One Capitalism - Two Opposite Ways of Economic Thinking

The very much publicized EU budget, and therefore, the redistribution system through member countries contribution and participation system, even though its actual size as a percentage of GDP is practically negligible (1%) subconsciously creates a false impression about nations’ and therefore global wealth creation and consumption sources among Europeans.

Regardless of the data comparability issues, in Europe about 50% of the GDP is redistributed through centralized countries’ national budgets as opposed to approximately 20% federal budget in the US.  Including the state and other levels governments the real US redistribution is close to 40%.

What the European system in effect does is creating a subliminal perception that the states or to be more precise the governments create the means and as such have a superior role in the economy whereas in fact they only are the guardian of funds.

These two different wealth distribution systems, the EU and the US, determine the whole efficiency, profitability and monetization models for businesses and individuals.  What I think is even more important, they shape the way of reasoning about how wealth is created, with consequences reaching far into the future, for generations.

In both models, the decision making process is different.  The financing and funding philosophies vary.  The risks are placed on different market players.  The effective decision makers are dissimilar.

These basics lead to two totally opposite ways of thinking and economic responses created by two completely different types of environment which seemingly, on the surface, appear to be alike since they are both called free market capitalism.

In the first one, in the US, the independent individual – the entrepreneur, the businessman or business-person, to be politically correct - is the risk taker and at the same time the major decision maker at the micro economy or his or her own pocket level.

It is contrasted by the EU model where decisions are centrally driven by directives.  Still, so many years after the fall of the, so economically discredited, communism.  Funds are distributed according to some rather vague and politically motivated, supposedly, macro principles, which de facto are office guidelines, where risk is placed on the businessperson and separated from the fund distributor and actual decision maker – the bureaucrat.