Safety nets provided by European countries are intended mainly for not ending homeless.

If you are running business, your loses are opportunity costs. Eg. you have already 100k EUR yearly salary and you decide to try running startup. If it fails after 5 years, so you didn't get any money from it (eg. you had to paid debts at the end), you probably lost 500k EUR in opportunity cost.

Progressive taxes incentivize risk taking in lower and lower-middle class, because you are protected from "total failure", but disincentivize risk taking for upper-middle and upper class, because expected rate of return is lower.

At the end of the day, there is no single "right way" to run a state. You have to make tradeoffs, decide what you value more and what you value less.

The healthcare safety net is a very big one, and a big disincentive to risk-taking in the U.S.

Only for lower income earners. A great health plan is $1k-1.5k/mo, which is crushing if your savings or excess capital are in the 5 digits or less.

If you’re financially independent or wealthy enough to be (independently) doing a startup or taking on a business venture, it’s a rounding error in the books.

Correct. That's why SV startups are billionaire's playgound.

And billionaires are much more scarce outside of US (and those who exist have better chances investing in other fields).

That's why SV salaries for developers are so crazy.

It doesn’t take a billionaire, but it certainly doesn’t hurt. A couple million can work, or half a million if someone is crazy.

Your point still stands though.

You can raise capital so easily with any traction (seriously, if you have any credible paying customers at all YC will take you and that unlocks funding from everyone else). The cost of health insurance is negligible compared to the astronomical salaries of software developers.

Must be causing the huge lack of entrepreneurship in the US vs the rest of the world. /s

https://ceoworld.biz/2021/01/03/worlds-most-entrepreneurial-...

It seems to me that risk taking is probably deeply cultural, and is also likely effected by both policy and economic status (collective and individual status). It's probably hard to know how to quantify all of these different effects, but I hope some people are trying to research this!

Culture is not that hard to change when there is money involved. The difference in SV is that there is so much venture capital willing to create new companies. Given that amount of capital, there will always be someone willing to do it.

Doesn't it seem a bit old fashioned that venture capital should be geographically localized, as if it were a physical pile of gold? Is that not on its way out?

Maybe it will change post covid, but capital wants easy access to workers. That's why they like to concentrate in certain geographical areas.

There’s probably a big difference in the kind of risk taken. The safety net might lead to starting a coffee roastery vs a VC-backed tech company that will create a thousand jobs and massive advertising revenue.

There are effects in both directions - there’s both less upside due to higher taxes and less downside due to the safety net.

You can't take risk with money you already paid your taxes with.

High taxation creates a perfect environment for corruption.

Some of the countries with the highest tax rates are among the least corrupt.

In the US everything is pretty broken anyway - so go right ahead and change stuff, you might even fix something!!

Whereas in Europe everything pretty much works as it should, so why rock the boat??

If things are working so well in Europe, why hasn't most of Europe seen any economic growth in two or three decades? That sure sounds like it's severely broken to me.

The GDP of Germany and France are both below where they were in 1995 inflation adjusted (and that was true even before Covid hit). Britain's economy is where it was in 1998. Italy is far below where it was 30 years ago ($2.1t today; $1.32t in 1992, which is $2.58t inflation adjusted). Spain is where it was in 1992. Russia's economy hasn't expanded in 13 years; the Netherlands is in the same boat as Russia, no expansion since 2007-2008. Belgium's economy hasn't moved since 1995. Sweden's economy has grown by about 10% in nearly 30 years (not per year, total; $284b in 1992, which is $564b inflation adjusted; their present GDP is $625b). Austria has similarly seen economic stagnation for nearly a generation. Finland was at $141b in 1990 ($303b adjusted), they're at $300b now. And so on.

If Europe weren't disastrously broken, they wouldn't be suffering such intense and widespread economic stagnation. How long can that stagnation continue before something very bad happens (eg the social safety nets start to melt, as costs climb with demographic aging and there's no economic growth to offset it; growth doesn't get easier as the worker demographics erode)?

While Europe has been asleep for 30 years, China went and became a superpower with an economy larger than the whole of the EU, starting from $426b circa 1992.

> The GDP of Germany and France are both below where they were in 1995 inflation adjusted

No, they aren't. German real (=inflation adjusted) GDP and real GDP per capita are much higher than in 1995.

(real GDP) https://tradingeconomics.com/germany/gdp (real GDP per capita) https://tradingeconomics.com/germany/gdp-per-capita

France looks similar.

I don't know where you got your numbers, or if you did something like take the nominal GDP in USD and then adjust using the US CPI.

> The GDP of Germany and France are both below where they were in 1995 inflation adjusted

In US dollars. You can't use USD inflation numbers for other countries, Euro inflated much less than US dollars in these years. The effect you see where Europe has stagnated given USD levels of inflation is just the effect of USD currently being a bubble. If you use their internal inflation numbers then the economies of Europe are growing just fine.

USD is supposed to be a bubble, because that's how it was designed (at least after Breton Woods). I realized this when trying to figure out when the GDP of China would be higher than the US, and seeing that this depends less on real Chinese production and more on the crazy valuation of USD.

A lot of US economy is not real. A lot of the GDP is based on financial services, real estate, and stocks (including tech), which are pure bubble money. A lot of the economy is also based on health care, which basically doesn't exist is a decent country with public services. The other part is "defense", which means they threat the rest of the world into growing their economy.

In fairness, China has twice the population of the entirety of Europe put together. It's easy to expand an economy from a small base, less so when you're already starting from a decent level.

Interesting stats nonetheless, I wasn't aware that Europe had stagnated so much. Your stats seem a little off; Most of the stagnation seems to have occurred from the GFC onwards, rather than before (using GDP per capita numbers)

What you said may be true for an individual, but not necessarily a small company. Because of socialist regulations and taxes a small company may have higher startup costs and it may be difficult to lay off employees, which makes hiring someone more risky, along with expanding the business.

The risk taking that matters is done by investors, not by individuals.

Random European engineers have few opportunities to take risks at all. It is not a question about attitude.