Bonjour, Entrepreneurs – Only you can prevent French-Bashing
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Because we've been hearing this "the old continent with its big government and socialist laws is dying" crap for generations, and so far the only major fuck-ups have been in the ideologically driven attempts to be more like the US.
Just a thought: maybe there are multiple roads that lead to success, and we should distinguish between real practical concerns and ideological prejudices.
This goes both ways, because next up will be an article about how much better France (or any other Euro country) is in terms of working conditions for employees.
It does mean you can't pretend to make your problems go away by cranking up the deficits and inflation, though. You just have to admit that everyone's poorer than they thought the old-fashioned way, by having less money (instead of more money worth less). I guess that can be hard on your electoral chances, though :P
Heck, you'd see the same for BTC-based loans if the risk factor was low enough for sane people to consider offering them.
(Of course, when you've got crazy government-imposed capital controls, like China or something, it's another story.)
The Greeks just called and asked if you could give them a loan.
I think you're right that there are multiple roads that lead to success, but not all roads do. The economic policies of quite a few European nations over the past decade or two have been unsustainable, and as we have now confirmed the hard way, that means sooner or later things break spectacularly. There's not much point comparing working conditions between Europe and the US when one of these places has widespread unemployment and there is literally rioting on the streets, as was the case not very long ago.
As 'gadders observed, there have been other economic policy decisions in (parts of) Europe that had nothing to do with emulating the US, sounded positive, but turned out to be crazy too.
Almost everything people consider typically European, from food, culture to social-economic policies, has mostly been imported and adopted from countries and cultures outside of Europe.
It's this openness to change, this constant iteration instead of desperately holding on to the "one true way" (something typical not only for cultures that rise and fall, but also something that seems to be hindering the US when it comes to implementing necessary change) is the essence of the enduring wealth of Western-Europe.
There is no one European way, just constant evolution until a new successful road is found.
The riots in the streets and social unrest, which are nothing new or unusual in Europe, are a part of that process, not a sign of deterioration.
(And unemployment figures are hard to compare when what is considered employment in the US is considered exploitation of people below the poverty line in Europe...)
The economic policies of "a decade or two" are nothing. A blip. European countries can completely tilt social-economic policy within a generation because none of it is tied to their fundamental identities. You visit some European countries now you would find it hard to believe they were strictly communist less than a generation ago.
Whatever traditions European nations have, they go much deeper than the favorite social-economic policy du jour. It's something Americans seem to find very difficult to separate.
The US has tied it's identity to fundamental social-economic values and ideologies. For European nations, social-economic policy is a changeable as the weather.
I think you are overstating how fast things change in Europe and how much has been imported and adopted from outside. With the arrival of the EU and its subsequent expansion to bring many more countries into "Europe", the mix has changed, but if you look at "old Europe" the character and general philosophy of each nation hasn't really changed all that much for quite a long time. The Germans are still industrious: they believe in making stuff well and follow a somewhat capitalist philosophy. The UK and most of northern Europe have similar tendencies, though some of these places have drifted away from manufacturing and toward service sectors more than others in recent decades. In contrast, the French are heavily socialist, and southern Europe has similar tendencies.
It's not that they don't work and rely on an economy with 'excessive' transfers.
Unless you believe the economic policies of the European countries that do get talked about e.g. France, Germany, the Nordics, (the UK should count but it's not very interesting), are unsustainable and about to erupt in rioting over high unemployment, I think there is much to learn in both directions.
Also, while Greece is the strongest example, you could probably substitute any of the PIIGS group and my counter-argument would still hold to a degree: when insufficiently moderated, the socialist-leaning economic policies that are popular in parts of Europe have not been very successful recently. There are many possible balances that might work, but neither extremely socialist nor extremely capitalist economic policies tend to fare well over the long term.
Please note that I never suggested they were. My intended point was only that generally socialist-leaning countries usually need to have something to balance that inclination or over time things tend to start going wrong.
In successful examples, such as we see in Scandinavia, competent government and generally good public services appear to be sufficient. People see a decent return on the relatively high levels of taxation they pay. Also, while the overall tax burden is relatively high, most of these countries tend to have a relatively soft touch with businesses that makes them nevertheless a reasonably attractive place to operate.
In less successful examples, such as we saw in Greece, the same sentiment is present, but the government failed to actually collect the taxes and provide effective public services. Black markets and corruption were everywhere, and a vicious cycle set in, leading to excessive borrowing by the government and the end result we're all familiar with. I'd suggest that similar factors were at work in Italy, with so much corruption and general incompetence in the government that they essentially gave up on democracy and wound up with an appointed technocrat at the helm. Portugal, also, had some very dubious financial management at government level, much of it based on excessive employment in the public sector and dubious arrangements based on public-private partnerships, and of course the problems with the banks that led up to their economic crisis.
I concede that perhaps it wasn't correct to identify the PIIGS as a group in this context, because not all of their recent economic troubles started the same way. Even so, several of them have shared striking similarities, both in being generally over-reliant on an inefficient public sector before the crisis and in being relatively difficult places to try and start a new business since then.
Which continent are you talking about now? Sounds like both?
Even in the past year or so, with fears of further recession fading and growth returning to the PIIGS group, Greek unemployment is still running at over 27%, while the US is running at under 7%.
Similarly, while the US and elsewhere saw significant protests as part of the Occupy movement, they were mostly peaceful in nature. The violence seen on the streets of Greece around 2010-2012 as severe austerity measures were taken was on a different scale entirely.
I have to volt-face that a bit though in that I was a bit surprised at both unemployment rate and labor force participation rates between EU and US. I.e. this graph didn't look like what I was prejudiced to think: http://data.worldbank.org/indicator/SL.TLF.CACT.ZS/countries...
It's crazy listening to US rhetoric about the job market given your relatively low unemployment, high labor force participation and relatively high average salaries.
That pretty much settle the discussion. I hire interns then pay them freelancing after that. Never would I dare hiring them.
That's true (although it's a pretty junior salary). However, thanks to the stuff funded by the €35k he didn't receive directly:
* he has no student loan;
* his kids' school is free or very cheap;
* he has top-level health insurance, and he knows there's a 0% chance he'll ever lose it; he hasn't got a clue what "preexisting condition" might even mean;
* he lives in a place safe enough that there's no sense in paying to live in a gated community; he probably doesn't know what a "gated community" is actually;
* he's got decent unemployment insurance (even if his qualifications are his best employment insurance, it still allows him to get bank loans more easily);
* his retirement is funded;
* his wife will be able to take years off to raise his babies under financially interesting conditions (legally he can, too, but culturally he usually won't want to).
* he gets massive tax breaks if he employs a nanny, a maid, etc.
So all-in-all, I'm not sure you're better off with $100K in the US than with €35K in France.
I'm going on 40. I'm not married, and I won't be having kids. From your list of benefits:
* although I also didn't have a student loan, it wasn't thanks to French taxes.
* I don't / won't have kids so their subsidised schooling does nothing for me individually
* health insurance. I'm still young enough that I don't have any major health problems, although of course, insurance is also protecting me from accidents and what not, so I am getting some benefit from this. Concretely though, I haven't as yet got much more than a few courses of antibiotics paid by the government in 10 years.
* safe enough? Pretty much the only reason you don't have gated communities in France is because all of the places that rich people live in have been there for hundreds of years. If they could figure out a way of doing it, the 16th arrondisment of Paris would totally gate itself off.
* unemployment - yeah, I'll give you this one. I'm almost tempted to try and get myself fired, just so that I can spend three years funded by the taxpayer to start my own business. (not really, but that idea certainly removes any fear I have of getting fired).
* retirement - no reasonable person believes that people of my age or younger will get much of a retirement pension. If you're not taking steps to guarantee your own retirement at this point, your going to get a bad surprise at the end of your career.
* I'm not having kids, so parental leave gets me nothing
* massive tax breaks for nannies etc? well, in the sense that you can more or less claim their salary off your salary for tax purposes, I suppose that's true, provided you're actually making enough money to be able to take someone on in the first place (I personally have a housecleaner, but my flat is so small that she only works for 3 hours a week - at her hourly rate, that works out to a tax saving for me of around 1000E a year. Not exactly massive).
As always with government subsidies, they are just not as flexible as giving people the money and letting them decide for themselves how they are going to spend it. My salary is suppressed to pay for a whole lot of benefits that I personally will never see. There is a case to be made to limiting government subsidies to oly those activities that the government can do cheaper than anyone else (maintaining roads, fire department, police department).
So why am I still in France if the deal is so raw? Well, personal reasons, and I'm also enough of a lefty that I do see value in providing good education, public transport and health services to everybody, so I don't resent those taxes. But I'm willing to bet that a lot of people would decide otherwise if they had the choice.
Liberté, Egalité, Fraternité.
No need to translate I think - except perhaps for the last word, which must be understood as "solidarity", not just "brotherhood".
My situation is quite similar to yours. I dislike to depend on others, I'm selfish in my own way, but I dislike it when people are struggling because they don't have enough money to live. Just because they were born less lucky than I, or because something terrible happened to them, or because they made mistakes. I would find it hard to enjoy what I earned in the middle of a shanty town.
So I don't moan and complain too much when I have to pay my taxes. I'm not short of money anyway.
> But I'm willing to bet that a lot of people would decide otherwise if they had the choice
You would lose that bet. For the last 30 years at least people have elected either socialists or moderate right wing representatives. Even N. Sarkozy would be considered a lefty in the US.
And most importantly although it was off topic wrt the OP: homo economics is a lie. It does not describe how individuals are motivated, and works barely better when applied to large groups of people. As you acknowledge it fails to describe your own incentive (yes I know, if something as fundamental was flawed in economics models, we'd notice, because economic predictions would be ridiculously inaccurate, bit guess what?)
The US model on the other hand has a few good side effects, but is so meaninglessly violent, stupid and wasteful that even then more is destroyed than is created.
> his kids' school is free or very cheap;
You don't really care when you are single and don't have kids. And usually people get married relatively late nowadays, especially the ones with higher education. And primary school does not cost that much anyway, it's more when it comes to secondary, junior high that it starts getting costly. So, MEH.
> * he has top-level health insurance, and he knows there's a 0% chance he'll ever lose it; he hasn't got a clue what "preexisting condition" might even mean;
Top Level insurance ! That's what french people say without stepping out of their country. There are numerous countries where you get private insurance AND better service than in France. Top-Level insurance in france gets you in a free public hospital where you may very well catch infections that will end up killing you. There's like hundred of thousands people per year in France dying of infections they contracted in top level hospitals. So please put in pinch of salt in your statement.
> * he lives in a place safe enough that there's no sense in paying to live in a gated community
Oh my GOD. France is nowhere near safe as so many other countries around it. You must live in Neuilly or something, but I tell you, when you live in suburbs you are nowhere near safe for you and your possessions.
> * he's got decent unemployment insurance
Based on growing country's public debt, so I'd say it's not really sustainable in the long term, but hey, Keynesians say it's OK never to repay the debt, so I must be wrong.
> * his retirement is funded;
Funded by debt. French govenrment borrows billions of euros every month on the private markets to keep functioning and paying for such benefits. And actually, it's not funded, because you are currently paying for the current retirees, not for your own retirement. If the demography should fail and the government go bankrupt, your retirement money is up in the air.
So, I'd say your vision of things is incredibly biased, and I'm not sure how much experience you have abroad. I've live in 4 different countries outside of France and I've nowhere felt that France had such a better system than all the others. And most french people who left the country actually never come back.
You're not sure because you _can't_ be sure. Because there's no competitive offer to help price discovery.
It isn't. The grand-parent post implied that paying €2 for every euro in the employee's pocket what a terrible disadvantage for French companies. My point was to show that, all things considered, it was not a huge disadvantage, and that it might even not have been a disadvantage at all, if we knew how to communicate about it.
May I add that employees are, on average, more risk-averse than entrepreneurs. So the lower-risk, lower-reward compromise enforced by France will be more seductive to many of them than the quasi-libertarian approach adopted in the USA.
But the fiscal services systematically target those who take this tax break, and it's pretty random whether they'll cancel it retroactively, up to 3 years after you received it. For startups, which often spend most of their money on R&D salaries, such a recall is often fatal. And qualifying for it makes or breaks many business plans. So it adds a considerable risk to an activity that's more than risky enough, in a country that already suffers from risk averseness.
Unfortunately, the department of taxes & finances a.k.a. "Bercy" is where the best graduates from ÉNA [http://en.wikipedia.org/wiki/%C3%89cole_nationale_d%27admini...] go, and ÉNA is also the alma mater of most French politicians: finance civil administrators often control politicians more than the other way around, so the latter don't seem capable to control the formers' destructive power.
It would be easier and better all round to have lower bureaucracy and business tax, and scrap the R&D credits, which would allow the market to actually function, but cynically I came to believe the whole scheme exists just to employ a load of accountants and government bureaucrats, not to actually achieve anything.
Now, if only the locals would get the culture of optimism that pervades Silicon Valley, they'd be going somewhere. There was a story on HN just the other day from a high-frequency trader moving to Silicon Valley. Lesson #1: everyone collaborates and is helpful. Not making fun of you and telling you that you are going to fail.
It's called "communication channel overflow": When I used normal channels like talking to my "deputee for French people living abroad", I got rejected based on the tone. I feel like other channels would be the same: We don't get heard, never, unless we strike or do mass demonstrations.
So I overflow my criticism to HN. When they have enough negative feedback, a report will land on Hollande's desk and they'll decide what to fix.
That said, I still think the "autoentrepreneur" status in France is unbeatable to start a business.
Edit: reworded.
TO start a business a single owner, yes, but once it grows, you need to leave, basically, or face tax-death.
You can't get rich in France. We hate rich people anyway, you'd be subjected to all kinds of verbal violence.
In Germany on 75,000 EUR profits you have to pay ~30,400 EUR and get to keep ~44,600 EUR. Total taxation rate at this level is ~40.5%. At 1,000,000 EUR profits you get taxed ~49.5% and have to pay ~494,000 EUR taxes.
If you moved a few hundred km to the east to Poland which has an opt-in 19% flat tax rate you would pay only ~15,000 EUR on 75,000 EUR profits and ~192,000 EUR on 1,000,000 EUR profits.
So France seems to be "worse" than Germany tax-wise. Something I wouldn't have expected.
Since when are we responsible for other's misuse of an example or metaphor?
Whatsapp was less than 50 employees when it was bought, restrictive french laws kick in when you reach 50 employees. This means that does those constrains actually don't affect you when your business is taking off. It looks like a valid remark to me.
> Is he saying that a French startup can easily be a $19B company while still being exempt from the employment laws?
It looks like it. Whatsapp wasn't making $19B, it was sold $19B.
Besides, when you reach 50 employees I don't think you can be considered a startup anymore.
The interesting question with regard to this french bashing is: why do You even care? Are they threatening You in some way?
No, all it means is that those constraints wouldn't have affected WhatsApp when their business is taking off. To extrapolate it beyond WhatsApp you have to assume that WhatsApp was somehow representative, when it was clearly a gigantic outlier.
I'd almost go so far as to say that 50-100 employees is a kind of gauntlet you need to squeeze through fairly quickly. It's not good to get stuck at that size for too long. If you can't grow past it, then rethink and retreat back to a smaller startup size.
If you're WhatsApp, I doubt it matters how onerous the regulation and taxation is where you operate your business.
The French supporters of Francois Hollande can put all the spin they want on it. But when the fifth largest city in your country is London then you've got a problem.