OP basically says people in Europe look at you weird for starting a business. Failing the business afterward is a social tragedy.
It's about social/peer pressure.
Having lived in many countries across Europe, I can attest. Some countries are worse than others of course (the worst being the ex-commie/socialist ones).
My experience was different. Failing the business is a social tragedy only if you took too much debt. If you simply find a job afterwards, then it is ok. At least among my friends.
What's the other side? I don't see how it could discourage entrepreneurship at all.