Friday, November 28, 2014

Entrepreneurship: The Difference Between U.S. and European Health Care

What is happening in the United States is something quite different: a profound shift from a “managerial” to an “entrepreneurial “ economy.

Peter F. Drucker (1909-2005), Innovation and Entrepreneurship, Harper and Row, 1986

In 2007, I wrote a book Innovation-Driven Health Care. In the book, I quoted Peter F. Drucker, who, among other things, said,”The American development (entrepreneurship) is unique. Nothing like it has happened in any other country. Western Euro[e during the period 1970 to 1984 actually lost jobs, 3 to 4 million of them. In 1970, western Eruple still had 20 million more jobs than the United States’ in 1984, it had almost 10 million less.”

Today this pattern is being repeated. According to the Grobal Entrepreurship Monitor, the percentage of adults involved in early entrepreneurial activity is 5% in Germany, 4.6% in France, 3.4% in Italy, and 12.7% in the U.S.. There is another negative factor in Europe as well, the fear of failure, the percentage of people age 18-34 who say fear of failure stops them from opening a business. This fear is 45.1% in Spain, 41.9% in the European Union, 40.% in Asia, and 31.4% in the U.S. Scarce capital, an interventionist bureaucracy , and cultures deeply averse to risks have suppressed startups in Europe.

It’s not easy being an entrepreneur in Europe, where unemployment is rampant among the youth (23.7% in Spain), economies are stagnant (with 10% to 50% less growth than in the U.S), and where Europeans are turning to private enterprise alternatives to socialized health systems, and where even religious figures like the Pope are calling for health care and economic reforms.

The Pope is saying Europe is “elderly and haggard… We encounter a general impression of weariness and aging, of a Europe that is now a ‘grandmother,’ no longer fertile and vibrant, the great ideas that once inspired Europe seem to have lost their attraction, only to be replaced by the bureaucratic technicalities of its institutions.”

The Pope cited the E.U.’s treatment of immigrants, soaring young unemployment, and ‘uncontrolled consumerism.’ He blames his situation on free-markets, with abandonment of the elderly, a lost generation of young people, and disparagement of the poor.

But at the same time, he calls for “joining market flexibility with need for stability and security for workers.”

Presumably, the Pope means balancing compassionate socialism with purposeful capitalism.

This is no small trick. The high taxation required on the general population to cover all health care ills and the bureaucracy needed to implement universal coverage tends to sink all boats rather than lifting them.

What the Pope doesn’t say is that the U.S. economy is performing much better than that of Europe, that most of the major innovations (the Internet, social media, hydraulic fracturing , and medical innovations ) contributing to economic growth, youth employment, and technological innovations for treating illness have come out of the U.S. have resulted from private entrepreneurialism rather than government regulations.

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