If there was one group to look to for the future of human development, it would western Europe. These countries mostly have a terrific quality of life, the highest trust societies in the world, and, until recently, the moral high ground generally.<p>It's a shame, then, that they are unable to make attractive economic rules, and organize in a way that can sustain them.<p>Specifically as it pertains to EU economic planning, they have a fundamentally bad philosophy for encouraging business.<p>In most EU countries, they try to encourage innovation largely through grants and subsidies. In other words, they try to pick winners.<p>Instead, they should do what works: cut bureaucracy and tax breaks. No one wants the headache of starting a business here. And the few that do, against all odds, get something off the ground, quickly move their corporate headquarters to more tax friendly nations.<p>Denmark, Switzerland, Estonia, and Ireland have all been more successful in encouraging new innovation and also happen to have the most attractive tax breaks for innovative businesses and some of the easiest business rules. They, too could do more here. But it is obvious what works and what doesn't.<p>Grants and subsidies cannot make innovation. Picking winners never does that.