Comment by pj | Hacker News Reader

Comment by pj | Hacker News Reader

OMG, this is the most absurd thing I've heard in a long time.

I think it's really a symptom of a much deeper problem with American government and that is that the "system" is getting so big that no one really knows how to fix it. I see this kind of thing happen with software too. Your IT department buys software or adopts a new platform and builds all these great interconnected applications with messaging busses and information silos and then one day everyone who knows anything about the system is gone and what to do now?

Well, you start building systems on the platforms that are easier to understand and try to work around problems and in the meantime, the people who don't know what to do are trying to keep their jobs by doing something at all which is just making the whole package even worse!

At some point, a company has to make a very tough decision to "rip and replace." It's costly. It takes time. And while you are ripping and replacing you have to try to do the best with what you have working now. But the consequences of not ripping and replacing are just going to continue crippling you and eventually, you are going to be leap frogged by an agile startup who doesn't have the legacy deficit you've run up by not doing things right in the first place!

Another problem is that the majority of policy makers don't have a business background (most are analysts, lawyers or career politicians), and thus don't have that unique entrepreneurial experience required to fully grasp the impact of their policies on new high-growth businesses.

I would bet that many politicians in Congress or the Treasury couldn't tell you how a VC firm operates, let alone how their actions would affect future new-technology incubation and growth. If this wasn't the case, SOX would never have passed in its current form.

In short, we have too many "Nancy Pelosis" and "Timothy Geitners" with not enough "Jared Polises" in Congress today.

Agreed this is a completely absurd move by the Treasury Department. What brought the financial industry to its knees was too much leverage. Venture capital firms don't use leverage, so they can't be a systemic risk.

But the institutions that invest in them do.

And many people who have physical dollars also have credit card debt. Should we force dollars to follow the same rules?

Your comparison is absurd. You're making the case for regulating the same amount of leverage twice -- once when it's borrowed, and once when it's invested. That doesn't do anything but make life inconvenient for the folks who don't lever up.

The issue is that the investors are overwhelmingly public and corporate pension funds, endowments, fund-of-funds, etc.

Then it is the public and corporate pension funds, endowments, fund-of-funds, etc., that should face scrutiny, not the venture capital firms. Figuring out their expected return from their venture capital investments shouldn't be very difficult because of how long the industry has been around, not to mention that venture capital investments on average are only 1-3% of their portfolios (due to venture capital's lack of liquidity), so the amount of money at risk is insignificant compared to the size of the portfolio. If losing 1-3% will collapse an investors fund, then they were over-leveraged to begin with, just like Lehman Brothers.

If the Treasury Department is worried about how much people are putting into venture capital, then they should make a ceiling of 1-3% of the fund's portfolio being able to be invested in venture capital. No regulations are needed on venture capital firms.

Except no one knows how to rip and replace in this case. There are governments out there that are less complicated but offer more to their constituents than the US government does. And no one in the US government wants to give up power or funding.

As an analogy, corporations are to countries as stock is to currency. So, if that is the case, perhaps we can help understand what is going to happen in the US by examining what has happened to companies in similar situations.

What are some examples of the governments that are simpler and better?

If no one wants to give up their power, what is going to happen? Revolution? Civil war? Domination by another power somewhere else?

Austria for example, and Germany. They have social services that are built in and aren't nearly as bloated as the US government.

However I don't agree with that analogy in this day and age where countries offer services countries should be seen as corporate entities.

There are still a few differences. Countries are bounded by geography, but corporations can be in multiple countries. Also, people are born citizens of a country, but they aren't born customers or employees of a corporation. Countries, for its citizens, are monopolies in the governmental services they provide. It's hard to avoid paying taxes, but easy to avoid being a customer.

But I see your point.

Not exactly, there's private healthcare in Canada, and in France, but the government provides free Healthcare. So they don't hold a monopoly unless it's legally enforced.

Do they refund your taxes if you decline to use government services? If not, it's the best kind of monopoly since they still get paid even if they don't provide the products or services...

Also, in 6 out of 10 Canadian provinces, it is illegal to enter into a contract for health services that are publicly funded. (http://www.cmaj.ca/cgi/reprint/164/6/825) Still not a monopoly?

This may be true. But France also has public schooling that is a mess. They have incredibly powerful teacher unions that rape the state budget. Since it is such a large amount of people, they have an incredible amount of political clout. France gets a lot less bang for buck education wise for the amount spent on education.

It will also be interesting to compare the average remuneration for doctors in France and Canada when compared to other countries. I am not saying that the American system is not broken – but France and Canada’s health system isn’t the model to follow.

For interest sake, Canada imports a hell of a lot of doctors. They simply do not train enough doctors to be self sufficient and must rely on the brain drain from 3rd world countries for their staff. (In the province of Saschatewan, more than 50% of doctors are from abroad – most prominently from South Africa).

The amount spend on medical research in Canada is also a lot lower (per capita) than the USA.

Well said, however no government is perfect. That being said....

The US has incredibly powerful teachers unions as well. The teacher's union is so powerful it's still technically on the Homeland Security list of terrorist organizations.

Yet we don't have healthcare.

Not only that there's a reason why IT and (real) Doctors aren't the most popular jobs (or majors) unlike Business and Psychology, it's because they're the #2 and #1 (respectively) most stressful occupations according to Forbes.

> Austria for example, and Germany. They have social services that are built in and aren't nearly as bloated as the US government.

It depends on your definition of bloat. They do consume comparable amounts of GDP and they don't do some things that the US govt does.

However, there's an even bigger difference - both are tiny by comparision to the US govt. Germany would be a big state and Austria a middle-size one.

The subject of the OP is the climate for startups, and it is almost certain that the climate for startups is better in the U.S. than it is in Germany or Austria.

Off-topic, but I recently considered relocating to Germany, and here is a brief synopsis of the main considerations.

I saw figures on the web once saying that in the U.S. government (Federal, state and local) takes about 40% of the income of individuals and in Germany government takes about 50%. Take the figures with a grain of salt because I do not recall where I saw them or who compiled them.

Homeschooling is illegal in Germany, and the law against homeschooling is enforced, making it very difficult to raise children there without sending your children to government schools or to private schools heavily regulated by the government. For example, it is illegal for private schools to pay their teachers less than the pay of teachers in government schools. The result of the heavy regulation of private schools is that almost everyone sends their children to government schools.

It is easier for men to get laid in Germany than in the U.S. I cannot tell you why, but several sources have said so, including a French manufacturer of sex dolls (high-end ones costing thousands each) who said that his company's dolls sell much better in Japan and the U.S. than they do in Europe. His exact words were, "Sex is easier in Europe, but taxes are harder." So if you are a heterosexual man having trouble getting laid in the U.S., moving to France or Germany might solve the problem.

> Austria for example, and Germany. They have social services that are built in and aren't nearly as bloated as the US government.

And, they're about as diverse as Minnesota.

There's New Zealand if you want more diversity.

78% European is diverse?

http://en.wikipedia.org/wiki/New_Zealand#Demography

And, we're talking about less than 4.5m people.

Compare it with http://en.wikipedia.org/wiki/Demographics_of_Chicago , which has more people than live in all of New Zealand's 4 largest cities and has almost as many people as NZ's 16 main urban areas. And, that's not counting Chicago's suburbs.

Chicago is only moderately diverse for a large American city - there are less than 50 languages spoken by more than 1000 people.

See http://en.wikipedia.org/wiki/Demographics_of_Los_Angeles for diversity (which has more people than all of new zealand's major urban areas, and I'm still ignoring suburbs and other major adjoining cities.)

Reply on news.ycombinator.com