Re: Europe's Best and Brightest Flee the Welfare State

Recently in Europe's Best and Brightest Flee the Welfare State,  the Cato Institute blog featured this quote from the article 4 Myths About America-bashing in Europe bused focused on how the “sclerotic welfare states in Europe” were holding back Europe and their best and brightest were fleeing to America:

When I spoke last year with about 50 Germans studying at MIT and Harvard, not one of them expressed a desire to return home. They all wanted to live and work in the United States, where, they said, opportunities are far more abundant.  Many complained that the sclerotic welfare states in Europe punish those who work and reward those who don't. So they're fleeing the crushing tax burden at home for more lucrative challenges in the United States.

My experience, not just talking to students, but living and working in France and later running the US branch of a French company, with many of the employees being French workers here, was different.  Their focus wasn't, as Cato would like us to believe, so much on the “welfare state” in Europe, but on the first issue raised, that “opportunities are far more abundant” here in America.

The welfare states may or may not be rigid and incapable of change, but the problem I saw was much more on the lack of opportunity side.  There were several key factors:

• much of the economy and politics was run on as an old-boy club including an insider advantage in the stock market (Bourse),
• there is no venture capital industry to invest in entrepreneurs,
• the unions exercised so much power in unproductive ways and
• the burden of workforce reductions was too heavy so that companies were reluctant to hire until it was deeply required because it was too hard to fire later.

Of these, some are amenable to politics and government, some aren't.  Breaking up the old-boy network is tough, except in the area of promoting American-style financial transparency, especially in stock-market related activities.  The lack of a venture capital industry was, and is, a critical gap which could be filled by making it more financially attractive through tax advantages.  (At the time I was there, the government would help fill the capital gap by paying salaries for some time for government employees entering a new company in order help make up the difference.)  Unproductive exercise of union power is something only the people of France can stop -- stop work activities just to “flex their muscles” were not uncommon.  In the abstract, politics can change the excessive workforce restrictions (but see the power of the unions) on business, but it is that “government is the problem” here, it is that the people of France have not been willing to fight for it.

So there are real issues, but only a few of them are really “government” issues, most are the people's choice.

Reducing the rigidity of the “welfare state” would be nice, but if you want to create real change you have to create opportunity, and there are more important changes to be made to do that.

Technorati Tags: France

Comments

[Jeffery Smith]

A good way to open up opportunity is to lose taxes and subsidies. Replace taxes with user-fees, especially land-use fees, and replace subsidies, especially corportate welfare, with a dividend to all citizens. European parliaments debate a basic income for citizens. Oregon could begin emulating Aspen CO. We could pay a housing voucher to all residents good for mortgage, lease, construction, or taxes. We'd fund it from site values, especially high in downtowns. As have other areas, we could shift the property tax off buildings, onto locations, driving much more intensive use of urban parcels, less extensive use of rural land. Efficient use of land with economic opportunity - can't beat it.