traps, because paying net benefits to high earning people is uneconomical but avoiding this when the base level of benefits is higher requires higher benefit phase out rates, which is equivalent to a higher marginal tax rate, in addition to the higher formal tax rates to pay for the benefits. The result is less incentive for individuals to try their hand at entrepreneurship, because the higher risk is still there (you could still go several years without making any money) but the higher reward is blunted.

p_l 2y ago
The reality is more that USA built up VC and the like by having lots of capital (often government capital - Silicon Valley, Boston route 128, etc being built heavily on military funding), ridiculous demand (only western industrial country that didn't have its industry heavily damaged), lots of workforce (returning soldiers, considerably low losses). Hell, Marshall Plan essentially fueled demand for american goods, because funds provided in US Dollars pretty much translated to purchasing things that could be sold for USD. The network effects were huge and paved the way for dot com boom and later cycles, especially with zero interest rates combined with huge 401k funds looking for any return.
- scrollaway 2y ago
  I’m extremely pro EU but GP has a point. The field advantages the US had doesn’t change the fact that the EU as a whole is less friendly to small businesses. Where I will disagree however is that it’s not an EU thing, it’s a country thing. The Netherlands for example is extremely SMB friendly. Yes EU has more regulations but most of the ones that matter, US SMBs also have to deal with them so it doesn’t change the playing field.
  - p_l 2y ago
    To me, the way it simply doesn't align with reality because of differences between countries in EU, makes the whole argument even more detached from reality. Unfortunately, small companies when facing level playing field are also easier to be destroyed by bigger ones, and EU did level the playing field quite a bit...
    - AnthonyMouse 2y ago
      > differences between countries in EU We're talking about overall trends, not to mention EU-level rules like GDPR. > Unfortunately, small companies when facing level playing field are also easier to be destroyed by bigger ones That's not what a level playing field is. Large companies destroy small ones through regulations. The rules impose fixed costs, which the large company pays once and the small company pays once, but the large company has more money. Then large companies lobby for "uniformity", i.e. national/international rather than local rules, which helps only them because local businesses with local customers don't have to be concerned with foreign laws, but further harms the smaller businesses because the "uniform" rules are naturally more complicated since they end up just being the intersection of all the local rules that anybody wanted anywhere.
      - p_l 2y ago
        > We're talking about overall trends, not to mention EU-level rules like GDPR. GDPR actually reduced complexity of rules you had to deal with, some of them imposed since 1998 if not earlier. It's just that companies happily operated as if the rules didn't apply. Then GDPR changed one crucial bit of the equation by making fines for breaking the law actually be impactful (see also how NIS2 introducing personal financial responsibility for company boards started putting up a fire into them regarding security). In my experience, the uniform rules are actually simpler than what came before often. Pre-unification you often had to deal with them anyway because otherwise you had smaller market... where the big corporation could easily just deal with the rules just as well as you. A small company is not going to have considerable win from more rules to deal with, unless it's a subcontractor to a big corp (and that's a precarious situation often) or where it's going to deal with possibly ever-smaller niche.