Friday, April 16, 2010

The Trouble With Becoming Europe

Withywindle writes:
"What's so bad about the US becoming like Europe? Europe isn't so bad." But Europe is as free as it is, economically and politically, because of US influence, pressure, and competition; when we become Europe, they will become worse, and decay even farther into undemocratic, managerial elitism. Ill effects are dynamic.

He is correct, but the real problem as I see it with the US becoming Europe is one of technological and economic progress. The US is more innovative and dynamic because it is more market oriented. The corporatist/social partners model of industrial organization is a huge problem for innovation. Oftentimes, studies look at the number of patents and say this is overstated, but there's a difference in content and value of patents.

FLG'll put it this way. German and Japanese are good at refining existing technology. Maybe they improve some sort of optics production process or lasers. However, de novo technological innovation almost universally comes out of the United States and the answer is the economic and financial system.

If FLG has a great idea for a brand new product, then he doesn't really know what the market will be like for sure in the way a corporation rolling out a more refined version of a similar product can. He can't be sure about how many people he'll employ and things like that. The types of labor protections and regulations put in place in many of those social partner/corporatist economic models are extremely concerning for a small, new entrepreneur. Realizing this, many small enterprises are exempted, but then you create a new barrier where many firms don't go beyond. Thus, constraining the economic innovation.

Put simply -- Europe free rides on America's innovation, which is made possible by the decision to have a more flexible and consequently a less predictable, riskier economic system. Moreover, and FLG thinks he's mentioned this before, they free ride on our non-cost controlled health care system to drive innovation in that market as well.

Unsurprisingly given all that, FLG thinks Sen. Dodd's plan to regulate angel investing is fucking stupid.

1 comment:

Withywindle said...

He is correct,

Bless your soul, my son.

but ...

You will burn in hell, you unspeakable bashi-bazouk.

...

Substance of the post? What?

 
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