7 ms·

A Strong Welfare State Produces More Entrepreneurs

104 points by nols 12y ago

nakedrobot2 12y ago
Sorry but the evidence doesn't stand up to this AT ALL. Americans are much, MUCH more entrepreneurial than anyone in Europe. I'm American, I live in Europe, I know this very, very well. (Yes, anecdotally speaking, of course!) Americans simply embrace risk, and embrace potential failure, far better than anyone else in the world, taken as a whole. Europeans meanwhile are a more gloomy bunch, more risk-averse, and far less likely to strike out on their own. Notable slight exceptions being the Dutch to some degree. America is so far from a "welfare state" - it is about as far away as you can get. America is a "if you're going to fall, you are going to fall all the way down, and no one is going to save you, no matter what". And somehow, a huge part of the world's entrepreneurs and innovation come from there. I don't know why. And don't take me as some kind of patriotic jingoist champion of the US of A - I am just about as far as you can get from the "Yeah Murica" kind of ultra patriots - heck, I live in Europe because I prefer the slower pace, the old world, the semblance of an actual culture, the environment that has not eaten itself from capitalism taken to the extreme. Nice linkbait headline though. :)
- noir-york 12y ago
  "Europe"? Which Europe? The Anglo-Saxon UK? The Germanic DACH region? The Nordics? The Mediterranean? All these are "Europe" - but in terms of culture, finance, social welfare, educational systems and much else beside they are very different.
  - nakedrobot2 12y ago
    All of it. Some more than others, but no one in europe comes close to the entrepreneurial energy of the USA.
    - mauricemir 12y ago
      Oh and this leads to such a diverse and competitive market in telecoms NOT!
    - pyre 12y ago
      > entrepreneurial energy of the USA So I can go anywhere in the USA and find the exact same amount of entrepreneurial energy as everywhere else? Good to know.
    - GFK_of_xmaspast 12y ago
      French don't even have a word for 'enrepreneur.'
      - TazeTSchnitzel 12y ago
        https://en.wiktionary.org/wiki/entrepreneur#French https://en.wiktionary.org/wiki/entrepreneur#French Where did you think "entrepreneur" came from?
        Chinjut 12y ago
        I'm quite positive this was a deliberate joke by GFK_of_xmaspast...
        TazeTSchnitzel 12y ago
        Poe's law strikes again...
        GFK_of_xmaspast 12y ago
        Indeed. http://www.snopes.com/quotes/bush.asp http://www.snopes.com/quotes/bush.asp
      - deleted 12y ago
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  - deleted 12y ago
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- vasilipupkin 12y ago
  http://www.theatlantic.com/business/archive/2012/10/think-were-the-most-entrepreneurial-country-in-the-world-not-so-fast/263102/ http://www.theatlantic.com/business/archive/2012/10/think-we...
- dd36 12y ago
  The question is if that entrepreneurial spirit is a result of the welfare state or something else. If it's something else (cultural), we may not be maximizing our entrepreneurial abilities. Risk taking should be encouraged.
- api 12y ago
  No they aren't -- not nationwide. Americans in most of the country are no more entrepreneurial than Europeans. Americans in a few cities and regions are very entrepreneurial. These are not necessarily the cities and regions with the lowest taxes, most "business friendly" policies, or anything else that right wingers would consider likely to produce entrepreneurship. California is incredibly entrepreneurial, but it never shows up on those top ten lists of most business friendly states. I think that strongly argues for this being cultural.
  - brador 12y ago
    The more entrepreneurial Americans are those from wealthy backgrounds, well networked backgrounds, or desperate circumstances. Notice, all three of the above do not require a state sponsored safety net, and it is that need for a safety net against destitution that creates an entrepreneurial mindset. Without that safety net you don't get many risk takers.
    - noir-york 12y ago
      Exactly
    - api 12y ago
      You can certainly botch entrepreneurship with business-unfriendly policies, but they are not the ones right wingers always harp on about. High-ish taxes are okay as long as they are not punitively high. Regulations are okay as long as they are easy to follow and simple to understand, and as long as they aren't over the top ideologically-driven stop-everything sorts of things. Keep fear mongers, authoritarians, and ideologues away from the regulatory pen. Complexity is death. Regulations that categorically stop you from acting are death. Things that encumber agility are death. Anything that saps your time is death, since time is often worth more than money. As a founder I'd rather pay more in taxes on profit as long as the government stays the F out of the way of my time and my executive decisions. The ideal setup for maximum entrepreneurship would probably be some kind of libertarian socialism: moderate and moderately progressive taxation, health coverage, guaranteed minimum income or negative income tax, and a simple regulatory structure that makes it easy to form new ventures, hire and fire, etc. Other than that the governments gets out of the way and lets people try new things. One caveat on progressive income taxes: they should not be too progressive and there probably should be lower taxes on capital gains. Investing in long-sighted things should be a form of tax shelter. That's a good thing. The best would probably be a progressive tax curve but where the curve doesn't start to increase until you get really, really up there. Another rationale here is diminishing marginal utility of money-- eventually you get to the point where more money does not materially alter your circumstance in any perceptible way. That's the point at which taxation should become more progressive. At that point you are as rich -- as subjectively experienced -- as a human being can possibly be, and the rest is "savings beyond planned investment" as Keynes would say.
- orf 12y ago
  I see a lot of patriotism in this comment but almost no facts. > And somehow, a huge part of the world's entrepreneurs and innovation come from there I would say that's for historic reasons and the egregious amount of money you possess as a country rather than some in built ability to take risks?
  - TeMPOraL 12y ago
    > I would say that's for historic reasons and the egregious amount of money you possess as a country rather than some in built ability to take risks? Indeed. The US is very young, and throughout history, we had many temporary centers of innovation - from various parts of Europe to Middle East to deep Asia to Africa.
  - timepiece 12y ago
    The Petrodollar standard set by Nixon helps for sure.
- bullfightonmars 12y ago
  Whose evidence? According to this list[1] with data from the World Bank, Netherlands is 35th has 45.05 small businesses per 1000 people. Do you have a stationary shop on your corner or in your neighborhood? I certainly had access to many small businesses in Rotterdam, that would have folded 25 years again the States, replaced by mega corps and big box retailers. The United States on the other hand is 69th on the list with 19.98 small businesses per 1000 people [1] http://www.nationmaster.com/country-info/stats/Economy/Micro/Small-and-medium-enterprises/Number/Per-capita http://www.nationmaster.com/country-info/stats/Economy/Micro...
  - vasilipupkin 12y ago
    in all fairness, comparing numbers of micro businesses across countries is tricky. differences in tax laws can create incentives to register as a micro business vs some other way, but not much of a measure of large scale entrepreneurship. But, either way, little evidence that US is more entrepreneurial
  - SilasX 12y ago
    It doesn't seem helpful to equate small businesses and startups. Usually meme about "entrepreneurs being good for the economy" is referring to the latter, who fundamentally change how it works, finding numerous non-obvious efficiency improvements, rather than giving slightly cheaper picture framing. On that metric, is Europe still ahead of the US?
  - wsc981 12y ago
    I guess small businesses include the so-called ZZP-er (freelancer), for many jobs paid pretty crappy. In the Netherlands, especially for low income jobs like packet delivery, many Dutch companies hire ZZP-ers these days, since it's easier to get rid off. It's really hard and expensive in The Netherlands to get rid of bad performing employees with a permanent contract, especially compared to the USA. Because of this reason many companies prefer to hire ZZP-ers currently. From recent statistics I understand we have approximately 800.000 ZZP-ers in the Netherlands or 1 per every 21 citizens.
- dangerlibrary 12y ago
  Care to criticize the referenced research rather than jump to conclusions from anecdotes? There's a link to the PDF right there in the article. http://www.econ.brown.edu/students/Gareth_Olds/assets/olds_food_stamps.pdf http://www.econ.brown.edu/students/Gareth_Olds/assets/olds_f...
- technotony 12y ago
  I think even in the best case scenario Welfare State is only going to be one small factor in the rate of entrepreneurship, so Americans can easily be more entrepreneurial than Europeans despite the lack of welfare state. Culture, education, role models etc are all also going to be important. I think this data shows increasing welfare in America could increase entrepreneurship even more.
- a_c_s 12y ago
  We're discussing an article based on multiple research studies by somebody at the Harvard Business School. Rebuttals should be based on more than vague anecdotes.
- higherpurpose 12y ago
  For this reason I think such a study should be focused on Europe and compare the countries there with each other, to see if this theory is a good one or not. I don't think it makes much sense to compare it to US, because there are other factors contributing greatly to the success of US entrepreneurs and it has nothing to do with "being more risk-averse or not". It has to do with the fact that the US is actually a huge single market. EU really isn't right now. It's not easy to just launch a company in a country and easily have success in another. Certainly nowhere as easy as it is to launch an online business in one state in US and have success in other states. There are other factors, such as concentrating many entrepreneurs in one place, which also leads to a concentration of investors in one place (talking about Silicon Valley here). There's also a huge concentration of media in the US that is followed by other countries as well. How many European media sites or blogs do you know? I bet you can count them on one hand. It's much harder for a company in Europe to get promoted across all European countries, let alone to have Americans hear about it. I'm sure there are many other factors as well that make the US a much easier startup environment than Europe.
- namlem 12y ago
  Keep in mind that some cities/states have much more generous social safety nets than others. Utah, is perhaps a bad example due to the confound of Mormon culture, but it has a good safety net and tons of entrepreneurs.
- timepiece 12y ago
  I can attest to that. I am not American and I believe that one of the bright spots in America is the entrepreneurial spirit of its people in general. People in America love taking risk and pushing the envelope experimenting with new stuff and technologies and that's one of the major strengths of this nation but I wouldn't go too far to express something like this far better than anyone else in the world. That's just absurd patriotism and there's no doubt about it.
- tessierashpool 12y ago
  The Internet exists because of massive and very long-term spending on scientific research. This was a massively successful public works program, which led to a colossal boom in entrepreneurship. Likewise, I'm no fan of the Department of Defense in this country (the US), but the research they're currently funding in robotics has similar potential. "Americans embrace risk," as you say, partly because our government creates incredible opportunities through public research which can easily be transformed into private profit. Also, the article repeatedly demonstrated that Americans embrace risk more when they have a social safety net. You can't hand-wave away research with a generalization, especially not when the research you're hand-waving away has gone into great depth examining the detailed workings of the underlying truth which made your generalization possible in the first place.
  - dataker 12y ago
    One certainly cannot axiomatically assert the internet wouldn't be here without the U.S government. Although it has definitely helped, the community programmers and engineers were the `fathers of the internet`. If the government hadn't invested, there would certainly be analogous technologies and initiatives built on top of scientific developments. It's just too hard to say how it'd be like
    - api 12y ago
      Without the government it would be a hodgepodge of walled gardens based on different protocols and standards with everyone trying to make a 'platform play' to lock it down... exactly like what you see today with OSes. You'd also have complicated fee structures with every little service charged differently since telcos would want to charge a la carte for access to individual protocols and endpoints. https://en.wikipedia.org/wiki/Standard_gauge https://en.wikipedia.org/wiki/Standard_gauge
- tjradcliffe 12y ago
  There are at least two ways of looking at this: one is to compare countries, the other to compare what the same individual would do in different countries. There are quite a few non-Americans working in the American technology sector. I've worked on teams with 30% American content, the rest coming from around the world. Talking to those people, it's clear that they are taking advantage of the best of both worlds: the large capital accumulations that are available for investment in the US, but with the backup plan of going back home to a sensible social welfare structure if things don't work out. I've been in the same boat: a Canadian who has lived and worked in both the US and Canada. I've taken risks--particularly as a husband and father--that my American colleagues could only take because they were childless and had spouses who worked. Knowing that no matter what happened, my kids would have access to a health-care system that produces significantly better outcomes at significantly lower cost to the public purse than the American mess, was without question an enabler for me. I was very conscious of this in making business decisions, including the decision to go into business (while broke and unemployed in the wake of the dot-com crash, as it happens.) Had I been in the US at the time I would have been scrambling to find a job so my kids would be covered by decent health insurance. Maybe my case is atypical, but some kind of comparison between foreigners living/have lived in the US vs natives might shed some light on this question.
- techpeace 12y ago
  Citation needed.
- vinceguidry 12y ago
  > America is a "if you're going to fall, you are going to fall all the way down, and no one is going to save you, no matter what". And somehow, a huge part of the world's entrepreneurs and innovation come from there. I don't know why. It's not that bad. People do look out for each other. They try to save each other from themselves. America is risky in that if you don't take steps to protect yourself from the broader market, eventually that exposure will over time erode your social position. There are ways to protect yourself, most of them involve mobility. You get out of crappy markets, crappy jobs, crappy situations. You move towards hot spots, hot markets, hot ideas. So long as you keep moving with capital and wealth, that wealth will protect you because America is a place where there's always a shortage of good people available to do things. If you don't want to be mobile, then you have to make up for that with planning. There are retirement vehicles that take time and skill and planning to execute on. Insurance products that take the sting out of all kinds of horrible risk. Health plans that will give you a baseline of care that you can then start planning your own health on. To gain access to this world you need a certain amount of means, but you can generally trade time for capital. For example, you can shop around for insurance, health plans, and such. You can usually find something that will work at a very basic level that's relatively affordable. There's always someone out there that's recognized the market segment you are searching in and has a service tailored for you. America's social services are also typically pretty good. It's certainly a point of contention, but people aren't starving, your dignity will take a hit if you end up homeless but Americans are compassionate enough so that, for instance, homeless people in San Francisco can find someone to loan them their garage. We don't like to see people suffer, and there are numerous church groups, social services, even the cops will take pity on you if they see you're really struggling. America really takes its economy seriously, and everybody's expected to contribute to it, so we will not respect someone if they choose not to participate, but we won't let them starve, either. People who stay on the streets long-term are generally people who simply cannot contribute for whatever reason. Plenty of people become homeless for economic reasons, but the economy is fluid enough that they'll find a berth eventually, if they want one.
- javert 12y ago
  > I live in Europe because I prefer the slower pace, the old world, the semblance of an actual culture, the environment that has not eaten itself from capitalism taken to the extreme. Well, you can thank American capitalism and ingenuity for that even existing, given WWI and WWII and the Cold War.
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- vilmosi 12y ago
  You are spot on when it comes to the difference in cultures. But Europe has little bearing to the argument as the question was more about US welfare. And don't pretend you don't know why entrepreneurs come to the US... we all know why, that's where the money is. Investors and consumers with spending money. It's as simple as that.
- eli_gottlieb 12y ago
  >Sorry but the evidence doesn't stand up to this AT ALL. >NO STATISTICS AT ALL >Nice linkbait headline though. :) Nice complete lack of statistical evidence, though.
maerF0x0 12y ago
It seems to make a little sense: If you're not worried about the worst case scenarios you can take on more risk. ie: if you know your kids wont starve (food stamps), you wont end up in permanent debt (bankruptcy laws), you wont be killed by your creditors (social order) etc etc. then you can do things (start a business) that would otherwise risk those consequences.
- asn0 12y ago
  Or if you want to take crazy risks with investments, you don't have to worry about going out of business (banking)
- TazeTSchnitzel 12y ago
  Right, same reason we have limited-liability corporations.
javert 12y ago
More dishonest sludge from The Atlantic. This simply isn't true.
- freshyill 12y ago
  Is your source on this reliable?
  - javert 12y ago
    A welfare state is reducing some people's economic security to add to other people's economic security. There is no way that can produce a net increase in entrepreneurship. Plus, a welfare state adds more regulations that block private enterprise in various areas and make it more difficult. Moreover, a welfare state hurts economic growth overall, also dragging down the total amount of entrepreneurship.
    - freshyill 12y ago
      I'm going to throw this out there: If I had a proper social safety net and I didn't have to worry about things like health insurance, I'd be much more likely to start a business and take some risks.
    - themoonbus 12y ago
      So, uh... sources? Because the parent article had sources. Simply from a logical standpoint, it makes sense to me that having a safety net would make person less risk averse.
      - deleted 12y ago
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gavanwoolery 12y ago
Yes, there are two sides to the coin. Look at France, which once had a 75 percent tax rate [1] on the wealthy. When you are only getting 25 percent of what you make (or even 50 percent in many countries), you have that much less incentive to succeed and others have that much less incentive to invest. There are not very many French startups, relative to other countries. I'm not saying you can't have the best of both worlds. You could have a good social program and low taxes, if you cut things like defense spending (I believe in a strong defense, but I also believe that in the US we let contractors bill excessively and do little to curb it). But I think you give the consumer more freedom when you just cut taxes - it gives them the choice of what they want to buy, without government imposed restrictions (i.e. certain things not being covered in healthcare, having to live in low income housing, etc). If you want to encourage startups, you can always provide government grants (most countries already do in many areas), or tax breaks for small businesses. [1] http://www.theguardian.com/world/2014/dec/31/france-drops-75percent-supertax http://www.theguardian.com/world/2014/dec/31/france-drops-75...
- weddpros 12y ago
  France is definitely a counter example in my opinion: one of the strongest welfare in the world is producing more unemployment than anything, and certainly not entrepreneurs.
- duaneb 12y ago
  Just because there aren't french startups doesn't mean that french entrepreneurs aren't successful. This is about culture, not "where are startups located".
  - gavanwoolery 12y ago
    I believe there is nothing that differentiates a French man from an American (a large part of America was colonized by the French, after all!). French entrepreneurs can be just as successful, but IMHO they would flourish better in a lighter government.
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pcardh0 12y ago
Sure
SilasX 12y ago
The first thing I expected the article to show: a correlation between welfare state strength and rate of entrepreneurship, with the counterintuitive result that there are numerous countries with higher rates than the US and weaker welfare states, but if there are, it didn't list them. The closes it comes is showing that the already-abysmal rates of entrepreneurship for people around CHIP eligibility levels, it's 30% higher for people just below the bracket. Then there's idle theorizing about how food stamps "must" embolden entrepreneurs because they know they can fall back on it if their venture fails. While it sounds superficially plausible, can anyone give a concrete example of the kind of hypercompetent person who launched a successful startup and who would also have needed food stamps if it didn't succeed? Bezos? Musk? Kalanick? Even Brin or Page?
- TazeTSchnitzel 12y ago
  None of them needed food stamps because they had rich backgrounds.
  - SilasX 12y ago
    Sure, but I think the causality is reversed: had they not been rich, they are still extremely capable people who could and would have build up a big buffer before starting their business, which didn't depend on food stamps.
    - TazeTSchnitzel 12y ago
      Had they not been rich they wouldn't have gone to university. Had they not gone to university, I doubt they'd have been able to go anywhere.
    - deleted 12y ago
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- s73v3r 12y ago
  "The first thing I expected the article to show: a correlation between welfare state strength and rate of entrepreneurship, with the counterintuitive result that there are numerous countries with higher rates than the US and weaker welfare states, but if there are, it didn't list them." Here you go: http://www.nationmaster.com/country-info/stats/Economy/Micro/Small-and-medium-enterprises/Number/Per-capita http://www.nationmaster.com/country-info/stats/Economy/Micro... The US is pretty low on that list. "Then there's idle theorizing about how food stamps "must" embolden entrepreneurs because they know they can fall back on it if their venture fails. While it sounds superficially plausible, can anyone give a concrete example of the kind of hypercompetent person who launched a successful startup and who would also have needed food stamps if it didn't succeed? Bezos? Musk? Kalanick? Even Brin or Page?" All of those people were already rich.
tomphoolery 12y ago
I totally get this. Most people I know who are on welfare also describe themselves as "entrepreneurs". Unfortunately, they are not very good at making or saving money.
blumkvist 12y ago
>America is a "if you're going to fall, you are going to fall all the way down, and no one is going to save you, no matter what". I don't see how this is even remotely true. There are 42million people on food stamps, costing $82bn a year. This is a mere fraction of the spending that goes towards catching falling people. There is no capitalism. Open your eyes.
- mr_luc 12y ago
  "Devil's avocado, Larry": Assuming a perfectly efficient system, that's slightly under $2,000 per person per year. Divided by 52 weeks, that works out to $38.00 per week in food aid. (In a perfectly efficient system; so, let's say a bit less). Federal, State and Local governments had combined revenue of around 6 TRILLION dollars last year, 3.2 trillion of which was for the Federal government. Does it seem unreasonable to you that the richest country on earth would spend 1/39th of its Federal revenue to give impoverished citizens $30/week of food aid?
- TazeTSchnitzel 12y ago
  A welfare state is not incompatible with capitalism. Actually, it is a natural consequence of capitalism, a thing bolted on to try and work around some of its more severe issues.
patja 12y ago
I can see the argument making sense that with a strong safety net folks are more willing to take risk. I know for me and my family needing to shoulder the full burden of health care expenses, even with the ACA changes, was one of the major inhibitors to striking out on my own. Even with the ACA and the opening up of the individual direct insurance market, we end up with a catastrophic high deductible plan that makes me loathe to seek medical care for some issues that maybe I should take care of and that a citizen of a nanny state wouldn't think twice about going in to have checked out. Unfortunately a strong welfare state often goes hand in hand with a stronger bureaucracy in general including many regulations, red tape, unfavorable tax codes, and other obstructions to entrepreneurship. This is where the US trumps the strong welfare states.
- noir-york 12y ago
  "Unfortunately a strong welfare state often goes hand in hand with a stronger bureaucracy in general including many regulations, red tape, unfavorable tax codes, and other obstructions to entrepreneurship." Often... in general... - too many maybes. I know for a fact that the UK and Ireland make it very simple and painless to start up. "This is where the US trumps the strong welfare states." Does it? Most regulations are set at the state level as well, so you're saying that, say, Massachusetts is more bureaucratic than North Dakota?
umanwizard 12y ago
Most people in this thread are conflating "entrepreneurs" and "startups". Anecdotally there are a lot more small businesses (bakers, butchers, independent bookstores, family owned clothing stores, etc.) in Europe than in the US. The people who own these establishments are every bit the "entrepreneur" the founders of Uber are. Maybe the US has more startups on the ultra-successful end but that doesn't say much about the chances of the average person starting an average, unremarkable business.
- dismal2 12y ago
  Yeah, I think people are confusing terms here. I'm not sure what the global trend is but this is an interesting article: http://www.washingtonpost.com/news/on-small-business/wp/2015/02/12/the-decline-of-american-entrepreneurship-in-five-charts/ http://www.washingtonpost.com/news/on-small-business/wp/2015... I could see a lack of social safety nets, increased costs/risks of safely running a compliant business and corporate consolidation being behind this trend...
  - graeme 12y ago
    Interesting to see that entrepreneurship among the 20-34 cohort is sharply down. In marked contrast to the prevailing narrative which says we are an entrepreneurial generation. The article mentions student debt. I'm part of that cohort, and did start a business. I'm Canadian. If I had had the average US student debt, I never would have got started.
- nickpinkston 12y ago
  Though the pizza shop owner isn't that unique or in large scale to help a lot of people, so the impact is far more limited. Who cares whether someone can semantically be called "entrepreneur", etc. If they didn't do their pizza shop, no one would notice, but if we didn't have high growth startups, I think we'd feel that impact far far more. This is not to imply that high growth = high impact, because there's of course a ton of rent-seeking bullshit out there to be condemned.
  - 12y ago
zmitri 12y ago
"More" doesn't necessarily mean "more successful". It's not unreasonable that government intervention creates more entrepreneurs - as a Canadian I know I can go and get tens of thousands to start my own company along with some nice tax breaks - but it doesn't mean they would produce much value or amount to anything more than a barely afloat small business.
sambe 12y ago
I suspect there is a correlation between welfare provision and protectionism around small businesses/anti-big business behaviour. This would lead to many more small businesses than the free market would support, but there is a bit of a question mark over how entrepreneurial and economically valuable this is. I live in Amsterdam (cited elsewhere in this thread as being entrepreneurial): I appreciate having small independent shops and see the Dutch entrepreneurial attitude relative to other European countries in which I've lived. But I also understand why Hacker News readers would not believe the article is reflective: the majority of these businesses are not going to risk everything, change the world, or be worth millions/billions. Perhaps the count alone is not a useful metric. edit: I'm European. Lots of neutral comments treated to downvote-disagree in this thread.
- Jacqued 12y ago
  I think entrepreneurship is more of a mindset where you liberate yourself from the wage constraint and take control of your life by directly producing value for others. Changing the world and being worth billions is just the Silicon Valley mythology, but that is not the only 'real' form of entrepreneurship there is. Dare I say, a small business owner is more of an entrepreneur in my opinion than some wealthy dude who made an app, raised 5 mil, and ran the company into the ground in 12 months. Now startups are great, but I really don't get the contempt the startup-types hold for small businesses. Maybe that's just a form of class contempt.
  - sambe 12y ago
    I like your perspective and agree the 0.1% of glamorous tech startups do not define the whole word. I think though that more people lean towards a concept of risk-taking and innovation (me too). I guess my hypotheses are: a) HN will mostly lean this way too; b) America will mostly lean this way (but I have not lived there); c) if you accept this definition, European business are on average less of this style than American ones (due to government mitigating their risk or them being in established segments) in some - but definitely not all - cases. You are of course free not to accept the definition ;) and I could be wrong about what the majority of HN readers/Americans think. If I'm not, the Atlantic - an American magazine with mostly American readership - is being a bit unrepresentative. As others have said, even if I'm wrong the conclusions seem a little strong for the evidence.
Steer 12y ago
I am European (Swedish), but I have a hard time wrapping my head around the notion that the welfare state would produce more innovation/entrepreneurs. We have a large public discussion here in Sweden that we need to create more new companies and we definitely have a welfare state. I would argue that a welfare state COULD be helping entrepreneurs, but that depends where all the taxation for the welfare state comes from. In Sweden it is very expensive to hire people for example, and it is also very hard to fire people (besides the point, taxation-wise, but still), The companies that hire people pay a large part of the welfare state. This makes it very hard to grow a company since it is so very expensive to hire.
notsureifwant 12y ago
The two Olds papers both use clever triple difference designs (e.g. you're using change in entrepreneurship amongst those who've just become eligible for food stamps in one state relative to those who were already eligible as the treatment group, and the change in entrepreneurship amongst those same types of people in another state that didn't have a change in eligibility laws as the control group) which are hard to find fault in. It seems like a lot of people are arguing "other countries have strong welfare states, but less entrepreneurship", but that's a different question - most of the papers cited are arguing that in the United States, a strengthening of the welfare state leads to increased entrepreneurship. That does not mean that this would be true in other countries, nor that moving to a proper guaranteed minimum income would increase entrepreneurship, nor that entrepreneurship is the best measure of dynamism in the economy. But it is pretty convincing evidence that giving potential entrepreneurs the ability to fail at starting a business without too severe of consequences increases the rate at which they'll start businesses.
- vannevar 12y ago
  One question I had was whether the overall rate of entrepreneurship increased. As you note, the papers seem to focus on rates within the population that receives the benefits, but the typical conservative argument is that the cost of those benefits in taxes retards economic growth overall. I'm not suggesting that they are right (as far as I know no substantial link has yet been found between low tax rates and economic growth), but it's a question worth addressing in the article and it was not.
ffn 12y ago
Honestly, social-structure probably has a lot more to do with amount of entrepreneurs in a nation. In America, we utter the word "entrepreneur" the same way a 1960s boy would utter the word "astronaut" (or, if Soviet, "cosmonaut" or "potato"). As an American, I take it for granted that I can do a startup without my wife fearing she'll be ostracized by her friends, that I can still find a job if things don't work out, and the general public thinks it's endearing to support local/small businesses. Plus my parents don't feel the need to wallow in shame if I were to stay in their garage for a year to build my prototype (unless they're Asian), which effectively removes all my internal barriers to quitting my job and going down the path less traveled. The fact that social-security is there for me when I retire at 65 (lol) or so, general medical insurance won't be denied to me (considering the demographic of your average entrepreneur, why would it in the first place?), etc., don't occur to me at all. As much as your average 20-something cynical know-it-all likes to bag on our education system and its spew of "you're special", "believe in your dreams", "don't be afraid to do something if you truly believe in it", etc., I should think it's that very sort of indoctrination starting at a young age that is ultimately responsible for so many Americans casting caution to the wind and pursuing their "American Dream", and for so many other Americans to sympathize with and be willing to support such folk on their trek. But I will admit that the one government innovation that definitely helps entrepreneurship is the creation of the corporation. The fact that I can create this entity that's owned by me and the family, friends, and fools who believe in me, and that if things go South, the corporation can die without dragging me down with it, is extremely helpful in encouraging folks to venture. If I was a builder and the law was that if a house collapses and kills its residents, the builder will be found and killed in an eye-for-an-eye manor, I'd seriously think twice about building a house for anyone other than myself. So what encourages entrepreneurship? Telling people since the founding of your nation that entrepreneurship is good and providing a means of separating the entrepreneur from his corporation.
lifeisstillgood 12y ago
Why not give every graduate a bursary for one year and see what happens. In the logic of VC's it will take only 1% to pay that back and more.
borgia 12y ago
If the conclusion of this is true, why aren't we seeing grand scale innovation and entrepreneurship from European countries that are most certainly very strong welfare states? Why instead are we seeing massive amounts of unemployment? There seems to be a delicate balance to strike to get this right. The fact of the matter is that in many European countries someone who is not working can enjoy the same standard of life as someone who is, except they don't have to get up in the morning to earn it. Those benefiting from these states likely have very little incentive to rock their own boat of comfort by stepping out and taking on debt/risk for more of a reward. Especially when you throw high taxation into the mix, where that risk/reward ratio is further skewed because even if you do very well you'll end up paying the state a huge amount of tax, to then support the same welfare system. In the US, on the other hand, you've a significantly less generous safety net and I would imagine the vast majority of those who fall into it from a more grand place - such as being securely in the middle class - would fight more to get out of it. That's intuitive anyway. Where the argument starts to fall apart is when you look at all the young tech entrepreneurs, whether it's hardware or software, or those starting up new media companies, or whatever, very few seem to come from the type of background where if they failed they'd end up on food stamps. Are they better risk takers because they have a better, non-government provided safety net, perhaps? Which then goes on to conflict with the enhanced safety net available in Europe and the comparatively low level of innovation and entrepreneurship. My conclusion would be that the government provided welfare is likely not a factor in determining innovation and entrepreneurship and that there's other, less obvious, factors at play.
- TazeTSchnitzel 12y ago
  > Why instead are we seeing massive amounts of unemployment? Because enterpreneurialism is not the sole factor affecting economic growth, and European countries are currently dealing with various other issues.
- michaelchisari 12y ago
  The strongest welfare states (and by that, I also mean the best managed) are the Scandinavian countries. And the amount of culture and technology that comes out of Sweden alone is extraordinary for their population size.
dataker 12y ago
A very important premise has been ignored: the consequential government intervention in the economy. That means hundreds of regulations that constitute a barrier for many aspiring entrepreneurs. Living in a welfare state, it took me 7 months to incorporate and ~$50000 on licenses+fees to start a simple exporting business. Maybe America and certain EU countries just haven't gotten there yet.
- notahacker 12y ago
  Kafkaesque licensing processes and protectionism are totally orthogonal to the welfare state, as demonstrated by many a developing country which neither permits the average person to try and start a business larger than a food stall nor provides them with access to any form of welfare whatsoever. Edit: Do people genuinely believe that the average sub-Saharan African state, or even growing economies like Vietnam or Indonesia are either easier to legally form a trading company in or more generous with welfare (relative to incomes) than say, the UK, Sweden or even the USA? If there's evidence rather than blindly partisan "he said welfare states weren't bad for business" knee-jerk reactions behind the downvotes, I'd really like to see it.
geoelectric 12y ago
Worth noting that a "welfare state" approaches basic income as it benefits more and more people. Without getting into the various hairballs on here about the truth of the research, -if- this were true it might imply that the core conjecture of a basic income promoting innovation holds up.
techpeace 12y ago
The amount of blind conservatism on HN is pretty rattling. Here's the formula: "Headline Claiming That Anything About Welfare is Positive, with Supporting Evidence" Top comment: "Sorry, but the evidence doesn't support that." Evidence provided to substantiate claim: none.
- MollyR 12y ago
  I don't think it's conservatism but skepticism. However I could be wrong, I haven't been around on HN for long time. Also I personally value skepticism, but I come from a semi scientific-engineering background. It was pretty hammered hard into us lab techs, we need to be skeptical of our bioinformatics results, you never knew what hidden confounding factor could be affecting the experiment. We even tried to use markov models to help find hidden confounding variables. Edit: On why skepticism is important, its because propaganda is everywhere https://news.ycombinator.com/item?id=9269760 https://news.ycombinator.com/item?id=9269760
  - techpeace 12y ago
    I'm a big fan of skepticism, but blindly questioning anything you see without supporting your claims is just another form of superstition.
    - MollyR 12y ago
      I'm not familiar with this term/phrase "blindly questioning". I've heard of "blindly without questioning" , which has negative connotations. It seems like blindly questioning is far better than blindly without questioning.
  - whybroke 12y ago
    >Edit: On why skepticism is important, its because propaganda is everywhere https://news.ycombinator.com/item?id=9269760 https://news.ycombinator.com/item?id=9269760 There is here too. Not from The Atlantic but in the form of right wing ideological sock-puppets. If you are skeptical of this claim then read the article and its evidence and the comments and their lack of evidence and consider which is which. Just because there are some smart people here doesn’t mean there aren't kooks.
karl11 12y ago
There is a point where this makes sense, but I would venture to guess that there is also a point where increased welfare benefits yield less and less entrepreneurship. People have to be willing to take a risk because they believe they could be better off - if the benefits of welfare were too great, there would no longer be any desire to take risks.
graeme 12y ago
I certainly felt the Canadian social safety net made it easier to start my business. First, my health care was covered. So I didn't have to worry about that downside risk. In fact I even had a major health problem two years in when money was tight. My medical care was a non issue financially. I had some extended health insurance through my parents in the early years. Covered wisdom tooth extraction, and rehab to fix an arm injury. (I needed this to type). Not government safety net, but similar effect. Some countries would cover this sort of thing. Tuition is lower in Canada. Low student debt. And repayment is very lenient for entrepreneurs and low income people. Never had to make payments or interest while starting up. There are tax credits for low income earners. I received about $1000 a year in cash payments for sales tax credits. Tuition credits prevented my paying income tax starting out. I would have gone bankrupt several times over without the above. Or maybe not even started. Instead, this year I'll be sending the government a large amount of income and sales tax payments, and I'm glad to have the opportunity to do it. On the other hand, there was almost no red tape for starting up. This was crucial. I didn't have to ask permission, I didn't need to pass a capital threshold, I could easily open accounts for my business and I didn't even need to register my company. And I didn't have to bother with sales tax until I passed a revenue threshold. Keeping that sort of bureaucratic regulation low is also crucial for encouraging business creation.
pdeuchler 12y ago
Argh, yet another simple economic principle conflated by politicization. Entrepreneurship is directly correlated to easy access to capital and the legal environment surrounding both starting and maintaining a small business... this has been proven ad nauseam. I can't directly critique the papers linked in the article (especially because one of them 404's) right now, but I'd be willing to be a lot of money they cherry pick policies that (either directly or indirectly) created greater access to capital or made it legally easier to start and run a small business. That, or they've found some correlation between the two and are trying to gloss over the actual economics of the deal and support their political opinions. Strong "social good" (read: welfare), strong laissez faire, totalitarian, anarchic, doesn't matter your political leanings as long you increase capital and ease of legal machinations you will experience an increase in entrepreneurship (comparatively, of course).
- Chinjut 12y ago
  Surely there can be more than one thing which has an influence on rates of entrepreneurship... Why couldn't it be the case that both increasing ease of access to capital increases entrepreneurship and, separately, increasing security against risk of destitution via a strong welfare state increases entrepreneurship?
skilesare 12y ago
This is true. It would be nice if the welfare didn't have to come from the state. I'm solving this and am announcing my findings Sunday at the Texas bitcoin conference. The fix is really pretty simple.
stonetomb 12y ago
Although the cost of healthcare is not insignificant, it pales in comparison to general living expenses (food, rent, utilities, etc.). Everyone is discussing conceptually, here are concrete numbers... When I was striking out on my own a few years ago health insurance was "the big one" everyone brought up, so I went on Kaiser's website and got a quote from ~$250 - $450/month (varies with copay, benefits, out of pocket max). It's a bit of a cost though not nearly as scary as everyone makes it out to be and not enough to plunge you into the depths of debt if things don't work out (it's also tax deductible).
Futurebot 12y ago
This is the result of the "Peltzman effect" or "risk compensation." If you make it so that failure does not sting so much, people take more risks. Bad for car safety, but great for business creation. We've long had a schizophrenic relationship with business creation in this country. We lionize it. We glorify it. However, we also require people who do not already have plenty of money / family backing to potentially put everything on the line for it. It's where our love of business crashes head first into our "dog eat dog, every man for himself, lift yourself up by your bootstraps, everything that happens to you is your own fault" ideology. We say "you can do anything if you try!", but then also tell you "but you cannot afford to risk it." If we combined the American culture of entrepreneurialism and free enterprise with Denmark's level of safety nets and free higher education, we could probably do a lot more amazing things than we are now. There are likely plenty of people who could make brilliant contributions (to business, technology, art, science, etc.), but are forced to take what they perceive to be the least risky path in their lives, and so never even attempt to get off the ground with their ideas. That's just sad. http://angrybearblog.com/2012/01/peltzman-effect-why-economic-growth-has.html http://angrybearblog.com/2012/01/peltzman-effect-why-economi...
kuni-toko-tachi 12y ago
This article, like every other one produced by the laughable Atlantic magazine is pure nonsense.
ende 12y ago
I think the headline is a misnomer. It's not a strong welfare state that promotes entrepreneurism but rather simply a saftey net. There's a huge difference. A highly centralized cradle-to-grave welfare state seems to actually facilitate the opposite. But the point is taken that a limited but efficient social safety net is facilitative of risk taking. A universal basic income would probably be more effective than either the strong centralized European welfare state or the inefficient multitude of highly specialized national programs in the US.

104 points by nols 12y ago

Sorry but the evidence doesn't stand up to this AT ALL. Americans are much, MUCH more entrepreneurial than anyone in Europe. I'm American, I live in Europe, I know this very, very well. (Yes, anecdotally speaking, of course!) Americans simply embrace risk, and embrace potential failure, far better than anyone else in the world, taken as a whole. Europeans meanwhile are a more gloomy bunch, more risk-averse, and far less likely to strike out on their own. Notable slight exceptions being the Dutch to some degree. America is so far from a "welfare state" - it is about as far away as you can get. America is a "if you're going to fall, you are going to fall all the way down, and no one is going to save you, no matter what". And somehow, a huge part of the world's entrepreneurs and innovation come from there. I don't know why. And don't take me as some kind of patriotic jingoist champion of the US of A - I am just about as far as you can get from the "Yeah Murica" kind of ultra patriots - heck, I live in Europe because I prefer the slower pace, the old world, the semblance of an actual culture, the environment that has not eaten itself from capitalism taken to the extreme. Nice linkbait headline though. :)

noir-york 12y ago
"Europe"? Which Europe? The Anglo-Saxon UK? The Germanic DACH region? The Nordics? The Mediterranean? All these are "Europe" - but in terms of culture, finance, social welfare, educational systems and much else beside they are very different.
- nakedrobot2 12y ago
  All of it. Some more than others, but no one in europe comes close to the entrepreneurial energy of the USA.
  - mauricemir 12y ago
    Oh and this leads to such a diverse and competitive market in telecoms NOT!
  - pyre 12y ago
    > entrepreneurial energy of the USA So I can go anywhere in the USA and find the exact same amount of entrepreneurial energy as everywhere else? Good to know.
  - GFK_of_xmaspast 12y ago
    French don't even have a word for 'enrepreneur.'
    - TazeTSchnitzel 12y ago
      https://en.wiktionary.org/wiki/entrepreneur#French https://en.wiktionary.org/wiki/entrepreneur#French Where did you think "entrepreneur" came from?
      - Chinjut 12y ago
        I'm quite positive this was a deliberate joke by GFK_of_xmaspast...
        TazeTSchnitzel 12y ago
        Poe's law strikes again...
        GFK_of_xmaspast 12y ago
        Indeed. http://www.snopes.com/quotes/bush.asp http://www.snopes.com/quotes/bush.asp
    - deleted 12y ago
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vasilipupkin 12y ago
http://www.theatlantic.com/business/archive/2012/10/think-were-the-most-entrepreneurial-country-in-the-world-not-so-fast/263102/ http://www.theatlantic.com/business/archive/2012/10/think-we...
dd36 12y ago
The question is if that entrepreneurial spirit is a result of the welfare state or something else. If it's something else (cultural), we may not be maximizing our entrepreneurial abilities. Risk taking should be encouraged.
api 12y ago
No they aren't -- not nationwide. Americans in most of the country are no more entrepreneurial than Europeans. Americans in a few cities and regions are very entrepreneurial. These are not necessarily the cities and regions with the lowest taxes, most "business friendly" policies, or anything else that right wingers would consider likely to produce entrepreneurship. California is incredibly entrepreneurial, but it never shows up on those top ten lists of most business friendly states. I think that strongly argues for this being cultural.
- brador 12y ago
  The more entrepreneurial Americans are those from wealthy backgrounds, well networked backgrounds, or desperate circumstances. Notice, all three of the above do not require a state sponsored safety net, and it is that need for a safety net against destitution that creates an entrepreneurial mindset. Without that safety net you don't get many risk takers.
  - noir-york 12y ago
    Exactly
  - api 12y ago
    You can certainly botch entrepreneurship with business-unfriendly policies, but they are not the ones right wingers always harp on about. High-ish taxes are okay as long as they are not punitively high. Regulations are okay as long as they are easy to follow and simple to understand, and as long as they aren't over the top ideologically-driven stop-everything sorts of things. Keep fear mongers, authoritarians, and ideologues away from the regulatory pen. Complexity is death. Regulations that categorically stop you from acting are death. Things that encumber agility are death. Anything that saps your time is death, since time is often worth more than money. As a founder I'd rather pay more in taxes on profit as long as the government stays the F out of the way of my time and my executive decisions. The ideal setup for maximum entrepreneurship would probably be some kind of libertarian socialism: moderate and moderately progressive taxation, health coverage, guaranteed minimum income or negative income tax, and a simple regulatory structure that makes it easy to form new ventures, hire and fire, etc. Other than that the governments gets out of the way and lets people try new things. One caveat on progressive income taxes: they should not be too progressive and there probably should be lower taxes on capital gains. Investing in long-sighted things should be a form of tax shelter. That's a good thing. The best would probably be a progressive tax curve but where the curve doesn't start to increase until you get really, really up there. Another rationale here is diminishing marginal utility of money-- eventually you get to the point where more money does not materially alter your circumstance in any perceptible way. That's the point at which taxation should become more progressive. At that point you are as rich -- as subjectively experienced -- as a human being can possibly be, and the rest is "savings beyond planned investment" as Keynes would say.
orf 12y ago
I see a lot of patriotism in this comment but almost no facts. > And somehow, a huge part of the world's entrepreneurs and innovation come from there I would say that's for historic reasons and the egregious amount of money you possess as a country rather than some in built ability to take risks?
- TeMPOraL 12y ago
  > I would say that's for historic reasons and the egregious amount of money you possess as a country rather than some in built ability to take risks? Indeed. The US is very young, and throughout history, we had many temporary centers of innovation - from various parts of Europe to Middle East to deep Asia to Africa.
- timepiece 12y ago
  The Petrodollar standard set by Nixon helps for sure.
bullfightonmars 12y ago
Whose evidence? According to this list[1] with data from the World Bank, Netherlands is 35th has 45.05 small businesses per 1000 people. Do you have a stationary shop on your corner or in your neighborhood? I certainly had access to many small businesses in Rotterdam, that would have folded 25 years again the States, replaced by mega corps and big box retailers. The United States on the other hand is 69th on the list with 19.98 small businesses per 1000 people [1] http://www.nationmaster.com/country-info/stats/Economy/Micro/Small-and-medium-enterprises/Number/Per-capita http://www.nationmaster.com/country-info/stats/Economy/Micro...
- vasilipupkin 12y ago
  in all fairness, comparing numbers of micro businesses across countries is tricky. differences in tax laws can create incentives to register as a micro business vs some other way, but not much of a measure of large scale entrepreneurship. But, either way, little evidence that US is more entrepreneurial
- SilasX 12y ago
  It doesn't seem helpful to equate small businesses and startups. Usually meme about "entrepreneurs being good for the economy" is referring to the latter, who fundamentally change how it works, finding numerous non-obvious efficiency improvements, rather than giving slightly cheaper picture framing. On that metric, is Europe still ahead of the US?
- wsc981 12y ago
  I guess small businesses include the so-called ZZP-er (freelancer), for many jobs paid pretty crappy. In the Netherlands, especially for low income jobs like packet delivery, many Dutch companies hire ZZP-ers these days, since it's easier to get rid off. It's really hard and expensive in The Netherlands to get rid of bad performing employees with a permanent contract, especially compared to the USA. Because of this reason many companies prefer to hire ZZP-ers currently. From recent statistics I understand we have approximately 800.000 ZZP-ers in the Netherlands or 1 per every 21 citizens.
dangerlibrary 12y ago
Care to criticize the referenced research rather than jump to conclusions from anecdotes? There's a link to the PDF right there in the article. http://www.econ.brown.edu/students/Gareth_Olds/assets/olds_food_stamps.pdf http://www.econ.brown.edu/students/Gareth_Olds/assets/olds_f...
technotony 12y ago
I think even in the best case scenario Welfare State is only going to be one small factor in the rate of entrepreneurship, so Americans can easily be more entrepreneurial than Europeans despite the lack of welfare state. Culture, education, role models etc are all also going to be important. I think this data shows increasing welfare in America could increase entrepreneurship even more.
a_c_s 12y ago
We're discussing an article based on multiple research studies by somebody at the Harvard Business School. Rebuttals should be based on more than vague anecdotes.
higherpurpose 12y ago
For this reason I think such a study should be focused on Europe and compare the countries there with each other, to see if this theory is a good one or not. I don't think it makes much sense to compare it to US, because there are other factors contributing greatly to the success of US entrepreneurs and it has nothing to do with "being more risk-averse or not". It has to do with the fact that the US is actually a huge single market. EU really isn't right now. It's not easy to just launch a company in a country and easily have success in another. Certainly nowhere as easy as it is to launch an online business in one state in US and have success in other states. There are other factors, such as concentrating many entrepreneurs in one place, which also leads to a concentration of investors in one place (talking about Silicon Valley here). There's also a huge concentration of media in the US that is followed by other countries as well. How many European media sites or blogs do you know? I bet you can count them on one hand. It's much harder for a company in Europe to get promoted across all European countries, let alone to have Americans hear about it. I'm sure there are many other factors as well that make the US a much easier startup environment than Europe.
namlem 12y ago
Keep in mind that some cities/states have much more generous social safety nets than others. Utah, is perhaps a bad example due to the confound of Mormon culture, but it has a good safety net and tons of entrepreneurs.
timepiece 12y ago
I can attest to that. I am not American and I believe that one of the bright spots in America is the entrepreneurial spirit of its people in general. People in America love taking risk and pushing the envelope experimenting with new stuff and technologies and that's one of the major strengths of this nation but I wouldn't go too far to express something like this far better than anyone else in the world. That's just absurd patriotism and there's no doubt about it.
tessierashpool 12y ago
The Internet exists because of massive and very long-term spending on scientific research. This was a massively successful public works program, which led to a colossal boom in entrepreneurship. Likewise, I'm no fan of the Department of Defense in this country (the US), but the research they're currently funding in robotics has similar potential. "Americans embrace risk," as you say, partly because our government creates incredible opportunities through public research which can easily be transformed into private profit. Also, the article repeatedly demonstrated that Americans embrace risk more when they have a social safety net. You can't hand-wave away research with a generalization, especially not when the research you're hand-waving away has gone into great depth examining the detailed workings of the underlying truth which made your generalization possible in the first place.
- dataker 12y ago
  One certainly cannot axiomatically assert the internet wouldn't be here without the U.S government. Although it has definitely helped, the community programmers and engineers were the `fathers of the internet`. If the government hadn't invested, there would certainly be analogous technologies and initiatives built on top of scientific developments. It's just too hard to say how it'd be like
  - api 12y ago
    Without the government it would be a hodgepodge of walled gardens based on different protocols and standards with everyone trying to make a 'platform play' to lock it down... exactly like what you see today with OSes. You'd also have complicated fee structures with every little service charged differently since telcos would want to charge a la carte for access to individual protocols and endpoints. https://en.wikipedia.org/wiki/Standard_gauge https://en.wikipedia.org/wiki/Standard_gauge
tjradcliffe 12y ago
There are at least two ways of looking at this: one is to compare countries, the other to compare what the same individual would do in different countries. There are quite a few non-Americans working in the American technology sector. I've worked on teams with 30% American content, the rest coming from around the world. Talking to those people, it's clear that they are taking advantage of the best of both worlds: the large capital accumulations that are available for investment in the US, but with the backup plan of going back home to a sensible social welfare structure if things don't work out. I've been in the same boat: a Canadian who has lived and worked in both the US and Canada. I've taken risks--particularly as a husband and father--that my American colleagues could only take because they were childless and had spouses who worked. Knowing that no matter what happened, my kids would have access to a health-care system that produces significantly better outcomes at significantly lower cost to the public purse than the American mess, was without question an enabler for me. I was very conscious of this in making business decisions, including the decision to go into business (while broke and unemployed in the wake of the dot-com crash, as it happens.) Had I been in the US at the time I would have been scrambling to find a job so my kids would be covered by decent health insurance. Maybe my case is atypical, but some kind of comparison between foreigners living/have lived in the US vs natives might shed some light on this question.
techpeace 12y ago
Citation needed.
vinceguidry 12y ago
> America is a "if you're going to fall, you are going to fall all the way down, and no one is going to save you, no matter what". And somehow, a huge part of the world's entrepreneurs and innovation come from there. I don't know why. It's not that bad. People do look out for each other. They try to save each other from themselves. America is risky in that if you don't take steps to protect yourself from the broader market, eventually that exposure will over time erode your social position. There are ways to protect yourself, most of them involve mobility. You get out of crappy markets, crappy jobs, crappy situations. You move towards hot spots, hot markets, hot ideas. So long as you keep moving with capital and wealth, that wealth will protect you because America is a place where there's always a shortage of good people available to do things. If you don't want to be mobile, then you have to make up for that with planning. There are retirement vehicles that take time and skill and planning to execute on. Insurance products that take the sting out of all kinds of horrible risk. Health plans that will give you a baseline of care that you can then start planning your own health on. To gain access to this world you need a certain amount of means, but you can generally trade time for capital. For example, you can shop around for insurance, health plans, and such. You can usually find something that will work at a very basic level that's relatively affordable. There's always someone out there that's recognized the market segment you are searching in and has a service tailored for you. America's social services are also typically pretty good. It's certainly a point of contention, but people aren't starving, your dignity will take a hit if you end up homeless but Americans are compassionate enough so that, for instance, homeless people in San Francisco can find someone to loan them their garage. We don't like to see people suffer, and there are numerous church groups, social services, even the cops will take pity on you if they see you're really struggling. America really takes its economy seriously, and everybody's expected to contribute to it, so we will not respect someone if they choose not to participate, but we won't let them starve, either. People who stay on the streets long-term are generally people who simply cannot contribute for whatever reason. Plenty of people become homeless for economic reasons, but the economy is fluid enough that they'll find a berth eventually, if they want one.
javert 12y ago
> I live in Europe because I prefer the slower pace, the old world, the semblance of an actual culture, the environment that has not eaten itself from capitalism taken to the extreme. Well, you can thank American capitalism and ingenuity for that even existing, given WWI and WWII and the Cold War.
- deleted 12y ago
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vilmosi 12y ago
You are spot on when it comes to the difference in cultures. But Europe has little bearing to the argument as the question was more about US welfare. And don't pretend you don't know why entrepreneurs come to the US... we all know why, that's where the money is. Investors and consumers with spending money. It's as simple as that.
eli_gottlieb 12y ago
>Sorry but the evidence doesn't stand up to this AT ALL. >NO STATISTICS AT ALL >Nice linkbait headline though. :) Nice complete lack of statistical evidence, though.

maerF0x0 12y ago

It seems to make a little sense: If you're not worried about the worst case scenarios you can take on more risk. ie: if you know your kids wont starve (food stamps), you wont end up in permanent debt (bankruptcy laws), you wont be killed by your creditors (social order) etc etc. then you can do things (start a business) that would otherwise risk those consequences.

asn0 12y ago
Or if you want to take crazy risks with investments, you don't have to worry about going out of business (banking)
TazeTSchnitzel 12y ago
Right, same reason we have limited-liability corporations.

javert 12y ago

More dishonest sludge from The Atlantic. This simply isn't true.

freshyill 12y ago
Is your source on this reliable?
- javert 12y ago
  A welfare state is reducing some people's economic security to add to other people's economic security. There is no way that can produce a net increase in entrepreneurship. Plus, a welfare state adds more regulations that block private enterprise in various areas and make it more difficult. Moreover, a welfare state hurts economic growth overall, also dragging down the total amount of entrepreneurship.
  - freshyill 12y ago
    I'm going to throw this out there: If I had a proper social safety net and I didn't have to worry about things like health insurance, I'd be much more likely to start a business and take some risks.
  - themoonbus 12y ago
    So, uh... sources? Because the parent article had sources. Simply from a logical standpoint, it makes sense to me that having a safety net would make person less risk averse.
    - deleted 12y ago
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gavanwoolery 12y ago

Yes, there are two sides to the coin. Look at France, which once had a 75 percent tax rate [1] on the wealthy. When you are only getting 25 percent of what you make (or even 50 percent in many countries), you have that much less incentive to succeed and others have that much less incentive to invest. There are not very many French startups, relative to other countries. I'm not saying you can't have the best of both worlds. You could have a good social program and low taxes, if you cut things like defense spending (I believe in a strong defense, but I also believe that in the US we let contractors bill excessively and do little to curb it). But I think you give the consumer more freedom when you just cut taxes - it gives them the choice of what they want to buy, without government imposed restrictions (i.e. certain things not being covered in healthcare, having to live in low income housing, etc). If you want to encourage startups, you can always provide government grants (most countries already do in many areas), or tax breaks for small businesses. [1] http://www.theguardian.com/world/2014/dec/31/france-drops-75percent-supertax http://www.theguardian.com/world/2014/dec/31/france-drops-75...

weddpros 12y ago
France is definitely a counter example in my opinion: one of the strongest welfare in the world is producing more unemployment than anything, and certainly not entrepreneurs.
duaneb 12y ago
Just because there aren't french startups doesn't mean that french entrepreneurs aren't successful. This is about culture, not "where are startups located".
- gavanwoolery 12y ago
  I believe there is nothing that differentiates a French man from an American (a large part of America was colonized by the French, after all!). French entrepreneurs can be just as successful, but IMHO they would flourish better in a lighter government.
  - 12y ago

pcardh0 12y ago

Sure

SilasX 12y ago

The first thing I expected the article to show: a correlation between welfare state strength and rate of entrepreneurship, with the counterintuitive result that there are numerous countries with higher rates than the US and weaker welfare states, but if there are, it didn't list them. The closes it comes is showing that the already-abysmal rates of entrepreneurship for people around CHIP eligibility levels, it's 30% higher for people just below the bracket. Then there's idle theorizing about how food stamps "must" embolden entrepreneurs because they know they can fall back on it if their venture fails. While it sounds superficially plausible, can anyone give a concrete example of the kind of hypercompetent person who launched a successful startup and who would also have needed food stamps if it didn't succeed? Bezos? Musk? Kalanick? Even Brin or Page?

TazeTSchnitzel 12y ago
None of them needed food stamps because they had rich backgrounds.
- SilasX 12y ago
  Sure, but I think the causality is reversed: had they not been rich, they are still extremely capable people who could and would have build up a big buffer before starting their business, which didn't depend on food stamps.
  - TazeTSchnitzel 12y ago
    Had they not been rich they wouldn't have gone to university. Had they not gone to university, I doubt they'd have been able to go anywhere.
  - deleted 12y ago
    [deleted]
s73v3r 12y ago
"The first thing I expected the article to show: a correlation between welfare state strength and rate of entrepreneurship, with the counterintuitive result that there are numerous countries with higher rates than the US and weaker welfare states, but if there are, it didn't list them." Here you go: http://www.nationmaster.com/country-info/stats/Economy/Micro/Small-and-medium-enterprises/Number/Per-capita http://www.nationmaster.com/country-info/stats/Economy/Micro... The US is pretty low on that list. "Then there's idle theorizing about how food stamps "must" embolden entrepreneurs because they know they can fall back on it if their venture fails. While it sounds superficially plausible, can anyone give a concrete example of the kind of hypercompetent person who launched a successful startup and who would also have needed food stamps if it didn't succeed? Bezos? Musk? Kalanick? Even Brin or Page?" All of those people were already rich.

tomphoolery 12y ago

I totally get this. Most people I know who are on welfare also describe themselves as "entrepreneurs". Unfortunately, they are not very good at making or saving money.

blumkvist 12y ago

>America is a "if you're going to fall, you are going to fall all the way down, and no one is going to save you, no matter what". I don't see how this is even remotely true. There are 42million people on food stamps, costing $82bn a year. This is a mere fraction of the spending that goes towards catching falling people. There is no capitalism. Open your eyes.

mr_luc 12y ago
"Devil's avocado, Larry": Assuming a perfectly efficient system, that's slightly under $2,000 per person per year. Divided by 52 weeks, that works out to $38.00 per week in food aid. (In a perfectly efficient system; so, let's say a bit less). Federal, State and Local governments had combined revenue of around 6 TRILLION dollars last year, 3.2 trillion of which was for the Federal government. Does it seem unreasonable to you that the richest country on earth would spend 1/39th of its Federal revenue to give impoverished citizens $30/week of food aid?
TazeTSchnitzel 12y ago
A welfare state is not incompatible with capitalism. Actually, it is a natural consequence of capitalism, a thing bolted on to try and work around some of its more severe issues.

patja 12y ago

I can see the argument making sense that with a strong safety net folks are more willing to take risk. I know for me and my family needing to shoulder the full burden of health care expenses, even with the ACA changes, was one of the major inhibitors to striking out on my own. Even with the ACA and the opening up of the individual direct insurance market, we end up with a catastrophic high deductible plan that makes me loathe to seek medical care for some issues that maybe I should take care of and that a citizen of a nanny state wouldn't think twice about going in to have checked out. Unfortunately a strong welfare state often goes hand in hand with a stronger bureaucracy in general including many regulations, red tape, unfavorable tax codes, and other obstructions to entrepreneurship. This is where the US trumps the strong welfare states.

noir-york 12y ago
"Unfortunately a strong welfare state often goes hand in hand with a stronger bureaucracy in general including many regulations, red tape, unfavorable tax codes, and other obstructions to entrepreneurship." Often... in general... - too many maybes. I know for a fact that the UK and Ireland make it very simple and painless to start up. "This is where the US trumps the strong welfare states." Does it? Most regulations are set at the state level as well, so you're saying that, say, Massachusetts is more bureaucratic than North Dakota?

umanwizard 12y ago

Most people in this thread are conflating "entrepreneurs" and "startups". Anecdotally there are a lot more small businesses (bakers, butchers, independent bookstores, family owned clothing stores, etc.) in Europe than in the US. The people who own these establishments are every bit the "entrepreneur" the founders of Uber are. Maybe the US has more startups on the ultra-successful end but that doesn't say much about the chances of the average person starting an average, unremarkable business.

dismal2 12y ago
Yeah, I think people are confusing terms here. I'm not sure what the global trend is but this is an interesting article: http://www.washingtonpost.com/news/on-small-business/wp/2015/02/12/the-decline-of-american-entrepreneurship-in-five-charts/ http://www.washingtonpost.com/news/on-small-business/wp/2015... I could see a lack of social safety nets, increased costs/risks of safely running a compliant business and corporate consolidation being behind this trend...
- graeme 12y ago
  Interesting to see that entrepreneurship among the 20-34 cohort is sharply down. In marked contrast to the prevailing narrative which says we are an entrepreneurial generation. The article mentions student debt. I'm part of that cohort, and did start a business. I'm Canadian. If I had had the average US student debt, I never would have got started.
nickpinkston 12y ago
Though the pizza shop owner isn't that unique or in large scale to help a lot of people, so the impact is far more limited. Who cares whether someone can semantically be called "entrepreneur", etc. If they didn't do their pizza shop, no one would notice, but if we didn't have high growth startups, I think we'd feel that impact far far more. This is not to imply that high growth = high impact, because there's of course a ton of rent-seeking bullshit out there to be condemned.
- 12y ago

zmitri 12y ago

"More" doesn't necessarily mean "more successful". It's not unreasonable that government intervention creates more entrepreneurs - as a Canadian I know I can go and get tens of thousands to start my own company along with some nice tax breaks - but it doesn't mean they would produce much value or amount to anything more than a barely afloat small business.

sambe 12y ago

I suspect there is a correlation between welfare provision and protectionism around small businesses/anti-big business behaviour. This would lead to many more small businesses than the free market would support, but there is a bit of a question mark over how entrepreneurial and economically valuable this is. I live in Amsterdam (cited elsewhere in this thread as being entrepreneurial): I appreciate having small independent shops and see the Dutch entrepreneurial attitude relative to other European countries in which I've lived. But I also understand why Hacker News readers would not believe the article is reflective: the majority of these businesses are not going to risk everything, change the world, or be worth millions/billions. Perhaps the count alone is not a useful metric. edit: I'm European. Lots of neutral comments treated to downvote-disagree in this thread.

Jacqued 12y ago
I think entrepreneurship is more of a mindset where you liberate yourself from the wage constraint and take control of your life by directly producing value for others. Changing the world and being worth billions is just the Silicon Valley mythology, but that is not the only 'real' form of entrepreneurship there is. Dare I say, a small business owner is more of an entrepreneur in my opinion than some wealthy dude who made an app, raised 5 mil, and ran the company into the ground in 12 months. Now startups are great, but I really don't get the contempt the startup-types hold for small businesses. Maybe that's just a form of class contempt.
- sambe 12y ago
  I like your perspective and agree the 0.1% of glamorous tech startups do not define the whole word. I think though that more people lean towards a concept of risk-taking and innovation (me too). I guess my hypotheses are: a) HN will mostly lean this way too; b) America will mostly lean this way (but I have not lived there); c) if you accept this definition, European business are on average less of this style than American ones (due to government mitigating their risk or them being in established segments) in some - but definitely not all - cases. You are of course free not to accept the definition ;) and I could be wrong about what the majority of HN readers/Americans think. If I'm not, the Atlantic - an American magazine with mostly American readership - is being a bit unrepresentative. As others have said, even if I'm wrong the conclusions seem a little strong for the evidence.

Steer 12y ago

I am European (Swedish), but I have a hard time wrapping my head around the notion that the welfare state would produce more innovation/entrepreneurs. We have a large public discussion here in Sweden that we need to create more new companies and we definitely have a welfare state. I would argue that a welfare state COULD be helping entrepreneurs, but that depends where all the taxation for the welfare state comes from. In Sweden it is very expensive to hire people for example, and it is also very hard to fire people (besides the point, taxation-wise, but still), The companies that hire people pay a large part of the welfare state. This makes it very hard to grow a company since it is so very expensive to hire.

notsureifwant 12y ago

The two Olds papers both use clever triple difference designs (e.g. you're using change in entrepreneurship amongst those who've just become eligible for food stamps in one state relative to those who were already eligible as the treatment group, and the change in entrepreneurship amongst those same types of people in another state that didn't have a change in eligibility laws as the control group) which are hard to find fault in. It seems like a lot of people are arguing "other countries have strong welfare states, but less entrepreneurship", but that's a different question - most of the papers cited are arguing that in the United States, a strengthening of the welfare state leads to increased entrepreneurship. That does not mean that this would be true in other countries, nor that moving to a proper guaranteed minimum income would increase entrepreneurship, nor that entrepreneurship is the best measure of dynamism in the economy. But it is pretty convincing evidence that giving potential entrepreneurs the ability to fail at starting a business without too severe of consequences increases the rate at which they'll start businesses.

vannevar 12y ago
One question I had was whether the overall rate of entrepreneurship increased. As you note, the papers seem to focus on rates within the population that receives the benefits, but the typical conservative argument is that the cost of those benefits in taxes retards economic growth overall. I'm not suggesting that they are right (as far as I know no substantial link has yet been found between low tax rates and economic growth), but it's a question worth addressing in the article and it was not.

ffn 12y ago

Honestly, social-structure probably has a lot more to do with amount of entrepreneurs in a nation. In America, we utter the word "entrepreneur" the same way a 1960s boy would utter the word "astronaut" (or, if Soviet, "cosmonaut" or "potato"). As an American, I take it for granted that I can do a startup without my wife fearing she'll be ostracized by her friends, that I can still find a job if things don't work out, and the general public thinks it's endearing to support local/small businesses. Plus my parents don't feel the need to wallow in shame if I were to stay in their garage for a year to build my prototype (unless they're Asian), which effectively removes all my internal barriers to quitting my job and going down the path less traveled. The fact that social-security is there for me when I retire at 65 (lol) or so, general medical insurance won't be denied to me (considering the demographic of your average entrepreneur, why would it in the first place?), etc., don't occur to me at all. As much as your average 20-something cynical know-it-all likes to bag on our education system and its spew of "you're special", "believe in your dreams", "don't be afraid to do something if you truly believe in it", etc., I should think it's that very sort of indoctrination starting at a young age that is ultimately responsible for so many Americans casting caution to the wind and pursuing their "American Dream", and for so many other Americans to sympathize with and be willing to support such folk on their trek. But I will admit that the one government innovation that definitely helps entrepreneurship is the creation of the corporation. The fact that I can create this entity that's owned by me and the family, friends, and fools who believe in me, and that if things go South, the corporation can die without dragging me down with it, is extremely helpful in encouraging folks to venture. If I was a builder and the law was that if a house collapses and kills its residents, the builder will be found and killed in an eye-for-an-eye manor, I'd seriously think twice about building a house for anyone other than myself. So what encourages entrepreneurship? Telling people since the founding of your nation that entrepreneurship is good and providing a means of separating the entrepreneur from his corporation.

lifeisstillgood 12y ago

Why not give every graduate a bursary for one year and see what happens. In the logic of VC's it will take only 1% to pay that back and more.

borgia 12y ago

If the conclusion of this is true, why aren't we seeing grand scale innovation and entrepreneurship from European countries that are most certainly very strong welfare states? Why instead are we seeing massive amounts of unemployment? There seems to be a delicate balance to strike to get this right. The fact of the matter is that in many European countries someone who is not working can enjoy the same standard of life as someone who is, except they don't have to get up in the morning to earn it. Those benefiting from these states likely have very little incentive to rock their own boat of comfort by stepping out and taking on debt/risk for more of a reward. Especially when you throw high taxation into the mix, where that risk/reward ratio is further skewed because even if you do very well you'll end up paying the state a huge amount of tax, to then support the same welfare system. In the US, on the other hand, you've a significantly less generous safety net and I would imagine the vast majority of those who fall into it from a more grand place - such as being securely in the middle class - would fight more to get out of it. That's intuitive anyway. Where the argument starts to fall apart is when you look at all the young tech entrepreneurs, whether it's hardware or software, or those starting up new media companies, or whatever, very few seem to come from the type of background where if they failed they'd end up on food stamps. Are they better risk takers because they have a better, non-government provided safety net, perhaps? Which then goes on to conflict with the enhanced safety net available in Europe and the comparatively low level of innovation and entrepreneurship. My conclusion would be that the government provided welfare is likely not a factor in determining innovation and entrepreneurship and that there's other, less obvious, factors at play.

TazeTSchnitzel 12y ago
> Why instead are we seeing massive amounts of unemployment? Because enterpreneurialism is not the sole factor affecting economic growth, and European countries are currently dealing with various other issues.
michaelchisari 12y ago
The strongest welfare states (and by that, I also mean the best managed) are the Scandinavian countries. And the amount of culture and technology that comes out of Sweden alone is extraordinary for their population size.

dataker 12y ago

A very important premise has been ignored: the consequential government intervention in the economy. That means hundreds of regulations that constitute a barrier for many aspiring entrepreneurs. Living in a welfare state, it took me 7 months to incorporate and ~$50000 on licenses+fees to start a simple exporting business. Maybe America and certain EU countries just haven't gotten there yet.

notahacker 12y ago
Kafkaesque licensing processes and protectionism are totally orthogonal to the welfare state, as demonstrated by many a developing country which neither permits the average person to try and start a business larger than a food stall nor provides them with access to any form of welfare whatsoever. Edit: Do people genuinely believe that the average sub-Saharan African state, or even growing economies like Vietnam or Indonesia are either easier to legally form a trading company in or more generous with welfare (relative to incomes) than say, the UK, Sweden or even the USA? If there's evidence rather than blindly partisan "he said welfare states weren't bad for business" knee-jerk reactions behind the downvotes, I'd really like to see it.

geoelectric 12y ago

Worth noting that a "welfare state" approaches basic income as it benefits more and more people. Without getting into the various hairballs on here about the truth of the research, -if- this were true it might imply that the core conjecture of a basic income promoting innovation holds up.

techpeace 12y ago

The amount of blind conservatism on HN is pretty rattling. Here's the formula: "Headline Claiming That Anything About Welfare is Positive, with Supporting Evidence" Top comment: "Sorry, but the evidence doesn't support that." Evidence provided to substantiate claim: none.

MollyR 12y ago
I don't think it's conservatism but skepticism. However I could be wrong, I haven't been around on HN for long time. Also I personally value skepticism, but I come from a semi scientific-engineering background. It was pretty hammered hard into us lab techs, we need to be skeptical of our bioinformatics results, you never knew what hidden confounding factor could be affecting the experiment. We even tried to use markov models to help find hidden confounding variables. Edit: On why skepticism is important, its because propaganda is everywhere https://news.ycombinator.com/item?id=9269760 https://news.ycombinator.com/item?id=9269760
- techpeace 12y ago
  I'm a big fan of skepticism, but blindly questioning anything you see without supporting your claims is just another form of superstition.
  - MollyR 12y ago
    I'm not familiar with this term/phrase "blindly questioning". I've heard of "blindly without questioning" , which has negative connotations. It seems like blindly questioning is far better than blindly without questioning.
- whybroke 12y ago
  >Edit: On why skepticism is important, its because propaganda is everywhere https://news.ycombinator.com/item?id=9269760 https://news.ycombinator.com/item?id=9269760 There is here too. Not from The Atlantic but in the form of right wing ideological sock-puppets. If you are skeptical of this claim then read the article and its evidence and the comments and their lack of evidence and consider which is which. Just because there are some smart people here doesn’t mean there aren't kooks.

karl11 12y ago

There is a point where this makes sense, but I would venture to guess that there is also a point where increased welfare benefits yield less and less entrepreneurship. People have to be willing to take a risk because they believe they could be better off - if the benefits of welfare were too great, there would no longer be any desire to take risks.

graeme 12y ago

I certainly felt the Canadian social safety net made it easier to start my business. First, my health care was covered. So I didn't have to worry about that downside risk. In fact I even had a major health problem two years in when money was tight. My medical care was a non issue financially. I had some extended health insurance through my parents in the early years. Covered wisdom tooth extraction, and rehab to fix an arm injury. (I needed this to type). Not government safety net, but similar effect. Some countries would cover this sort of thing. Tuition is lower in Canada. Low student debt. And repayment is very lenient for entrepreneurs and low income people. Never had to make payments or interest while starting up. There are tax credits for low income earners. I received about $1000 a year in cash payments for sales tax credits. Tuition credits prevented my paying income tax starting out. I would have gone bankrupt several times over without the above. Or maybe not even started. Instead, this year I'll be sending the government a large amount of income and sales tax payments, and I'm glad to have the opportunity to do it. On the other hand, there was almost no red tape for starting up. This was crucial. I didn't have to ask permission, I didn't need to pass a capital threshold, I could easily open accounts for my business and I didn't even need to register my company. And I didn't have to bother with sales tax until I passed a revenue threshold. Keeping that sort of bureaucratic regulation low is also crucial for encouraging business creation.

pdeuchler 12y ago

Argh, yet another simple economic principle conflated by politicization. Entrepreneurship is directly correlated to easy access to capital and the legal environment surrounding both starting and maintaining a small business... this has been proven ad nauseam. I can't directly critique the papers linked in the article (especially because one of them 404's) right now, but I'd be willing to be a lot of money they cherry pick policies that (either directly or indirectly) created greater access to capital or made it legally easier to start and run a small business. That, or they've found some correlation between the two and are trying to gloss over the actual economics of the deal and support their political opinions. Strong "social good" (read: welfare), strong laissez faire, totalitarian, anarchic, doesn't matter your political leanings as long you increase capital and ease of legal machinations you will experience an increase in entrepreneurship (comparatively, of course).

Chinjut 12y ago
Surely there can be more than one thing which has an influence on rates of entrepreneurship... Why couldn't it be the case that both increasing ease of access to capital increases entrepreneurship and, separately, increasing security against risk of destitution via a strong welfare state increases entrepreneurship?

skilesare 12y ago

This is true. It would be nice if the welfare didn't have to come from the state. I'm solving this and am announcing my findings Sunday at the Texas bitcoin conference. The fix is really pretty simple.

stonetomb 12y ago

Although the cost of healthcare is not insignificant, it pales in comparison to general living expenses (food, rent, utilities, etc.). Everyone is discussing conceptually, here are concrete numbers... When I was striking out on my own a few years ago health insurance was "the big one" everyone brought up, so I went on Kaiser's website and got a quote from ~$250 - $450/month (varies with copay, benefits, out of pocket max). It's a bit of a cost though not nearly as scary as everyone makes it out to be and not enough to plunge you into the depths of debt if things don't work out (it's also tax deductible).

Futurebot 12y ago

This is the result of the "Peltzman effect" or "risk compensation." If you make it so that failure does not sting so much, people take more risks. Bad for car safety, but great for business creation. We've long had a schizophrenic relationship with business creation in this country. We lionize it. We glorify it. However, we also require people who do not already have plenty of money / family backing to potentially put everything on the line for it. It's where our love of business crashes head first into our "dog eat dog, every man for himself, lift yourself up by your bootstraps, everything that happens to you is your own fault" ideology. We say "you can do anything if you try!", but then also tell you "but you cannot afford to risk it." If we combined the American culture of entrepreneurialism and free enterprise with Denmark's level of safety nets and free higher education, we could probably do a lot more amazing things than we are now. There are likely plenty of people who could make brilliant contributions (to business, technology, art, science, etc.), but are forced to take what they perceive to be the least risky path in their lives, and so never even attempt to get off the ground with their ideas. That's just sad. http://angrybearblog.com/2012/01/peltzman-effect-why-economic-growth-has.html http://angrybearblog.com/2012/01/peltzman-effect-why-economi...

kuni-toko-tachi 12y ago

This article, like every other one produced by the laughable Atlantic magazine is pure nonsense.

ende 12y ago

I think the headline is a misnomer. It's not a strong welfare state that promotes entrepreneurism but rather simply a saftey net. There's a huge difference. A highly centralized cradle-to-grave welfare state seems to actually facilitate the opposite. But the point is taken that a limited but efficient social safety net is facilitative of risk taking. A universal basic income would probably be more effective than either the strong centralized European welfare state or the inefficient multitude of highly specialized national programs in the US.