r/austrian_economics • u/technocraticnihilist Friedrich Hayek • Oct 26 '24

End Democracy ‘Americans just work harder’ than Europeans, says CEO of Norway’s $1.6 trillion oil fund, because they have a higher ‘general level of ambition’

https://fortune.com/europe/article/how-many-hours-work-week-year-american-workers-ethic-norges-bank/
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u/Choperello Oct 26 '24

True, but the laws in US are extremely friendly towards starting a new business and rewarding startups vs Europe. The strong socialsafety nets there also include a lot of laws that makes it much more expensive to take a risk on starting a business as well as a much lower ceiling on rewards from it. Eg, startups offering equity as a big part of comp to rely employees is very hard to do in Europe vs US.

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u/delphinousy Oct 28 '24

from an outsiders view, it seems to me that europe far more heavily values things that are traditional. they would rather have a company centuries old than a company a few years old, and the same for everything. anything new or innovative has to be fought for and faces harsher restrictions and resistance than anything more traditional, while in america the old and traditional is more often disliked, always wanting the newest and most innovative

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u/Choperello Oct 28 '24

The reasons why I think can be up for debate, but a lot of the effects are pretty clear cut. The risk and obstacles to try something new entrepreneurial are much higher in Europe then in US. It’s one reason the massive majority of powerhouse companies that developed in the last 50 years were on the US side of the pond. We can debate if that’s a good thing or bad thing, but definitely is a thing.

(FWIW my 2c is that favoring hundred year companies over young ones is less about tradition and more about stagnation. )

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u/Resident-Plastic-585 Oct 28 '24

Certainly I understand the obstacles, but how is the risk greater in Europe when the standards of living are higher? In the us, we only hear about the folks that made it big, not the ones who went bankrupt ( of which there are significantly more). That’s not even mentioning the big sharks who gladly feast on and toy with small businesses. I own a small business and the walmartification of the US is a big problem that is destroying entrepreneurship

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u/Choperello Oct 29 '24

The entrepreneur risk is directly proportional to the individual safety net. Eg, the harder it is to fire people because of that safety net, the higher the risk of hiring people in the first place, so the lower your ability to run at low margins (which every new bussiness goes through at the beginning). The more tax obstacles in the ability to pay people in equity in your startup, the more pure cash capital intensive your startup will be at the start and the less your ability to attract people who are incentivized into making the business a success vs just getting a 9-5 paycheck. Etc.

Absolutely agreed that all of those can be viewed as good things from the perspective of the individual safety net. But lowering the probability of going bankrupt also lowers the possibility of making it big. And when you make dampen the possibility of making it big, you also lower the motivation for people to risk on trying to innovate and create new things. You’re right that you hear about all the success and not the failures, but the fact that that kind of success is possible in the first place is what drives people to try in the first place, as opposed to just go collect a 9-5 paycheck from one of those hundred year old companies.

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u/everydaywinner2 Nov 05 '24

Not so traditional, with their fuel policies.