As someone living in Finland, I would argue the cons balance out the pros. The welfare state also creates massive disincentives for entrepreneurs. There is no free lunch.
In addition to the psychological aspects mentioned below (why try so hard when you’ll be fine either way), there are bigger reasons.
While the safety net makes it less dangerous to fail, it also makes it harder to succeed.
The barrier you need to clear before the business can be successful is much higher, due to:
- 15-20% higher taxes than the US at every level. Cut your profit margin by 15% and you need roughly double the amount of revenue you’d need in the US to pay yourself a good salary.
- high cost of living (like living in NYC/SF but without all the opportunities)
- inability to hire full time employees until you get much bigger (they literally cannot be fired and if one goes on maternity leave you can be stuck paying someone without getting their labor for a year+)
-lack of funding/financing and risk capital (Europe is starting to catch up, but nowhere near the US, especially at the small business levels). There’s nothing like the SBA loans the US has.
-more severe penalties for failure in the form of bankruptcy, you cannot walk away relatively unscathed in the same you can in the US
-impossibility of building wealth by working a job to fund the business yourself (salaries are extremely low due to the massive social benefits overhead)
In addition to the psychological aspects mentioned below (why try so hard when you’ll be fine either way), there are bigger reasons.
While the safety net makes it less dangerous to fail, it also makes it harder to succeed.
The barrier you need to clear before the business can be successful is much higher, due to:
- 15-20% higher taxes than the US at every level. Cut your profit margin by 15% and you need roughly double the amount of revenue you’d need in the US to pay yourself a good salary.
- high cost of living (like living in NYC/SF but without all the opportunities)
- inability to hire full time employees until you get much bigger (they literally cannot be fired and if one goes on maternity leave you can be stuck paying someone without getting their labor for a year+)
-lack of funding/financing and risk capital (Europe is starting to catch up, but nowhere near the US, especially at the small business levels). There’s nothing like the SBA loans the US has.
-more severe penalties for failure in the form of bankruptcy, you cannot walk away relatively unscathed in the same you can in the US
-impossibility of building wealth by working a job to fund the business yourself (salaries are extremely low due to the massive social benefits overhead)