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As a very broad generalization, Europe treats businesses as businesses, rather than financial instruments. They are expected to grow and be profitable, rather than be fattened like cows for an eventual slaughter.

That's why Europe has thousands of "small" companies whose revenue might "only" be a billion dollars or so, but they are sustainable companies who generally have accrued a competitive global advantage through years, and decades of R&D. The end result of this is that Europe - certainly Western Europe, and increasingly Central and Eastern Europe - has one of the highest standards of living in the world.

Sure, the VCs and investors who only want to make money without producing anything of value themselves don't like this model, but fuck 'em.

> Europe - certainly Western Europe, and increasingly Central and Eastern Europe - has one of the highest standards of living in the world.

I have a feeling that with the current energy crisis this might not age very well.

That’s true, but can hardly be blamed on their tax or higher education policies, surely?

You are aware that the crisis is, besides some energy price spikes that will affect consumers and industry for a while, is basically over since both electricity and gas are readily available?

Hm... I've just checked gas prices and they are still 10x higher than 2020. It's not obvious to me that German industry in general and chemical industry in particular can stay competitive at this price point.

Gas prices for customers are high, over simplified of course, because everybody and their grandparents raced to fill gas reserves before winter. That was because nobody really knew how things would be without a stable supply of gas from Russia. That drove prices up, and that expensive inventory is now sitting there. With gas consumption down (weather and in general) it is not possible to mix the expensive inventory with cheap one. So, until the expensive gas is consumed, prices for customers will be high. Unless the government steps in (the German one does come December). Overall, spot market gas prices have even been negative lately.

Electricity should be fine as well, Germany keeps three nuclear plants online long enough for the French fleet to be back, in exchange for gas from France. And you don't exchange electricity for gas if electricity itself is a limited factor.

i have a feeling that in the long term it might. also increasingly people accross europe are realizing that the US (and of course the UK) see them as competitors while the US elites are relizing that the EU as a living destination is becoming more attractive than US

> people accross europe are realizing that the US (and of course the UK) see them as competitors

That's been quite a while already.

> US elites are relizing that the EU as a living destination is becoming more attractive than US

It's hardly more attractive for elites. It's already been quite a while: some people moving from the US to EU for a comfortable life while others moving from EU to the US for self-realization, studying in top universities and working for top companies. Pretty precarious situation long term. At least our politics (at least in Germany and westwards) seems more stable though.

> It's hardly more attractive for elites

i meant to say something different. namely there is a growing push in the us for a european style social safety net which is a concern for the us elites

The thing about energy crises is that they provoke new forms of innovation and can usher in necessary change. Europe made a strategic mistake, but they are correcting it, and even if the next few years are hard, it's not going to have too many deleterious long-term effects.

If we somehow solve renewable energy problem that would be amazing. It requires deep innovation though, and with most top universities being outside of the EU it is frankly unlikely Europe will lead the way here.

Also, looking at deals with Qatar (failed AFAIK), Azerbaijan, and the latest developments about Hamburg harbour, I think we still have many exciting strategic mistakes ahead.

The tax code is the least of Europe’s outlier creating problems. Nearly everyone can just go to the neighboring country and let it grow tax free.

Europe’s growth issues come primarily from mindset, liquidity, and mindset again.

There is practically no risk appetite.

Venture Capital? Private Equity? Its a joke.

The banks themselves have such small capital positions that its mind boggling.

Such nearly perfect and stable combinations of regulatory playgrounds to arbitrage, but nobody is there for it. If you are a foreigner with capital already, have fun! Knock yourself out! If you need to acquire and grow capital? You’re in the wrong continent.

And the solutions themselves are very recent. The monetary union was very important for having contracts and credit in the same currency. Things we take for granted in other economic unions. But thats only 20 years old. The attitudes just haven’t shifted and there isn’t a human infrastructure to help the attitudes shift. The software developers that would shift it are making 25,000 - 80,000 / yr and so they will never accumulate capital fast enough to shift it themselves.

When it comes to growth possibilities, Its a very steep bell curve from 1st place to 2nd place. Various markets in the US represent the US as a whole and thats 1st place, and 2nd place, whatever that even is, is very far behind in financial infrastructure, liquidity and risk tolerance. These concepts are not separable.

Capital in Germany at least is very concentrated. Instead of young people starting businesses, you have people age 55+ starting their second or third venture. Not a matter of age, but capital distribution more or less makes the old generation the boss. And arguing with them about sensible future development is tiring at some point. There are some exceptions to this, but you really feel the fear of tech from a lot of sides.

We couldn't even manage to have a sensible legal framework for free wifi. People say legislation is slow, but in cases were rights holders feared their decline, the law mowed down any innovation before it could happen.

I don't necessarily agree with the outlier story, but everyone needs at least some capital and options to start a venture. And you don't do that as a side project while needing to earn your keep. You can live comfortable as an engineer too and many just don't want to start a business anymore.

Also, there is a significant penalty for Europe and that is language. English as a base language is a major advantage for almost all kinds of software products. It would be smarter to primarily target that market instead of the domestic one.

That said, I don't see only benefits and the tripple down effect of star companies of the US. I also believe that success isn't reliant on these superstars. They have to see that they aren't fading as quickly as they have risen. And there are also successful ventures in Europe. You just often don't know their name as a consumer.

Society is, of course, also dragged backwards by outlier success: think Lehman Brothers. And all progress, as every change, has its downsides. Without industrialization, there wouldn't have been a climate crisis.

> This is why the big slow trend of people organising against inequality is so concerning.

I think you mistake the goal. It isn't to prevent some engineer from making some money from an invention. There is however a very perverse reward for purely financial instruments, which make the rich richer, and conversely, the poor poorer. That's one thing that should definitely be halted and reversed.

Historically: WW2 was quite the equalizer, and it didn't lead to stagnation. Currently, OTOH, inequality is much higher, and the most rewarded job is getting people addicted to dividing content with the goal of pushing more ads.

> WW2 was quite the equalizer, and it didn't lead to stagnation.

I hope you don't want to re-trigger WWII. The survivors would probably have rather have not been equalized.

> I think you mistake the goal. It isn't to prevent some engineer from making some money from an invention.

I know exactly what the goal is, people are talking about it all the time. I think the goal is foolish. It will, best case scenario, have no impact. Worse case scenario, it'll make people worse off. My neighbours' relative wealth has exactly no impact on my material or psychic comfort. Pretending it is the problem plays well to human emotions and distracts people from the real issue, which is median living standards.

> My neighbours' relative wealth has exactly no impact on my material or psychic comfort.

It does, though. First, people get unhappy when others have it better. Greed, jealousy, envy, you're not going to cure it. Second, the accumulated wealth of all those neighbours has a significant impact on the economy.

> First, people get unhappy when others have it better. Greed, jealousy, envy, you're not going to cure it.

Which is a powerful argument that their instincts are leading them away from the real problem, which is median living standards. Policy motivated in the first instance by greed, jealousy and envy often has bad outcomes! Policy should be motivated by reason, principles and evidence.

> has a significant impact on the economy

The ideal state of the world is that there are 8 billion people, we identify the one that is best at growing rice and put them in charge of growing all the rice in the world. If there is a limit to how much rice they can grow effectively, we give them control of as much rice growing as possible and then repeat with the 2nd best rice grower.

"Outsized influence" is a feature. We want unusually competent people to have unusually wide influence. You'll need a more sophisticated argument to claim that it is bad.

> Especially the tax code and measures against people succeeding too much like in America.

This is a big one. Why would someone earning €60k as a regular engineer take all of the responsibility of leading a team for only €10k/year more? Anyone actually qualified for that position knows it's not worth the additional money, and anyone that would accept that promotion is only in it for the title and is likely unqualified. Not to mentioned that you only see half of the additional €10k after tax (in Germany).

Equally destructive is the extremely conservative view of success and failure.

Once you’ve failed in a business venture, you’re burned for years before any investor will talk seriously or any bank will touch you. Tax authorities and chamber of commerce will also make your life quite difficult when you do.

I personally know several people who needed to incorporate a new company under their wive’s name after a bankruptcy, to even be able to start a new (successful) business.

I think bankruptcy is quite frowned upon in the US too. It’s not like you can borrow a lot of money, not repay them, and then get another loan there either. Your credit score is toast.

Pssst… if you’re a good software engineer only making €60k in Germany and have been out of uni for at least five years, go look up which large companies are in the IG Metall tariff.

Or: why would they start a business/ side project that makes them some money if you'll barely get to improve your financial situation due to high taxation?

It's much more profitable to continue in an employed Position. Or to marry someone with a low income.

> It is stunning that Europe has failed to participate in the tech boom of the last few decades.

In my view much lower level of financialization is a big culprit. The stock market is nowhere near what the US stock market is. This limits what kind of exits startups can have as well as how much they make out of it. So there is no perpetual engine of successful entrepreneurs financing the next generation. There is barely any investment capital available. Certainly not the kind that would allow years of un-profitability.

Another huge factor is language and cultural barriers. While the US states are very different, they are nothing compared to the difference between Spain, France, Italy, Germany and others.

Isn't it weird that Europe is being blamed for not being as successful due to not being financialized enough when it's being compared to USA, instead of reflecting upon the fact that it's the USA that's the outlier here and the state of Europe might be a somewhat direct consequence of United States financial hegemony?

You see "people succeeding too much", i see "amazon workers peeing in bottles", which I suspect is a fundamental difference between Europe and the States (in point of view, i'm not claiming this is a black and white issue). I'd rather keep the safety nets and succeed a normal amount, as far as the society I live in is concerned.

>my impression is that Europe has a number of very well developed systems to protect the social elite from becoming social not-elites

To add onto your complexity: socioeconomic movement in Europe is higher. Anecdotally, tax breaks are high for individuals who've 'made it'. Kids, housing etc. Social dynamics (strong coupling age and assumed experience) adds to this, too.

>Even with the social safety nets to protect against failure.

These social safety nets also require payment. Look at what individuals are paid for, multiply by 1.5x for each employee you think you'll need for your still growing startup. You're not getting paid 100k a year early, saving isn't easy, good luck paying a full FTE for someone else without any instances around to give you VC money.

The safety nets also breed a risk-averse mentality.

Former German resident: its not just the tax code that fucks innovation there, its the slow rate of bureaucracy and change.

Until relatively recently, to open a GmbH (limited company), you needed to have 25k in assets (cash or similar) in the company upfront. Which stifled a lot of small things.

There's now a mini-gmbh structure that you can set up and later upgrade to a full one, but its infuriatingly complex IMO.

The UK has much simpler company rules, but Brexit, and way back when in the pre web days the UK government basically destroyed the UK's high tech industries by forcing various mergers and buyouts to happen (ICI, various computing firms, etc), which has had long lasting impacts on the field there.

As for why people go into medicine: medicine has a lot of social capital associated with it, and you need extremely high grades to get into med school, so its prestigious.

Its also almost guaranteed employment with a relatively high level of income, so a lot of parents push smart kids into becoming a doctor.

Doctor, lawyer, accountant and engineer (bridges, not code) are jobs that are seen as "high value".

A GmbH actually only requires 12.5 k up front, you are on the hook for the other half so. Setting on eup is quite straight forward as well, and reasonably priced. If a GmbH is preventing you from starting your own thing, every one person retail shop beats you on the entrepreneur front.

> my impression is that Europe has a number of very well developed systems to protect the social elite from becoming social not-elites

This. Going to med school in Germany is the standard way of keeping your upper middle class social status if you are not super talented but willing to work hard.

You don't need extreme success in software if you can wait till the monopolies are established for a decade and then break them up

Yeah, we have have only created tiny software companies like Spotify, Klarna or Minecraft.

or SAP..