Comment by valkmit
11 hours ago
A lot of these are mostly well-meaning but have backfired. The only way an international business is going to consider investing in French workers, for example, is with relatively low salaries to offset the inability to fire them.
It's counterintuitive but if you allow "failing fast", you lower risk of new engagements, and this allows for more speculative bets on ideas and people.
Make it difficult to evict tenants? Expect more stringent requirements from landlords
Enact rent control? Initial rents are going up, new builds are are disincentivized.
Strong worker protection? Expect fewer highly paid roles (wage compression)
I'm not saying these regulations are unilaterally bad - I'm saying don't be surprised that there are 2nd-order effects that are arguably just as bad, if not worse.
I would push back on a few things from what you mentioned.
> The only way an international business is going to consider investing in French workers, for example, is with relatively low salaries to offset the inability to fire them.
> Strong worker protection? Expect fewer highly paid roles (wage compression)
For European startups it’s different motivation. Lower salaries than in USA are an advantage, but job security isn’t a show stopper. First team is hired in fixed contracts, which may be converted to permanent with growth. In scaling phase you add external support, with e.c. 20% of workforce coming from outstaffing, so that you can react on the market and scale down when needed. If you are big enough to be called international business, you will not hire in one of the most expensive locations in the world (USA) unless you have a good reason. There exist other easy-to-fire tech hubs, and it’s not a big problem in Europe anyway (it’s just some more effort to execute, but even with payouts it’s probably cheaper than in US).
> Make it difficult to evict tenants? Expect more stringent requirements from landlords
In Europe there’s less homeless people. It doesn’t work like that.
>Enact rent control? Initial rents are going up, new builds are disincentivized.
It’s not rent controls that make markets inefficient. They are reaction to NIMBY regulations and disincentivized home ownership like in Germany. Root cause is uncontrolled extraction of scarce resource (land) and the solution is actually to scale down for-profit rental market while aggressively subsidizing ownership and construction.
This is something you talk to people about that are in the western world but outside of the US (which includes me) but whenever I have the conversation people just can't grasp it.
The US, by having bad worker protections and privacy abusing tech companies, etc. have been able to pave the way for extreme amounts of innovation that just wouldn't happen anywhere else. The rest of the world then effectively has innovation subsidized since they import the finished product.
I also found most US startup opportunities to be practically enabled by shitty service provided by the incumbents, whether it is the state or the banks or the healthcare system.
Take Cost Plus Drugs, for instance. Or companies enabling faster cash transfers over the internet, like Paypal. Or healthcare insurance plans from Oscar Health or prescriptions from Truepill. Or videos made by Khan Academy, which are currently in use in many schools across the US.