Why Failing Well Is the Key to Success

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by Megan McArdle,

from CATO Institute,

When you talk to Europeans who have done business in America, and vice versa, they tell you the same thing: a European executive who works for a company that has failed is an executive who no longer has a career. In America, by contrast, the assumption is that in your failure, you’ve learned a lot of valuable lessons on somebody else’s dime.

In a certain sense, the genius of America’s economic system is that it is so forgiving. The United States is far and away the bankruptcy capital of the world. Most of us don’t realize how uniquely generous it is. But it’s a system that fosters innovation and risk taking, encourages entrepreneurship, and helps folks who make mistakes, even bad ones, get back on their feet. Everywhere else, bankruptcy is a stigma, an enduring disgrace, a permanent stain.

Here it is just a likely to be the doorway to a business empire. By wiping old debt off the books, we help the economy by speeding up the redeployment of capital-both human and financial.

America spent several centuries being really good at failure, and somewhere along the way we built the biggest, richest country in the world.

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