February 12, 2007
Phelps on Entrepreneurial Culture
Edmund S. Phelps, a Nobel prize winner in economics, has written a series of editorials in the Wall Street Journal about the determinants of a country's "entrepreneurial culture." Todays paper contains another. He has made the point the the United States is a healthier economic system than those in other developed countries, particularly those in Europe. Studying the performance of the "Big Three", Germany, France, and Italy, he notes that they lag significantly behind the United States in unemployment rates, labor force participation rates, productivity, and, surprisingly, in employee engagement and job satisfaction surveys. He takes the differences and attempts to correlate them to a country's characteristics. He finds that a country's economic institutions and economic culture matter. Some features of a country whose development is lagging?? Employee voting in management structure, state intervention in research and development, and strong public sentiment to protect existing social communities (and all corporate stakeholders other than shareholders) from "disruptive market forces." He has unwittingly listed the agenda of some of our current Presidential candidates.
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