German Catchup

The topic of organizing a society is a big one. I am mostly a capitalist, but I believe having a social net for those who need it is equally important.

The topic gets more tricky as soon as you get into things like healthcare, and how universal it should be. Should it be funded by taxes and controlled by government, fully private, or something in between?

The way of organizing a society really gets to me when I start thinking about technology. Why America is dominating the world while Germany isn’t?

There is tons of literature on why silicon valley works, it is mostly abstracted to three main factors: A high density of well educated nerds, high density of risk capital aka VC, and a competitive culture of survival to the fittest with high tolerance for failure.

When I look at Germany I see the high density of nerds, I see the capital, but I don’t see the culture.

I am not going into the typical discussions of risk aversion and Germans vs Americans. I don’t see this as a big challenge because humans are normally risk averse, and Germany has good immigration policies. From blue cards to refugees, the country is welcoming for immigrants from all over the world. We can debate why are they doing this, or how welcoming it is, but the fact is, there are a lot of immigrants, and more are coming.

Immigrants are less risk averse, more motivated to build things, and they add a lot to the economy. This leads to motivating non-immigrants as well, and then you have a fusion of businesses starting, both from immigrants and non-immigrants.

What I am more interested in is the role of government in fostering a culture of innovation, this is where I see Germany’s biggest barrier to dominate the world technologically in the age of software.

I think big part of the solution to foster innovation as government, is to have less government. I will mention the two biggest areas where I think Germany needs less government.

  • Taxes, and Insurance: Starting a company involves leaving the full-time job. With so much stress, and having to worry about “Compulsory insurance”, “TV and Radio Taxes”, and god knows what else, this discourages many entrepreneurs from starting since being unemployed will result in paying much more money than they can afford. At the same time, you can get two years of unemployment benefits, receiving 60% of your last salary, and do nothing. What deserves more encouragement?
  • Workers and their rights: There is no Uber in Germany to protect yellow cabs (imagine if Uber started in Germany instead of US). You have to pay minimum wage to employ someone. It is hard to fire people after a 6 months probation. You can’t have temporary contracts for longer than specific period, after that they have to be permanent ones. Employee rights make it hard to start companies that are volatile by nature.

These are my observations on top of my head. The problem is with less government you get back to the topic of organizing a society, because the result of relaxing these policies is having a smaller social net, and therefore more people falling into poverty, debt…etc

Is it worth it to allow big breakthroughs to relax rules and regulations? or is it better to see what works, and artificially try to create an environment to make it work here?

Is humanity’s technological progress worth sacrificing some people’s well being? Or it is better for everyone to live a relaxed life and have slower progress. And where do we draw the line?

I don’t know.