If there was one group to look to for the future of human development, it would western Europe. These countries mostly have a terrific quality of life, the highest trust societies in the world, and, until recently, the moral high ground generally.
It's a shame, then, that they are unable to make attractive economic rules, and organize in a way that can sustain them.
Specifically as it pertains to EU economic planning, they have a fundamentally bad philosophy for encouraging business.
In most EU countries, they try to encourage innovation largely through grants and subsidies. In other words, they try to pick winners.
Instead, they should do what works: cut bureaucracy and tax breaks. No one wants the headache of starting a business here. And the few that do, against all odds, get something off the ground, quickly move their corporate headquarters to more tax friendly nations.
Denmark, Switzerland, Estonia, and Ireland have all been more successful in encouraging new innovation and also happen to have the most attractive tax breaks for innovative businesses and some of the easiest business rules. They, too could do more here. But it is obvious what works and what doesn't.
Grants and subsidies cannot make innovation. Picking winners never does that.
> "What does work is making it easy to do business - cutting bureaucracy - and tax breaks. No one wants the headache of starting a business here. And the few that do, against all odds, get something off the ground, they quickly move their corporate headquarters to more tax friendly nations."
I am not an insider who has any special knowledge of the motivations of companies exiting Europe, but I suspect that those companies are at least as worried about regulatory uncertainty as they are about tax rates. The EU has a history of suddenly killing 'undesirable' business models and products through regulation. The EU also seems to make it generally difficult to scale up and scale down businesses, due to labor market regulations; if you're having a rough spell, you basically can't lay off your least productive workers and try to 'regroup', you might as well just sell off the productive business units, and shut down.
I think you're trying to refer to the Digital Markets Act indirectly at least with part of your comment.
Actually, I mostly believe in this regulation. Gatekeepers are a new kind of monopoly/government. This, too, discourages innovation. The US should have a spine against these companies. I'm glad the EU is, at least, trying to.
It also doesn't really affect small business. Or, indeed, helps them. I hope they can, in the end, force Apple to allow more than safari browser on iphones so PWAs can be a real thing.
GDPR, on the other hand, is hell for small businesses. It's complicated and scary. Understanding and implementing the rules is expensive. It's broader than you think - restaurants, for example, are often technically breaking the rules. Most businesses are breaking the rules somehow without knowing it. This is the sign of bad law.
From a consumer perspective, the cookie thing was just not thought out and extremely negative. Bad rules written by unthoughtful legislators. If they wanted to ban third party tracking, they should have just done that.
> I hope they can, in the end, force Apple to allow more than safari browser on iphones so PWAs can be a real thing.
You really have to respect Apple though: Despite the fact that they have approximately 30% market share in smart phones globally, and even smaller fraction of the overall browser market, they have single-handedly prevented PWAs from becoming a thing.
It’s even more amazing when you consider how Apple was not able to prevent Android-native and Windows-native apps (which have a smaller addressable market than PWAs)! Apple must have projected all their magic juju at the PWA market and forgotten to save any for native Android apps.
We know this is true because only the stupidest person could believe that users don’t like PWAs, and that PWAs simply failed on their own merits.
> This is a sign of a bad law.
Or maybe it is a sign that European businesses have normalized some really bad and abusive practices, and that the EC needs to crack down harder on consumer protections until those businesses get the message. Maybe 20% of revenue for a start? What was it that everyone likes to say about Apple? “Just follow the law”
I find it puzzling that no-one else has commented on the obvious conflict between the following quote and your call for corporate tax-breaks.
> If there was one group to look to for the future of human development, it would western Europe. These countries mostly have a terrific quality of life, the highest trust societies in the world, and, until recently, the moral high ground generally.
"Ziel bleibt die deutsche Gesellschaft, aber diese deutsche Gesellschaft, wie sie lange Zeit existierte – zwar nicht homogen, aber durch gemeinsame Werte und Normen zusammengehalten – hat sich grundlegend verändert. Der technologische Fortschritt, die Globalisierung und die zunehmende Individualisierung haben diesen Rahmen, der durchaus Integrationserfolge vorweisen konnte, aufgelöst und das Große und Ganze in viele Gesellschaften zersplittern lassen.
Heute existiert keine Gesellschaft mehr, sondern zahlreiche Lebenswirklichkeiten, in der Regel Milieu genannt, nebeneinander, und jedes hat seine ureigenen Vorstellungen von einem richtigen und guten Leben. Eigene Normen, individuelle Verhaltensmuster sowie abweichende Wertevorstellungen. Das gab es vielleicht in größeren Blöcken schon immer, niemals jedoch in einer solchen Vielfalt der Unterschiedlichkeit und des Individualismus.
Bleiben wir bei den klassischen Milieus, die sich gesichert nachweisen lassen. Hedonisten, die primär Spaß und Genuss suchen, haben andere Ziele als Prekäre, bei denen es teilweise um die nächste Mahlzeit geht. Traditionelle oder Post-Materielle präferieren völlig unterschiedliche Lösungen für Probleme. Man nehme hier die Energiewende, die genannten Abschiebungen oder die Gendersprache als Stichworte. Die adaptiv-pragmatische Mitte ist viel flexibler als die alte bürgerliche Welt oder das etablierte Establishment. So setzt sich das dann fort. Ja, es gibt Schnittmengen, aber manche Milieus sind so weit voneinander entfernt, dass der Konsens immer schwieriger zu finden ist. Das ist natürlich euphemistisch. In Wahrheit steht man sich heute erbittert, fast verfeindet gegenüber, besteht auf seine Meinung und zeigt häufig nur noch wenig Kompromissbereitschaft. Ein Blick in die Wirklichkeit sollte hier genügen.
[...]
Deutschland fehlt ein einheitlicher gesellschaftlicher Rahmen, der Normen und Werte vorgibt, auf die sich alle einigen können. Historische Narrative wie das Versprechen des sozialen Aufstiegs oder das Vertrauen in staatliche Institutionen verlieren an Strahlkraft, was die gesellschaftliche Kohäsion weiter schwächt.
[...]
Das Ergebnis muss dann eine Zunahme sozialer Spannungen sein, da noch mehr Gruppen mit unterschiedlichen Werten und Normen in einer Gesellschaft koexistieren, ohne sich gegenseitig zu verstehen oder zu akzeptieren. Schon bei der deutschen Gesellschaft führt dies zu heftigen Milieukämpfen, die kaum mehr kontrollierbar sind. Man betrachte nur die aktuelle Stimmung im Lande. Wollen wir noch zahlreiche weitere abgekapselte Lebenswirklichkeiten durch Untätigkeit schaffen?"
There exist, for example, Google Translate and DeepL.
For me, it is a very common experience (both online and at work (because I have work colleagues whose native language is neither German nor English)) to see texts in languages that I barely understand. Having to use some translation service to at least get a glimpse of the meaning of such texts is just my usual daily experience.
> The goal remains German society, but this German society as it has existed for a long time - not homogeneous, but held together by common values and norms - has changed fundamentally. Technological progress, globalization and increasing individualization have dissolved this framework, which has certainly been successful in terms of integration, and have caused the big picture to fragment into many societies.
Today, there is no longer a society, but rather numerous realities of life, usually called milieus, that exist side by side, and each has its own ideas of a good and proper life. Its own norms, individual behavior patterns and different values. This may have always existed in larger blocks, but never in such a variety of differences and individualism.
Let's stick with the classic milieus that can be reliably proven. Hedonists, who primarily seek fun and pleasure, have different goals than precarious people, for whom the next meal is sometimes the main concern. Traditional or post-materialists prefer completely different solutions to problems. Take the energy transition, the deportations mentioned above, or gender language as keywords here. The adaptive-pragmatic middle is much more flexible than the old bourgeois world or the established establishment. And so it continues. Yes, there are overlaps, but some milieus are so far apart that consensus is becoming increasingly difficult to find. That is of course a euphemism. In reality, people today are bitter, almost hostile towards one another, insist on their opinions and often show little willingness to compromise. A look at reality should suffice here.
[...]
Germany lacks a uniform social framework that sets norms and values that everyone can agree on. Historical narratives such as the promise of social advancement or trust in state institutions are losing their appeal, which further weakens social cohesion.
[...]
The result must then be an increase in social tensions, as even more groups with different values and norms coexist in a society without understanding or accepting each other. Even in German society, this leads to fierce milieu conflicts that are hardly controllable. Just look at the current mood in the country. Do we want to create many more isolated realities of life through inaction?"
I think this is Draghi's report. The proposals are already outdated of course, Europe is way behind and unable to play catch up. What i find is funny that it proposes new committees to reduce regulation. And new funding for pie-in-the-sky projects, as if we don't have various research funding schemes that have spurred the creation of thousands of research grant mills across the EU.
Draghi's 'whatever it takes' turned europe to a heaven for bankers, and everyone else has since left. It's increasingly turning to a tourist destination, and that's not something to celebrate [evidenced by the high demand for tourist workers , the highest of all]
Reducing regulations and generally “opening up” can be done largely without substantial cost outside of political will, which is costly for political parties because lobbies exist and represent single-issue voters.
Just as an example, Uber does not operate in Italy as it does in many other countries, including in Europe, because taxi drivers are historically a highly organized group/mafia that can move substantial numbers of votes. Allowing Uber to operate would, perhaps, cost votes in the short term, but it could happen without monetary cost. Instead, taking a cab in Rome is a nightmare because the taxi mafia has no interest in increasing the number of cabs on the road or opening up to competition.
There is not a single citizen who does not benefit in some way from the artificial limitation of supply (i.e., taxi drivers and their families) who agrees with the current regulations/restrictions, but for some reason (money or votes) no politician is willing to crack down hard on them.
Since it is not and will not be one of the voters' priorities, it is an issue that is talked about for a few days after a journalist has to wait 3 hours to get a cab and disappears for months until another journalist can't find a cab. A clear symptom of a political class that is corrupt, immature, or both. Incompetent, I would add to the list.
Still in Italy, reforming the cost of the Italian university could be done at a reasonable cost. However, the deep and historical connection between the university and the bureaucratic and political system makes it preferable for decision-makers to maintain a heavily nepotistic status quo that everyone says will change sooner or later, but has not changed and I don't think will change in the next 10-20 years.
Countries that bet on tourism are failing states that are busy trying to get what they can instead of creating what they might.
The first thing that the EU ought to do is crush the notary business. It's amazing how many things still require notary services in some EU countries. For most of it the fraud protection they provide isn't worth the cost and delay.
Monopoly laws are one thing, not being able to create new products is another. Sure Europe need not become a carbon copy of USA/China, but they need to ensure they can keep creating valuable products so their current way of life may sustain. I will encourage everyone to read the pdf as it highlights the concerns.
You can reach a $100B market cap simply by creating an amazing product that people all over the world want to use, no monopoly required. A prerequisite for this, of course, is an ecosystem that encourages and efficiently enables the creation of amazing products.
yeah but are they? it's not like there are five European search providers competing equally for the users. On the other hand, there's a bunch of quasi monopolies, e.g., Lufthansa on many routes in Germany after other airlines collapsed, or Datev for accounting (which interestingly you can't even buy but have to go through a tax advisor).
Why would that be an achievement? On contrary it should be seen as an achievement and enabler for competition that this is not the case. Ie. Monopolistic behavior.
I would rather we had the US situation where the market was dominated by new publicly traded companies, instead of companies, some of them not even publicly traded, all of which founded many decades, if not centuries ago.
It is actually one of our biggest issues that not only is the population physically old, but everything we do is done in such an old fashioned way.
As bad as Google and Facebook may be, they are publicly traded, transparent, their existence gives the US a very good geopolitical asset, their creation lifted a lot of people into out of the middle class into the upper class.
We really cannot say the same about any EU corporation.
That is up to a fair, well governed, market to decide that.
And before you say something along the lines of: "Well, the market want McDonalds food and snort themselves to death in cocaine" - let's just stop it there and think, in silence, about what a fair market is.
Try pondering on the opposite for a bit: a market where the people with the biggest guns can coerce others to give up valuables. Where participants are actively left to die because the governing body only allow a single person to treat ill people. Etc.
When we have a grasp of an unfair malgoverned market, then we can think about what a fair we'll governed market is.
I am not sure if you catch the point? It is OK that you have the political belief that governments should have less regulation (It is after all a US based forum this one) - but there is not support that this inherently gives a free market.
A free market has two core properties: Supply and demand decides pricing and voluntary exchanges.
Down stream effects of these two are:
1. We need competition to have choice: Only have a single search provider and a single social network does not give that.
2. We need to have fair compensation to have voluntary exchanges: People who need money might involuntarily go into a labor contract to stay alive.
3. ... I am sure you can expand on this list yourself.
> Free markets on the other hand have already devised pretty effective ways to measure value and allocate resources.
What you are discussing is pure politics and has nothing to do with any discourse of "scientific" economics - which indeed is what I tried to refuse to go into by saying that we can think about these things in silence.
However, if we do talk about economic freedom, then it seems like the US is on a 25th place over taken by more than 10 EU countries - all with foundational systems that are pro regulation: https://en.wikipedia.org/wiki/Index_of_Economic_Freedom
I definitely don't, especially pertaining to the actual question I asked:
>> participants are appraised based on the value they provide to the society
>How do you measure that? And who decides?
I wasn't talking about "pure free markets", I am not interested about philosophizing and talking politics - just concrete, real, actionable points.
LE: I live in the EU and saying Western European countries offer more economic freedom than the US is joke. The actual reality proves it: European economy has fallen badly behind the US. Reasons include overregulation, anti-business and anti-corporation climate.
It would be an achievement as the EU is not an isolated planet. For the prosperity of EU it needs to compete in external markets. If EU has no big companies but US/China do EU will be less and less competitive in global markets. Certain things require big companies to be possible with efficiency (e.g you can't have Airbus as a collection of small companies and certainly would not have been competitive with Boeing).
Anyhow, you are right, and that is the infamous downwards spiral and lack of sovereignty to the market.
Either we see increased protectionism, increased inequality, or we pull our selves together and make a plain global playing field (eg. Through minimum taxation schemes).
Sadly Europe is not at a point where it can utilize increased protectionism to save itself. Europe has far too few natural resources and needs a far higher standard of living, necessitating importing a lot of stuff. Unless it can maintain technological edge in some products, Europe is doomed to lose it's current standard of living.
Maybe you know this already but I reckon rather not: Europe is not "one" state to apply all that things you mention. Europe is a loosely connected network of wildly diverging national and partisan interests, with resources very unevenly distributed, so I definitely cannot see an "European" solution - heck I cannot even expect one. So, nice chat, but not gonna happen - or at least not in this way.
It's not so direct though. There is a huge technological factor in it. France didn't have coal. It developed tremendous nuclear capacity. From trade perspective Finland was basically an island separated by impassable ice for some part of the year. Finland developed ice breakers. Europe developed communication satellites but USA wouldn't launch them as they competed with US satellites. So Europe developed Ariane launchers.
Europe has a huge technological base and has the capability to affect its own destiny.
Ariane is expensive now. But that wasn't the case for decades. Everything wasn't static in the eighties or nineties and won't be from here to eternity either. American rockets were very expensive as well.
As we speak, companies like Rocket Factory Augsburg are developing cheap access to orbit.
It is an achievement because it shows that the market works: That new companies can be created and blossom and grow by their own merits to become large enterprises.
By contrast, the lack of competition in Europe holds down any newcomer. The only big companies today are those that have already be big companies for many years. That is not a natural state in a competitive market… normally new companies thrive and take market share while others decline and whither away.
The fact that Europe has no new big companies just proves that old big companies are monopolizing the market and using anti-competitive tactics to keep out any newcomer. That’s bad for Europe’s consumers.
800 billion euro per year and that on top of other needs like green initiatives. How are they going to finance such investments? EU banks don’t have capital and foreign borrowers will ask steep rates which will impact European borrowing costs and extinguish economic activity even more.
The simple truth is Europe cannot afford such programs.
Well, half joking here.. there probably will be a new green initiative to decarbonise IT. New tax money will pay for a new IT hub in Germany or France, where companies will stay for as long as EU pays their rent and gives tax incentives. After that, they will move out.
"First,
integrating Europe's capital markets to better channel high household savings towards productive investments in
the EU will be essential. Second, the more willing the EU is to reform itself to generate an increase in productivity,
the easier it will be for the public sector to support the investment drive."
Ahuh.. so they are going to force "investment" from european households.. Read into that what you will..
Also talking about decarbonisation and militarization in the same breath.. just utter opposite ends of the spectrum.
The EU is schizophrenic at the best of times.. but this is absurdum ad nauseum
Read the report? High level: removing policy & procurement fragmentation, boosting standardisation, completing the single market, creating a capital markets union, pruning back regulation and introducing euro bonds
I think at least half of the issues in EU / EUR including UK are cultural issues rather than regulation and policy. Although these do goes hand in hand as those cultural thinking are what drives some of the regulation and policy.
> Quantum computing is poised to be the next major innovation, but five of the top ten tech companies globally in terms of quantum investment are based in the US and four in China. None are based in the EU.
I've read most of the report and the following passages stand out:
"[securitisation] could also act as a substitute for lack of capital market integration by allowing banks to package loans originating in different Member States into standardised and tradeable assets that can be purchased also by non-bank investors."
sounds a lot like what went wrong in 2008 with credit default swaps but hey, the devil would be in the details.
For hacker news most relevant would be the part at the end: "The EU should also enable the use of AI-powered software and machine-processed data to lower compliance and administrative costs for SMEs. Measures should include requiring harmonised reporting templates, de minimis reporting thresholds, and centralised reporting requirements using one multilingual interface."
Yes, lets be honest here: bureaucracy and bad IT systems are responsible for a lot of bullshit jobs. Improving this would be nice.
What I also found interesting was the part that said that because in Europe pensions are not invested [a lot] in the stock market, this means that European companies have less money to put into Research and Development compared to US and UK. And that's one of the reasons why the report says the EU needs 800 billion per year to stay competetive (4,7% of GDP! Marshall plan was 2%! Not my numbers, those are also in the report).
It's a shame, then, that they are unable to make attractive economic rules, and organize in a way that can sustain them.
Specifically as it pertains to EU economic planning, they have a fundamentally bad philosophy for encouraging business.
In most EU countries, they try to encourage innovation largely through grants and subsidies. In other words, they try to pick winners.
Instead, they should do what works: cut bureaucracy and tax breaks. No one wants the headache of starting a business here. And the few that do, against all odds, get something off the ground, quickly move their corporate headquarters to more tax friendly nations.
Denmark, Switzerland, Estonia, and Ireland have all been more successful in encouraging new innovation and also happen to have the most attractive tax breaks for innovative businesses and some of the easiest business rules. They, too could do more here. But it is obvious what works and what doesn't.
Grants and subsidies cannot make innovation. Picking winners never does that.