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If there was one group to look to for the future of human development, it would western Europe. These countries mostly have a terrific quality of life, the highest trust societies in the world, and, until recently, the moral high ground generally. It's a shame, then, that they are unable to make attractive economic rules, and organize in a way that can sustain them. Specifically as it pertains to EU economic planning, they have a fundamentally bad philosophy for encouraging business. In most EU countries, they try to encourage innovation largely through grants and subsidies. In other words, they try to pick winners. Instead, they should do what works: cut bureaucracy and tax breaks. No one wants the headache of starting a business here. And the few that do, against all odds, get something off the ground, quickly move their corporate headquarters to more tax friendly nations. Denmark, Switzerland, Estonia, and Ireland have all been more successful in encouraging new innovation and also happen to have the most attractive tax breaks for innovative businesses and some of the easiest business rules. They, too could do more here. But it is obvious what works and what doesn't. Grants and subsidies cannot make innovation. Picking winners never does that. |
I am not an insider who has any special knowledge of the motivations of companies exiting Europe, but I suspect that those companies are at least as worried about regulatory uncertainty as they are about tax rates. The EU has a history of suddenly killing 'undesirable' business models and products through regulation. The EU also seems to make it generally difficult to scale up and scale down businesses, due to labor market regulations; if you're having a rough spell, you basically can't lay off your least productive workers and try to 'regroup', you might as well just sell off the productive business units, and shut down.