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Comment by HenryKissinger | Hacker News Reader

It's all of that. European tech companies are smaller than US tech companies, have lower gross revenue per employee, make less profit per employee. Taxes are higher in Europe, which disincentivizes risk taking and ambitious individuals. Labor productivity is also lower in Europe. Finally, Europe still has a culture where software engineers, cloud architects/products/managers/etc. are viewed as code monkeys and the people who really matter in a corporation are the finance people and upper level executives.

Europe also suffers from a brain drain to the US (and Canada to a smaller proportion). Many of Europe's best and brightest software engineers have already emigrated to the US, leaving behind the less productive ones.

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> Europe also suffers from a brain drain to the US (and Canada to a smaller proportion). Many of Europe's best and brightest software engineers have already emigrated to the US, leaving behind the less productive ones.

You need to back this up with something better than anecdotal evidence - FWIW I've worked with plenty of world class American engineers who don't live in the US

Brain drain doesn’t mean that all top talent is gone, but rather that there is less of it than there would have been otherwise.

That this is happening between Europe and US is beyond clear: European engineers often emigrate to US, but American engineers emigrate much more rarely to Europe.

You need only look at the makeup of every MBA, MEng, MS, and STEM PhD program. 50% European and 50% Asian, all foreigners (i.e. immigrated on a student visa). If there was no brain drain then you'd expect mostly US permanent residents/citizens.

> Labor productivity is also lower in Europe.

You know, i feel like this is probably a bit misleading, at least because of how we measure productivity:

> Labor productivity measures the hourly output of a country's economy. Specifically, it charts the amount of real gross domestic product (GDP) produced by an hour of labor.

(from https://www.investopedia.com/terms/l/labor-productivity.asp)

Whereas i'd like to see something along the lines of:

> The ratio of hours needed to develop features X, Y and Z, as median values based on the output of all the companies within the industry in said country, categorized by tech stacks, the education/experience of employees etc.

That'd let you have a controlled environment (same features, categorized by stack), as well as get insights based on how the different groups (students, younger developers, more experienced developers) compare in different countries, possibly as a proxy for the quality of education and how much companies invest in skill development.

If we don't do that, our productivity simply describes a hourly measure of GDP, which feels wrong, at least as far as semantics and the language aspects are concerned.

Of course, the above suggestion also isn't realistic, because there have been attempts to formalize estimation (for example, COCOMO 2), but even those didn't work out.

Of course not, it is just mind numbing regulation coupled with systematic risk aversion. Many SV startups would never have gained traction starting over from Europe, neither financially nor for large-scale deployment authorisation.

> it is just mind numbing regulation coupled with systematic risk aversion.

It's also exceptionally difficult and time consuming to rapidly scale through the EU with its many local economies/languages/cultures, versus the giant and quasi homogenous US market. And you get Canada pretty much as a freebie with the US market. That's $24.x trillion in economy in just two markets (nearly 50% larger than the EU). By the time you slog your way through a bunch of the EU markets, you'll find that a US venture capital funded competitor is already several times larger and turning its attention to your home market/s (putting you on the defensive, while they've locked up the lucrative US market and can pummel you endlessly with the financial resevoir that comes with that).

If you're in a smaller nation in the EU, the ideal is to go right after the US market first as a springboard (assuming the product/service is globally useful and will benefit from grabbing the US market). That's especially true if you're early and have an opportunity to lead the US market.

Yes, thank you very much, that’s the most sensible tip from a business / commercial perspective I also share locally when asked for advice: plan for the anglosphere natively. Not that there are no success stories from Europe as well, they are just much rarer and too much too often much smaller and deeply fatigued by years spent fighting fragmentation.

It must be said that large scale, extreme/first-of-a-kind tests are simply not possible over here: not in the energy sector, not with autonomous AI deployment, not using any sort of active biochemicals/pharma, not as hostile moves in the fintech or the information sectors. This simply makes innovation much slower and pretty bureaucratic, but we cannot say there is no innovation at all, it generally being funded in the end under one of the numerous EU grants.

why does Europe not value engineers? Because the environment in the USA has created tech companies where engineers can achieve more?

Much longer history, higher fragmentation and the constant need to avoid wars after the fall of the Roman empire made humanities/politics/commerce prevail dramatically upon science/tech/innovation. Edit: you can see a living example of this at work again with the increasing feud between the EU and the UK after the Brexit (even before that but, you know, it was aptly defused from within).

Aside from games, European companies founded by tech entrepreneurs are extremely rare, and are only really appearing in the last decade.

Most of Europe's engineers work in large corporations that were created ages ago, and subsisted on government procurement of infrastructure, defence, or as subcontractors/staffing agencies to industry. And government spending in Europe has also been much tighter than USA.

Most "new" media/tech companies are founded as "spin-offs" from older media companies/publishers/telcos/banks. The engineering in Europe's early web efforts was considered as important as copy-machine technicians. This is changing, but the attitude is still deeply ingrained: people are either decision makers or "technicians".

> Taxes are higher in Europe, which disincentivizes risk taking and ambitious individuals.

The implication is unproven.

Furthermore, most FAANGs dodge most taxes and have offices everywhere including in Europe, making your point moot.

> Labor productivity is also lower in Europe.

That has to do with US geopolitical influence. (and army).

> Finally, Europe still has a culture where software engineers, cloud architects/products/managers/etc. are viewed as code monkeys and the people who really matter in a corporation are the finance people and upper level executives.

That depends on the company. Again, there are european companies in US and US companies in EU... and yet the salaries are in no way aligned.

Analysis on most technical or important FOSS projects prove otherwise, with EU having the brightest.

> Analysis on most technical or important FOSS projects prove otherwise, with EU having the brightest.

Such as? All of the prominent Europeans I can think of live in the United States: Linus Torvalds, Bjarne Stroustrup, Guido van Rossum, etc.

Hackerrank begs to differ https://blog.hackerrank.com/which-country-would-win-in-the-p...

Again, there are plenty of US tech companies in Eastern Europe.

>So based on these tests, which country has the programmers that score the highest?

>In order to find out, we looked at each country’s average score across all domains

So it's taking the average of the country, not really looking at the best individual programmers. Considering the US had more entrants than China(which has 3x the population of the US), my guess is that there are many more mediocre devs from the US participating, which brings the average down.

> Taxes are higher in Europe, which disincentivizes risk taking and ambitious individuals.

This seems backwards to me. A society with higher taxes typically has better social safety nets, better infrastructure, less corruption, etc. Higher-tax societies incentivize risk-taking, not the other way around, especially for "ambitious individuals". When there is more structure and support around, more people are able to take a leap.

There are effects in both directions - there’s both less upside due to higher taxes and less downside due to the safety net.

It seems to me that risk taking is probably deeply cultural, and is also likely effected by both policy and economic status (collective and individual status). It's probably hard to know how to quantify all of these different effects, but I hope some people are trying to research this!

Culture is not that hard to change when there is money involved. The difference in SV is that there is so much venture capital willing to create new companies. Given that amount of capital, there will always be someone willing to do it.

Doesn't it seem a bit old fashioned that venture capital should be geographically localized, as if it were a physical pile of gold? Is that not on its way out?

Maybe it will change post covid, but capital wants easy access to workers. That's why they like to concentrate in certain geographical areas.

There’s probably a big difference in the kind of risk taken. The safety net might lead to starting a coffee roastery vs a VC-backed tech company that will create a thousand jobs and massive advertising revenue.

What you said may be true for an individual, but not necessarily a small company. Because of socialist regulations and taxes a small company may have higher startup costs and it may be difficult to lay off employees, which makes hiring someone more risky, along with expanding the business.

You can't take risk with money you already paid your taxes with.

Safety nets provided by European countries are intended mainly for not ending homeless.

If you are running business, your loses are opportunity costs. Eg. you have already 100k EUR yearly salary and you decide to try running startup. If it fails after 5 years, so you didn't get any money from it (eg. you had to paid debts at the end), you probably lost 500k EUR in opportunity cost.

Progressive taxes incentivize risk taking in lower and lower-middle class, because you are protected from "total failure", but disincentivize risk taking for upper-middle and upper class, because expected rate of return is lower.

At the end of the day, there is no single "right way" to run a state. You have to make tradeoffs, decide what you value more and what you value less.

The healthcare safety net is a very big one, and a big disincentive to risk-taking in the U.S.

Must be causing the huge lack of entrepreneurship in the US vs the rest of the world. /s

https://ceoworld.biz/2021/01/03/worlds-most-entrepreneurial-...

Only for lower income earners. A great health plan is $1k-1.5k/mo, which is crushing if your savings or excess capital are in the 5 digits or less.

If you’re financially independent or wealthy enough to be (independently) doing a startup or taking on a business venture, it’s a rounding error in the books.

Correct. That's why SV startups are billionaire's playgound.

And billionaires are much more scarce outside of US (and those who exist have better chances investing in other fields).

That's why SV salaries for developers are so crazy.

It doesn’t take a billionaire, but it certainly doesn’t hurt. A couple million can work, or half a million if someone is crazy.

Your point still stands though.

You can raise capital so easily with any traction (seriously, if you have any credible paying customers at all YC will take you and that unlocks funding from everyone else). The cost of health insurance is negligible compared to the astronomical salaries of software developers.

In the US everything is pretty broken anyway - so go right ahead and change stuff, you might even fix something!!

Whereas in Europe everything pretty much works as it should, so why rock the boat??

If things are working so well in Europe, why hasn't most of Europe seen any economic growth in two or three decades? That sure sounds like it's severely broken to me.

The GDP of Germany and France are both below where they were in 1995 inflation adjusted (and that was true even before Covid hit). Britain's economy is where it was in 1998. Italy is far below where it was 30 years ago ($2.1t today; $1.32t in 1992, which is $2.58t inflation adjusted). Spain is where it was in 1992. Russia's economy hasn't expanded in 13 years; the Netherlands is in the same boat as Russia, no expansion since 2007-2008. Belgium's economy hasn't moved since 1995. Sweden's economy has grown by about 10% in nearly 30 years (not per year, total; $284b in 1992, which is $564b inflation adjusted; their present GDP is $625b). Austria has similarly seen economic stagnation for nearly a generation. Finland was at $141b in 1990 ($303b adjusted), they're at $300b now. And so on.

If Europe weren't disastrously broken, they wouldn't be suffering such intense and widespread economic stagnation. How long can that stagnation continue before something very bad happens (eg the social safety nets start to melt, as costs climb with demographic aging and there's no economic growth to offset it; growth doesn't get easier as the worker demographics erode)?

While Europe has been asleep for 30 years, China went and became a superpower with an economy larger than the whole of the EU, starting from $426b circa 1992.

> The GDP of Germany and France are both below where they were in 1995 inflation adjusted

In US dollars. You can't use USD inflation numbers for other countries, Euro inflated much less than US dollars in these years. The effect you see where Europe has stagnated given USD levels of inflation is just the effect of USD currently being a bubble. If you use their internal inflation numbers then the economies of Europe are growing just fine.

USD is supposed to be a bubble, because that's how it was designed (at least after Breton Woods). I realized this when trying to figure out when the GDP of China would be higher than the US, and seeing that this depends less on real Chinese production and more on the crazy valuation of USD.

A lot of US economy is not real. A lot of the GDP is based on financial services, real estate, and stocks (including tech), which are pure bubble money. A lot of the economy is also based on health care, which basically doesn't exist is a decent country with public services. The other part is "defense", which means they threat the rest of the world into growing their economy.

In fairness, China has twice the population of the entirety of Europe put together. It's easy to expand an economy from a small base, less so when you're already starting from a decent level.

Interesting stats nonetheless, I wasn't aware that Europe had stagnated so much. Your stats seem a little off; Most of the stagnation seems to have occurred from the GFC onwards, rather than before (using GDP per capita numbers)

> The GDP of Germany and France are both below where they were in 1995 inflation adjusted

No, they aren't. German real (=inflation adjusted) GDP and real GDP per capita are much higher than in 1995.

(real GDP) https://tradingeconomics.com/germany/gdp (real GDP per capita) https://tradingeconomics.com/germany/gdp-per-capita

France looks similar.

I don't know where you got your numbers, or if you did something like take the nominal GDP in USD and then adjust using the US CPI.

High taxation creates a perfect environment for corruption.

Some of the countries with the highest tax rates are among the least corrupt.

The risk taking that matters is done by investors, not by individuals.

Random European engineers have few opportunities to take risks at all. It is not a question about attitude.

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