I saw this Kaufman Foundation article that argues that, by reducing the downside risks, an aggressive government-provided safety net promoted entrepreneurship, jobs, and economic growth.  If one follows the links, there is some empirical support for the argument.

So, I figured that if I looked at data across countries, high-support countries would dominate new-business data.  When I looked here, the story seems to be much more complicated:

There are some high-social-net countries in the top, but countries with very weak economies, suggesting that many business startups are of necessity.  That is, they reflect limited other options.  Maybe the data are telling us that people with nothing to lose start business.

People with nothing to lose generally don’t start businesses that generate the economic growth we’re after.  If they did, Mexico would be an economic powerhouse.

The problem is that we’re measuring the wrong thing.  We’re interested in economic growth, and we notice that new businesses create most new jobs.  So, we think we should measure new business starts?

Most new businesses don’t create many jobs or much in the way of economic activity. Their failure rates reflects that reality.  That’s why there appears to be little, if any, correlation between business startup rates and economic vitality in the above chart.

There is a better measure, and that’s venture capital investments.  These represent entrepreneurs with much to gain, not little to lose.

These data show that America dominates in venture capital investment.  The U.S. experiences about 17 times the venture capital investment of Japan, the second highest destination of venture capital investment:

Entrepreneurship at a Glance 2013 – © OECD 2013
Table 6.1 Venture capital investments
Millions US dollars, 2012
Estonia (2011)	1.8	Italy	91.7	Australia	331.3
Slovenia (2011)	2.5	Finland	101.6	Korea	606.9
Czech Republic	6.7	Denmark	101.7	Germany	706.2
Russian Federation (2011)	9.3	South Africa (2011)	109.6	France	710.5
Poland	11.7	Ireland	113.5	Israel	867.0
Greece (2011)	13.7	Belgium	115.9	United Kingdom	929.1
Luxembourg	14.2	Norway	143.4	Canada (2011)	1406.0
Portugal	20.4	Spain	148.1	Japan (2011)	1553.6
New Zealand (2011)	28.9	Switzerland	209.5	United States	26652.4
Austria	43.5	Netherlands	226.5
Hungary	82.6	Sweden	285.6

Within the United States, California dominates new venture capital investment in a manner similar to America’s domination in international data.  It explains why California, with a policy set seemingly designed to crush economic activity, has an economy that refuses to die.