How Europe Crushes Innovation (economist.com) 153
European labor regulations enacted nearly a century ago now impose costs on companies that discourage investment in disruptive technologies. An American firm shedding workers incurs costs equivalent to seven months of wages per employee. In Germany the figure reaches 31 months. In France it reaches 38 months. The expense extends beyond severance pay and union negotiations. Companies retain unproductive workers they would prefer to dismiss.
New investments face delays of years as dismissed employees are gradually replaced. Olivier Coste, a former EU official turned tech entrepreneur, and economist Yann Coatanlem tracked these opaque restructuring costs and found that European firms avoid risky ventures because of them. Large companies typically finance ten risky projects where eight fail and require mass redundancies. Apple developed a self-driving car for years before abandoning the effort and firing 600 employees in 2024. The two successful projects generate profits worth many times the invested sums. This calculus works in America where failure costs remain low. In Europe the same bet becomes financially unviable.
European blue-chip firms sell products that are improved versions of what they sold in the 20th century -- turbines, shampoos, vaccines, jetliners. American star firms peddle AI chatbots, cloud computers, reusable rockets. Nvidia is worth more than the European Union's 20 biggest listed firms combined. Microsoft, Google, and Meta each fired over 10,000 staff in recent years despite thriving businesses. Satya Nadella called firing people during success the "enigma of success." Bosch and Volkswagen recently announced layoffs with timelines stretching to 2030.
New investments face delays of years as dismissed employees are gradually replaced. Olivier Coste, a former EU official turned tech entrepreneur, and economist Yann Coatanlem tracked these opaque restructuring costs and found that European firms avoid risky ventures because of them. Large companies typically finance ten risky projects where eight fail and require mass redundancies. Apple developed a self-driving car for years before abandoning the effort and firing 600 employees in 2024. The two successful projects generate profits worth many times the invested sums. This calculus works in America where failure costs remain low. In Europe the same bet becomes financially unviable.
European blue-chip firms sell products that are improved versions of what they sold in the 20th century -- turbines, shampoos, vaccines, jetliners. American star firms peddle AI chatbots, cloud computers, reusable rockets. Nvidia is worth more than the European Union's 20 biggest listed firms combined. Microsoft, Google, and Meta each fired over 10,000 staff in recent years despite thriving businesses. Satya Nadella called firing people during success the "enigma of success." Bosch and Volkswagen recently announced layoffs with timelines stretching to 2030.
Cope (Score:5, Insightful)
Private companies (Score:2)
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If the EU is the same as the US in this regard, the laws around employment don't change based on that.
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He seems to suggest that this is how somebody "copes" with the reality that in the US, there are fewer protections around employment.
But "coping" with that doesn't seem necessary in light of:
- If you live in the US, you're going to have a lot more disposable income than if you did in the EU. The only exception might be Luxembourg, who the US periodically trades places with at the top, but everywhere else in the EU you're going to do worse. That figure, by the way, is after you account for taxes, health care
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Why not? I automate more and more within my system, what I used to do by hand and then hired someone to keep doing by hand and then hired a developer to automate no longer needs to be done by hand, why should I not be able to enjoy the results of this innovation, which means cutting cost and delivering the same value with automation?
Innovation is not necessarily in inventing a new engine, it is quite possibly just another batch job.
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https://youtu.be/APo2p4-WXsc?t... [youtu.be]
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That's a South Park gag, not Family Guy.
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To me this seems like an AI written article and not something of value.
What really stifles innovation isn't employee rotation but the huge amount of paperwork to even put a product on the market. Add to it the recycling fees that every product has to bear. Etc. etc....
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translation (Score:5, Insightful)
Corporations pissed that some countries don't allow them to treat human beings like cattle, or worse, "human resources".
Re:translation (Score:4, Funny)
Re:translation (Score:5, Insightful)
Sorry, slavery has been disrupted long ago. TCO was too expensive. Sub-minimum-wage employees are much cheaper with much less liability, especially if you trick them into thinking they're "gig workers."
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"Sorry, slavery has been disrupted long ago. TCO was too expensive."
Yeah, the TCO is unsupportable when your nation rejects the immorality and you end up going to war with your sons, friends, and neighbors. And dying.
Oh, yeah, only in some nations.
Re: translation (Score:2)
Slavery still works, and it's still going on.
For example in the US the 13th amendment explicitly protects slavery as punishment for a crime. And we do still have prison labor. A few states have outlawed it.
California just voted not to outlaw it, so we are now WILLFULLY a slave state.
Re:translation (Score:5, Interesting)
If you're employing 1000 people, you can self ensure this risk because the averages will work out in such a large group. But if you have only 5 employees, this is not a financial risk you can take so you have to take out costly insurance against this. The obvious solution is to make society pay for this safety net that society demands... for instance by upping corporate taxes.
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Re:translation (Score:4, Insightful)
So ... corpratise the profits? But socialise the costs?
I mean it's not like the big companies (wherever based), don't do that anyway.
At a fundamental level I would say you are right. It is a human right to have decent levels of education and health care. However, that same society should demand AND GET a decent return of taxes. None of this double Irish-Dutch Luxembourg sandwich.
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For instance in the Netherlands, if a worker is hurt for any reason, even outside working hours (snowboarding, skydiving, juggling chainsaws), the employer is on the hook to continue to pay him for up to 2 years.
Not sure about Netherlands but it's pretty common for accident insurance to be through the employer. What is not common is for insurance to cover accidents caused by negligence or recklessness. E.g. if I practice extreme sports and I get an accident doing them, my accident insurance will very likely not fully cover it unless I purchase a dedicated optional coverage plan for them, assuming it's offered.
If you're employing 1000 people, you can self ensure this risk because the averages will work out in such a large group. But if you have only 5 employees, this is not a financial risk you can take so you have to take out costly insurance against this.
That might be an issue of regulation. Put in place standardized insurance plans that mainly take into accou
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Not sure about Netherlands but it's pretty common for accident insurance to be through the employer.
Whose insurance? Accident insurance often covers the expenses of the person in an accident, not the sick leave expenses of their employer. I.e. It will cover my hospital stay, not my income.
Now the company will likely have an insurance policy that covers them for having to pay out income protection to long term sick employees.
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Whose insurance? Accident insurance often covers the expenses of the person in an accident, not the sick leave expenses of their employer. I.e. It will cover my hospital stay, not my income.
In many European countries an employer is required to provide accident insurance to its employees. In most cases that insurance only covers accidents incurred during work-related activities, but in some countries the insurance also covers accidents incurred privately outside of work.
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For instance in the Netherlands, if a worker is hurt for any reason, even outside working hours (snowboarding, skydiving, juggling chainsaws), the employer is on the hook to continue to pay him for up to 2 years.
That is not strictly true in every case. In many of the stupid cases you cite the company recovers costs from insurance. The vast majority of cases where long term illness needs to be covered are for actual medical grounds. Also the recovery process is determined at the discretion of the *company* appointed doctor, not strictly someone that typically sides with patients. Additionally there needs to be a path to reintegration. If that looks impossible (i.e. your arm got torn off from your chainsaw and you ca
Re: translation (Score:2)
U.S. solution works pretty good. Lots of labor laws don't kick in until the company reaches a certain number of employees. Allows innovative startups to come in and prove themselves before growing into the more onerous expenses accompanying larger companies.
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same in EU, more job protection and regulations are added as your company surpasses 20, 50 and 100 employees, etc.
Re: translation (Score:2)
...as it should be!
The Germans have a say for that: wealth obliges. (Actually it's not a say, it's a principle of law docimented in their constitution.)
It is short for: "Hey, you chose to have am economic system in which you're not equally sharing profits with your employees; rather, you're paying them a fixed wage and pocket all the rest. You're calling this carrying all the risk, but let's be honest here; all the risk you're carrying is in fact an obscene amount of money made off the back of others, the w
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That seems like an issue with The Netherlands then. In other parts of the EU, small companies are excluded from this and the government picks up the tab for sick pay. Back before the UK committed brexicide that's how it was here, limited sick pay for small companies and then they were off the hook. Larger companies with many staff had larger responsibilities.
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Human beings pissed that corporations won't hire them.
It does not matter why.
Have you gotten it yet?
Alternative title (Score:5, Insightful)
How Europe Protects Workers
And Privacy, Safety, Education, ...
Re: Alternative title (Score:5, Insightful)
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How Europe Protects Workers
... or:
No, they got it right. (Score:2, Interesting)
How well protected will European workers be in 50 years? That continent is bleeding its wealth away right now, this should be a major problem to anyone over there who cares about keeping their first world standard of living.
It's not "pro-worker" to piss all your nation's wealth away making current generations happy so that future ones don't have anything.
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Race to Armageddon (Score:3, Insightful)
Some in Europe argue innovation is happening faster than humans can digest it anyhow, risking doomsday. Whether that's true or not, they cannot control nations who push tech boundaries, creating pressure to join the crazy game.
The world may be going mad, but they are not in a position to stop it.
CHeck the source (Score:5, Insightful)
The Economist.
'nuff said
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I'd not burn their pages, as the fumes contain too much stupid.
Good! (Score:5, Interesting)
So-called 'disruptive' businesses represent profit for a few but exploitation for everybody else. The ultimate goal of society shouldn't be whiz-bang gadgets and billionaires, it should be prosperity and opportunity for all.
Re:Good! (Score:4, Interesting)
Mmmhmm. There's a meme about an illegal money laundering medium, illegal hotel, and illegal taxi company, and probably another one that slips my mind. I'd argue that in many of these the goal is to privatize profits and push the burdens to operate onto the public.
I have no objection to businesses being forced to treat their workers well, and businesses being forced to go all-in when they are trying to do something, ie, structure to do it right and to give the development team the time and resources to do it, or don't do it.
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Why should that be the goal?
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Exactly this. As you get older, you realise that there is no 'end goal' for all this economic growth. it's not like if we can get to better innovation faster, we will all live forever in peace and prosperity. The truth is we all get old and die.
In the short time we have on this planet, there is a lot to see, do and enjoy. Our industrial societies, are truely amazing things, and its important that we all put in some effort to keep them running. Many of us get enjoyment out of being a small cog in the wheels
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Should a company not try to invent something new if it may fail, and thus cost the people working on it their jobs?
Re: Good! (Score:2)
"To date, the net effect of "disruptive" businesses has been an overall increase in prosperity and opportunity."
I reject your framing. The effect of modern capitalism is destruction of our life support system for temporary profit and it is predicated upon the murders of millions.
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And there's a lot more of that in the US.
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What do we do if not everyone attains the same outcome? Do we have to wait until the last homeless bum achieves the suburban home with two cars in every garage?
how much poison do you really need in that well. you've killed the whole village
Re:Good! (Score:5, Insightful)
It is a really a stretch to convert "prosperity and opportunity for all" into "everyone attains the same outcome." They are not even remotely the same thing. It takes some very politicized blinders to get there.
Does the original poster even hint at "the last homeless bum achieves the suburban home with two cars in every garage? Not even close. But the last homeless bum at least should have a tiny apartment, food and medical care. That is a level of prosperity they would be grateful for and provides opportunity not available to starving, sick, desperate, and dirty individual who wouldn't be let into most buildings, never mind being allowed to apply for a job. It also mean the homeless people WITH jobs (roughly 50% of all homeless in the US) could have an apartment.
Will we have to stop and redistribute wealth periodically to ensure this eqitable prosperity?
Yes. As has happened many times throughout history. Ideally, it would not be 18th century French style redistribution, but since we've been on a decades long path of wealth redistribution towards the already wealthy, it would be rational to just turn that around and start funneling that money back down for a few decades to even things out. The maxiimum tax rate is less than half what it was in the 1950s, and the actual tax rate amongst the wealthiest is ridiculously low. The cuts in services to low income were not necessary if the actual tax rates were fair and the laws not so skewed.
But another few decades of the path the US is on, and 18th century French redistribution will be way more likely.
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It is a really a stretch to convert "prosperity and opportunity for all" into "everyone attains the same outcome."
This is true. But it's a stretch that one political side makes all the time. Search for "opportunity vs outcome" and educate yourself. do some reading. Go ahead. I dare you.
18th century French redistribution will be way more likely.
Study history. The French Revolution (the first one) wasn't about the aristocracy vs the poor. The poor really didn't see any benefits until long after the reign of Napoleon.
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This is true. But it's a stretch that one political side makes all the time.
It's a stretch that you made, in the post I replied to. It doesn't matter where you got it from, it was your claim. Don't act like it has nothing to do with you when it's pointed out for being idiotic.
Study history. The French Revolution (the first one) wasn't about the aristocracy vs the poor. The poor really didn't see any benefits until long after the reign of Napoleon.
From the point of view of those who were at the top, there certainly was wealth redistribution. The money may have moved to the upper middle, but the money stopped flowing exclusively upward. And the poor certainly had a role in the process.
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I don't have to Google it, it's in your fucking post. It doesn't matter where you got it from, you said it, and now are acting like you should be held blameless for saying it because you read it somewhere else first. Reality doesn't work that way. You brought it up, it was stupid, you're 100% to blame for saying it.
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Reality doesn't work that way.
Perhaps not for you. But I'd venture a guess that some other people following this discussion did do the search I suggested. And perhaps learned something. So, I win. Debates aren't about winning over your opponent. They are useful for convincing the audience.
I particularly liked the illustration used in one of the first search results illustrating one of the political positions: That of a dodo bird. Make whatever you will of that.
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You're talking about a Universal Basic Income (UBI).
It would reduce or eliminate the need for quite a lot of rules, unfunded mandates such as the minimum wage, and government programs such as social security. It would shrink the government significantly. So conservatives should be on board with it, right?
Re: Good! (Score:3)
If they only cared about small government, yes, they would. That is, if they were actually conservatives. But what they mostly want is for people they don't like to suffer. What is logical or provides for the most people at the lowest cost is irrelevant to them.
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Milton Friedman was. But that deal will never be on the table. If we get a universal basic income (or negative income tax as Friedman called it), we'll also still have the minimum wage, social security, and all the other programs and regulations the UBI is
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So conservatives should be on board with it, right?
For all the reasons you posted, yes. But it just doesn't pencil out. There just aren't enough wealthy to fund a true Universal Basic Income. If you completely cleaned out the corporate executive class, and I mean down to zero, it would make a nice Christmas bonus for the working class. Not great, just nice. Add in the poor and non-working and you'd never really see it. We've done the math.
It has worked on an experimental basis when you apply it to a very small slice of the population for a short time. Bu
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Who do you think is funding the minimum wage today?
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Joseph Heller, an important and funny writer, now dead, and I were at a party given by a billionaire on Shelter Island.
I said, “Joe, how does it make you feel to know that our host only yesterday may have made more money than your novel ‘Catch-22’ has earned in its entire history?”
And Joe said, “I’ve got something he can never have.”
And I said, “What on earth could that be, Joe?”
And Joe said, “The knowledge that I’ve got enough.”
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That is just the mindset of the greediest billionaire being applied to every single one of the poorest of people. And it is not even remotely close to reality.
Are there some people who would feel that way? Undoubtedly. But it is an extremely small minority that you have just amplified to everyone based on zero facts or even a slight bit of rationality.
Re:Good! (Score:4, Interesting)
Medical care includes mental health care and addiction treatment. And you invented where I said they need to be housed in your home or a nice neighborhood, and also invented where I said there were no consequences for illegal activities. None of those things are requirements when giving a homeless person a tiny apartment, enough to eat, and medical care.
Disruptive technology (Score:5, Insightful)
is fine if it doesn't create obscene inequalities and equally obscene psychopathic billionaires. If that's the cost of disruptive technology, I'm perfectly happy to hamper it.
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How about if this one guys is 1 million times better off and he uses his insane wealth to install a raging fascist in the White House who ruins everybody's lives and threatens world peace?
I can easily do without the technological disruption this one guy, and all the other guys like him, bring about.
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Yes.
People are far too concerned about what someone ELSE has.
Many people could have "plenty" (however you want to define it), but as soon as they see someone with "a lot more", then all of the sudden, having "plenty" is not enough. They think it "unfair" that someone else has "a lot more" and want something done about it.
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It created cars, planes, trains, computers, phones, cellphones, TV, radio... Seems like a net gain for everyone. I couldn't care less if one guy is a thousand times better off and another is only 1% better, all I see is a net gain.
The irony of that list is almost all of those or the technology that enabled them were invented in Europe. The only one out of that list that goes to the USA is cellphones. Internal combustion engine German, cars, French/German. Trains, modern computer, telephone, TV all British. Radio is Italian.
Cr-AI me a river (Score:2)
Sounds like a post written by sobbing AI agent that is disappointed that they can't exploit people the way they'd like.
People need stability (Score:5, Insightful)
Like it or not, Big Tech, but people actually value predictability and stability over disruptive technologies. Slow and steady growth, and just-the-right-amount of change is what people need to feel safe, secure and to bring up your children. Disruptive technologies are anything but.
Re: People need stability (Score:3)
I think you're misunderstand the term "disruptive technology". Well-thought, gradual progress and change is good. But big tech, however, are highly dependent on their stakeholders and their expectation to constantly deliver money. This money comes from continuous growth which is very difficult to achieve these days because the market is extremely saturated with goods and services of all kinds; most of what we truly need has already been developed and monetised. That's why big tech talk about disruptive tech
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You wouldn't, by any chance, be Sally, are you?
How's the general prosperity? (Score:5, Interesting)
Don't talk about productivity or innovation, talk about the general, widespread, median prosperity? Can Germany afford good schools, are kids going hungry in France? These are the measures I care about.
You're talking about measures that INVESTORS care about, and I'm not one.
I just read a dissertation by Terry Chu, a doctoral candidate in Toronto; it was about how different the COVID infection rates were in districts that read mainly Chinese media, and our media. Far worse for us. It turns out the Chinese media mainly wrote about COVID as a public health problem, a risk to life. The main Toronto papers mostly wrote about the *economic* problem, the risk to money-making.
This is another case of writing about "risks to money", not "risks to the population".
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I'd say the likely scenario is that the person actually buys stuff but doesn't consider the stuff an 'investment'. I bought a house to live in, not to turn it around for a profit.
To the extent people are 'investors' in things like 401k, they may not be 'active' investors and would just as much prefer something like a massive expansion of social security instead of letting investment companies play with their money. Or to the extent they do want to 'invest', they actually want to contribute to the potential
Re: How's the general prosperity? (Score:3)
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And what is actually more valuable to us? (Score:5, Insightful)
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"reusable rockets" will make humanity a multiple planetary species, and this increase in redundancy might be what we need to pass through the Great Filter.
Is that you, Elon? Did you mix Ambien with red wine, again?
I'm Extremely Ambivalent About This (Score:3, Insightful)
GDP versus standard of living (Score:4, Insightful)
I don't care what my country's GDP is if I don't see any of it. It doesn't matter how big the pie is if my slice requires an electron microscope to measure.
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Canada has a much higher standard of living than America and a much lower GDP.
I don't care what my country's GDP is if I don't see any of it. It doesn't matter how big the pie is if my slice requires an electron microscope to measure.
Wrong.
European companies vs. American companies (Score:2)
Perversely, Wall Street rewards those companies that lay off employees by the thousands. Not so much
At least in Germany it's different (Score:2)
I mean Germany got less innovative as the social system got torn down.
I think the main issue is strategic support for companies. While in the US you have a huge military sector which supports companies which then see civil markets for their military goods (think of integrated circuits) the German stategy was always to ask the leading companies what thy think we should support.
That's why, for example, we got things like Teletex. A sort of "end-to-end" e-mail system that works without servers over the circuit
not working people 996 hurts profits! (Score:2)
not working people 996 hurts profits!
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Funding, funding, funding. (Score:5, Insightful)
Why are all the giant US tech companies concentrated in Silicon Valley and Seattle instead of being spread evenly throughout the country? Because Silicon Valley and Seattle is where all the tech investors are. The success of tech startups depends almost entirely on investor funding. And what do EU tech startups lack the most? You guessed it, investor funding. EU tech companies have to earn money for their growth the hard way because European investors are almost as risk-averse as the banks. Loosening labor regulations will do exactly nothing to improve access to funding.
Other comments say it all (Score:2, Interesting)
TFA talks about why companies cannot innovate in Europe because of over regulation and every top comment is âoehereâ(TM)s why thatâ(TM)s a good thingâ.
Your 6 months off a year and 3 year resignation periods may seem great but what youâ(TM)re really doing is mortgaging your childrenâ(TM)s future for your own convenience. They will grow up in a poorer, less dynamic Europe with fewer opportunities. Innovators leave Europe for bluer skies. Anyone can look at a the GDP charts of the
Do we need innovation? (Score:4, Insightful)
This is rage bait (Score:5, Insightful)
This article was simply posted to increase engagement with /. readers by making us angry. There is no attempt to engage in good faith
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That may be msmash's latest angle (like the story about removing Powershell to make Windows smaller, despite Powershell still being a part of Windows, and the old one being removed having nothing to do with installation size), but there's something more sad about this all. This is in the Economist. They aren't there to piss off Slashdotters. There are actually morons who think this way in the world.
Yeah that's not innovation (Score:5, Insightful)
I hate crap like this, and this is my explanation.
Large companies are not innovative, large companies suck little companies dry. Compare the dot com bubble with the AI bubble. In the dot com bubble we had thousands of small companies riding the wave. Of course a very large chunk of them went under. In the AI bubble we have a few big companies and that's it. How is that better for innovation? The only really new company is Open AI. Nvidia, Microsoft, Google, Facebook are all borg companies where innovation goes to die.
Steve Jobs was never afraid to kill off cash cows if something more innovative comes along. The companies I mentioned are not willing. Chinese companies have figured out how to run these models on less hardware. Yet American companies keep talking billions upon billions. They do so so that no little company would ever challenge them.
Take for example Musk and Optimus vs Unitree Robots. Unitree has a video where it shows a robot that can be knocked down and it gets up without problems. Musk to counter shows a robot with power lines that can do a simple kata. GIVE ME A BREAK! This is the best American engineering can do?
So to critique European innovation is yet another tactic by American "innovation" companies to try and make things go their way. BTW what the article fails to mention is that labor costs quite a bit more in America, than Europe. I am talking about high tech labor.
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Successful large companies start out as successful small companies driving innovation though. You say as much in your own post.
Europe isn't getting those small companies which is why it isn't getting the large ones. Notice the lack of major companies produced in the last 50 years as illustrated in the graphics in this article https://geekway.substack.com/p... [substack.com] . They're in a state of economic stagnation which is bad for their long term prosperity.
And yet... (Score:3)
And yet, I know French workers that were able to bootstrap their own businesses in part thanks to the generous severance packages they got from their former employers.
Scandinavia is different (Score:2)
What about when it was innovative? (Score:2)
Back when Europe was innovative, could companies fire workers more easily?
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Huh, didn't mean for that to post AC.
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No amount of Nvidia etching IP onto wafers is worthy of a 4.6 TRILLION market cap - bigger than the 4.2 Trillion market cap of the ENTIRE name-brand pharmaceutical industry.
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The problem that Europe's top 20 are worth less than Nvidia can't just be hand waved away by claiming a bubble. Nvidia is certainly over valued right now but it's not that over valued. That is an absolutely insane amount.
This isn't just a thing with one US company either, this graphic does a good job illustrating the problem https://www.reddit.com/r/neoli... [reddit.com] (we have 100 million less people then Europe too!). Europe has just gotten awful at creating wealth and if this is left unchecked it will eventually co
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Generally, when someone says something is "that simple", it's anything but "that simple".
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Every sentence in that overview says that "innovation" is and only is "laying off workers".