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Europe is Burning
Self-Sabotage, EU Style

There are many reasons why southern Europe is suffering a catastrophic rise in unemployment, but a new Gallup poll highlights one of the most important and often overlooked: In some countries it’s nearly impossible to start a business. Gallup asked Europeans about regulatory barriers to entrepreneurship in their countries, and found that Portugal, Spain, Greece, and Italy were among the worst offenders. In Italy, 96 percent of respondents believe the government is making business life more difficult, and the other countries aren’t far behind.

Luxembourg, Sweden and Malta are the only countries where more respondents believe their governments are helping things more than hindering, but other northern European countries, like Germany and Finland, are roughly evenly split on the question. Gallup offers a stark depiction of Europe’s north-versus-south divide: Northern Europeans may be lukewarm about their country’s business policies, but southerners are despondent.

If there’s any silver lining here, it’s that residents of these countries still have great esteem for business owners. With the notable exceptions of Greece, Croatia, and the Czech Republic, solid majorities in every European country believe that business leaders are excellent role models. Unfortunately, their governments aren’t making life easy for them, to the detriment of the unemployed youth who desperately need the jobs their businesses would bring.

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  • Andrew Allison

    What does TAI think about this? Since the only way the sociopolitical influences work here are likely to change is full integration of the EU regulatory environment (not just business formation, but tax collection, etc.), and the chances of that happening are considerably less than those of a snowflake in hell, should Europe simply write off the PIGS and let them self-destruct? Any other ideas?

  • Pete

    “Gallup asked Europeans about regulatory barriers to entrepreneurship in their countries, and found that Portugal, Spain, Greece, and Italy were among the worst offenders. ”

    One has to wonder how much of this anti-entrepreneurship is due to the influence the Catholic Church has had in shaping the cultures of those countries. More than a little I would guess.

    • B-Sabre

      Greece isn’t Catholic, but Orthodox. What three of the four do have is a recent history of military dictatorship, and Greece and Italy have histories of divided, weak and ineffectual governance (don’t know enough about Spain and Portugal, but I know which way I’d bet…).

      • Richard T

        The Greek military dictatorship ended 40 years ago. The German one ended 69 years ago. I think Germany was doing all right 29 years ago.

        But Germany had Bismarck where Italy had only Garibaldi. I’m reminded of a famous sentence from The Leopard, “If you want things to stay as they are, things will have to change.” I surmise that, in Italy and Spain at least, the established ruling classes were able to stay on top by making only the changes they wanted. Economic upheaval brings social upheaval, which they would rather avoid. So they make sure that economic change happens very slowly and only in their own interests — which means growth is very slow. However, someone who knows the history of those countries better should chime in.

        • B-Sabre

          Well, I would not call Nazi Germany a “military dictatorship” since the Wehrmacht was clearly not in the driver’s seat – if they had been, Herr Hitler would have been given the sack (or maybe a bullet in the neck) a lot sooner.

          That said, I think you may be onto something in the second paragraph – Nazi Germany was ended by external actors, who burnt it down, ripped out what was left root and branch, and then transplanted their own systems into the remains, and then occupied the country for more than 40 years just to ensure there was no backsliding.

          From what I know, Greece, Spain and Portugal underwent their own “Glorious Revolutions” with minimal bloodshed, and the winners weren’t interested in destroying the old regime and all its works – unlike the French and Russian Revolutions. I’d be interested to know how much of the infrastructure put in place by the old military governments by those countries survived to the modern day.

          • Richard T

            The German economy grew rapidly in the run-up to the First World War. I’m inclined to credit Bismarck for that; certainly not Truman!

  • Richard T

    Poland is also very strongly Catholic but doesn’t have the same problem. Ditto Ireland (the Republic, that is), which used to be one of the PIIGS but certainly is friendly to business.

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