Market Dynamism, US vs Europe
I am reading Olaf Gersemann's book Cowboy Capitalism and enjoying it immensely. He points out that of the top 20 largest publicly traded companies in the US in 1967, only 11 are even in the top 60 today, much less the top 20. In contrast, he points out that of the 20 largest German companies in 1967, today, thirty-five years and nearly two generations later, 19 are still in the top 60 and 15 are still in the top 20.
We think of European fascism as having been defeated in 1945, but, at least in terms of fascist economic ideas like the corporate state, it is alive and well in old Europe. Take France for example. France is run by an elite group from a couple of universities who circulate and criss-cross paths between government, large corporations, unions, and the military. This group is loyal to each other first, and to ideology second. What the US Government stands accused of doing to support Haliburton (forget what actually happened - just take the wildest accusations) happens routinely and as a matter of policy between the French Government and their largest corporations.
Though the US has from time to time made mistakes in this regard (e.g. Chrysler bailout), their actions are nothing compared to the total support that French and German corporations get. In many industries, the government has gone so far as to fix current business models in place by law, effectively outlawing alternative business approaches (e.g. discounting is illegal in German retailing). In addition, these countries make entrepreneurship extraordinarily difficult, helping to prevent competition from new upstarts. For example, Gersemann points out that the cost of organizing a new business entity in the US costs an entrepreneur about a week's pay; In France and Germany, it costs 4 months pay or over 20x more.
In my article "60 Second Refutation of Socialism, While Sitting on a Beach", I pointed out that wealth is created when people are free to use their mind to envision new things, AND free to pursue this vision without undue barriers. Europe, in killing entrepreneurship and dynamism, is killing this second criteria for wealth creation. Propping up aging basic industries, four day work weeks, 8 week vacations, immense public sector employment, and unlimited unemployment benefits may feel good for a while, but they destroy wealth. Old Europe is like a retired person spending their investment principle: Quality of life may be good today, but future income and wealth is at risk.
UPDATE
