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Aug 3 / Jonathan

Lack of Dynamism Seems to Be More a Problem in the U.S. Than Europe

It’s nice to hear a story like this and then find that Dean Baker has dealt with it before I even got out of bed.

Lack of Dynamism Seems to Be More a Problem in the U.S. Than Europe

NPR did a segment this morning asking whether the U.S. economy would likely develop to be more like Europe’s. At one point it presents the comment of the employee of a German software company, that he wished Germany’s economy was “more dynamic.”

While the media frequently repeat lines like this, it is not clear what they mean. The productivity experience of Europe and the United States over the last quarter century has been comparable. If small business is viewed as the key measure of dynamism than the United States lags badly.

A much larger share of the workforce is employed in small businesses in most European countries than in the United States. This could reflect the fact that many potential small entrepreneurs in the United States don’t want to take the risk of going without health insurance.

—Dean Baker

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