The Economist has a new article to explain why the EU is SO CRUSHINGLY BAD at tech.

(paywalled) https://www.economist.com/europe/2025/10/02/how-europe-crushes-innovation

The chief argument: EU's "protection" of workers makes the EU too clumsy to form cutting edge high-tech startups and efforts. Specifically, inherent costs of hiring (and firing) workers make the EU uncompetitive. Compared to say Google or Meta, who can afford to fire 10,000 workers at whack, while pivoting to the "latest, best thing".

The data is primarily coming from OECD Indicators of Employment Protection, (LINK BELOW), but here is an sample showing the implicit costs of firing workers (in terms of months of salary):

Country Firing cost
United States 5~7 months
Germany ~31 months
France ~20-25 months

There has been a lot of whining on F16 about U.S. CEO's not "caring" enough about workers and "just seeking profits".

There is a counterpoint to this, free enterpise maximizes businesses' contributions to our nation and to its workers.

"Capitalism is the worst economic system, except for all the others."

https://www.oecd.org/en/data/datasets/oecd-indicators-of-employment-protection.html

Quote:

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EU's "protection" of workers makes the EU too clumsy to form cutting edge high-tech startups and efforts.

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aka - unions, born out of Marxist thought processes

If it's too expensive to fire people, you won't keep them, you'll just stop hiring them.

Tale as old as time.

Yeah its one of those tradeoffs those on the left generally avoid. They call for worker security above all without realizing (or even caring about) the repercussions of that desire. About par for the course for most leftist ideas.

Indirectly related but I studied in Germany as part of my graduate degree some years ago now. Another primary differentiator between us and the EU is human portability (I'm blanking on the proper term here).

In the US, we are much more apt to up and move across the country to find and chase jobs. The German culture (at least then)...not so much. The Germans tended to stay within a few miles of wherever they were born. Several different factors caused this but it all led to a much less dynamic talent pool limiting innovation because it was hard to source the best in country talent and then match supply to demand, if you will.

That was 23 years ago. I have to think that has actually improved somewhat as globalism continued to increase over the last two decades, but it certainly impacted their ability to compete with us.

Another reason which wasn't obvious to me until I talked to a few guys in this category (one German and one French).

In Germany and France, to go to work for one of those firms, you have to have all of your university credentials in order. In other words, they're not going to hire you unless you're a top graduate from an accredited university.

American companies however, will hire folks in Europe who do not have college degrees.

Over_ed said:

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The Economist has a new article to explain why the EU is SO CRUSHINGLY BAD at tech.

(paywalled) https://www.economist.com/europe/2025/10/02/how-europe-crushes-innovation

The chief argument: EU's "protection" of workers makes the EU too clumsy to form cutting edge high-tech startups and efforts. Specifically, inherent costs of hiring (and firing) workers make the EU uncompetitive. Compared to say Google or Meta, who can afford to fire 10,000 workers at whack, while pivoting to the "latest, best thing".

The data is primarily coming from OECD Indicators of Employment Protection, (LINK BELOW), but here is an sample showing the implicit costs of firing workers (in terms of months of salary):

Country Firing cost
United States 5~7 months
Germany ~31 months
France ~20-25 months

There has been a lot of whining on F16 about U.S. CEO's not "caring" enough about workers and "just seeking profits".

There is a counterpoint to this, free enterpise maximizes businesses' contributions to our nation and to its workers.

"Capitalism is the worst economic system, except for all the others."

https://www.oecd.org/en/data/datasets/oecd-indicators-of-employment-protection.html

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Maybe there's a middle ground somewhere between these Euro policies and our government enabling companies who abuse the h1b program to import indentured servants from India. I don't think many here are pushing for the former.

McNasty said:

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Over_ed said:

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"Capitalism is the worst economic system, except for all the others."

https://www.oecd.org/en/data/datasets/oecd-indicators-of-employment-protection.html

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Maybe there's a middle ground somewhere between these Euro policies and our government enabling companies who abuse the h1b program to import indentured servants from India. I don't think many here are pushing for the former.

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I can think of at least one poster who is probably in favor of the former, but who knows, he/she is all over the place. :-)

As far as H1B, I agree with you - the program has been greatly abused. It absolutely needs to have a lot more rules, tests, and penalties.

But, if we believe in immigration at all, getting top 5-10% of chinese (and indian) talent and adding them to our pool of citizens is probably is one of the best things we can do for making the US more competitive.

I realize this is a VERY unpopular opinion. I don't have any idea how we establish the optimal number of H1B's, but the cr@p needs to stop. I don't see a middle ground for most Americans, though.

Purely in terms of low cost to fire an employee, China smokes us. And they are our primary competition.

The theory is that their centrally-directed allocation of resources is inferior to our "individually" directed allocation. I agree with this theory over the long term.

But do they have the abilty to steal stuff (like AI) and mob it with resources.

Edited to add - and I worry about chinese H1B in particular as far as IP theft. I think this should be a factor in the positions H1Bs should be permitted to fill.

We are in a fight.

I like that quote. Who said it? Sounds like a Thomas Sowell quip.

halfastros81 said:

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I like that quote. Who said it? Sounds like a Thomas Sowell quip.

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I think it's Milton Friedman.

As to the OP, Europe has many factors against them. If you are a tech entrepreneur that wants to build a startup it's about as hostile of a place imaginable. Tech startups thrive on getting young folks that work 80 hours a week in the hopes of getting equity and making it big. That's against everything European employment law is about and if you do make it they will tax and regulate you into oblivion.

That's why the best and brightest from Europe have been coming to the US forever. It really has just evolved from the original "brain drain" post Industrial Revolution. If you want to build a company and make it big it's so much easier to do it here than anywhere else and the access to talent and resources is so much better and the potential rewards are so much greater.

halfastros81 said:

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I like that quote. Who said it? Sounds like a Thomas Sowell quip.

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I'm not sure it was said exactly as such, but first was Winston Churchill.

Does sound like Sowell, though.

I've worked in tech startups for the past 10 years. There's many reasons why EU lags the US tech:

- Risk appetite - Americans are alpha predators of capitalism and have a risk taking culture.
- Funding - EU is actually not bad for very early stage funding, but later stage funding is harder to come by. Many founders will start in the EU and then relocate to the US where funding is easier to come by (read: better venture ecosystem)
- Differing attitudes towards failure - Startups have a high rate of failure. Failing in the US tech community is accepted and even welcomed. If you fail in some European countries, you're toast.
- Taxes / capital gains - European founders, at least the ones who are smart, move their startups to the US for tax reasons
- Attitudes towards work... self explanatory
- Equity markets - You'd be a fool to list your company on a European exchange
- Universities and tech transfer - European universities have laughable terms on university owned intellectual property. Poor terms on licensing IP dooms your startup before you're off the ground.

All that being said, there's a lot of activity in EU based defense startups, all things considered.

YouBet said:

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In the US, we are much more apt to up and move across the country to find and chase jobs. The German culture (at least then)...not so much. The Germans tended to stay within a few miles of wherever they were born. Several different factors caused this but it all led to a much less dynamic talent pool limiting innovation because it was hard to source the best in country talent and then match supply to demand, if you will.

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Linguistic homogeneity helps a lot with that.

In North America, you can travel 5000 miles from Alaska to Florida, and everyone along the way (including most of Canada) speaks English.

Not so in Europe.

BonfireNerd04 said:

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YouBet said:

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In the US, we are much more apt to up and move across the country to find and chase jobs. The German culture (at least then)...not so much. The Germans tended to stay within a few miles of wherever they were born. Several different factors caused this but it all led to a much less dynamic talent pool limiting innovation because it was hard to source the best in country talent and then match supply to demand, if you will.

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Linguistic homogeneity helps a lot with that.

In North America, you can travel 5000 miles from Alaska to Florida, and everyone along the way (including most of Canada) speaks English.

Not so in Europe.

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Correct but I'm talking about even within domestic Germany. Germans tended to stay near home vs even traveling to different geographies within their own country much less rest of Europe. It's much more of a village centric culture. Or was at least.

Anecdotal data point....I have a 92 yr old German friend. Absolutely fascinating life but that's a different thread. He's from Bavaria. He doesn't consider the rest of Germany as even being Germany. When you bring it up, he protests the thought. It's pretty funny.

javajaws said:

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Yeah its one of those tradeoffs those on the left generally avoid. They call for worker security above all without realizing (or even caring about) the repercussions of that desire. About par for the course for most leftist ideas.

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The Leftist dream is a do nothing government office job (or one that gives them power to oppress anyone they think disagrees with them) that still pays them 90k a year with pension and full benefits.

They don't care how bad that deal is for everyone else because like all Libs, no one rain drop ever believes it is responsible for the flood

US to Europe: "Byte me."

CDUB98 said:

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Quote:

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EU's "protection" of workers makes the EU too clumsy to form cutting edge high-tech startups and efforts.

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aka - unions, born out of Marxist thought processes

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The largest chip company in Germany is actively moving jobs to Mexico, India, and Indonesia. The workers council or whatever is fighting it, but it's happening