Such are the questions that bemuse the 2006 Nobel Prize winner in Economics, Edmund Phelps. In his opinion, Europe's experiment with "social market economy", which creates economic growth through market intervention rather than startups, is failing.
The introduction of institutions to protect "stakeholders" and "social partners" of the free market economy is resulting in low GDP growth and high unemployment. The employer confederations, trade unions and monopolistic banks are giving rise to "high context" political environments, where the individual entrepreneur's dynamism and creativity are being shut down.
In attempting to correct the free markets excesses, seen in the America capitalist system, the European interventionist policy is killing off its efficient market economy. The European market favours established players and dampens the input of independents and outliers. In a top 10 list of startup friendly countries, Europe has one of the most hostile environments for startups, which deprives it of its essential seed bed of growth, the startups and entrepreneurs.
Our economy is more dependent on true free enterprise and the work of real entrepreneurs than it has been in over one hundred years. This is no time for us to embrace the kind of socialized entrepreneurship we see in much of Western Europe.
[Prof. Phelps]
Eastern Promise: Asian Entrepreneurs
Other economies are harnessing and empowering individual entrepreneurs.
In third world countries entrepreneurs are the key tools for economic recovery of nations, as signaled by the 2006 Nobel Economic Prize to Dr. Muhammad Yunus and the Grameen Bank. Their revolutionary micro-credit loan programs empower third world entrepreneurs to enter Global Trade Markets. According to the Norwegian Nobel Committee
Every single individual on earth has both the potential and the right to live a decent life. Across cultures and civilizations, Yunus and Grameen Bank have shown that even the poorest of the poor can work to bring about their own development.
My few experiences with people in harsh economic environments is that they demand the opportunity to earn a living in dignity, and feed their families; not free hand-outs. They want to trade, and a chance to take part in a capitalist market. Their choice path to a sustainable high standard of living.
Social entrepreneurship is the new Peace Corps.
The best way to give back to a community: become an entrepreneur on its behalf. Social entrepreneur association Ashoka defines a social entrepreneur fellow as follows
Ashoka Fellows are leading social entrepreneurs who we recognize to have innovative solutions to social problems and the potential to change patterns across society. They demonstrate unrivaled commitment to bold new ideas and prove that compassion, creativity, and collaboration are tremendous forces for change. Ashoka Fellows work in over 60 countries around the globe in every area of human need.
Bhagyamma Vadla, left, started a dairy with $674 from Unitus Global Microfinance. She is the kind of entrepreneur eBay founder Pierre Omidyar is hoping to fund with his $100m donation to Tufts University microfinance program.
The American Dream
In the US, entrepreneurs are seen as wealth and employment creators. Culturally the entrepreneurial dream is deeply entrenched in everybody's lives. How many taxi drivers in New York, Los Angeles, Boston or Chicago, inflict their startup dream on their rides; be it private jet company, general services firm, limousine services, they all have a dream and are not ashamed to pitch it.
Professor Phelps is quick to trace the excesses of the American capitalist market to a failing of the American electoral politics, not the free market itself.
Only the Brave Declare Themselves Entrepreneurs in Europe
I remember negotiating hard to omit details of my company acquisition in the Libertysurf IPO filing in 2000. Where else in the world does an entrepreneur seek less press coverage of a good outcome ?
Professor Phelps speculates that Europeans associate entrepreneurs with entrenched wealth and power...
....it appears that the recent street protesters associate business with established wealth; in their minds, giving greater latitude to businesses would increase the privileges of old wealth. By an "entrepreneur" they appear to mean a rich owner of a bank or factory, while for Schumpeter and Knight it meant a newcomer, a parvenu who is an outsider. A tremendous confusion is created by associating "capitalism" with entrenched wealth and power.
from "Dynamic Capitalism: Entrepreneurship is lucrative--and Just", Edmund Phelps
As my company's communication director can attest, pushing company founders to interact with the media is more akin to herding cats than advising a company officer. Few places in the world have an entrepreneurial community so intent on discretion, and less self promoting than Europe.
Cultural change is inevitable though; American trained entrepreneurs are spreading all over the world, and rattling European cages. Martin Varsavsky is an excellent role model, with his irrepressible baiting of established and "high-context" European institutions. Spanish Telecoms giant, Telefonica, might have won the first battle against Varsavsky's Jazztel telecom challenge in 2000. But he is back for round two of his fight against incumbent state backed monopolists. He describes the progress of his free wifi networking company FON in his ebullient blog entries.
Another European entrepreneurship standard bearer is Loïc Le Meur, a successful entrepreneur and political lobbyist. His blog is a great source on the political state of affairs for entrepreneu's in France. His recent endorsement of Nicolas Sarkozy at the next 2007 presidential elections has caused controversy in France. Loïc explains
The reason I did that is that Nicolas Sarkozy, currently #2 in Government and future candidate is the only politician in France to my knowledge to say he wants to transform France into a "nation of entrepreneurs" when entrepreneurs are often seen as "enemies of the State" these days, so I can only support him. Of course, many people disagree..
Loïc Le Meur
Even I find myself blogging freely about entrepreneurs. Then again, I am now based in the UK, which embraces unfettered entrepreneurship.
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