
The United States is not the nation of small businesses - gasull
http://www.guardian.co.uk/commentisfree/cifamerica/2009/aug/13/us-economy-healthcare-productivity
======
adamhowell
This quote is personally why I support health care reform:

"There are enough risks associated with choosing to start a business over
being an employee, but the Europeans don't have to worry that they will go
bankrupt for lack of health insurance."

And this is an interesting quote from a Krugman post a/b the study
([http://krugman.blogs.nytimes.com/2009/08/04/big-business-
ame...](http://krugman.blogs.nytimes.com/2009/08/04/big-business-america/)):

"Another possibility, more favorable to the United States, is that in some
European countries (Italy comes to mind) firms stay small to escape onerous
regulations."

~~~
viggity
I support health care reforms, but the only reforms I support involve reducing
the government's role, not massively increasing it. Things like policy
portability, a greater ability to create risk pools, the ability to buy
policies originating in a different state and the simplification of red tape
and bureaucracy.

The currently proposed health care reforms try to ignore the laws of supply
and demand because they don't seem fair. But as we found out in the 70's with
gasoline price controls, it is better that 10% of people don't get a service
because they can't afford it than 60% of people not getting a service because
it isn't available.

~~~
ajg1977
I'm confused. You say you support reforming healthcare by reducing the role of
government, but what exactly do you mean by this? Reducing medicare? medicaid
(although that is more of a state run program)?

Perhaps you could enlighten me by specifying what exactly you'd like to
reduce, and what you hope to achieve? (Note: statements such as "reduce
government involvement" are soundbites, not answers).

~~~
viggity
What are you talking about? I gave 3 very specific examples in my post.

Quote: _Things like policy portability, a greater ability to create risk
pools, the ability to buy policies originating in a different state._

The Government restricts all of these things.

In addition, the government could drastically reduce the barriers to creating
new drugs and treatments. Do these barriers save some lives: yes. But they end
up killing many more because the FDA is always going to error on the side of
caution, thereby denying the treatments that work to people who desperately
need them.

------
cwan
CEPR, the think tank that did the research, is a left-wing advocacy group:
[http://www.discoverthenetworks.org/groupProfile.asp?grpid=72...](http://www.discoverthenetworks.org/groupProfile.asp?grpid=7226)

That said, I would be curious as to how well their research stands up to
scrutiny in the days to come as they've obviously made some provocative claims
but I wouldn't accept their views immediately at face value.

update: [http://www.examiner.com/x-14795-Page-One-
Examiner~y2009m8d5-...](http://www.examiner.com/x-14795-Page-One-
Examiner~y2009m8d5-Lies-damned-lies-and-statistics-from-the-CEPR) \- a
debunking of the CEPR paper cited though with a wrinkle at the end that states
that the OECD paper "is explaining something unique to the US: which could
indeed be the lack of national health insurance" but a relationship is !=
causation which CEPR obviously attempts to argue.

~~~
mercurio
It is hardly a debunking if the author writes in an update at the end of the
same article that "My critique is thus wrong".

~~~
cwan
He's not saying that his entire critique was wrong - his attempt to show that
healthcare wasn't the reason was "thus wrong". This isn't to say that the
authors' attempt to show causation was true either. But, fortunately we do
have better critiques here (and critiques where one of the authors of the CEPR
attempts to respond to in the second and third links):

(1) [http://ipeatunc.blogspot.com/2009/08/entrepreneurship-in-
oec...](http://ipeatunc.blogspot.com/2009/08/entrepreneurship-in-oecd.html)
(2) [http://ipeatunc.blogspot.com/2009/08/entrepreneurship-and-
he...](http://ipeatunc.blogspot.com/2009/08/entrepreneurship-and-health-care-
in.html) (3) [http://ipeatunc.blogspot.com/2009/08/entrepreneurship-and-
he...](http://ipeatunc.blogspot.com/2009/08/entrepreneurship-and-health-care-
in_14.html)

To summarize - Scott Shane of Case Western studies states as follows:

"If you compare health care’s portion of G.D.P., as measured by the World
Bank, with the self-employment rate across the 21 O.E.C.D. countries in the
C.E.P.R. study, you will find that the correlation is only -0.19, which
statistically speaking, cannot be considered different from zero."

"I know that everyone is focused right now on the health care debate, which is
great. But we can’t just say that the absence of universal health care
influences the size of our small-business sector. It’s certainly possible that
national differences in health care affect national differences in self-
employment and small-business generation in some way."

"But we have to show some evidence of those effects."

------
jimmybot
Contradictory things are being advocated. Health care reform at least
intuitively looks pro-small business. But mandatory vacation days and high
unemployment benefits? If they are paid out by the hiring company? I doubt
that is helpful for small businesses, who can't shift around workers as easily
and will be discouraged from hiring if the costs of firing are so high.

And France isn't a nation of small businesses. Their best industries seem to
be those really complicated infrastructure ones that require a lot of state
intervention (bullet trains, nuclear reactors) and luxury goods (LV). It may
have been nice to have that welfare cushion during the financial crisis, but
that's a separate and potentially contradictory goal to encouraging small
businesses.

And then there's Taiwan. It has always been a country of small and medium
sized businesses, and to my knowledge, there was no uptick in this when
national healthcare was implemented in the 90s. It could be high at a
percentage for other reasons, though, and that it was so prevalent made it
difficult for there to be any additional uptick.

~~~
thstart
"...But mandatory vacation days and high unemployment benefits?...

This is a problem in Germany. One of the reasons only big companies can exist
there. Some people there are having 3 month vacation.

"...the costs of firing are so high..." It is very hard to fire there because
of the Unions.

"...And France isn't a nation of small businesses. Their best industries seem
to be those really complicated infrastructure ones that require a lot of state
intervention (bullet trains, nuclear reactors) and luxury goods (LV)..."

Absolutely right. You can extend this statement to other countries in Europe
as well.

~~~
eru
> This is a problem in Germany. One of the reasons only big companies can
> exist there.

There are plenty of small and medium sized business in Germany. Ever heard of
the Mittelstand? (Not to deny that those regulations can be a problem. On the
other hand, Germany does not (in most sectors, yet) have a minimum wage.)

------
DanielBMarkham
There's something about this set of articles that strike me as fishy.

First, the study was measuring "self-employment" as reported on tax forms.
Most small businesses start up and disappear without ever appearing on a
government tax form somewhere. My neighbor goes to yard sales. My cousin sells
rare books on Ebay. I was a stringer for a small paper for while receiving
cash payments. These kinds of ephemeral efforts spring up and dissipate all of
the time.

Secondly, in the executive summary we go immediately from small business
numbers to health insurance issues, which seems like a bit of editorializing.
One can debate health care all day long -- I think it needs to be fixed. But I
know a lot of guys who have small businesses, and I've never, ever heard
somebody say they didn't start a business due to health care costs.

This just doesn't smell right to me.

------
davidw
Aside from the fact that this article is _very_ political and I flagged it,
any economic ranking where Greece, Portugal and Italy are leading is probably
not indicative of good things.

------
tybris
Looking at the comparison in the report I see no correlations between the
health care system and the amount of self-employment.

There does seem to be a strong inverse correlation between self-employment and
GDP-per-capita, with Norway Luxembourg and US being at the bottom and Spain,
Italy and Greece on top. The only thing this report suggests is that a strong
economy has relatively large businesses.

------
besquared
I'd be more interested in looking at the overall income of businesses under
500 people compared across countries. According to the US Census Beaureau that
category of employers plus all nonemployer firms account for about 42.19% of
all annual receipts. What's it like for other countries?

------
joubert
The US is a nation of free individuals. Big and Small.

~~~
thstart
I would say "the only nation".

~~~
sho
And that would be a pretty silly thing to say, wouldn't it?

~~~
thstart
I admit I am biased. But I've a very good reason to be.

~~~
sho
(removed insults)

"Wrong and proud of it", huh? There's no valid reason for that.

------
jon_dahl
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biohacker42
If the US is truly not a nation of small business anymore that's bad. Small
businesses are the true engine of the economy and tend to be more stable. A
"top heavy" economy is more typical of developing nations.

------
wmeredith
I call bullshit. Someone is spinning the statistics. The latest census data
from the US SBA says that 36% of all business in the US have fewer than 5
employees.

~~~
tokenadult
That statistic can be true without showing that most United States workers
work in small businesses.

------
known
Internet and Globalization have profound impact on cultural and socio-economic
issues across the world due to the non-proliferation of
<http://en.wikipedia.org/wiki/Information_asymmetry>

------
known
"A country is not made of land; a country is made of its people." -- Unknown

------
thstart
I would add a comment about Europe (Germany in particular which I know best) -
just try to start a small business in Germany. If you are foreigner - forget
it. OK who can be a German citizen - 2 ways - 1) you a German by blood - it
does not matter where are you born - blood comes first. 2) you are foreigner
trying to get a German citizenships - even if you get it after 15 years or
more stay in Germany you will be always 2nd class citizen. Reasons - a ton of
reasons - too much to list it here. France - the same. Probably Netherland is
better - but no much business opportunities there. England - forget it a
closed class society - you have to be from inner circle.

In Germany - there are several big companies working with thousand
subcontractors. Siemens for example. There is a saying in Germany - if
something happens to Siemens - the same will happen to Germany. So basically
to have a small business there practically you have to be a subcontractor to
some of the big companies there AND better be a German citizen. Big companies
there a heavily subsidized by the government. Besides Germany-Russia are so
heavily interconnected so you can imagine the subsequences. The pact Molotov-
Ribentrop is still not widely known but the European Union wants to make it
official data of victims of fascism and socialism because again they are so
close. Recently it was discovered German banks with filials in Luxemburg
washing money for Iran government - this is a big theme - where the money come
in Europe and why this leisure and welfare theme.

Here in US - you can register a business the next day you got your stamp in
your passport if you come with a business visa. If you are born here - it is
much easier of course, but not much different. I can comment about California
where I came not so long time ago but enough to tell - once you understand the
US specifics and have a drive you can have a success here no matter what.
Opportunities are everywhere even in these hard times.

The financing possibilities - there is simply no comparison. Small business
friendliness - beyond comparison. Business opportunities - beyond comparison.

~~~
stse
Is this just upmodded because people here like to bash Europe? A simple google
search shows that the poster is just wrong.

~~~
tokenadult
Please tell us in detail what he said that was wrong, and what sources show
the correct facts.

~~~
Maascamp
Can you not check for yourself. Is your only method of retrieving information
people on hacker news?

~~~
andymism
I don't see anything wrong with requesting that someone back up their claims
in a discussion. Your suggestion that the rest of us should just RTFM (or in
this case google it) adds no value whatsoever.

------
thstart
Reading this article I wondered why it is published in UK by an American
economist and what is the point of publishing such an article. If this
academic economist lived a little bit in Europe he should know better.

I made some research. The bottom line - an American economist supporting Hugo
Chávez.

Weisbrot has been cited as the architect of the Bank of the South.

The Bank of the South (Spanish: Banco del Sur, Portuguese: Banco do Sul); or
BancoSur is a monetary fund and lending organization first proposed by
Venezuelan President Hugo Chávez.

Some comments on the artice: "...being the only "no-vacation nation"..." I
have been working in West Germany for 4 years and can tell - yes indeed
Germans have up to 12 weeks in paid vacation. The question is who is paying
for this? You can look at the taxes Germans pay and understand the German
government is subsidizing it. In Germany grocery stores, etc. still close at
18:00 PM - the debate is still going on to remove this or not. Most probably
not - because of the unions.

"...we have a broken healthcare system that costs about twice as much per
capita as that of our peer nations and delivers worse outcomes..."

I agree here in US healthcare payment via insurance is not the best solution.
From other side in Germany (I know Germany best) the government is subsidizing
it. Guess who is paying this?

"...the French could not afford their welfare state..." Again - who is paying
the bills. Somebody has to pay the bills.

"...half as much energy per capita as the US does. A big part of this
difference is because Europeans, in recent decades, have taken much more of
their productivity gains in the form of increased leisure time..."

Increased leisure time? So what is the point?

"...We estimated that the US would consume about 20% less energy if it had the
work hours of the EU-15. This would have a significant impact on world carbon
emissions..."

Carbon emissions - this was invented by Europeans academics to get more grants
for research, then supported from interested leisure oriented parties as a way
to extract money from big businesses - e.g. who has the money.

~~~
mercurio
I can't believe a comment that essentially consists of irrelevant objections
to the article is sitting at the top. Please don't upvote emotional rants
masquerading as arguments.

 _The bottom line - an American economist supporting Hugo Chávez_

The author's political views do not automatically make his arguments valid.

 _Yes indeed Germans have up to 12 weeks in paid vacation. The question is who
is paying for this? You can look at the taxes Germans pay and understand the
German government is subsidizing it._

First, while the German government might subsidize a lot of things, I doubt
that it pays employers for the vacation time taken by employees (except in
special cases like childbirth). Even if this were true, since the subsidies
would come out of taxes, it would be economically the same as a person
choosing to take a pay cut for working less hours.

 _I agree here in US healthcare payment via insurance is not the best
solution. From other side in Germany (I know Germany best) the government is
subsidizing it. Guess who is paying this?_

I don't recall the author claiming anywhere that healthcare is magically paid
for in Europe. His point was that per capita it costs half has much and
provides better outcomes.

 _"...the French could not afford their welfare state..." Again - who is
paying the bills. Somebody has to pay the bills._

I don't get this rhetorical technique of asking who is paying the bills. Not
only is it a bad argument, it is poor rhetoric.

 _Increased leisure time? So what is the point?_

May I point out that almost all art, science and human culture originally came
out of leisure time.

 _Carbon emissions - this was invented by Europeans academics to get more
grants for research_

Carbon emissions are real. They are byproducts of combustion. It is their
trading that was invented. Consuming less energy reduces real world emissions,
and _increases_ the tradable commodity.

------
kingkongrevenge
You guys realize Europe has all kinds of laws against large retailers and in
favor of mom & pop shops, right? This is basically about the inefficient
"shopkeeper lobby" that makes it difficult to buy various things outside of
weekday business hours.

Small businesses are not inherently better than large businesses. In general,
employees of large businesses make more money. Larger firms tend to be more
economically efficient.

I am not at all surprised that Europe has more [antiquated] small businesses.
I'm a bit surprised someone is trying to present this as a boasting point.

