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Comment by jacquesm | Hacker News Reader

How do countries with good social safety nets factor in here? In EU people are definitely not nearly as likely to start their own business as in the US, and many people that would otherwise be labelled 'jobless' (or on the dole) are 'self employed' instead.

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In many EU countries, the safety net is much better if you had a job than if you had your own company. Eg in NL, if you get fired after working more than x months, you get 70% of your last salary for max 2 years while you can go find a job. But if your company goes to shit, all you can get is "bijstand" which is much lower benefits and you have to sell all your assets (eg if you owned a house, you have to sell it and move to rent, even though that's usually more pricey than the mortgage, etc) before you get it. So if your company goes bust and you come from a middle class (or higher) background, you'll probably prefer to depend on your family for a bit while finding a job (or a freelance gig etc). But if you have nothing like that to depend on, then it means that starting a company is extremely risky (I'm not sure most Dutch Uber drivers realise this).

IMO if NL really want to encourage more entrepreneurship, and if they want do so in a way that matches our culture and values, then they should create the same safety net for entrepreneurs and employees. But lots of entrepreneurs are against this because ofc this safety net also means paying more taxes. I think that's stupid. I'd gladly take a 5% pay cut if it helps make my country more entrepreneurial, and me more safe. Plus, now I buy commercial accident insurance (pays out monthly if I can't work ever again), which would also be covered by said safety net, so in effect the cost difference would be smaller than 5%.

EDIT: I'm only just seeing who I'm replying to. I think you knew the above already so I must've misunderstood your question.

This is demonstrably untrue.

Looking at the official docs here: https://www.sba.gov/sites/default/files/advocacy/2018-Small-... for the US and here: https://researchbriefings.files.parliament.uk/documents/SN06... for the UK (both are PDFs)

In the USA for the first quarter of 2016, there were 240,000 new companies. So just million in a year, assuming that trend. Also, that is all companies, including those with no employees

in 2016 for the UK in the whole year, there fore 416,000 new businesses, all of which had at least one registered employee.

The USA, in 2016 only created twice as many companies compared to the UK.

Given the gulf between population _and_ economy, I would say the US is significantly underperforming compared to the UK

The UK and quite a few other places require gig economy operators to register as an independent business.

I don't think that applies to this stat, though; gig economy workers are required to register as self-employed for tax and NI purposes, but that's not the same thing as being a business, which I think in those stats requires one of VAT (turnover higher than a threshold of £85k) or PAYE (employing someone else).

A sole trader is not the same as a limited company.

The US number is only counting businesses with at least one employee (owners are not employees, even if they work day-to-day), and may only be counting businesses that incorporate, or are formed via articles of organization. The source is unclear. As someone else noted, the UK number also leaves out certain types of businesses. Therefore, I can't tell that this is actually comparing apples to apples.

At least in Germany IMHO the biggest risk of ones own start-up is failure. While the social security network is rather strong, even if it used to be stronger, you can basically ruin your whole future career once potential employers perceive you as a failed entrepreneur. The reasons are many, but mostly cultural. And that is huge risk you take.

The state is actually encouraging people to start their own business out of unemployment with various programs and incentives. Not in the most efficient way or at a start-up scale but still.

I read somewhere most businesses in US are started by immigrants. So only a person with means can immigrate to US, I guess even the people coming from India or China or Eastern Europe do have people back in home backing them financially or in other words they've enough financial moat to take risks through which they are able to jetset themsleves into new businesses.

I've this friend in Europe he's working on a startup idea once it's developed and become bit popular he plans to move it to states because of stronger private property rights and less taxes and better benefits for employers there and a bigger market.

So maybe a lot of people come to US to start a new businesses once they've some idea and implementation in their mind and enough resources to execute it.

Do remember that immigrants aren't usually trying to start the same kinds of businesses as the "natives", small businesses make a lot of sense if you want to be able to rely on yourself and not an employer who might not appreciate that you're just learning the language, and if you're willing to make use of the labour of your entire family rather than just a breadwinner.

If you're an immigrant there are small businesses that are closer to stable jobs and you can start immediately with your savings, whereas if you're a native the reason you'd start a business is because you're interested in that thing or you want to be an entrepreneur and grow that business into something bigger.

55% of billion dollar startups had an immigrant founder. It's not just mom & pop shops.

I does factor in, it is somewhat hard to see because startups will always be marginal. In Sweden both Markus Persson (Minecraft) and Daniel Ek (Spotify) come from non-privileged background, with little university experience. When you see this in the US it is usually that someone got into a well known school first, with the contacts that bring.

Anyone who was born a citizen of Sweden is highly privileged on a global level. Compare with anyone from a developing country and it's easy to see all of the advantages that enabled those fortunes to be made.

that is due to a strong safety net

My anecdote is from a Finnish perspective: First things first, some people make more money being unemployed than working (though for only short periods of times, to my knowledge max. couple months). This is related to entrepreneurship because owning a company, whether it makes any money or not, labels you to the workforce. This is problematic because it obliterates your unemployment aids. In some circumstances, this can be extended into your close family. Now, if you own a company, you (and in some cases your close family) do not get the same social safety net as others! Bad! This also extends (to the entrepreneur) to other class of social safety net, which is living aid. For entrepreneurs, the living aid is calculated from the (mandatory!) retirement account (which are a mess by itself, the public sector chooses private companies which handle this money, with no control of the individual to seize the money before government defined retirement age) contributions. If you have little to no contributions (e.g., your company makes little money and you rather pay yourself salary), you cannot get living aids. Further, taxes are higher. First, entrepreneurs pay 5% more taxes than the same bracket in income as an employee. Next, if your company becomes profitable, the system incentivizes you to increase your personal income hence the tax bracket, because otherwise, the company gets taxed 20% of the money left into the company.

The reality is much like pictured here https://imgur.com/a/o5MGARc for entrepreneurs. That is, in Finland, we do not need to have this Twitter discussion, because by default entrepreneurship is a viable option for the ones who can patch up the holes in the safety net that the government has removed.

> https://imgur.com/a/o5MGARc

The really bad part is that your spouse will lose most benefits if you start a business (because it's automatically considered to be a family business apparently).

Numbers for UK have been given earlier, but in 2017 France had 591k company creations, of which 349k are "classic" (not individual) companies. This would put both France and UK well over the US in per capita creation...

(https://www.insee.fr/fr/statistiques/3314444)

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