Countries with social safety nets have many more startups

http://www.samefacts.com/2011/10/safety-nets-hammocks-or-trampolines/

by neilk • 15 years ago

9 2 15 years ago

They might have more startups.

However, typically, once you get your company past the startup level, there are many more restrictions and taxes associated with running a company.

So you have a small short-term gain.

dan85• 15 years ago

How did the author connect the number of startups with the safety net and reached the conclusion that the safety net is a good (or a bad) thing?

What if in countries with social safety nets it is much more cheaper to spawn a new extra company than to let your current one grow too big? For example, a country might require a lot less paperwork from companies with less than 10 employees. The same country might require a lot of extra regulation for a company with more than 20 employees. So you might be BETTER OFF WITH 3 companies x 10 employees than with 1 company x 30 employees.

I am curious to know:

(1) what is the ratio of startups that grow beyond the stage of a small company in those contries.

(2) what is the ratio of startups which provide jobs for at least 2 other people besides the owners. I'm willing to bet that in the European ex-communist countries, the vast majority of startups are actually small shops which barelly allow a family to survive (with the only employees being husband and wife).

The number of startups as presented in the article doesn't really say much at all and the conclusion really was just pulled out of thin air. One could as well say "Safety nets: ball and chain (You can't grow beyond startup level)" without changing a single word in that article.

Countries with social safety nets have many more startups

Related Stories