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Ed Driscoll

On April Fools’ Day of 1976, two very different businesses were launched:

Perhaps no day illustrates the rate that varying institutions change better than April Fool’s Day 1976, when two divergent businesses began operation. The government-funded, rustbelt-oriented Conrail began operations on the same day that a corporation called Apple Computer was formed by three young Californians: Steve Jobs, Steve Wozniak, and Ronald Wayne (who left shortly thereafter, becoming the computer industry’s equivalent of The Beatles’ Pete Best). And it’s been the computer that has transformed how wealth is created in the last 40 years, just as the railroad did in the 19th century.

Besides tremendous changes in the economy and wealth creation, the 1970s was a decade full of fuzzyheaded thinking, and a load of doomsday books predicting economic and environmental doomsday. The Tofflers’ 1980 book, The Third Wave (the concepts of which Revolutionary Wealth builds on) bucked this trend. In the midst of the hyperinflation, astronomical interest rates, and rampant unemployment of the Carter-era 1970s, the Tofflers were able to look past that to see the actual long-term causes of many of these trends: much of the free world was making the transition from what a rustbelt mass-production assembly line economy of heavy manufacturing to a high-tech, on demand, service-oriented economy.

That’s from my Tech Central Station review of Alvin Toffler’s most recent book to date, Revolutionary Wealth, published in 2006, when it seemed like the mid-20th century smokestack era was finally bested by high-tech demassified Internet-based entrepreneurialism.

So much for that idea. Two years after Toffler’s book hit the streets, America would elect a president whose mindset is trapped somewhere between 1933 and 1968. Or as Michael Barone wrote last year, Obama offers “Industrial Age Solutions to Information Age Challenges.”

Which is but one reason why Glenn Reynolds is asking this week in USA Today,  “Where are the start-ups?”

A new report from JPMorgan economist Mike Feroli indicates that employment in start-ups is plunging. New jobs in the economy tend to come from new businesses, but we’re getting fewer new businesses. That doesn’t bode well.

In fact, it is yet another sign of a United States that is looking more like Europe: A society in which big businesses have cozy relationships with big government, while unemployment remains comparatively high. If you’re fortunate enough to have a job at one of those government-connected businesses, GE, for example, your situation is pretty good. If you’re a recent college graduate looking for work, your situation is not so great. If you’re a low-skilled worker, your situation is dreadful.

So what’s to blame for this change? A lot of things, probably. One reason, I suspect, for a job market that looks more like Europe is a regulatory and legal environment that looks more like Europe’s. High regulatory loads — the product of ObamaCare and numerous other laws — systematically harm small businesses, which can’t afford the personnel needed for compliance, to the benefit of large corporations, which can.

Likewise, higher taxes reduce the rewards for success, making people less likely to invest their money (or time) into new businesses. And local regulatory bodies, too, make starting new businesses harder.

But I wonder if the biggest problem isn’t cultural. Since 2008, this country hasn’t celebrated achievement or entrepreneurialism. Instead, we’ve heard talk about the evils of the “1%” ” about the rapaciousness of capitalism, and the importance of spreading the wealth around. We’ve even heard that work in the public sector is somehow nobler than work in the private sector.

If, as Glenn writes, the US is looking more like Europe, it’s worth looking back at a snapshot of Europe’s business community at the start of the 21st century, focusing on its own lack of entrepreneurial start-ups.

As Orson Welles said in 1941′s Citizen Kane, “How did I find business conditions in Europe? With great difficulty!” Six decades later, based on this Steven Den Beste post from December of 2002, very little had changed there to alter that formula; “Europe is a high-tech disaster area,” he wrote:

It’s a desert pock-marked with occasional oases. For an area with the kind of overall education level Europe has, and the kind of industrialization Europe has, and the overall average wealth that Europe has, and the transportation and communication infrastructure that Europe has, the amount of ground-breaking work in science and technology happening on the continent is embarrassingly small.

It’s not that they cannot do it. There are significant examples which demonstrate otherwise. The Ariane program has been a substantial technical success. Airbus is the only company in the world which is even challenging Boeing in the passenger jet business (though Airbus only was able to get going through substantial subsidies by the French and British governments). Philips has been creating cutting edge technology for years. At least three major pharmaceutical companies are headquartered in Switzerland. CERN is doing good work, and has one of the world’s best particle accelerators. And I have only the highest regard for the engineering which is being done by the European Southern Observatory for its sites in Paranal and La Silla, (not to mention their full intention of creating a telescope with a one hundred meter main mirror).

But what these few successes show is that the potential is there and that it is not being realized very broadly. The Europeans can do this stuff, but it seems as if they mostly don’t bother. You have a small number of companies which are competitive in production of high technology, but most of Europe’s companies seem to produce rather prosaic me-toos, using fundamental technology developed elsewhere (usually the US).

If you ask someone with any kind of technical background to list high-tech Japanese companies, they’ll have no trouble at all reeling off several names immediately (often brandnames chosen for the American market, like Pioneer), and several more after a few seconds of thought: Sony, Toshiba, Matsushita; the only reason there aren’t more names on the list is because of the Japanese zaibatsu system. Ask pretty much anyone to list American high tech companies and they may come up with 50 names before they have to slow down.

But ask people to list high-tech companies from continental Europe, and I think most people would have to think hard to list even one. I, myself, having been in the industry for 25 years can only list a few: Nokia, Ericsson, Siemens, Alcatel, Philips and then I run out, and honestly can’t think of any more right now. And among them, Philips as the only one actually doing cutting-edge research. (They developed the laserdisc, which led to the CD and DVD, among other interesting things.)

What the Europeans seem to spend most of their time doing is to refine or develop or apply basic technology coming from other places. Americans created the transistor, the laser, the MOSFET, the integrated circuit, the LED, the first computer built out of transistors, the first microprocessor, the hard disk, television, wide area networks, cell phones. Europe uses computers, but the only major contribution from Europe in my field is the development of the first block-structured programming language, ALGOL, which influence later languages like C but which itself was too bloated to really be very useful. And in general, I’m really pretty hard pressed to think of anything (except the laserdisc) which has come from the continent which ranks the same as that long list of American innovations, which is far from complete.

Where is Europe’s Intel? Where is Europe’s Microsoft? Where is their IBM? Their Dell? Their Applied Material?

On the next page, some thoughts on what Europe does export all too well.

Comments are closed.

All Comments   (16)
All Comments   (16)
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With the most anti-European* President in US history residing in the White House, it takes a lot of sophistry to argue that the US is becoming more like Europe.
Of course Western Europeans are stupid in believing that Obama is "one of them", but that doesn't mean you have to be stupid too.

The flaw of this post is to straight-jacket all thinking into a single dichotomy: if it's not "conservative" it must be "liberal", if it's not "right" it must be "left", if it's not American it must be "European". A few other comments make the same point, but I want to note that this tendency to force everything into a single dichotomy is typically American: not European, and afaik not from any other part of the world.

Interesting points about hi tech though. It might be worth thinking more deeply about why Japan and other Asian countries are so good in hi tech in spite of being so "European" (ie so unlike the US).

* and culturally least European.
1 year ago
1 year ago Link To Comment
I sense the sackcloth and smell the ashes that must have surrounded you as you wrote this. As a "European", I'm proud of my cynicism; it helps me question the urge to hang a label on everything. You're suggesting there's an aggregated sort of Keynesian Krugmanism in man, you're lumping things together and then present the result as erudite insights. Well, suck on this: I'm ultra-conservative but don't care if gays want to get married, I believe in the Golden Rule but also know that greed is good, I'm for law and order but laugh out loud at those who say that morals come from God. These may be opposites to you, but I live them by recognizing that I'm responsible for what I do and that I can't load one up for Azazel, whether State or Church.
1 year ago
1 year ago Link To Comment
"a sluggish socialist economy" makes all of us, except our exalted ruling class, equally poor, a socialist nirvana.
1 year ago
1 year ago Link To Comment
"In fact, it is yet another sign of a United States that is looking more like Europe"

Ironic that Dear Liar is both mad at the colonial imperialists and wants a more Europe-like America. Because the colonial imperialists were the Europeans. His world-view is inherently contradictory.
1 year ago
1 year ago Link To Comment
Ah, you don't understand. He hates the Imperialist Great Satan the most. The more he makes the Great Satan European, the fastest the GS will be cut down like the Europeans.

Now we have over 10 millions "disabled" workers who are afraid to find jobs, lest they forfeit their disabled labels; we have 25% age 25 - 34 unemployment. The amazing thing is we fall so fast.
1 year ago
1 year ago Link To Comment
One of the wonders of deregulation is that even in severely beaten down industries, like rail, they can come back.

Florida is getting privately financed, operated, and maintained passenger rail between Miami and Orlando.

http://www.allaboardflorida.com/

It gives me hope for the rest of our over-regulated sectors.
1 year ago
1 year ago Link To Comment
All that regulation means new jobs for people at companies that have to implement them! And new jobs for people in government who have to maintain and update regulations and measure compliance.

Just like diversity creates jobs in academia, in government bureaus, and companies that have to implement it. That's all lot of jobs!

Problem is, Democrats confuse being "employed" with working in jobs that create value in a market place with free buyers and sellers.

Creating an opportunity for someone to be employed and get a paycheck is good enough - doesn't matter where the money for their pay comes from. And if a lot of people are unemployed in that system - well...at least their economic situations are equal. And isn't equality what really matters?
1 year ago
1 year ago Link To Comment
It's symbiotic. I can't figure out how to make it relevant in a thumbnail, but the European socialist ideals, at least for factories and marriage, were road-tested in America during the 1820's onward. They wrote about their experiences and theories, and then European socialists and communists studied what they wrote. Marx and Engels were influenced by John Humphrey Noyes, who had as good an American pedigree as anyone. He founded the Oneida Community, which eventually got into plated tableware, after a detour through farming and animal traps.

This whole vision of all women belonging to all men, and all children going to daycare? Or even "special" children, and not-special drone children- that's Noyes. That's our betters on the East Coast when they get ahold of a manufacturing fortune. Darwin, in England, benefitted from a manufacturing fortune- he wanted to think he was more special than a landed aristocrat. Darwin and Galton, cousins, inspired Noyes to experiment with breeding humans.

It's not just them- they got part of it from us. We've got the space and the fortune to exercise a theory and see how it works out.

1 year ago
1 year ago Link To Comment
Spor-on as to European High-Tech companies.

During the latter 80's, I had to attempt to repair a piece of medical electronics made by Vickers. It was utterly incomprehensible and one great big kluge.

I finally had to draw in my Operation's Manager and even then, between the two of us (several decades electronics experience between us) could not figure it out.

Courtesy of their crappy and ill-conceived kluge, we recommended that department cancel their contract with Vickers, never use them again, and go with an American product instead. They did so and were very pleased.
1 year ago
1 year ago Link To Comment
Hate to tee off on my neighbors again,but it's too easy.My guess,75% Government dependents.Overweight,listless,adrift,uneducated,drugged and complaining.City taxes going up? Not on them!
1 year ago
1 year ago Link To Comment
There is a tar pit in California,where mastodons sometimes go, on their final walk.Big government also sinks and takes everyone along to the bottom! Much like a mouse trap,waiting to give you some Government cheese.
1 year ago
1 year ago Link To Comment
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