Comment by Barrin92
4 years ago
>there are only upsides to people starting up a business.
that is not true at all. The majority of business ventures fail and a lot of small businesses aren't productive, and at the end of the day someone needs to pick the tab up. Even Thiel used to say, don't start a business until you have a very good reason to.
What you actually want is to incentivize the kind of people to start a business who have a high chance of driving innovation and bringing about large, productive firms, you don't really want an army of self-employed people with low capital formation in a developed country.
I meant that there are only upsides for society and the state. Sure the people and investors who start a business take a risk, but the state does not: If the new business fails the state loses nothing, if the new business succeeds then wealth and taxes are produced. So make it as simple and cheap as possible to incorporate and to run a business and reap the benefits later.
(I have edited my previous comment to clarify)
>but the state does not
the state takes a pretty big amount of risk and costs. Who pays healthcare, who pays maternity leave and social security in a fast and loose labor market like that? The answer in the US often is, nobody or the federal government.
In a country like Germany, France or in Scandinavia running a business is harder because there's an expectation that businesses can take care of their workers. A lot of red tape exists to make sure that a business can shoulder these things. In fact in Scandinavia eliminating unproductive firms through measures like wage compression was deliberately part of their social model to drive concentration and creation of productive firms.
There really are a lot of implications to creating the sort of environment that the US or to a lesser extent the UK has, and it doesn't work well with the economic model of most of Europe.
> Who pays healthcare, who pays maternity leave and social security in a fast and loose labor market like that?
Are you from Scandinavia? Because the state pays these things (except maternity leave) in Denmark, whether you're in a job or not, so no there really isn't a risk to the state. The only thing the business is paying for is your salary, pension (if they offer it) and other "bonuses" (if they offer them).
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> In a country like Germany, France or in Scandinavia running a business is harder because there's an expectation that businesses can take care of their workers. A lot of red tape exists to make sure that a business can shoulder these things.
That's not true. Red tape is red tape, it serves no other purpose that perpetuating itself (and since we're on this topic there is much less red tape in the UK than in France or Germany.
If you're a business an hire someone then you have to pay their salary and any taxes to finance healthcare and other benefits. OK. There is no need for red tape for this or to make it difficult upfront to incorporate a company, just make it clear and simple to know what to pay and how to pay it when or if you hire someone.
>at the end of the day someone needs to pick the tab up
Only if they have debt. Some companies never take on debt and then fail.
And that would be a non-issue, because the lender would be taking a calculated risk. Businesses of all size go bankrupt all the time.