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This is why Jakob Ander won't hire you
January 13, 2012 9:47 PM   Subscribe

This is why I don't give you a job. Hungarian blogger Jakab Andor breaks down the numbers and explains why taxes and regulations make it highly unappealing for him to start a small business employing people in Hungary. He also argues that these same factors make women and older people particularly unappealing prospects. His comments generated quite a bit of controversy (warning: most comments in Hungarian), to which he responded with an offer.
posted by shivohum (96 comments total) 11 users marked this as a favorite

 
In countries with maternity leave laws, do maternity leave laws apply the same way to very small companies (1-5 people) and large ones? i.e. full salary and guaranteed job at the end of it? (I gather the time given varies wildly between countries from months to years)
posted by the mad poster! at 9:58 PM on January 13, 2012


here's some info on Hungary

Paid maternity leave - 24 weeks at 100% of pay.
Paid paternity leave - 5 days at 100% of pay
posted by the mad poster! at 10:04 PM on January 13, 2012 [4 favorites]


Reacting with anger to this guys reasoned and mathematical explanation of why he can't afford certain types of workers isn't the right one. I totally understand the angry responses emotionally, but it's killing the messenger. I'm an American so I'll just take it on good faith that his numbers are correct. A Hungarian person would know better.

Perhaps his business could really afford it less optimally, but then we delve into the morality of business whether it's to the business or society.

I find it hard to believe Hungarians get 3 years of maternity leave. I do not agree with him calling it a "vacation" at all, but 3 years...? Calling it vacation may be a translation issue. Again, I'll take this on good faith as it was translated. For smaller companies, this would be clearly unacceptable and the fact that he was ballsy enough to say it, well, crucifying him is not the right response. I must sound like I'm horribly against maternity leave, don't I? Noooooope. Just that the government's role exists to figure shit like this out for the benefit of both worker and employer. You can't have it breaking one or the other.
posted by OnTheLastCastle at 10:06 PM on January 13, 2012 [3 favorites]


Oh, only 24 weeks? That's normal. I wonder where he got 3 years...? Can anyone clear this up?
posted by OnTheLastCastle at 10:06 PM on January 13, 2012 [1 favorite]


Here's the real fucking tragedy:

USA
Paid maternity leave - none.
posted by OnTheLastCastle at 10:08 PM on January 13, 2012 [46 favorites]


Men should get the same maternity leave that women do, then, no reason to discriminate against women.

I actually heard a similar sentiment from someone on reddit claiming to be a hiring manager for a fortune 500 company in the U.S. He basically said he wouldn't hire young, recently married women because he thought they would get pregnant right away, and then take maternity leave.
posted by delmoi at 10:08 PM on January 13, 2012 [5 favorites]


OnTheLastCastle, it's 3 years that you're required to reinstate her within ("unpaid leave")

In general I don't think the job of a company owner is to "create jobs". If you can sit on a ridiculous amount of money with very few employees that signals to me that you pulled off a great idea. They should only hire people who make sense to hire.

And delmoi, you have the right idea. Not that discriminating against women in employing is 'right' in either case but if men and women have the same leave then it discourages this type of selection as well as promotes equality in childrearing duties
posted by the mad poster! at 10:11 PM on January 13, 2012


He lost me when he started complaining about having to give vacation time. Geez, Jakab, I'm sorry you're unable to run your sweatshop the way you want to.
posted by fatbird at 10:12 PM on January 13, 2012 [23 favorites]


From the sources I see, the mother gets paid leave for six months, but also has a right to unpaid leave for child care until the age of three. So, the employer is obligated to hold her job in reserve for three years if she decides that is necessary. It isn't clear if there are any exceptions for small employers.

I also see that Hungary has mandatory vacation days based on the worker's age. That is a new one for me. So you can't hire a worker over 45 without giving them a minimum of 30 days, while workers under 25 can be given 20 days. Talk about "paying your dues"!
posted by meinvt at 10:14 PM on January 13, 2012


And delmoi, you have the right idea. Not that discriminating against women in employing is 'right' in either case but if men and women have the same leave then it discourages this type of selection as well as promotes equality in childrearing duties
It's not their right, but obviously it's difficult to prove. How do you know if you didn't get hired because they found someone better, or because of some bias?
posted by delmoi at 10:15 PM on January 13, 2012


This is such a tricky situation because it's balancing benefits for workers vs. incentives to actually hire a person. I'd like to live in the happy idealized world where the best person gets the job, but you can't ignore that businesses do this mental arithmetic. I do not like it!

How do you know if you didn't get hired because they found someone better, or because of some bias?

Really the only way to prove this is to examine their hiring records for a long period of time and prove a pattern. Reference Wal-Mart's recent class action lawsuit. So... it's difficult.
posted by OnTheLastCastle at 10:17 PM on January 13, 2012


I don't think anyone has read the last link.
posted by sanka at 10:19 PM on January 13, 2012 [1 favorite]


I read his offer. I just don't know what to make of it.
posted by OnTheLastCastle at 10:19 PM on January 13, 2012 [1 favorite]


I once had a man straight out ask me in an interview if I planned to have kids. Because, he helpfully explained, he was never going to hire a woman who planned to have kids again- they would just leave and waste his time.

These days I'd leave his office and go straight to make a complaint to the labor board for all the good it would to, but I was young then and so only closed the interview after he started pestering me about my religion.
posted by winna at 10:26 PM on January 13, 2012 [3 favorites]


He lost me when he started complaining about having to give vacation time. Geez, Jakab, I'm sorry you're unable to run your sweatshop the way you want to.

I didn't have time to read the article in detail but I thought a lot of his opinionating (I wouldn't do X) was meant to be satirical.
posted by polymodus at 10:30 PM on January 13, 2012


Winna, you make me want to record all my interviews.
posted by BrotherCaine at 10:38 PM on January 13, 2012 [2 favorites]


Good news, Andor! You want to pay 15% sales tax? Done! You want 30% salary tax; how about only paying 17%? You want to pay 10% corporate tax? You can pay 15%, but you also have the savings from the payroll tax (13% -- that more than makes up for being 5% over). Just hop the next flight to business utopia, and start creating those jobs! Screw stupid Europe with their stupid health care systems and stupid infrastructure and stupid educated workforce and stupid clean running water.
posted by Homeboy Trouble at 10:58 PM on January 13, 2012 [9 favorites]


Good news, Andor! You want to pay 15% sales tax? Done! You want 30% salary tax; how about only paying 17%? You want to pay 10% corporate tax? You can pay 15%, but you also have the savings from the payroll tax (13% -- that more than makes up for being 5% over). Just hop the next flight to business utopia, and start creating those jobs! Screw stupid Europe with their stupid health care systems and stupid infrastructure and stupid educated workforce and stupid clean running water.

Because the only places in the world with low tax rates are third world countries, right? Or hey, how about paying 7% income tax, 15% salary tax, and 17% corporate income tax in a first world country that even has a universal health care system!
posted by gyc at 11:11 PM on January 13, 2012 [2 favorites]


The competition sells the same service, illegally, under really crappy circumstances, charging only €9 per hour.

Here is the real problem. If you don't effectively enforce tax and labor laws, you create situations like this. If you cannot compete while operating legally and don't want to work out of the bounds of the law, you're shit out of luck.
posted by Authorized User at 11:13 PM on January 13, 2012 [16 favorites]


Just that the government's role exists to figure shit like this out for the benefit of both worker and employer. You can't have it breaking one or the other.

This is sort of where I'm at. Obviously giving birth has enormous social benefits (unless you're one of the people that thinks we should stop having kids due to overpopulation), yet most of that disproportionately benefits the government, while a disproportionate amount of burden is being placed on the private sector, so perhaps the idea in the follow up blog post for the government to incentivize companies with things like tax breaks for hiring women is not a bad idea.

On the other hand, there's also great benefit for companies to be women-friendly, not only because companies might miss out on hiring talented women, but also having a diverse workplace with men and women definitely lends itself to a better work environment than a workplace with only men aged 25-50.
posted by gyc at 11:20 PM on January 13, 2012


Because the only places in the world with low tax rates are third world countries, right? Or hey, how about paying 7% income tax, 15% salary tax, and 17% corporate income tax in a first world country that even has a universal health care system!

This is the same Singapore where it cost at least S$50,000 (US$38K) to be allowed to buy a car right?

By the by, Singapore doesn't have a universal healthcare system. It has a system of government subsidies on healthcare. Nothing is free in Singapore.

If it's not taken from somewhere it's just taken from somewhere else.
posted by Talez at 11:30 PM on January 13, 2012 [7 favorites]


Because the only places in the world with low tax rates are third world countries, right? Or hey, how about paying 7% income tax, 15% salary tax, and 17% corporate income tax in a first world country that even has a universal health care system!

I suppose, but I'm sure we'd just get a blog post a year from now complaining about the 35% of his hypothetical workers' salaries that are required to disappear into the black hole pension system, or the 140% car import duty (plus $35000/yr COE, plus registration, plus congestion charge).

But to walk back from this line of argument, the blog posts are burying the lead. The fundamental problem appears to be corruption; I don't know that it matters if it's manifesting itself in higher taxes rather than high debt (a la Greece) or a lack of social services (like much of the developing world). He seems to be focusing on the symptoms, not the root cause, and doing so in a particularly prickly and obtuse manner. (Not that my snarky comment a couple lines back isn't equally prickly and obtuse.)
posted by Homeboy Trouble at 11:38 PM on January 13, 2012 [5 favorites]


Here is the real problem. If you don't effectively enforce tax and labor laws, you create situations like this.

So much this. Part of the socialist legacy in Eastern Europe is an extreme lack of respect for the rule of law. Everybody is under the table in one way or another, and people do not think of it as wrong. And how could you really think it's wrong, when the black economy is actually priced in a sane way, in line with local earnings? Who the fuck will pay euro 37/ hour for services in Hungary aside from huge multinationals that have to be legit? Who can afford legit DVDs and CDs when euro 760/month is a dream salary?

Doing legit business in these circumstances makes you a chump, a sucker.
posted by Meatbomb at 11:41 PM on January 13, 2012 [9 favorites]


Meh, it's a pretty regular capitalist complaint - laws preventing a race to the bottom in working conditions. In Australia maternity leave is protected, too; that's what 12 month contracts are for, no big deal.
posted by smoke at 11:42 PM on January 13, 2012 [8 favorites]


I wonder if maternity leave suffers the same issues that vacation did at my last job. The vacation package seemed so wonderful! But your vacation days required approval and often my boss would say "oh no, you can't take XYZ days because it would look bad. You don't want to seem like you have a bad work ethic." And then when I did get vacation, I was pretty much expected to still answer calls and emails, and in an emergency put in some real work. But once I started running my own business I gave myself even fewer vacation days just because I didn't want my business to die and I didn't have any surplus employees to do stuff while I was gone.
posted by melissam at 11:47 PM on January 13, 2012


The fundamental problem appears to be corruption

I agree: the underlying problem is that he can't be competitive while sticking to the law - not because the law is bad or he's incompetent, but because so many other people are corrupt. If a country has an effective 40% business tax rate, but lots of companies cheat and pay nearly no tax, that's an incredibly uneven playing field. Not that this problem is unique to Hungary. (Vodafone & Goldman Sachs, I'm looking at you.)
posted by Zarkonnen at 12:23 AM on January 14, 2012 [3 favorites]


He managed to generate this much negative PR, internationally, with an imaginary company.

Imagine if he had a real one. I hope in that case at least four of those twelve thirteen people would be responsible for keeping Jakob away from the internet lest he stick his foot in it in a HUGE way.
posted by louche mustachio at 12:32 AM on January 14, 2012 [1 favorite]


Where'd this idea that Goldman Sachs doesn't pay taxes come from?
posted by planet at 12:39 AM on January 14, 2012


Good point. They did pay almost $14 million in tax in 2008. That's greater than zero, right?
posted by Talez at 12:47 AM on January 14, 2012 [1 favorite]


Good point. They did pay almost $14 million in tax in 2008. That's greater than zero, right?
Did anything happen to the financial services industry in 2008? That might make financial/tax results all loopy? I forget.

Also, why'd you ignore 2009 and 2010?
posted by planet at 12:52 AM on January 14, 2012


The funny thing is that was an effective tax rate of 1.4% on the back of a $2b profit.

And why 2008? This was pretty much the most egregious example of it?
posted by Talez at 1:16 AM on January 14, 2012


Did anything happen to the financial services industry in 2008?

It got vast amounts of free money from the government.
posted by dirigibleman at 1:32 AM on January 14, 2012 [5 favorites]


And why 2008? This was pretty much the most egregious example of it?
Example of what? Their disclosed effective tax rates for 2010 through 2005 are 35.2%, 32.5%, 0.6% (2008), 34.1%, 34.5%, and 32.0%.

Why's 2008 the year to focus on?
posted by planet at 1:34 AM on January 14, 2012


Because the only places in the world with low tax rates are third world countries, right? Or hey, how about paying 7% income tax, 15% salary tax, and 17% corporate income tax in a first world country that even has a universal health care system!
Third world countries are probably the only places where someone with a Hungarian passport could easily enter and start a business? Maybe other EU countries, and Ireland has a famously low corporate tax to lure non-eu countries who want to do business there.

Also, remember, this guy wants to pay his employees 750 euros a month. How many people in Singapore would that hire? Or in Ireland?

Singapore does have an entrapranure visa program, but you need to have at least S$50k in hand (about $38k USD) and be earning S$100k/year within a year for the lowest level visa (about $77k USD). I guess that's not too much money.
posted by delmoi at 2:17 AM on January 14, 2012


Here's the solution to your woes, Jakab: you fire everyone, tell them to set up their own companies, then sign contracts with them. Now your workers have to negotiate for vacations and maternity leaves and pay the insurance out of their own pocket. That's how it's done in Poland. And not just in small companies, I work for one of the world's largest publishing houses.
posted by hat_eater at 2:33 AM on January 14, 2012


Corruption and lack of enforcement is the real issue here. I feel that the author clouded the issue with bringing in maternity leave etc. He did plainly state that he planned to provide excellent service, and to that end he needed motivated workers who worked normal hours.

I have experience in even more corrupt contries than Hungary (according to the Corruption Perceptions Index) and it just puts a damper on all economic activity and generates an atmosphere of distrust. I live in Norway, which is near the top of the list, and it's almost like it's easier to breathe here.
posted by Harald74 at 2:42 AM on January 14, 2012 [5 favorites]


A long discussion of this post on Hacker News.
posted by egor83 at 2:44 AM on January 14, 2012


BTW, the US rating from the previously-linked index is OK, not great, and you're slipping. It will be interesting to see what this year will bring, with class warfare and the 1% coming into the national discourse even stronger.
posted by Harald74 at 2:44 AM on January 14, 2012 [1 favorite]


I could invite you out on a date and you'd have a wonderful time. But, see, I'd have to pay for petrol, and parking - maybe even tip the attendant! So there's about $20 right there. And then we'd go to a bar and you'd order a drink, and if it's one of those ones with fruit and stuff it might be say $10 - plus another tip!

After that we'd go and have a meal and I would be expected to pay for whatever you ordered. If I refused I'd look like a bad guy, so I'd sit there while you could choose the most expensive things off the menu. You might even have one of those special menus that don't have prices on them, so you could pretend that you had no idea that your paté on wagyu beef cost so much. And if I ordered some wine it would be marked up by at least 150%. And then dessert and coffee. Plus more tips!

So after dinner I drive you home and after all this, all this, all this, you still get to decide whether you invite me inside. Maybe $200 I would have spent on you! So this is why I will not invite you out. Your loss. I am sorry. I know some men go with prostitutes but I do not do this. If I do go out with someone it will be a man and we will go bowling and split the bill. Once again my apologies for denying you a wonderful time. But I will not spend so much for no return.
posted by Joe in Australia at 3:06 AM on January 14, 2012 [14 favorites]


Socialism evolves by the survival of the most corrupt, instead of the fittest. I prefer capitalism.

Oh, this guy is a real comedian.
posted by Decani at 3:13 AM on January 14, 2012 [7 favorites]


Here's the solution to your woes, Jakab: you fire everyone, tell them to set up their own companies, then sign contracts with them. Now your workers have to negotiate for vacations and maternity leaves and pay the insurance out of their own pocket. That's how it's done in Poland.

That's as may be. But in many other countries, including the US, tax enforcement agencies take a dim view of this. Doing this means you're hiring independent contractors, not employees. Which means you can't tell them where to do their work or when. Not really. If you've got an independent contractor, you can't expect them to show up at the office every day. That makes them an employee, and the IRS doesn't give two shits about whatever "contract" you've signed with your "contractors," and the courts won't either. It's just not allowed.
posted by valkyryn at 4:38 AM on January 14, 2012 [3 favorites]


I think the guy may be on to something he hasn't really articulated yet. It's really nice to like social safety nets, good health care benefits, paid leave, etc. But all of those things are expensive. Ultimately, it doesn't matter whether the public or private sector pays for them, because the money for it has to come out of the same pool of economic activity, whether directly in the form of corporate spending or indirectly in the form of government spending. The government doesn't actually generate any revenue itself (not in any significant amounts, anyway), it redirects the revenues the private sector generates via taxes.*

Not saying this is a bad thing, just that it's a thing. If the total GDP of a country is $1 trillion, it doesn't really matter whether the tax rate is 10% or 90%: you've only got $1 trillion to spend on stuff.

But what if what you're doing isn't worth all that much? This guy says he needs to charge $37/hour to pay for his employees, their benefits, his overhead, himself, and a reasonable profit margin. But the market seems to think that the services he's providing are worth about a quarter of that. People just aren't willing to pay that much. And here's the thing: better law enforcement isn't necessarily going to change that very much. I don't know what this guy's doing, but there are very, very few essential services, but plenty of services that almost no one uses because they can't be made economical for a majority of people. This is why we don't see all that many domestic servants anymore: the cost of keeping someone around the house full time is so high that only the very, very rich can afford it, and even they are doing vastly less of this than they were a century ago. So by increasing the minimum cost of employing someone in that capacity legally, we've effectively eliminated what used to be a rather significant source of employment.

But we haven't really replaced it with anything else. Factory work used to pay well because there weren't all that many people doing it, and the demand for labor was huge. Now it's mostly automated and almost anyone can do it, so it's moved to places where it's cheaper. And insisting that we keep manufacturing at home doesn't change the fact that people probably can't afford to pay the extra whatever it costs to pay to produce things domestically.*

This is sort of my dilemma about Wal-Mart. Yes, they've really shaken up the supply chain and forced a lot of small businesses to go under. But they've also made available a vast quantity of consumer goods that the vast majority of their customers would never have been able to afford. In doing so, they've probably, single-handedly, reduced inflation by two or three points over the last decade and raised the standard of living for most of the country significantly. This isn't a bad thing.

So what are we to do about the fact that many (if not most) people, even if they show up for work and work hard, simply aren't capable of producing anything worth what it costs to employ them? Even at minimum wage? This didn't used to be a problem, because for most of history, people were just looking for enough to keep body and soul together. That's right, for most of history, most people lived in grinding poverty, and even the very rich in ancient times don't compare very well with even a lower-middle-class family in rural Iowa. Sure, they had slaves and a buttload of sheep, but they didn't have access to antibiotics, indoor plumbing, central air/heat, or the internet. Rather, even an ancient king probably spent a decent amount of time either hungry or just eating decidedly un-tasty food, in pain from absolutely treatable diseases or injuries, being too cold or too hot, and would probably have died by 40 or 50. We don't think that's okay anymore, but living at a higher standard than that just costs money.

So what are we to do if society, as a whole, isn't capable of supporting that kind of lifestyle? And by "society" I don't just mean any single country, I'm talking about the world at large. I'm increasingly of the opinion that most First World wealth exists by massively over-consuming natural resources, partially our own, but especially in the Third World. The only way out of it I see is to drastically reduce our standard of living. And I'm not sure we can do that while maintaining our population. Or without a big war, because people don't like getting poorer.

Don't give me this "inherent value of human labor" bullshit. That's just making up a number for something that isn't quantifiable as a matter of aesthetics.

*There seem to be signs that this is changing, but it has nothing to do with regulation and everything to do with rising wages overseas and an increasingly punishing cost of transportation. The more you're paying for intercontinental transport, the more you can afford to pay higher labor costs by eliminating it.
posted by valkyryn at 4:59 AM on January 14, 2012 [21 favorites]


But in many other countries, including the US, tax enforcement agencies take a dim view of this. Doing this means you're hiring independent contractors, not employees.

That's true. So such contract workers aren't told officially when they have to show up and how long they have to work. Nevertheless, they are very well aware that if the work isn't done on time, their contract just won't be renewed. Effectively, they have to work, on average, 8 hours on all weekdays or they won't fulfill the contract conditions. And if the job inspectors did their job, they would recognize them as employees. And the companies would be fined to oblivion, and they would have to bear the real job costs, and the miraculous growth of the Polish economy would more or less disappear. I gather that there are no miracles in economy.
posted by hat_eater at 5:02 AM on January 14, 2012


Joe in Australia: So after dinner I drive you home and after all this, all this, all this, you still get to decide whether you invite me inside. Maybe $200 I would have spent on you!

So by your paraphrase, you're implying that he's a scummy human being for treating a date like a business enterprise.

Thing is, he's not doing that. He's treating a potential business enterprise as a business enterprise.

Such a cad. A true scoundrel. Obviously, you're fully justified to make him out as a manipulative asshole who is incapable of forming altruistic human attachments. And, further, everyone should immediately throw themselves into money-losing work endeavors for the altruistic good of society.... nevermind that a society where everyone did that would collapse in short order.
posted by Malor at 5:13 AM on January 14, 2012 [1 favorite]


That's a pretty egregious false equivalence, Joe.
posted by vanar sena at 5:18 AM on January 14, 2012 [1 favorite]


Seems like he's making decent points about the government telling him who he can't fire.
posted by Brandon Blatcher at 5:34 AM on January 14, 2012


Malor wrote: you're implying that he's a scummy human being for treating a date like a business enterprise.

No, I think he wants to rant about big government, and he justifies it by claiming that he could employ a dozen people if he wasn't tied down by all these labor regulations and his sense of morality. If he genuinely has the capacity to employ a dozen people (something I don't necessarily accept) then he's ridiculously timid: he's freezing his business plans because of the risk that by offering a position he might employ a woman who might become pregnant and then he would have to hire a temp. Sure.

Vanar sena wrote: That's a pretty egregious false equivalence, Joe.

Thank you! Wait, "egregious" means "outstanding", right?
posted by Joe in Australia at 5:45 AM on January 14, 2012 [2 favorites]


Joe in Australia: "No, I think he wants to rant about big government, and he justifies it by claiming that he could employ a dozen people if he wasn't tied down by all these labor regulations and his sense of morality."

I read it more as putting hard numbers on the cost of hiring someone at take-home salary X. At least in software development, I normally estimate around 2.5X-3X to hire a developer, to account for tax, admin overhead (for example, six additional employees might need one additional support person), office/work facilities, vacation and sick time etc. Anyone starting a business needs to do this math - all moral considerations aside - if they want to be able to keep paying whoever they hire. Government regulations play a role in that, you can't really argue otherwise.
posted by vanar sena at 6:00 AM on January 14, 2012


Doing business costs money. Taxes and regulations are only a part of the picture, and they are part of a package that all businesses have to factor in. Like a lot of guys like this, I think he'd still be bitching about things right up until the point where taxes and regulations were zeroed-out.
posted by Thorzdad at 6:06 AM on January 14, 2012 [4 favorites]


Ultimately, it doesn't matter whether the public or private sector pays for them, because the money for it has to come out of the same pool of economic activity, whether directly in the form of corporate spending or indirectly in the form of government spending.

No, it can matter if the pubic vs the private sector buys them because if the public, if it is a single entity (like the federal government as opposed to states being multiple entities) it can enforce its buying power on the sector. This is why Medicare-for-all is more efficient in other countries.

So, if the total GDP of a country is $1 trillion and your people currently spend 17% of their money on health care, having the government step-in and achieve better quality at a fraction of that 17% with happier doctors then who buys what makes a serious contribution to your society.

So what are we to do about the fact that many (if not most) people, even if they show up for work and work hard, simply aren't capable of producing anything worth what it costs to employ them? Even at minimum wage?...So what are we to do if society, as a whole, isn't capable of supporting that kind of lifestyle?

We tax the rich and give it to them...no programs, just give it.
posted by Hypnotic Chick at 6:14 AM on January 14, 2012 [3 favorites]


But what if what you're doing isn't worth all that much?

I gather from my layman's reading that resource allocation is pretty tricky in all societies. There's something to be said about pricing signals in market societies, but this seems to come at the cost of inefficiencies and redundancies inherent in a market (and a not so small article of faith that the benefit of competition is greater than the inefficiencies). Pure communism should theoretically be more efficient, but has different problems altogether. There really shouldn't be any difference with who is supplying the service (whether private or government). And none of these scales upwards very well (complexity has its own problems that really hasn't been addressed either).

So when you say what you're doing isn't worth that much, it has to be in relation to what else you could be doing (resource allocation). The world could easily use 1 million more nurses, let's say, but a combination circumstances (each with their own chain of resource allocation and complexity problems) keeps a group of former machine operators from moving into the medical field, or keeps a group on the dole.

This either invites corruption, a certain cultural ennui (why bother training to do much of anything when that career path may be outdated in 10 years and it takes 4 to train), or whole fields dying out.

Jakab is choosing the latter.

As an aside, with the great gains in productivity you would expect there should be more resources to address fundamental problems, and lower costs across the board. This hasn't been the case, and it is a great mystery where all that lost capacity went.
posted by quintessencesluglord at 6:24 AM on January 14, 2012 [1 favorite]


ugh..."it" being money. Sorry.
posted by Hypnotic Chick at 6:28 AM on January 14, 2012


Metafilter: slaves and a buttload of sheep
posted by sneebler at 6:41 AM on January 14, 2012


Isn't this really simple?  

Age protections and maternity leave are a social necessity but also provide a form of regulatory capture by large companies that imposes regressive and unpredictable expenses upon small companies.

All taxation should be progressive with the smallest players paying the least and being given predictable payment plans, this applies both to people and to companies.1

Just fyi, there is often a government component to both maternity and paternity leave in European countries, like Sweden, but I'm unsure how progressive their governmental support is.

1 There are large companies that introduce large company products into the marketplace, think Gmail, but most often your revolutionary products come from small companies, think Google Search, Skype, DropBox, Facebook, etc. These are usually small companies with fantastically rich people backing them however because they need the financing to overcome the barriers to entry create through regulator capture by establish companies.

It follows that we can advance technology, increase economic mobility increase real economic growth in efficiency, not consumption, advance democracy, etc. etc. etc. through moving the tax burden from small companies to large companies will improve society. There are of course limits to encouraging small businesses beyond which you'll create many failures and/or tax dodges, but no western country even remotely approaches such limits.

posted by jeffburdges at 6:43 AM on January 14, 2012


How do you define large? By number of employees? If so, wouldn't it act as incentive to downsize and/or hire fewer employees? Sorry, just trying to think this through.
posted by vanar sena at 6:48 AM on January 14, 2012


I have a lot of sympathy with one line there. The competition sells the same service, illegally, under really crappy circumstances, charging only €9 per hour. Endemic corruption is a very bad thing.
posted by Francis at 6:50 AM on January 14, 2012


It's my understanding that in the Dutch operate on a system that allows employers to fire at will, for any reason, but also has unemployment benefits that last up to two years.

As a result, everyone has been fired at some point, there is no stigma associated with it, and employees and employers are both comfortable with dynamic employment circumstances.

Combine easy access to education, and that seems like a recipe for an evolving workforce that would seem to be better able to respond to market changes, benefiting businesses by giving them access to employees that have high levels of skills that are also current.

The trade off is obviously a high tax rate. I think that is a reasonable trade-off if the taxes are funding services that efficiently and effectively benefit all of society, even businesses. But that's me.
posted by dglynn at 7:14 AM on January 14, 2012 [4 favorites]


It's my understanding that in the Dutch operate on a system that allows employers to fire at will, for any reason, but also has unemployment benefits that last up to two years.

That sounds like a good compromise.

The trade off is obviously a high tax rate.

I'm ok with that, if it's benefitting all of society.
posted by Brandon Blatcher at 7:34 AM on January 14, 2012


There is nothing wrong with incentivizing downsizing, vanar sena, waste that creates jobs is still waste.   If though you've progressive taxation for companies, and don't create tax loopholes, then you could simply pay maternity leave from tax revenues because larger corporations should be paying more anyways.   Dutch system sounds great, btw.

In fact, I'd prefer we restricted individual income tax to the top 5% of wage earners, replacing it with a logarithmically-progressive VAT :  There would be a basic VAT rate around 2% that any company making some fixed income level pays, probably 100k or 1M. After that, every 2x increase in the corporate income increases the VAT rate by x%. You'd make x fairly small but nevertheless quickly arrive at 30% VAT rates for very large companies. You might impost statistical restrictions upon x so that very very few corporations paid over 50% VAT. Individuals among the top 5% of earners pay income taxes at the VAT rate for corporations with their income level, this includes inheritance taxes.  Why tax this way? Easy, discourage monopolies. Any merger between similarly sized companies always increases their VAT rate by x, directly penalizing growth or dividends. You'd punish anti-competitative behavior with additional VAT increases too.
posted by jeffburdges at 7:45 AM on January 14, 2012


Jeffburdges, you appear to suffer from a case of software geek tunnel vision. Seriously, get it treated. All the examples of companies you give are IT companies. IT companies could not exist without industrial companies to produce computers and cables, utilities to distribute power, telecoms, etc. All those companies are necessarily large because of the economies of scale involved. Much as I am in favor of progressive tax rates for individuals, they are nonsensical for corporations. A large corporation does not necessarily have richer shareholders, just more of them. Of course, we should also make sure that complex loopholes don't result in actually regressive corporate tax rates, but a progressive corporate tax rate would also be unfair, and introduce all sorts of nasty perverse incentives.
posted by Skeptic at 8:12 AM on January 14, 2012 [2 favorites]


but a progressive corporate tax rate would also be unfair, and introduce all sorts of nasty perverse incentives.

Land value tax. It ends up being a progressive tax while minimizing complexity and loopholes.
posted by quintessencesluglord at 8:26 AM on January 14, 2012


We tax the rich and give it to them...no programs, just give it.

I'd sort of be in favor of that, but two things.

First, I'm not entirely convinced that it'd work. I don't think there's enough to go around. Part of this is because a lot of that GDP is represented by rich people and corporations spending money on stuff that no one would be able to afford if we just equalized all incomes. And if no one's spending money on those things, there are that many fewer jobs, which reduces the size of the whole pie. I think I'm arguing that inequality may actually be an essential component of prosperity on a societal level.*

Second, and this is sort of part of my original quandary, I don't think that's good for people. People need to work. Unemployment is actively bad for you, as a human being, even if you have enough material resources to get by. Depression, anger, restiveness, all of these are associated with long-term unemployment. I think this is contrary to any well-developed concept of human flourishing. So simply giving people money, people who are not gainfully employed and do not have the ability to be productive enough to merit a paycheck given the requirements we've placed on employment, is not a real solution.

*This doesn't mean I think the extreme level of inequality we currently see is okay. Just that it may be that the only way for there to be no rich people is for everyone to be poor. The Soviets certainly managed to achieve that pretty well. I'd rather there be some rich and some poor than all poor.
posted by valkyryn at 8:29 AM on January 14, 2012 [2 favorites]


> People need to work.

Only the people who have bought into this. The vast majority of humanity could be perfectly happy not going to work ever.
posted by bukvich at 8:36 AM on January 14, 2012 [7 favorites]


I don't see any Hungarians showing up here, so let me (as a person with several Hungarian friends) let you know what's going on here.

The unfortunate fact is that, shorn of some of the taste of sexism and agism that seems to have permeated his rant, I've heard pretty well the same thing from every Hungarian friend of mine.

The issue is unfortunately terribly simple. A good chunk of the economy has gone underground; it pays no taxes; as as result, legitimate businesses pay so much tax to support the many tax freeloaders that they can barely make ends meet.

Now, like it or not, things like maternity leave are in fact "equivalent to" taxes for a business - they're additional benefits mandated by the government that cost money and provide no direct value to a business. This man is completely right in thinking of these things as further millstones around his neck.

But these millstones are also in fact extremely desirable to society at large - and in a functioning economy without a huge black market, they're not even that expensive. The solution is not to get rid of them; the solution is to enforce the law so everyone's paying their share. Then legitimate businesses can compete on level ground; then we can find out whether this guy's business is really economic or not.

This guy has every right to complain, even if some aspects of his complaints are distasteful.
posted by lupus_yonderboy at 8:48 AM on January 14, 2012 [5 favorites]


> The vast majority of humanity could be perfectly happy not going to work ever.

CITATION NEEDED.

In my experience, most people desperately want and need a job to give them something to do. Let's take somewhere like Australia, which has good benefits for the unemployed - and yet a very low unemployment rate. Why? Because people won't respect you if you don't work...
posted by lupus_yonderboy at 8:50 AM on January 14, 2012


I think he raises an interesting point about the difficulty of running a business honestly in Hungary. The biggest shock I had in my time there was realizing how deep and intractable corruption actually is. Under Communism, it was virtually impossible to live honestly - nearly every person and every institution was bent and on the take in some way, and only a fool would try to live by the rules (and typically would pay a high price for their efforts). This cultural shadow persists even after twenty years, and is perhaps difficult to understand for people from cultures where they can expect some degree of freedom, justice and compliance. And it's really hard to move towards a clean honest compliant society when everyone doubts that their neighbours are paying their taxes and following the rules. Paradoxically, the fact that Hungary emerged from the fall of Communism in better shape than most Eastern bloc countries meant that it did have to make the radical reforms that were necessary elsewhere, and I suspect they are paying the price for this now. Although Jakab does not sound like someone I would want to work for, I totally sympathize with his point that it is very hard for a business paying its taxes and following regulations to compete with the massive entrenched Black Market.

Flat income tax systems have been popular in many post-Communist countries. Although I'm not an advocate in general, I wonder whether they have made it easier to create a more tax-compliant culture.
posted by UnreliableNarrator at 8:56 AM on January 14, 2012 [2 favorites]


> Paradoxically, the fact that Hungary emerged from the fall of Communism in better shape than most Eastern bloc countries meant that it did have to make the radical reforms that were necessary elsewhere

I suspect you're missing a "not" - as in "did NOT have to make the radical reforms"...
posted by lupus_yonderboy at 8:58 AM on January 14, 2012


People need to work. Unemployment is actively bad for you, as a human being, even if you have enough material resources to get by. Depression, anger, restiveness, all of these are associated with long-term unemployment. I think this is contrary to any well-developed concept of human flourishing.

I completely agree with this. I think one of the tricks of capitalism, though is to conflate "meaningful work" with "gainful employment". At its core it strikes at your original content of people not being willing to pay for something that someone is willing to work on.

I don't know software (or software history) very well, but I think that one example may be Linux. I can imagine a moment in which there was no meaningful employment opportunity for someone willing to create a different operating system when Windows utterly dominated the personal computer OS landscape. But can a social system that supports meaningful, but not capitalizable (sp?), work ultimately create something that has "value" aside from the "dollar value" that it can generate? Whither the non-celebrity artist? The open-source documentation writer?

I think that there is an underlying phenomena in what you describe, one which isn't false...the reality of free-riders. I think that there will always be free-riders no matter the social structure, but I also suspect that there would be fewer than you would believe to be the case in a robust social democracy. What's more, honest-to-goodness free-riders (which is to say people who cannot justify what they do as "meaningful" work), in such a robust social democracy, would definitely create great resentment. Would (could?) these people be shaped by such a society to really awaken and participate? I would hope for that.
posted by Hypnotic Chick at 9:00 AM on January 14, 2012


Correction: "it did NOT have to make the radical reforms"

Lupus: You beat me to it! You say "A good chunk of the economy has gone underground" - would you say this is something that has happened recently post 1989 or is it connected to Hungary's Communist past?
posted by UnreliableNarrator at 9:06 AM on January 14, 2012


We should provide everyone with healthcare and extremely basic subsistence, after that people "need to work", but this should include job seekers, students, qualified volunteers, and sane entrepreneurs all being paid a wage for their efforts.. and the recently unemployed should receive a few months pay to reevaluate their situation.

Who cares if the share holders aren't richer, Skeptic? We all suffer if some group holds a monopoly/oligopoly. We need some progressive taxation scheme that imparts advantages for being smaller across the entire range. There isn't anything wrong with large companies existing of course, but by virtue of their size, they create inequalities, which should be discouraged. There isn't anything wrong with some sectors paying more VAT than others either. You'll fund government services more when buying power, telecom services, hardware, etc. than when buying accounting, fruit, software development, etc. So what?

I haven't read nearly as much about LVT as I should, quintessencesluglord. It addresses certain environmental concerns fairly well I suppose. And it addresses the classical inequalities arising form monopolies on land ownership obviously. It doesn't afaik address monopoly formation in general though, which I'd consider the real point behind progressive corporate taxation.

posted by jeffburdges at 9:16 AM on January 14, 2012


I do wonder if Jakob is drawing the wrong lesson from his hypothetical black market competitors. He posits that he could render the same product or service profitably at 25 Euros an hour if only his competitors would comply with the regulations. Maybe the truth is that there would be no customers if it weren't available at 9 Euros an hour. The "black market" is in this sense a tacitly tolerated safety valve both for consumers (who get things they couldn't otherwise afford) and for marginal workers (who get at least some employment, when if the government fully enforced its rules, they would get no employment at all).

This is certainly a fair observation of many markets driven by non-compliant labor in the US, where the tax and regulatory overhead of employment is significantly less than in most of the EU (to say the least of what Jakob describes for Hungary). Before there were lots of illegal immigrants willing to work for cash, it's not like middle class people had lots of fully-on-the-books nannies, housekeepers and gardeners ... what the had instead was stay-at-home moms who did their own cleaning and husbands who mowed their own lawns and trimmed their own hedges on the weekends. Before there were tens of thousands of factories in Asia pumping out product under far less stringent wage and environmental constraints, Americans weren't paying double or triple (in inflation adjusted dollars) for consumer goods, they were buying less consumer goods. In both cases, the incremental workers (or their parents to keep the historical sense correct) were scratching out subsistence agriculture livings far less remunerative their children's present economic conditions.
posted by MattD at 9:27 AM on January 14, 2012


What Jakob appears to be angry about is the inherent corruption that still pervades Hungarian society and makes the lives of law abiding citizens like Jakob miserable. Can anyone here blame him?

America faces much the same tragedy and farce as the most successful members of society today are some of the most ruthless and corrupt gangsters we have produced. We have allowed the corrupt to rise and become the leaders of our this nations' corporations and governments, both local and national. The rules are most definitely rigged against the upcoming stars and in favor of the entrenched and powerful.

I work exclusively with small businesses who all face similar struggles here in the US, and the situation is not getting any easier. This isn't a rail against big government - there is a difference between a just government and one that has become hijacked by a particular socio-economic class. Ours has become the latter and it is the reason why Obama's tenure in office has been little different from Bush II. Sure, he's been allowed to tinker around the edges, but the core remains steady and consistent with the faces changing but the policy remaining essentially the same.
posted by tgrundke at 9:49 AM on January 14, 2012 [1 favorite]


And we have the same thing here in the US. People working off the books, for cash only, or workers with no immigration status that allows them to work legally, all reduce costs for employers. Other business operators that have to compete with these free rider employers face pressures they don't.
posted by dglynn at 9:54 AM on January 14, 2012


Many of the comments above peg the blame for the state of affairs on corruption. That may very well be true but isn't necessarily helpful in suggesting a productive response.

Looking at it in terms of feasibility, given the regulatory costs in Hungary, it appears it's cheaper for businesses to bribe off the policing agencies than to pay tax and more profitable for the policing agencies to collect bribes than enforce the tax liability. So, "stopping corruption" seems a non-starter as a sustainable strategy as long as the incentives tug towards being corrupt. Reforming the tax code must have a better chance of generating momentum towards bringing the existing black market into the fold.
posted by Gyan at 10:55 AM on January 14, 2012


UnreliableNarrator: I'm not really an expert, but from what I hear it's always been this way - the fall of "communism" changed little or nothing, the same people were running things, it merely meant that they didn't have to worry about Russian tanks any more.
posted by lupus_yonderboy at 11:08 AM on January 14, 2012


Who cares if the share holders aren't richer, Skeptic?

We all care if perverse tax incentives lead to capital being allocated in a less than optimal manner. If small corporations are favored over large corporations, people will invest in small corporations even when they create less overall value. Which is fine if you are a small corporation, less fine for society at large. The same, of course, can be said of overly complex corporation tax codes that give instead an advantage to large corporations which can afford top-flight tax lawyers...

We all suffer if some group holds a monopoly/oligopoly.

But this isn't necessarily related to the size of corporations. Small companies can also hold monopolies. Consider for instance a small industrial company which occupies a small technological niche because of its specific know-how, or the single baker or butcher in a small village. On the other hand, large companies can be in highly competitive markets, like for instance car companies or travel agents.

Moreover, in some cases monopolies or oligopolies are natural, and their only alternative the even less desirable "zero-poly". The inhabitants of a small isolated village may resent their baker's monopoly, but they'd hardly be any better if he just closed shop, even if he started instead a small innovative IT company making open-source smartphone bakery apps. The same goes for large companies: for instance, one may resent the business methods of Big Pharma, but bringing a new drug to market requires huge investments (ten-figure sums just for clinical tests). If you tax big pharmaceutical companies out of existence, who's going to produce those new drugs?

Finally, and most importantly, progressive taxation is quite an absurd way of fighting monopolies. If you increase taxes on a monopoly, it will obviously just raise its prices. It's a monopoly, right?!

There isn't anything wrong with some sectors paying more VAT than others either.

And at this point you become just another special interest pleading for special treatment from the government, and lose any remaining sympathy from me. Also, at this game, it isn't as if you are going to win against companies which can afford large sums lobbying, and which employ hundreds of thousands of potential voters...
posted by Skeptic at 11:10 AM on January 14, 2012 [3 favorites]


Gian:

> Reforming the tax code must have a better chance of generating momentum towards bringing the existing black market into the fold.

I'm not getting this. By "reform" you have to mean "cutting taxes", right? You're aware of the fact that the government is close to insolvent, right?

So your plan is to cut taxes, and then hope that companies that aren't paying any taxes at all will somehow go legitimate. But why would they do that? By the law of supply and demand, it's always cheaper to pay someone a bribe to get out of an obligation. Remember, the people who work in taxation organizations don't actually get a piece of the action on the taxes... but they do get all of the bribes... so if you can take bribes and never face consequences, why would an individual _not_ accept bribes.

It seems to me that your plan would actually cause the country to collapse as they lost a good chunk of their tax revenue with nothing to replace it.
posted by lupus_yonderboy at 11:14 AM on January 14, 2012


tell them to set up their own companies, then sign contracts with them

Yup, same way it's done in Brazil
posted by Tom-B at 11:21 AM on January 14, 2012


lupus_yonderboy: "so if you can take bribes and never face consequences, why would an individual _not_ accept bribes."

Becaue they are honest and ethical and care deeply about doing a good job.

sorry

Reminds me of Delhi High Court judge complaining to bureaucrats a couple of days ago:
“When judges from other countries come, they also read the newspapers here. And they laugh at what we are made to do. All of it is your job and we are compelled to pass orders because you don’t do anything on your own,” said Justice Sikri on Wednesday as he heard a petition by the Naraina Industrial Area Association.
posted by vanar sena at 11:27 AM on January 14, 2012


Maybe the truth is that there would be no customers if it weren't available at 9 Euros an hour.

This is what I'm saying. I think the idea that we can slap whatever tax or incentive we like on things is flawed, because at some point, people will choose--or be forced to choose for lack of resources--not to partake. That's maybe an argument against excessive taxation, but it's not the only problem. There's also the possibility that structural costs, things that no one chose in particular but which are nonetheless there, may curtail or even eliminate markets in particular goods, at least in particular areas. This is why there are, for example, "food deserts," places where lots of people live where you have to go quite a distance to find a grocery store: there's just no way of offering the goods/services in question at a price the locals can afford. But it's also why there isn't a Nordstrom in my current city. The people in my city, which is the second largest in the state, simply can't afford the goods being sold there. Or, at least, not enough of them to make the investment a profitable one.

So what do we do about the fact that all of our vaunted social safety nets may actually make it impossible to employ lots of people?
posted by valkyryn at 12:10 PM on January 14, 2012


By the law of supply and demand, it's always cheaper to pay someone a bribe to get out of an obligation.

No, it isn't. This is why there's remarkably little bribery in the US. It's usually a heck of a lot cheaper to just go out and buy the thing, and service providers generally stand to make more money on repeat business than they do stiffing you that one time. Cultures of bribery only exist when certain factors align, and supply and demand are only some of those factors.
posted by valkyryn at 12:12 PM on January 14, 2012 [2 favorites]


The vast majority of humanity could be perfectly happy not going to work ever.

I, and others, beg to differ. People hate their jobs, sure. But most people will go absolutely stir crazy if they don't have anything to do. Depression, anger management problems, the whole nine yards.
posted by valkyryn at 12:13 PM on January 14, 2012


> This is why there's remarkably little bribery in the US. It's usually a heck of a lot cheaper to just go out and buy the thing,

It seems like you're discussing some other article. We're not talking about buying things. We're talking about bribery as an alternative strategy to paying taxes. When is it cheaper to pay taxes than it is to bribe someone not to make you pay taxes?!

It seems to me that the reason that, say, I can't pay off the IRS guy personally rather than paying my taxes is that there's a pretty good chance we'll both go to jail, not because he'd charge me more than the actual taxes.

Actually, I'm baffled as what you could possibly mean, in general. What possible real-world good or service could you be talking about?

> So what do we do about the fact that all of our vaunted social safety nets may actually make it impossible to employ lots of people?

This is not a "fact": it's some doctrinary thing unsupported by facts and purely due to your political beliefs. The places with strong social safety nets and honest government are doing particularly well today - Germany, Canada, Scandinavia. The US is not doing well, and does not have a safety net. Greece and Italy (and Hungary) are not doing well, and have dysfunctional systems that encourage cheating.
posted by lupus_yonderboy at 1:11 PM on January 14, 2012 [3 favorites]


> Moreover, in some cases monopolies or oligopolies are natural, and their only alternative the even less desirable "zero-poly".

So many strange claims, with no evidence or reasoning, presented as unerring fact.

Since we're on the 'net, let's take 'net connectivity. It's a utility, the classic example of a natural monopoly, and in many unregulated parts of the US, a de facto monopoly. In New York where I live they are more heavily regulated, but instead of the only alternative being a zero-poly, I have in a choice of net.providers.
posted by lupus_yonderboy at 1:20 PM on January 14, 2012


So many strange claims, with no evidence or reasoning, presented as unerring fact.

And yet, you fail to refute a single one of them.

Since we're on the 'net, let's take 'net connectivity. It's a utility, the classic example of a natural monopoly, and in many unregulated parts of the US, a de facto monopoly. In New York where I live they are more heavily regulated, but instead of the only alternative being a zero-poly, I have in a choice of net.providers.

Simply because, at least in New York, it is not a natural monopoly. Coming back to my "single baker in a small isolated village" example, that is a natural monopoly because the bread market in that village isn't large enough to support two bakers. Introducing a second baker would drive them both into ruin, resulting in no bread for the village. Similarly, some areas may not have enough population density to finance building the (expensive) infrastructure for more than one provider. But this is obviously not the case in New York.

Careful, I am not claiming that monopolies are a good thing, and we should always be wary of monopoly-holders self-servingly claiming that their situation is "natural" or "unavoidable", never mind "beneficial". But sometimes monopolies can be a necessary evil, which must of course be regulated. Trying to tax them out of existence may however bring lots of unintendedly consequences...
posted by Skeptic at 2:21 PM on January 14, 2012


Skeptic: you have a very personal definition of a natural monopoly as "a market which is only large enough to sustain one business". Clearly in such markets, the only choice is "one or none" - because you defined your terms exactly that way.

That is not the usually accepted definition of natural monopoly. All the "classical" natural monopolies are not in tiny markets only big enough to support one competitor, which really isn't a very interesting example. In these cases, the market starts by supporting many businesses, but as one of the competitors starts to get an advantage, it drives the others out of business - in fact, that Wikipedia article is a good place to start.

Under the generally accepted meaning of "natural monopoly", your statement "in some cases monopolies or oligopolies are natural, and their only alternative the even less desirable "zero-poly"" is not correct.
posted by lupus_yonderboy at 2:53 PM on January 14, 2012 [1 favorite]


Valkyryn wrote: there's remarkably little bribery in the US. It's usually a heck of a lot cheaper to just go out and buy the thing ...

A lot of people in the USA think that political campaign contributions influence candidates' votes. What are those, if not bribes?
posted by Joe in Australia at 3:38 PM on January 14, 2012 [1 favorite]


We should simply start calling campaign contributions bribes, no qualifications, just bribes.
posted by jeffburdges at 6:35 PM on January 14, 2012


> So what do we do about the fact that all of our vaunted social safety nets may actually make it impossible to employ lots of people?

This is not a "fact": it's some doctrinary thing unsupported by facts and purely due to your political beliefs.


Umm... it's not exactly a secret that most European countries run consistently higher unemployment figures than the US does. This includes Germany, a lot of the time. Even Norway has recently admitted that their unemployment figures are artifically low because they've been counting "unemployed" people as "disabled". Which is significant, because Norway has the highest rate of persons on disability in Europe.

And, seriously, step off. The "fact" I alleged was actually couched as a possibility. Read carefully. There's a "may" in there, and I meant it. I'm not concerned about safety nets as such, more about the fact that we seem to demand an ever-increasing standard of living despite the fact that most people can't produce that much. Safety nets may have something to do with this, but so does a lot of other stuff that isn't necessarily the result of a policy choice.
posted by valkyryn at 7:10 PM on January 14, 2012


A lot of people in the USA think that political campaign contributions influence candidates' votes. What are those, if not bribes?

There's a difference in kind between campaign contributions, which maybe sort of sometimes influence policy-making trends and bribes, which are a direct, specific, quid pro quo on a particular subject. Campaign contributions are generally made with the assumption that the candidate will, generally speaking, vote in ways the contributor likes. But there are usually no specific votes in mind when the contribution is made. With a bribe, the person making it wants a specific action and is willing to pay a specific price.

And if that's all you can come up with, you're proving my point. Ever try to get utilities hooked up in Italy or Greece? The sort of service that government agencies are specifically charged to provide? Unless you give the bureaucrat a bribe, you probably won't get your connection, at least not in the next few months. Or in Africa, where police officers set up road blocks with the specific and more-or-less explicit purpose of shaking people down. Or in South America, where trying to get anything through customs, even when that thing is entirely legal and not subject to a tariff, will likely involve a substantial kickback to the customs office. Or any number of other similar setups in countries where the rule of law is weak. The US doesn't have any of this, or at least almost none. Complaining about indirect influence of elected officials on the basis of campaign contributions isn't even in the same ballpark.
posted by valkyryn at 7:16 PM on January 14, 2012


valkyryn: I noted the "may" - it really doesn't change the meaning of what you said at all. It is not the mediocre safety net that the US provides that's responsible for our issues - it's trillions of dollars for foreign wars and trillions in Wall Street bail-outs.

> we seem to demand an ever-increasing standard of living despite the fact that most people can't produce that much.

Who's this "we"? Nearly all of America has had a standard of living that's on paper flat but in reality much diminished over the last generation or so (because the official cost of living does not include housing or education, amongst many other reasons).

If you're an average American, consider the different between now and the 1960s. At the time, an autoworker could afford to support a wife who didn't work, a family, and send the kids to university. The number of blue collar workers in 2012 who can do this must be minuscule. Now, both parents are likely working, each individually putting in significantly more hours than one breadwinner would have a generation ago, and with a lot less security.

I assure you that today, a whole lot of Americans would be very grateful to simply be sure that they could keep the life they have right now. Don't let the fact that they have a lot of fancy consumer electronics gadgets fool you - those are just toys and really don't count for anything compared to security and a hope for the future.
posted by lupus_yonderboy at 10:34 PM on January 14, 2012 [3 favorites]


valkyryn: But most people will go absolutely stir crazy if they don't have anything to do. Depression, anger management problems, the whole nine yards.

Agreed. William Julius Wilson's When Work Disappears provides a really good description of the malign social effects in areas of concentrated unemployment.

So what are we to do about the fact that many (if not most) people, even if they show up for work and work hard, simply aren't capable of producing anything worth what it costs to employ them? Even at minimum wage?

The US already has an excellent policy in this area: the Earned Income Tax Credit. (Brad DeLong: "Come the Day of Wrath, my best pleading will be the role I played in 1993 in the Clinton administration in expanding the EITC.") Instead of requiring the employer to pay additional taxes, increasing the cost of labor, the government supplements the wages of low-income workers, thereby decreasing the employer's costs. It's a negative income tax for the working poor. According to Wikipedia, the EITC lifted 5.4 million people above the poverty line in 2010.
posted by russilwvong at 11:48 PM on January 14, 2012


I think the guy may be on to something he hasn't really articulated yet. It's really nice to like social safety nets, good health care benefits, paid leave, etc. But all of those things are expensive. Ultimately, it doesn't matter whether the public or private sector pays for them, because the money for it has to come out of the same pool of economic activity, whether directly in the form of corporate spending or indirectly in the form of government spending.
This is only true if you assume there is a fixed pool of economic activity. There is no reason to assume that.
posted by delmoi at 12:33 AM on January 15, 2012 [1 favorite]


Such a cad. A true scoundrel. Obviously, you're fully justified to make him out as a manipulative asshole who is incapable of forming altruistic human attachments. And, further, everyone should immediately throw themselves into money-losing work endeavors for the altruistic good of society.... nevermind that a society where everyone did that would collapse in short order.


I think Joe's point is that working for this guy would be like going on a date with his hypothetical example. In other words, not fun.

And while it's true that work is not about romance, it goes both ways. Just like a woman wouldn't want to date cheapskate, employees have a 'business interest' in not working for cheap assholes.

That said, it's obviously possible to go too far with socialism, just like with Capitalism. And it sounds like in Hungary, most business just ignores taxes, making it impossible for 'legitimate' business to flourish. It would be ideal if Hungary could expand it's legitimate economy without sacrificing their social support systems.
It seems like you're discussing some other article. We're not talking about buying things. We're talking about bribery as an alternative strategy to paying taxes. When is it cheaper to pay taxes than it is to bribe someone not to make you pay taxes?!
Depends on the tax. If you have a 20% VAT it's probably cheaper to pay someone under the table.
Jeffburdges, you appear to suffer from a case of software geek tunnel vision. Seriously, get it treated. All the examples of companies you give are IT companies. IT companies could not exist without industrial companies to produce computers and cables, utilities to distribute power, telecoms, etc. All those companies are necessarily large because of the economies of scale involved.
All of those large companies depend on the highway system. Which is provided by the government. So, presumably those services could also be provided by the government. Would that be an improvement? It probably depends on a lot of factors. However, those small companies could exist if the government provided infrastructure, rather then infrastructure companies.
posted by delmoi at 12:44 AM on January 15, 2012


It's my understanding that in the Dutch operate on a system that allows employers to fire at will, for any reason, but also has unemployment benefits that last up to two years.
That's incorrect. Perhaps you are confused with another country? It is hard to fire people here, certainly not at will for any reason.
posted by davar at 2:36 AM on January 15, 2012


It's my understanding that in the Dutch operate on a system that allows employers to fire at will, for any reason, but also has unemployment benefits that last up to two years.
That's incorrect. Perhaps you are confused with another country? It is hard to fire people here, certainly not at will for any reason.


He is mixing up danish with dutch. This is the danish system.
posted by Catfry at 2:54 AM on January 15, 2012 [1 favorite]


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