Want to Start Your Own Business? Better Try France

July 27th, 2011 at 3:55 pm | 28 Comments |

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Since Tocqueville, foreign observers have often helped the United States to see itself in a new light, and the British thinktank ResPublica seems to be continuing in that tradition as it prepares to set up an American branch. During a recent visit to FrumForum, ResPublica founder Phillip Blond shared a presentation which included a startling fact: despite American politicians’ pro-small business rhetoric, the U.S. lags far behind most other developed countries in the share of citizens employed by small businesses.


Click here to enlarge.

The chart above comes from a 2009 paper by John Schmitt and Nathan Lane of the Center for Economic and Policy Research. The paper also shows the U.S. falling behind on several other measures of entrepreneurship, including the share of self-employed individuals. The authors place most of the blame for this situation on the broken American health care system, writing that “the high cost to self-employed workers and small businesses of the private, employer-based health-care system in place in the United States may act as a significant deterrent to small start-up companies.”

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28 Comments so far ↓

  • Elvis Elvisberg

    Golly!

    Why, it’s almost as if the Republican Party doesn’t even care about entrepreneurship & job growth at all, and that they’re merely trying to further enrich the already wealthy!

  • Another William

    Isn’t any measure of entrepreneurship that puts Greece at the top a *little* suspicious?

  • Saladdin

    I guess all this will be worked out once the GOP repeals and replaces HCR.

  • tommybones

    I’m shocked! You mean Single Payer would help with small business job growth????? Golly, liberals never thought of that! Oh wait…

  • Churl

    Health system, eh? Here’s an experiment for the curious: check out in detail the cash outlay, time, and uncompensated labor that your local, state, and federal governments require from you to get permission to even start a small business. Consider the required permits, licenses, zoning ordinances, health and safety regulations for starters. Then note the ongoing and changing regulations a business is required to follow and regular fees that must be paid.

    All of this in addition to actually running the business.

    I expect that you’ll find the health care system to be only one of many obstacles to be overcome.

    • tommybones

      The usual strawman. You ever look into the massive bureaucracy when trying to start a business in most of those European countries???? Start with Italy. Your head would explode.

      But at least you admitted our pitiful health care system is one of the obstacles. That’s a start…

      • Traveler

        Churl, I cannot agree much. These regulations for service industries you cite protect our food supplies and property values. But I do agree with you that a lot of these licenses and permits could be streamlined. Try to get a license in Philly in the last century. Back then, you had to hire an “expediter”. Enough to make me understand why people vote republican. It’s better these days, but still no picnic.

        But for most businesses in the exurbs, the real barrier to entry is the health and liability insurance costs. Even there, republicans were right on both of those counts as well, seeing as how BO pushed through HCR following the precepts of Romney and Heritage. Too bad they disown such vestiges of sanity these days.

        • Steve D

          “Liability insurance costs..”

          Sounds like a case for tort reform.

          “These regulations for service industries you cite protect our food supplies and property values.”

          If you see a problem, YOU solve it without burdening other people.

        • tommybones

          You know when someone has no clue as to the real problems in Health Care when they use the words “Tort Reform.” Dead giveaway.

        • Steve D

          Actually, T-bone, I support a single payer system, not that facts matter any to you. But if you do something stupid and get hurt, you should carry the burden yourself. It should be absolutely impossible for a criminal to sue for getting hurt in commission of a crime. And doesn’t forcing me to pay for a lawsuit, even if I win, deprive me of my property without due process?

        • macacanadian

          “If you see a problem, YOU solve it without burdening other people.”

          How is an individual supposed to solve, say, an e coli outbreak from a contaminated slaughterhouse that has infected 2500 people from more than twenty states? Or, more accurately, how is he supposed to even know the scope of the issue?

          It is the responsibility of the business not to burden society with bad product, regulators and regulations should be in place to enforce that and it’s not the individual’s burden to solve it.

  • Oldskool

    That should be a great big Duh. Just today I mentioned that I wasn’t married to another business owner and the first thing he said was, did I have health insurance? My answer, “Of course not”.

  • SteveT

    We also don’t have small towns.

  • NRA Liberal

    It’s a chart about manufacturing employment.

    Most of our small businesses are service sector.

    • jamesj

      Excellent point.

    • mikewaz

      The paper that the graphic drew from also produced figures for self-employment rates, non-agricultural self-employment rates, manufacturing in businesses with less than 500 employees, computer-related services in businesses with less than 100 employees, R&D in businesses with less than 200 employees, and three separate categories of lower-tech services. America’s best result on any of these surveys was third to last. There’s absolutely no positive way to slice it: America sucks at supporting entrepreneurs.

  • Want to Start Your Own Business? Better Try France | zmetro.com

    [...] Ajay Ravichandran Since Tocqueville, foreign observers have often helped the United States to see itself in a new light, and the British thinktank ResPublica seems to be continuing in that tradition as it prepares to set up an American branch. During a recent visit to FrumForum, ResPublica founder Phillip Blond shared a presentation which included a startling fact: despite American politicians’ pro-small business rhetoric, the U.S. lags far behind most other developed countries in the share of citizens employed by small businesses. ‹ Previous Post NSA Lawyer Questioned Over Cellphone Location Tracking of Americans [...]

  • armstp

    Hard to read into those numbers what the author is trying to read into them. Look at the top 5 countries on the list? Does this mean that Greece is the most exciting and entreprenurial country on the planet?

    I think it just means that these poor countries just have a lot of small businesses and that they have a more fractured and less efficient economy.

    • Scritor

      I think the upshot of this is that the Republicans’ line on small business is just a canard. I mean, we here all know that Republicans are a party of big business that tries to play a Main Street hand by extolling the virtues of small business while doing loads of things that reward large businesses handsomely.

      On the graph: places with more traditional economies (read: not the economies of scale afforded by national networks) have lots of small businesses. This explains Greece, Italy, Portugal, and Spain, but not Australia, NZ, or Britain. Having visited Ireland, I also expected it to have lots of small businesses, but this data says that’s not the case.

      Small businesses are less efficient than large businesses if you take a macro-look at the economy. However, small businesses offer a more traditional, community-oriented feel than do large businesses, and it seems that this is one of the unpriceable advantages that people actually like about small business. In a climate of deregulatory fervor that makes running large businesses more profitable and enables businesses to get large enough to steer legislation to favor them even more, small businesses are totally squeezed out.

      Perhaps the best recent example of this pertains to the Dodd-Frank Financial Services regulatory act, which could have broken up systemically large banks and made the terms of bank operation more amenable to small, local banks than huge ones based in New York. Guess who lobbied extraordinarily hard to keep the system rigged towards supporting large banks at the expense of smaller ones? Time to get jaded again.

  • Graychin

    The climate for small business in America is difficult because our laws stack the deck in favor of BIG business. Both political parties are at fault.

  • baw1064

    Why is a story whose main point is that France is an entrepreneurial country accompanied by a picture of a Gold Rush town in California? Just wondering…

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  • jdeware

    Well I’m from France and it’s the first time I see a conservative article where the word france is not stomped on in any way thinkable, that’s refreshing…
    France has only recently stared to deregulate entrepreneurship, during the Mitterand’s years, to open any business you would be required to set aside the rough equivalent of 30000 usd, and you were never able to touch it, it ressembledmuch of what business regulation is in china today…then in the late 90, Various french government continued to deregulate further business until today, he biggest burden is the taxe preparation forhealthcare and wealthfare, and a axe code that is incridibly time conssuming and complex.But france is definitly aon the righ pah, a change of regulation under sarkozy allowed people to create their home business and micro business on the web in 5 clicks, that resulted in the creation of over 100000 business every years since 2007, and it definitly helped keeping our unemployment below 8%. Now he tax code is to be simplified and reviewed, and maybe the Euro crisis will force European states to review and to simplify their tax code.

    overall when comparing Irland to the UK for example, it’s pretty obvious that a corporation based economy like ireland is much more exposed to recession than a SMC country like britain who is weathering recession better than ireland