Comment by pembrook
1 year ago
The authors examples of “Digital Mittelstand” companies are not businesses at all but tiny “creator economy” side projects.
These do not scale to 30% of GDP in the same way high value B2B industrial equipment does (in manufacturing you happily pay $100,000 for a piece of machinery because it can turn inputs into more valuable outputs at scale).
Instead of coming up with incorrect ideas about what the government should “encourage” from the top down, what if European elites focused on cooperating more with their neighbors to open more opportunities and meanwhile let the peasants (the market) figure out the most productive and profitable uses of their time.
If Europeans can’t figure out new valuable areas where they can contribute to the world, than their system isn’t as clever or morally righteous or fantastic as they think it is. I believe if allowed the opportunity, the people would find this positive-sum value to be created. Who do you think founded all the Mittelstand in the first place?
Yes, but what if the big-software type economy isn't actually that useful?
Maybe you can grow it to 30% of GDP if you start doing a bunch of bad stuff, but if it can be replaced by open source local stuff-- if it's possible to simply kill facebook, Microsoft etc. and replace them with Linux together with a couple of not incredibly expensive software packages developed to provide a substitute, then why should we have a big-software economy?
I think this is more the idea. The interesting thing isn't to build a European Facebook or an EU SaaS economy, it's to kill the whole concept, globally.
> Maybe you can grow it to 30% of GDP if you start doing a bunch of bad stuff, but if it can be replaced by open source local stuff-- if it's possible to simply kill facebook, Microsoft etc. and replace them with Linux together with a couple of not incredibly expensive software packages developed to provide a substitute, then why should we have a big-software economy?
People have been saying this for twenty or thirty years, and in the meantime the economy has coalesced further into fewer American megacorps. It's a mirage. Things do not work that way.
(AI is going to be exactly the same: the huge corporate valuations are predicated on there being exactly one big AI company which takes a significant chunk of value from all word-based work being done today)
All this happening in the US due the lack of good anti-monopoly regulations.
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I 100% agree.
A European FB or alternatives for literally every US Big Tech product already exist, all of them OSS.
Even search (Google) now became much easier to replace with LLMs.
What it misses is solving the chicken and egg problem, basically getting people to use it.
Without its people, social networks are useless. The same is search.
Firstly, Linux isn't made for free by hobbyists. The biggest contributors are profitable, largely American tech companies. Intel, AMD, even Microsoft is now a contributor.
Secondly, the idea that you can just replace the entire software industry with Linux is... Are there even words to describe this? Linux is just an operating system. You can't replace a whole industry with "a couple of cheap packages."
I'm not saying that you can replace the entire software industry by Linux, but you can replace Windows with Linux, you can build simple locally run software to replace many of the well-known services, you can put some efforts into creating local clones with greater adaptability to match the biggest SaaS services, etc.
Basically, to go after the easy 90%. Then we go from a world with data in the cloud, massive advertisement statistics gathering etc., to a world where people mostly use computers to solve concrete physical problems in their environment and where networks are distributed, e-mail like or like a facebook where every participant stores a substantial amount of information locally in plaintext and has it interpreted by a desktop app, where he has no feed with the content decided by others, but chooses what he has the computer show him, etc.
Just look at telecom. How much complexity in the protocols isn't there just because people have to have their resource usage monitored so they can be billed for it, and for this to be settled between telecom companies?
The software to kill SaaS and Facebook might be so simple that a couple of people could write it by themselves. It's like that local government 'if you have regional govt they decide it all in Nottingham probably in a couple of meetings. Complete amateurs.' That's where I think we could go, but with software instead of the UK civil service.
It also fits really with with the coming of LLMs etc. You can just store of a lot stuff in plain text and have this super-fast reader process it all. Instead of lots of software, just huge amounts of plaintext that the machine can understand.
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The US forcing all government agencies to use open source software would save taxpayers money. Additionally — in tandem with other countries following suit — the policy would create the incentive for governments to contribute to OS development, and thus, the OS community would not need to rely so heavily on industry for Linux development, dismantling your implication that OS software is contingent on big-tech’s existence.
Switzerland already has a policy that all government agencies need to use open source software so the policy I mention isn’t a pie-in-the-sky theoretical.
You can easily replace simple apps like Facebook, WhatsApp or Snapchat with a couple of cheap packages.
Somebody remember elgg? Or buddypress? None of these mega cooperations have software that can't easily be copied.
You might be right.
The US might always dominate software (which could turn out to have no moat) and China might always dominate manufacturing.
But neither industrialized manufacturing or software even existed 200 years ago. I'm pretty sure we haven't hit the final destination in human history where there's no problems left to solve.
There's this one weird "AI" thing people are talking about. Could be something people find useful you could work on?
Germany has a big-nothing economy right now. Compared to that, even a small-software economy is useful. Germany can't live on everyone else's money indefinitely, at some point everyone else is going to get fed up that they have to be paying more tax and higher energy prices because Germany can't sustain itself.
You should read up before making grandiose statements like that. Totally not true. https://www.economist.com/finance-and-economics/2025/01/30/c...
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What?
They literally build machines that everybody needs to live. They make everything, all sorts of little of bits you need. If you need a special chemical reactor that resists some weird thing, it's probably from Germany.
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It's probably more of cultural difference. It's common in the US to build companies like a lot of houses are build in the US.
In the US houses are often build from wood and plaster and have a high chance of being knocked down by a storm. Companies in the US are often build on a ton of dept (and never making a profit is not considered "weird") and have a high chance of being knocked down by a storm.
In Europe people like to build houses from brick and concrete. Companies in Europe are often expected to be profitable at some point and be able to wither a storm.
US vs. EU building materials is actually locally determined - there's a lot more forest in the vast empty spaces of the US and Canada, hence all the cheap wood.
Same for oil. Same for e.g. the UK steel industry. I think people underestimate the extent to which the EU either doesn't have the same level of natural resources, or has used them up. There's a reason the last time that Germany got serious about resource independence it tried to invade Azerbaijan despite the USSR being in the way.
Wut?
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> If Europeans can’t figure out new valuable things to contribute to the world, than their system isn’t as clever or morally righteous or fantastic as they think it is.
Most Europeans have access to some kind of comprehensive public health offering, food that isn't killing us quite as quickly as American food does, etc. It is a system which requires thought and design that markets can't offer, since they're innately uncoordinated (the exception being oligarchies).
The idea that the market can be described as regular people deciding things is, by the way, fairly funny. We don't get to choose what gets made, and have to select from a buffet of often pretty poor options served up to us by people who are by and large not interested in anyone's wellbeing but their own.
Most of Europe recognises on some level that not everything that counts can be counted. That's the real difference. Regulation of new, high risk industries makes perfect sense from that perspective.
> The idea that the market can be described as regular people deciding things is, by the way, fairly funny. We don't get to choose what gets made, and have to select from a buffet of often pretty poor options served up to us by people who are by and large not interested in anyone's wellbeing but their own.
Is Europe more communist than I thought? You do realize if you aren't happy with the options on offer in the market, that's an opportunity for you to provide a valuable service to your fellow humans...and yes improve your own wellbeing at the same time...which is the point of a market?
Who do you think started all of the German Mittelstand companies in the first place?
That’s a bit naive. There are a lot of markets that are effectively impossible to enter without massive amounts of capital and current players are selling below cost.
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It makes as much sense as regulating nuclear weapons when you have none.
> If Europeans can’t figure out new valuable areas where they can contribute to the world, than their system isn’t as clever or morally righteous or fantastic as they think it is.
I don't think it follows that unprofitable things are by definition not clever, righteous, or fantastic. This seems like a blinkered, American-capitalist viewpoint.
Profitable and valuable are synonymous. If something is more valuable than the inputs used to make it, then it is profitable to make it.
Things being clever, or righteous, or "fantastic" (whatever that means) doesn't mean that people actually value them. That isn't what value means. Something is more valuable if you would give up more to have it. It is less valuable if you would give up less to have it.
Basically, no, it is in fact definitionally true, not blinkered, and has nothing to do with America. All of Europe is just as capitalist as America, Britain, Australia, New Zealand, etc.
You are right. My partner and I often provide each other sex for free. We should stop that and both become sex workers in order to be valuable.
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> Profitable and valuable are synonymous.
So your police, firefighters, the military, health services (not in the US though) and various charities are not valuable? That is an interesting take.
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I'm wondering from where you get these ideas? Which social media hell hole?
Europe is dying. It is an old socialist relic, with a completely outdated model of reality. The successes of the extreme left and right shows that the political nobility are done.
Sadly europe never realized that low taxes, capitalism and liberty is what drives wealth.
I wonder if, in a generation, when the best brains moved to the US, asia and argentina, the continent will finally awake from its socialist slumber?
Hong Kong managed to go from a peasant village to a global financial center in a generation or two. In theory, it should be possible for europe to do the same. But in order for that to happen, there needs to be insight into the sickness, and awareness of the cure.
I'm happy I left. After I left high tax western europe I basically doubled my salary after tax! =)
Spain is flooded with Argentinians fleeing. Spain, which isn't even that good. Europe is still a much better place to live to the common people than anywhere else in the world.
If you look for one, you can always find a worse place to live on the planet than your own, if you wanna make yourself feel better about where you live, however that's no excuse to be complacent and ignore the real issues your own place is facing. That's called coping.
I want my country every year to be just a little better than it was the year before. If that's not happening and I need to resort to comparisons to failed developing countries to see it in a good light, then something is going wrong with it.
HK was a special case of being an intermediary port city. Same with Singapore. The European equivalents are Luxembourg and Monaco.
Also HK and Singapore are intermediary port cities that made those general shifts by adopting policies inspired by Europe, in the former case whilst still being the territory of a European power...
Things are a lot easier if you are basically controlling a river delta (of a river with an absolutely huge hinterland).
Same for the Dutch, btw.
> Sadly europe never realized that low taxes, capitalism and liberty is what drives wealth.
Honestly we have moved Europe so far past the post-political that I find it difficult to comprehend peoples politics nowadays. I wonder what people think "socialism" or "left" politics is now that everything has been so thoroughly depoliticized, I genuinely don't know. Is the EU "left"? I guess so? Is the IMF?
You can just look at the numbers. Percentage of GDP that is driven by government spending:
China: 33%
USA: 34%
Germany: 50%
Economically, modern Europe is more communist and exerts more centralized control than China. Might explain why the current class of European elites have presided over the greatest destruction of an industrial base since the Soviet Union.
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By the Overton window of America, I think much of Western Europe is somewhere between "extreme left wing" and blank stares of non-comprehension at the still-present literal Soviet memorials that were never removed when the literal USSR fell.
By the Overton window of Europe, I think the Democrats are "dangerously right wing, look at them being pro-gun". Certainly they are to the right of my personal Overton window, though perhaps I am projecting my own views on my fellow Europeans.
Republicans of faint heart should avoid finding out how Trump gets labelled on newspaper front pages around here.