Do you really? Or do you actually want to sustain your standard of living as safely as you can?
Because then the question arises: What if the current way of handling labor protection in the EU (as one of many components) leads to destroying yours and everyone elses standard of living, simply because it's unaffordable? Would you still argue that this is the way to go? Everyone going down with the ship together?
I don't know what will happen and what the root causes are (labor laws might not contribute much to the picture, I really don't know), but at least we should be somewhat cognizant of the fact, where the industries of the future are currently built and where they are not, and have a fantastic explanation of why this is not going to be a super big issue.
> Because then the question arises: What if the current way of handling labor protection in the EU (as one of many components) leads to destroying yours and everyone elses standard of living, simply because it's unaffordable?
It's quite an assumption that it's unaffordable. In the last decades efficiency has been only increasing, but working hours per week aren't significantly going down nor are the salaries noticeably higher.
Where does all the extra efficiency go to? It's pretty ok in my book if it goes to social security.
It's absolutely fantastic for the people, as long as you get companies to agree with you. Looking at the EU market: Does it work? Is that your reading?
I am sure there are ways to try and force companies, but I would suspect it's fairly complicated politically, given that that's usually not how that goes.
> Looking at the EU market: Does it work? Is that your reading?
The EU single market isn't really single yet - and that is in my views the biggest obstacle to innovating start-ups being able to scale. If you want to release EU-wide you have to make sure you also comply to 27 national jurisdictions. It's hard. I work at financial services, and we really have to carefully grow and release per country. The UK would have been nice, but being even more different, for the company of our size they are a total no-go.
But I do think it works. The European countries with strong workers' protection are very attractive destination for knowledge immigration, they make a good chunk of top-10 in Human Development Index, and the whole of top-10 if you adjust it by inequality (so if you look at median at not an average).
> I am sure there are ways to try and force companies, but I would suspect it's fairly complicated politically
Less complicated in the EU than basically anywhere else in the world.
done by the workforce. The financial benefits of worker innovation flow upwards, first to shareholders then to executives. Whatever is left over is claimed by expenses, modernization and as low a wage as can be engineered.
Yes, the workers innovate, rather than the shareholders or management. I think that's the understood context of this discussion/reality. I think this is a tangent of the above.
Not sure if your point was caught up in all the negating but for clarity's sake:
Me + USA = starkly unaffordable. Rents here have ~doubled in 6yrs and are up 5-fold from 2000. Wages grow at a much slower pace - insuring the gap between wages and expenses grows continually.
Before we continue, please clarify whether you detected my sarcasm. Without that information your comment could be interpreted in two completely opposite ways
The EU has been like this for a long time. If it was going to become unaffordable to sustain it that would have happened years ago. Of course in the longer term anything could happen but I find it hard to believe it would happen because of the EU labor laws.
I think it depends on the industry. If it's printed circuit boards, then it's China. If it's software and financial services, then the US. If it's health and science research, then probably Europe.
In fact, where industries are built is even more granular: Shenzen and the Bay Area. Even within the US, big cities have tried building their own tech hubs, and failed. Economic policy may have played a minor role in building NYC or SFO.
> Because then the question arises: What if the current way of handling labor protection in the EU (as one of many components) leads to destroying yours and everyone elses standard of living, simply because it's unaffordable?
The GDP/capita of e.g. France is 10x what it was in the 1970s. There is nothing "unaffordable" about the European social safety net, except that there are political pressures to dismantle it (right-liberals like the Economist)
Because labor protection costs money. If you get something from that, that's net boosting your economy, you have no problem. If not, you get social cohesion, at a price.
Somebody is paying that price. If it's companies they are disincentivized to employ people in your market. If companies go somewhere else to employ people, jobs disappear from your market. If the jobs disappear, so does the money.
You can have your cake and eat it too. It's called the Danish model, although Denmark does not completely implement it. Make it cheap & easy to both hire & fire people, but then take care of people who are fired through a generous safety net. High taxes pay for the safety net.
Explicit taxes are better than implicit taxes. Forcing companies to provide social services such as employment guarantees or health insurance to employees makes taxes look lower than they actually are.
There is a small problem -- more innovative society next door will get richer and eat you anyway. So lets enjoy the good times and be weak men while it lasts.
Let them get richer, the same people who talk with these threatening remarks also talk how capitalism isn't a zero-sum game, someone else becoming richer doesn't mean someone else getting poorer, right? Just means getting richer at a slower rate, Europe is pretty rich on global standards, let's keep getting a bit richer while others get the chance to reach these levels.
The article is really making the point that shitting on workers is OK—desirable even!—so that individual companies can make trillions of dollars. “Innovation” to the author equals making money, and being unable to sack hundreds of people at once with complete disregard for them or the social impact it causes is seen as a negative.
The case is very simple: Working on risky ventures requires the ability to lay people off when the venture is not profitable. When only 1/5 risky ventures is profitable, you can't expect a business to take a risk if the likely result is severe financial penalties for failure.
I understand the argument the article is making. The point I’m making is that “innovation” which consists of a select few being better off at the expense of the majority is not something to be celebrated.
High-skill professionals, entrepreneurs, specialized trades, creative workers, young people, immigrants... and most other professions.
> Can we skip the transparent rage bait and personal jabs, though?
If you make nebulous complaints about "shitting on workers" without considering tradeoffs, you've made a feelings-based argument, so expect that kind of rebuttal.
Thank you for providing sources. Though you’re focused solely on money, which I think is a pretty poor measure for how “better off” one is (and was my original criticism of the article). Especially when you’re ignoring the percentage of people living in poverty and massive income inequality.
Furthermore, making more money can be offset by having to spend more money for basic things like healthcare.
I’d say happiness is a much better indicator of how “better off” one is than how much money one earns. The happiness index takes a much broader view with several indicators (of which GPD per capita is but one).
You’re entitled to valuing different things. But the whole point of my original comment is that I find the focus on money over people to not be something to celebrate. Clearly you (and the author) disagree.
Despite the ellipsis, that doesn’t really answer the question. Those definitions are so vague, they could all together describe a single person.
> immigrants
Are you really arguing, with the current state of the USA, that immigrants are “better off”? I’m somehow doubt the ones who are being grabbed and sent to jail without due process every day would agree with you.
> If you make nebulous complaints
It’s not “nebulous”. Read the article. It’s in context.
> so expect that kind of rebuttal
If you think someone made a bad argument, do better. That’s what the HN guidelines explicitly ask of us. Responding with a bad answer because you think that’s what someone did does not benefit the discussion.
Again, if your objective with a discussion is to “win”, there are other forums better suited for that.
Median wages while prices are higher doesn't mean much, Americans earn more but also pay quite a bit more in most products and services needed for living: housing, healthy food, transportation, healthcare, etc.
After experiencing the American work life I'd never trade my life in Sweden to earn 2-3x more in California, I'm sorry to say but it wasn't better to earn more in the USA, I could buy more trinkets but daily life was just not better.
There's a point where you should look past wages, what's the overall quality of life of living in a place where workaholism is rampant, stress from financial anxiety is constant, having to hedge for potential catastrophic events such as a health scare putting oneself into massive debt, losing your job in a downturn (or simply due to an industry going into herd mode and colluding on layoffs), so on and so forth.
Or you can keep using wages and money as your only guidance in life, I understand that's the only way most Americans can think about life. It's rather puerile though, as if simple metrics are the determining factor of a good life.
The article (which is great) is written from the perspective of "large old established companies innovating". This is something that is fairly elusive even in the different environment of the rest of the western world, I think.
Startups have a different set of constraints in Europe, one of which is the safety net for the people trying to become "ramen profitable".
I remember for the past 50 years, that Americans have been warned that looking across the oceans (or even the Great Lakes) for policy ideas would lead to "stagnation." The latest propaganda point is that Europe is even poorer than Mississippi. That sounds horrifying, if you've never been to either place.
Meanwhile it seems that Europe has been pulling ahead of us in measures that affect the quality of life for common people, including the working class. While the fear of "stagnation" was remotely believable during the 1970s, it's clear today that we're the ones who've been hornswoggled.
The US is still better for making software, as China is better for making printed circuit boards, but I'm not sure either of those things are all that bad for the common people.
I think most in Europe prefer the better living standards and higher life expectancy for most of the population.
The american style lack of employment protection may play a part in fostering innovative companies, although I suspect being the primary superpower with the world's reserve currency may also play a part too.
How is being incredibly innovative making everyone in the US happy? I just see a lot of division and unhappiness right now. And some very rich people.
This has been the case for over 40 years by now. Europe has been lucky or has made the best of it, but imagine: 40 years of hobbled economy!
But European firms have found some workarounds. For example, lots of engineers are owned, I mean, salaried by service companies who then contract that manpower to whoever wants some. A large company can then modulate year after year how many engineers of what kind they want to work for them. It adds a layer of intermediaries who collect a profit and shuffle paperwork - more costly - but engineers expect less salary to begin with. And this provides less control on who exactly does the work - which perhaps doesn't matter for the bulk of workers. But that's all easier than firing lots of people. It also makes it much easier to modulate between local and offshore engineering groups.
Sweden is relatively good at creating innovative companies but is pretty friendly towards small companies especially.
Europe does lag behind though for many different reasons. One big is that the single market of EU is on paper large but in practice it is a lot of different countries with very different cultures and languages.
> Europe does lag behind though for many different reasons. One big is that the single market of EU is on paper large but in practice it is a lot of different countries with very different cultures and languages.
This is the biggest one. The single market is not really "done", and all attempts to deepen it face enormous resistance by national electorates that is now at the point to vote against anything that comes out of the EU.
For example, in order to sell a product in the Netherlands you have to have a sticker in Dutch, even though >90% of population understands English. That's a tiny thing, but makes a supply chain that much more complex.
For digital services it's even worse, the laws still differ significantly per country. Where I work we want to expand, but we still have to do it per country...
It is indeed pretty impossible to fire people who don't want to be fired. It's still possible to spin up a subsidiary and hire people into it and if doesn't work out, well, it didn't work out. Is it even the most commons reason why companies do layoffs?
Sounds like a propaganda piece to suppress both wages and rights here.
The German magazine "Spiegel" has a (paywalled) career-info article on the homepage right now about a lawyer specializing in getting rid of unwanted employees.
> “I'm currently trying to get a severely disabled works council member out. We're well on our way.”
> Removing high earners from the payroll, compensating employees who cannot be dismissed: employer lawyers like Alexander Birkhahn are booming. Here, he reveals how companies can get almost anyone out—and how employees can secure their jobs.
I would add an aspect that is not covered here but is often ignored: the strong labour protection laws result in a mentality where if you get a good job you are much less likely to want to take risks e.g. start your own business. There was a post on the HENRY (high earner, not rich yet) UK subreddit the other day from someone who had a wealth of experience and had the opportunity to join a start up as a CTO. It honestly sounded like a great chance to initiate change. All of the comments were telling the poster that they had it good, that 99% of start ups fail, that the hours would be gruelling. I feel as though the conversation would have been quite different in a US subreddit.
I had the opportunity to move to the US and likely make 2-3x what I make in Europe.
My question is - what for? I earn enough money here that I could buy a nice house and raise my family in relative comfort. Why take unnecessary risk when I already have what I want?
> An American firm shedding workers will incur costs equivalent to paying those sacked for seven months and be done with it.
Seems like the solution (in both the US and EU) is to have some kind of mandatory severance, probably something like continuation of salary for 1/12th of time employed, up to 12 or 18 months.
Edit: This might impact negotiations with mid-career workers, as it'll make it harder to attract someone with a long tenure at an existing job without some kind of guaranteed severance.
All these takes on European workers being too shielded are nonsense.
First of all, they're greatly exaggerated. The specific case of a large German company that is union connected doing layoffs is cherry picked. It's basically the most shielded situation possible but far from the norm in Europe as a whole.
I'm from the Netherlands myself. Up until COVID we were on a path where employers were pushing everybody into flex contracts. It's a fixed length contract (1 year with a 3 month trial period) that may or may not be extended.
Maximum flexibility for employers, minimum job security for employees.
Did this lead to some spur in growth or innovation? No.
Europe's problem isn't related to worker conditions. It's a silly thing to say considering ludicrous US tech salaries.
Silicon Valley is the result of gigantic amounts of excess (Wall street?) capital creating a tech Valhalla. A black hole ecosystem swallowing money and talent domestic and abroad. Europe doesn't have this capital and the capital we do have we probably put in US tech stocks.
It's a similar problem to US manufacturing vs Shenzen manufacturing. The Chinese government as well as many Western companies invested decades and hundreds of billions into making it the state-of-the-art factory of the world.
> Now covering 64 critical technologies and crucial fields spanning defence, space, energy, the environment, artificial intelligence (AI), biotechnology, robotics, cyber, computing, advanced materials and key quantum technology areas, the Tech Tracker’s dataset has been expanded and updated from five years of data (previously, 2018–2022) to 21 years of data (2003–2023).
> These new results reveal the stunning shift in research leadership over the past two decades towards large economies in the Indo-Pacific, led by China’s exceptional gains. The US led in 60 of 64 technologies in the five years from 2003 to 2007, but in the most recent five years (2019–2023) is leading in seven. China led in just three of 64 technologies in 2003–2007 but is now the lead country in 57 of 64 technologies in 2019–2023, increasing its lead from our rankings last year (2018–2022), where it was leading in 52 technologies.
> Our research reveals that China has built the foundations to position itself as the world’s leading science and technology superpower, by establishing a sometimes stunning lead in high-impact research across the majority of critical and emerging technology domains.
> China’s global lead extends to 37 out of 44 technologies that ASPI is now tracking, covering a range of crucial technology fields spanning defence, space, robotics, energy, the environment, biotechnology, artificial intelligence (AI), advanced materials and key quantum technology areas. The Critical Technology Tracker shows that, for some technologies, all of the world’s top 10 leading research institutions are based in China and are collectively generating nine times more high-impact research papers than the second-ranked country (most often the US). Notably, the Chinese Academy of Sciences ranks highly (and often first or second) across many of the 44 technologies included in the Critical Technology Tracker. We also see China’s efforts being bolstered through talent and knowledge import: one-fifth of its high-impact papers are being authored by researchers with postgraduate training in a Five-Eyes country. China’s lead is the product of deliberate design and long-term policy planning, as repeatedly outlined by Xi Jinping and his predecessors.
There could be multiple innovation areas. Financial innovations, technical innovations or social innovations. For example S&P 500, electric cars or import Africa to Europe.
The “American boss” can also over-staff and then fire as they see fit and call it innovation. They hire way more people than they can employ long term, especially during another hype-driven tech bubble. They can get a few billion extra when they sell a company with 1000s of employees instead of 100s. Right after acquisition it’s time for mass layoffs because of “market conditions”. So employees work lives become another asset in speculator’s spreadsheets.
When hackers hear “innovation” they probably think of solving an existing valuable problem better. It seems economists and CEOs think of innovation as finding a better way to extract maximum mental labor for the cheapest price. Then use that to maximize the value of their own equity, at the expense of society if necessary. If you’re building a heavily isolated bunker in Hawaii or New Zealand, you’re not exactly signaling you care about the rest of humanity’s well being.
This article is so facile as to be meaningless. All it says is "making it easy to fire people is better for innovation," and then barely backs that up, as if it should be taken as writ that the author has found the one simple thing that Europe needs to fix. It talks about the "European model," but only really specifically mentions Germany (with a brief shout out to France in perhaps the only worthwhile section of the article, where it focuses on actual numbers) and doesn't really discuss anywhere else. It's certainly an opinion piece in that it showcases the author's opinion, but it doesn't do anything vis-a-vis persuasion.
Innovation at the expense of crushing workers and increasing the gap between parasitic management compensation and worker wages. No, thanks. Europe may need reform but it’s not the USA way of doing things, except for the elite for which “ the economist “ is a already known and tired sockpuppet.
Because their cost of living is insane, the social safety net is shitty, labor protections nonexistent, and they don't get any holidays, among other factors
The pay difference is not a factor 2. You are paid 300-400% more than in the EU easily in the US, and the difference grows if you compare net pay vs before-tax. Cost of living bay area vs center Paris is a wash. Hell, I'd say the food is actually cheaper in the US. Frankly, unless you know your way around to avoid tourist places, food is cheaper and better in the US compared to center of Paris, although I'll agree that if you look around you can find much better in Paris than in the Bay Area.
And if you're employed, especially as a SWE, medical care is better in the US. If you're not ... EU >>> US.
The entire point of the article is to compare Europe to the USA. Even the illustration at the top makes that point immediately obvious and unambiguous.
As an European, I don't agree with the analysis: it's not labour law that has stifled innovation, but the post-WWII generation that chose to try stopping the train of history.
Those born between the late 40s and 60s want NOTHING to do with innovation, people, from every social background and culture; the development model imposed after the war has killed Western Europe. From being the former greatest secular innovators, we've become the last wheels on the cart, still with some pockets of excellence, but not for long, and most don't want to capitalise on them. This is without even considering the high-treasonous nazi governments in almost all EU countries that pursue foreign interests against our own. Because this has been happening for decades, to put it plainly.
The populations who, when young, sang "we are always twenty years old" today reject all innovation, and the cure is simply the social fracture that will lead them to marginalisation compared to their current dominance, unfortunately dragging everyone down with them.
Unfortunately it is yet another piece from the Economist defending neoliberalism, as it has done from the beginning. Europe is not short on issues, one would have to agree, but the (hidden) author basically frames labour protections as inefficiencies rather than social achievements or desirables, and assumes investor imperatives are the only measure of success. What fairness? And what is this nonsense with people needing shelter, food, and healthcare?
The business enterprise, in this hit piece, should not be simply another tool for improving the quality of life and helping create a society that's worth living in, but the sole purpose of the society itself.
The "cumbersome process for letting go workers comes with hidden costs" aren't really hidden, unlike the author, but transparent social protections ensuring fair treatment, preventing arbitrary dismissal, and stabilising demand. Something a decent society should fully embrace.
> the sheer difficulty of shedding staff en masse—a reality of corporate life—steers Europe’s biggest companies away from making risky bets in innovative fields
No, thank you. Europe's lag in high-tech sectors stems mainly from underinvestment, fragmented capital markets, and US monopoly power, not employment law. Labour rigidity has no strict correlation with innovation deficits (Germany, Scandinavia, France, Japan, and South Korea all had stronger labour protections than the US and managed to become rather innovative), but why bother with data when the point was simply to bash Europe for protecting its workers from predatory businesses? At best, the evidence is mixed and context-dependent (focusing on patents, for example, instead of genuine innovation)[0], and OECD and Eurostat long-term data show that some high-innovation countries have some of the strongest worker protections and unions.
> investments in disruptive breakthroughs [...] require the ability for big companies to hire lots of staff, then later fire most of them if the projects don’t pan out
Likewise, nonsensical economic justification for precarious work. For the most part, innovation depends on R&D funding, talent, and public infrastructure, not firing freedom (which businesses are guaranteed to abuse). Rather than treating humans as disposable risk capital, the author should take a look at US's own history and they will undoubtedly notice that a significant part of the innovation that it benefits from today was developed when the US had huge taxes, immense investments in R&D and public infrastructure. [1]
Strong social and environmental protections should be the bare minimum for any democratic society. Remove that, and no economic system, whether capitalist or not, is worth having.
It's not so much crushing innovation, as it's prioritizing anything but innovation. Primarily the importance and the finances of people living in Brussels. It's more parasitic than actively hostile
How does the cost of the Brussels administration compare to, say, the US federal administration? A spot-checked LLM answer tells me, as fraction of GDP:
- EU: 1%
- US: 24%
- China: 35%
That is quite a favourable comparison for Europe, I'd say.
EDIT if anything, staring at these numbers, one might conclude the EU is not spending enough in general, in particular on innovation. Quite the stark contrast to being a money grab, IMO.
How nicely you ask. I arrived at them by division.
Since you ask so nicely, it gives me pleasure to provide further details:
- This link discusses the 2025 EU budget: https://www.consilium.europa.eu/en/policies/eu-annual-budget... there are two numbers. It is unclear if the budget is the sum, or if one number includes the other. But let's add them for an annual budget of approx 250bn EUR
I'm not claiming these are the best or most up to date statistics, but this is a roughly 20x difference between US and Europe, and I understand the 2025 EU budget is particularly large.
The notion that EU bureaucracy is particularly expensive has no foundation in fact, AFAICT.
As I suspected, there isn’t much there. What about individual member state expenditures (perhaps even limited to spending on things required by EU law)? OP’s point may have been silly, but this really isn’t any better.
Comparison does not work, EU does very little compared to what the US/China administrations do, you'll have to add the cost of all the countries administration too.
that's just the size of the eu budget but that's a fraction of what EUrocrats control via regulation and via their sovereignity in member states. EU is not a federal state government like the US
https://archive.is/8UOIg
I'd rather live in a society with strong labor protections than one that is "more innovative", whatever that means.
Do you really? Or do you actually want to sustain your standard of living as safely as you can?
Because then the question arises: What if the current way of handling labor protection in the EU (as one of many components) leads to destroying yours and everyone elses standard of living, simply because it's unaffordable? Would you still argue that this is the way to go? Everyone going down with the ship together?
I don't know what will happen and what the root causes are (labor laws might not contribute much to the picture, I really don't know), but at least we should be somewhat cognizant of the fact, where the industries of the future are currently built and where they are not, and have a fantastic explanation of why this is not going to be a super big issue.
> Because then the question arises: What if the current way of handling labor protection in the EU (as one of many components) leads to destroying yours and everyone elses standard of living, simply because it's unaffordable?
It's quite an assumption that it's unaffordable. In the last decades efficiency has been only increasing, but working hours per week aren't significantly going down nor are the salaries noticeably higher.
Where does all the extra efficiency go to? It's pretty ok in my book if it goes to social security.
It's absolutely fantastic for the people, as long as you get companies to agree with you. Looking at the EU market: Does it work? Is that your reading?
I am sure there are ways to try and force companies, but I would suspect it's fairly complicated politically, given that that's usually not how that goes.
> Looking at the EU market: Does it work? Is that your reading?
The EU single market isn't really single yet - and that is in my views the biggest obstacle to innovating start-ups being able to scale. If you want to release EU-wide you have to make sure you also comply to 27 national jurisdictions. It's hard. I work at financial services, and we really have to carefully grow and release per country. The UK would have been nice, but being even more different, for the company of our size they are a total no-go.
But I do think it works. The European countries with strong workers' protection are very attractive destination for knowledge immigration, they make a good chunk of top-10 in Human Development Index, and the whole of top-10 if you adjust it by inequality (so if you look at median at not an average).
> I am sure there are ways to try and force companies, but I would suspect it's fairly complicated politically
Less complicated in the EU than basically anywhere else in the world.
> efficiency has been only increasing
Through innovation.
> Through innovation.
done by the workforce. The financial benefits of worker innovation flow upwards, first to shareholders then to executives. Whatever is left over is claimed by expenses, modernization and as low a wage as can be engineered.
Yes, the workers innovate, rather than the shareholders or management. I think that's the understood context of this discussion/reality. I think this is a tangent of the above.
> destroying yours and everyone elses standard of living, simply because it's unaffordable?
As opposed to what has happened in the US, where everything is happy and everything is affordable. Innovation!
Are you not aware that this is the case? Look up affordability statistics.
Not sure if your point was caught up in all the negating but for clarity's sake:
Me + USA = starkly unaffordable. Rents here have ~doubled in 6yrs and are up 5-fold from 2000. Wages grow at a much slower pace - insuring the gap between wages and expenses grows continually.
Before we continue, please clarify whether you detected my sarcasm. Without that information your comment could be interpreted in two completely opposite ways
The EU has been like this for a long time. If it was going to become unaffordable to sustain it that would have happened years ago. Of course in the longer term anything could happen but I find it hard to believe it would happen because of the EU labor laws.
I think it depends on the industry. If it's printed circuit boards, then it's China. If it's software and financial services, then the US. If it's health and science research, then probably Europe.
In fact, where industries are built is even more granular: Shenzen and the Bay Area. Even within the US, big cities have tried building their own tech hubs, and failed. Economic policy may have played a minor role in building NYC or SFO.
> Because then the question arises: What if the current way of handling labor protection in the EU (as one of many components) leads to destroying yours and everyone elses standard of living, simply because it's unaffordable?
The GDP/capita of e.g. France is 10x what it was in the 1970s. There is nothing "unaffordable" about the European social safety net, except that there are political pressures to dismantle it (right-liberals like the Economist)
Why would it become unaffordable?
Because labor protection costs money. If you get something from that, that's net boosting your economy, you have no problem. If not, you get social cohesion, at a price.
Somebody is paying that price. If it's companies they are disincentivized to employ people in your market. If companies go somewhere else to employ people, jobs disappear from your market. If the jobs disappear, so does the money.
> Because labor protection costs money
Labor protection does not "cost money". It is a limit on the degree to which workers can be exploited.
Sorry but 50% tax rate is exploitation. Especially so how inefficient government spending is.
Not mangling your workers is for free.
Our standard of living is destroying the planet and it needs to go down a lot anyway.
You can have your cake and eat it too. It's called the Danish model, although Denmark does not completely implement it. Make it cheap & easy to both hire & fire people, but then take care of people who are fired through a generous safety net. High taxes pay for the safety net.
Explicit taxes are better than implicit taxes. Forcing companies to provide social services such as employment guarantees or health insurance to employees makes taxes look lower than they actually are.
How does that work with immigration? Does Denmark allow anyone to receive these benefits?
You have to live there for 10 years before you qualify. But you get to pay the high taxes regardless of whether you qualify or not.
You might. In aggregate far more people wanna move from Europe to US then opposite.
There is a small problem -- more innovative society next door will get richer and eat you anyway. So lets enjoy the good times and be weak men while it lasts.
Let them get richer, the same people who talk with these threatening remarks also talk how capitalism isn't a zero-sum game, someone else becoming richer doesn't mean someone else getting poorer, right? Just means getting richer at a slower rate, Europe is pretty rich on global standards, let's keep getting a bit richer while others get the chance to reach these levels.
The article is really making the point that shitting on workers is OK—desirable even!—so that individual companies can make trillions of dollars. “Innovation” to the author equals making money, and being unable to sack hundreds of people at once with complete disregard for them or the social impact it causes is seen as a negative.
The case is very simple: Working on risky ventures requires the ability to lay people off when the venture is not profitable. When only 1/5 risky ventures is profitable, you can't expect a business to take a risk if the likely result is severe financial penalties for failure.
I understand the argument the article is making. The point I’m making is that “innovation” which consists of a select few being better off at the expense of the majority is not something to be celebrated.
"I want to take risks exploiting workers. Taking risks treating them fairly is risky".
It objectively is a negative. The American worker is much better off than the European worker. It doesn't matter if it makes you feel sad.
> The American worker is much better off than the European worker.
In what ways, specifically? And which types of workers? Remember that labor laws aren’t exclusive to developers.
> It doesn't matter if it makes you feel sad.
Can we skip the transparent rage bait and personal jabs, though? There are other forums if you want to engage in that, I’m personally not interested.
> In what ways, specifically?
Median wages https://en.wikipedia.org/wiki/Median_income?useskin=vector Average work hours
Purchasing power parity https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)...
Despite average work hours https://en.wikipedia.org/wiki/List_of_countries_by_average_a...
Better youth unemployment than Europe https://en.wikipedia.org/wiki/List_of_countries_by_unemploym...
> And which types of workers?
High-skill professionals, entrepreneurs, specialized trades, creative workers, young people, immigrants... and most other professions.
> Can we skip the transparent rage bait and personal jabs, though?
If you make nebulous complaints about "shitting on workers" without considering tradeoffs, you've made a feelings-based argument, so expect that kind of rebuttal.
Thank you for providing sources. Though you’re focused solely on money, which I think is a pretty poor measure for how “better off” one is (and was my original criticism of the article). Especially when you’re ignoring the percentage of people living in poverty and massive income inequality.
https://en.wikipedia.org/wiki/List_of_countries_by_percentag...
https://en.wikipedia.org/wiki/List_of_countries_by_income_in...
Furthermore, making more money can be offset by having to spend more money for basic things like healthcare.
I’d say happiness is a much better indicator of how “better off” one is than how much money one earns. The happiness index takes a much broader view with several indicators (of which GPD per capita is but one).
https://en.wikipedia.org/wiki/World_Happiness_Report#Interna...
You’re entitled to valuing different things. But the whole point of my original comment is that I find the focus on money over people to not be something to celebrate. Clearly you (and the author) disagree.
> High-skill professionals, entrepreneurs, specialized trades, creative workers, young people, immigrants...
Despite the ellipsis, that doesn’t really answer the question. Those definitions are so vague, they could all together describe a single person.
> immigrants
Are you really arguing, with the current state of the USA, that immigrants are “better off”? I’m somehow doubt the ones who are being grabbed and sent to jail without due process every day would agree with you.
> If you make nebulous complaints
It’s not “nebulous”. Read the article. It’s in context.
> so expect that kind of rebuttal
If you think someone made a bad argument, do better. That’s what the HN guidelines explicitly ask of us. Responding with a bad answer because you think that’s what someone did does not benefit the discussion.
Again, if your objective with a discussion is to “win”, there are other forums better suited for that.
Median wages while prices are higher doesn't mean much, Americans earn more but also pay quite a bit more in most products and services needed for living: housing, healthy food, transportation, healthcare, etc.
After experiencing the American work life I'd never trade my life in Sweden to earn 2-3x more in California, I'm sorry to say but it wasn't better to earn more in the USA, I could buy more trinkets but daily life was just not better.
There's a point where you should look past wages, what's the overall quality of life of living in a place where workaholism is rampant, stress from financial anxiety is constant, having to hedge for potential catastrophic events such as a health scare putting oneself into massive debt, losing your job in a downturn (or simply due to an industry going into herd mode and colluding on layoffs), so on and so forth.
Or you can keep using wages and money as your only guidance in life, I understand that's the only way most Americans can think about life. It's rather puerile though, as if simple metrics are the determining factor of a good life.
The article (which is great) is written from the perspective of "large old established companies innovating". This is something that is fairly elusive even in the different environment of the rest of the western world, I think.
Startups have a different set of constraints in Europe, one of which is the safety net for the people trying to become "ramen profitable".
I remember for the past 50 years, that Americans have been warned that looking across the oceans (or even the Great Lakes) for policy ideas would lead to "stagnation." The latest propaganda point is that Europe is even poorer than Mississippi. That sounds horrifying, if you've never been to either place.
Meanwhile it seems that Europe has been pulling ahead of us in measures that affect the quality of life for common people, including the working class. While the fear of "stagnation" was remotely believable during the 1970s, it's clear today that we're the ones who've been hornswoggled.
The US is still better for making software, as China is better for making printed circuit boards, but I'm not sure either of those things are all that bad for the common people.
I think most in Europe prefer the better living standards and higher life expectancy for most of the population.
The american style lack of employment protection may play a part in fostering innovative companies, although I suspect being the primary superpower with the world's reserve currency may also play a part too.
How is being incredibly innovative making everyone in the US happy? I just see a lot of division and unhappiness right now. And some very rich people.
This has been the case for over 40 years by now. Europe has been lucky or has made the best of it, but imagine: 40 years of hobbled economy!
But European firms have found some workarounds. For example, lots of engineers are owned, I mean, salaried by service companies who then contract that manpower to whoever wants some. A large company can then modulate year after year how many engineers of what kind they want to work for them. It adds a layer of intermediaries who collect a profit and shuffle paperwork - more costly - but engineers expect less salary to begin with. And this provides less control on who exactly does the work - which perhaps doesn't matter for the bulk of workers. But that's all easier than firing lots of people. It also makes it much easier to modulate between local and offshore engineering groups.
Pooling engineers is big business.
Sweden is relatively good at creating innovative companies but is pretty friendly towards small companies especially.
Europe does lag behind though for many different reasons. One big is that the single market of EU is on paper large but in practice it is a lot of different countries with very different cultures and languages.
> Europe does lag behind though for many different reasons. One big is that the single market of EU is on paper large but in practice it is a lot of different countries with very different cultures and languages.
This is the biggest one. The single market is not really "done", and all attempts to deepen it face enormous resistance by national electorates that is now at the point to vote against anything that comes out of the EU.
For example, in order to sell a product in the Netherlands you have to have a sticker in Dutch, even though >90% of population understands English. That's a tiny thing, but makes a supply chain that much more complex.
For digital services it's even worse, the laws still differ significantly per country. Where I work we want to expand, but we still have to do it per country...
It is indeed pretty impossible to fire people who don't want to be fired. It's still possible to spin up a subsidiary and hire people into it and if doesn't work out, well, it didn't work out. Is it even the most commons reason why companies do layoffs?
Sounds like a propaganda piece to suppress both wages and rights here.
> It is indeed pretty impossible to fire people
It isn't really. In fact, it's usually very easy: you just have to follow the exact procedure that is written down for you.
Every example I've seen when people have claimed differently, they haven't followed that procedure. Literally every time.
It’s very easy: spend an insane amount of money, usually at a time when your business can’t afford it.
That's not how it works. You just can't fire at will.
If your business can't afford to fire people it probably shouldn't be hiring too.
The German magazine "Spiegel" has a (paywalled) career-info article on the homepage right now about a lawyer specializing in getting rid of unwanted employees.
https://www.spiegel.de/karriere/entlassungen-wie-unternehmen...
The headline text translated:
> “I'm currently trying to get a severely disabled works council member out. We're well on our way.”
> Removing high earners from the payroll, compensating employees who cannot be dismissed: employer lawyers like Alexander Birkhahn are booming. Here, he reveals how companies can get almost anyone out—and how employees can secure their jobs.
I would add an aspect that is not covered here but is often ignored: the strong labour protection laws result in a mentality where if you get a good job you are much less likely to want to take risks e.g. start your own business. There was a post on the HENRY (high earner, not rich yet) UK subreddit the other day from someone who had a wealth of experience and had the opportunity to join a start up as a CTO. It honestly sounded like a great chance to initiate change. All of the comments were telling the poster that they had it good, that 99% of start ups fail, that the hours would be gruelling. I feel as though the conversation would have been quite different in a US subreddit.
A term they like to use is 'crabs in a bucket'.
And that was sound advice.
I had the opportunity to move to the US and likely make 2-3x what I make in Europe.
My question is - what for? I earn enough money here that I could buy a nice house and raise my family in relative comfort. Why take unnecessary risk when I already have what I want?
> An American firm shedding workers will incur costs equivalent to paying those sacked for seven months and be done with it.
Seems like the solution (in both the US and EU) is to have some kind of mandatory severance, probably something like continuation of salary for 1/12th of time employed, up to 12 or 18 months.
Edit: This might impact negotiations with mid-career workers, as it'll make it harder to attract someone with a long tenure at an existing job without some kind of guaranteed severance.
I live in Europe and you can do something very close to the American thing in my country. Germany and France are at one end of a spectrum.
Estonia!
All these takes on European workers being too shielded are nonsense.
First of all, they're greatly exaggerated. The specific case of a large German company that is union connected doing layoffs is cherry picked. It's basically the most shielded situation possible but far from the norm in Europe as a whole.
I'm from the Netherlands myself. Up until COVID we were on a path where employers were pushing everybody into flex contracts. It's a fixed length contract (1 year with a 3 month trial period) that may or may not be extended.
Maximum flexibility for employers, minimum job security for employees.
Did this lead to some spur in growth or innovation? No.
Europe's problem isn't related to worker conditions. It's a silly thing to say considering ludicrous US tech salaries.
Silicon Valley is the result of gigantic amounts of excess (Wall street?) capital creating a tech Valhalla. A black hole ecosystem swallowing money and talent domestic and abroad. Europe doesn't have this capital and the capital we do have we probably put in US tech stocks.
It's a similar problem to US manufacturing vs Shenzen manufacturing. The Chinese government as well as many Western companies invested decades and hundreds of billions into making it the state-of-the-art factory of the world.
Once it's in place you can't replicate it.
Did anyone got the funny part?
Here is it: they assume the "innovative" one to be the U.S., not China.
Well yeah, copying is not real innovation.
https://www.aspi.org.au/report/aspis-two-decade-critical-tec... (August 2024)
> Now covering 64 critical technologies and crucial fields spanning defence, space, energy, the environment, artificial intelligence (AI), biotechnology, robotics, cyber, computing, advanced materials and key quantum technology areas, the Tech Tracker’s dataset has been expanded and updated from five years of data (previously, 2018–2022) to 21 years of data (2003–2023).
> These new results reveal the stunning shift in research leadership over the past two decades towards large economies in the Indo-Pacific, led by China’s exceptional gains. The US led in 60 of 64 technologies in the five years from 2003 to 2007, but in the most recent five years (2019–2023) is leading in seven. China led in just three of 64 technologies in 2003–2007 but is now the lead country in 57 of 64 technologies in 2019–2023, increasing its lead from our rankings last year (2018–2022), where it was leading in 52 technologies.
https://www.aspi.org.au/report/critical-technology-tracker (March 2023)
> Our research reveals that China has built the foundations to position itself as the world’s leading science and technology superpower, by establishing a sometimes stunning lead in high-impact research across the majority of critical and emerging technology domains.
> China’s global lead extends to 37 out of 44 technologies that ASPI is now tracking, covering a range of crucial technology fields spanning defence, space, robotics, energy, the environment, biotechnology, artificial intelligence (AI), advanced materials and key quantum technology areas. The Critical Technology Tracker shows that, for some technologies, all of the world’s top 10 leading research institutions are based in China and are collectively generating nine times more high-impact research papers than the second-ranked country (most often the US). Notably, the Chinese Academy of Sciences ranks highly (and often first or second) across many of the 44 technologies included in the Critical Technology Tracker. We also see China’s efforts being bolstered through talent and knowledge import: one-fifth of its high-impact papers are being authored by researchers with postgraduate training in a Five-Eyes country. China’s lead is the product of deliberate design and long-term policy planning, as repeatedly outlined by Xi Jinping and his predecessors.
There could be multiple innovation areas. Financial innovations, technical innovations or social innovations. For example S&P 500, electric cars or import Africa to Europe.
The “American boss” can also over-staff and then fire as they see fit and call it innovation. They hire way more people than they can employ long term, especially during another hype-driven tech bubble. They can get a few billion extra when they sell a company with 1000s of employees instead of 100s. Right after acquisition it’s time for mass layoffs because of “market conditions”. So employees work lives become another asset in speculator’s spreadsheets.
When hackers hear “innovation” they probably think of solving an existing valuable problem better. It seems economists and CEOs think of innovation as finding a better way to extract maximum mental labor for the cheapest price. Then use that to maximize the value of their own equity, at the expense of society if necessary. If you’re building a heavily isolated bunker in Hawaii or New Zealand, you’re not exactly signaling you care about the rest of humanity’s well being.
This article is so facile as to be meaningless. All it says is "making it easy to fire people is better for innovation," and then barely backs that up, as if it should be taken as writ that the author has found the one simple thing that Europe needs to fix. It talks about the "European model," but only really specifically mentions Germany (with a brief shout out to France in perhaps the only worthwhile section of the article, where it focuses on actual numbers) and doesn't really discuss anywhere else. It's certainly an opinion piece in that it showcases the author's opinion, but it doesn't do anything vis-a-vis persuasion.
Innovation at the expense of crushing workers and increasing the gap between parasitic management compensation and worker wages. No, thanks. Europe may need reform but it’s not the USA way of doing things, except for the elite for which “ the economist “ is a already known and tired sockpuppet.
Why do you think software engineers in the US are paid twice as much as software engineers in Europe? Is it because US is better at crushing workers?
Because their cost of living is insane, the social safety net is shitty, labor protections nonexistent, and they don't get any holidays, among other factors
The pay difference is not a factor 2. You are paid 300-400% more than in the EU easily in the US, and the difference grows if you compare net pay vs before-tax. Cost of living bay area vs center Paris is a wash. Hell, I'd say the food is actually cheaper in the US. Frankly, unless you know your way around to avoid tourist places, food is cheaper and better in the US compared to center of Paris, although I'll agree that if you look around you can find much better in Paris than in the Bay Area.
And if you're employed, especially as a SWE, medical care is better in the US. If you're not ... EU >>> US.
Why do you need to reference the USA? Makes it seem like your politics are based on resentment and not a dispassionate discussion of tradeoffs
The entire point of the article is to compare Europe to the USA. Even the illustration at the top makes that point immediately obvious and unambiguous.
The comment I replied to is clearly emotionally engaged by that aspect of it
The article image is literally the USA with a jetpack and Europe with a ball and chain. So it seems self evident why somebody might reference the US.
Read the first 3 lines of the article, my man.
The part of the article I can read is about a contrast between the US and Europe.
"Guys, we're crushing it on innovation! Even the Economist agrees!"
As an European, I don't agree with the analysis: it's not labour law that has stifled innovation, but the post-WWII generation that chose to try stopping the train of history.
Those born between the late 40s and 60s want NOTHING to do with innovation, people, from every social background and culture; the development model imposed after the war has killed Western Europe. From being the former greatest secular innovators, we've become the last wheels on the cart, still with some pockets of excellence, but not for long, and most don't want to capitalise on them. This is without even considering the high-treasonous nazi governments in almost all EU countries that pursue foreign interests against our own. Because this has been happening for decades, to put it plainly.
The populations who, when young, sang "we are always twenty years old" today reject all innovation, and the cure is simply the social fracture that will lead them to marginalisation compared to their current dominance, unfortunately dragging everyone down with them.
And the USA fixes that by moving the crushing to workers.
The "Innovation" of mass layoffs? Okay
Unfortunately it is yet another piece from the Economist defending neoliberalism, as it has done from the beginning. Europe is not short on issues, one would have to agree, but the (hidden) author basically frames labour protections as inefficiencies rather than social achievements or desirables, and assumes investor imperatives are the only measure of success. What fairness? And what is this nonsense with people needing shelter, food, and healthcare?
The business enterprise, in this hit piece, should not be simply another tool for improving the quality of life and helping create a society that's worth living in, but the sole purpose of the society itself.
The "cumbersome process for letting go workers comes with hidden costs" aren't really hidden, unlike the author, but transparent social protections ensuring fair treatment, preventing arbitrary dismissal, and stabilising demand. Something a decent society should fully embrace.
> the sheer difficulty of shedding staff en masse—a reality of corporate life—steers Europe’s biggest companies away from making risky bets in innovative fields
No, thank you. Europe's lag in high-tech sectors stems mainly from underinvestment, fragmented capital markets, and US monopoly power, not employment law. Labour rigidity has no strict correlation with innovation deficits (Germany, Scandinavia, France, Japan, and South Korea all had stronger labour protections than the US and managed to become rather innovative), but why bother with data when the point was simply to bash Europe for protecting its workers from predatory businesses? At best, the evidence is mixed and context-dependent (focusing on patents, for example, instead of genuine innovation)[0], and OECD and Eurostat long-term data show that some high-innovation countries have some of the strongest worker protections and unions.
> investments in disruptive breakthroughs [...] require the ability for big companies to hire lots of staff, then later fire most of them if the projects don’t pan out
Likewise, nonsensical economic justification for precarious work. For the most part, innovation depends on R&D funding, talent, and public infrastructure, not firing freedom (which businesses are guaranteed to abuse). Rather than treating humans as disposable risk capital, the author should take a look at US's own history and they will undoubtedly notice that a significant part of the innovation that it benefits from today was developed when the US had huge taxes, immense investments in R&D and public infrastructure. [1]
Strong social and environmental protections should be the bare minimum for any democratic society. Remove that, and no economic system, whether capitalist or not, is worth having.
[0] https://www.oecd.org/content/dam/oecd/en/publications/report...
[1] https://www.sciencedirect.com/science/article/pii/S259014512...
It's not so much crushing innovation, as it's prioritizing anything but innovation. Primarily the importance and the finances of people living in Brussels. It's more parasitic than actively hostile
How does the cost of the Brussels administration compare to, say, the US federal administration? A spot-checked LLM answer tells me, as fraction of GDP:
- EU: 1%
- US: 24%
- China: 35%
That is quite a favourable comparison for Europe, I'd say.
EDIT if anything, staring at these numbers, one might conclude the EU is not spending enough in general, in particular on innovation. Quite the stark contrast to being a money grab, IMO.
How are you arriving at these percentages? Show your work.
How nicely you ask. I arrived at them by division.
Since you ask so nicely, it gives me pleasure to provide further details:
- This link discusses the 2025 EU budget: https://www.consilium.europa.eu/en/policies/eu-annual-budget... there are two numbers. It is unclear if the budget is the sum, or if one number includes the other. But let's add them for an annual budget of approx 250bn EUR
- EU GDP is around 20tn EUR according to this Wikipedia link: https://en.wikipedia.org/wiki/Economy_of_the_European_Union (the nominal number)
- using division I arrive at 1.25% https://en.wikipedia.org/wiki/Division_(mathematics)
For the US:
- This webpage: https://fiscaldata.treasury.gov/americas-finance-guide/feder... puts the federal spending at $6.66tn (hmm)
- Wikipedia again puts US GDP at around $30tn: https://en.wikipedia.org/wiki/Economy_of_the_United_States
- We arrive at federal budget spending of 22%
I'm not claiming these are the best or most up to date statistics, but this is a roughly 20x difference between US and Europe, and I understand the 2025 EU budget is particularly large.
The notion that EU bureaucracy is particularly expensive has no foundation in fact, AFAICT.
As I suspected, there isn’t much there. What about individual member state expenditures (perhaps even limited to spending on things required by EU law)? OP’s point may have been silly, but this really isn’t any better.
Oh great oracle, I bow to your superior thinking.
Might you share then how the EU is a money grab for Brussels Eurocrats? With at least the level of detail you got from me?
And add the per country spend that almost certainly exceeds per capita EU spend.
Comparison does not work, EU does very little compared to what the US/China administrations do, you'll have to add the cost of all the countries administration too.
The claim was that the EU is a money grab for Brussels time wasters. The cost of the EU bureaucracy is minimal.
What the member states spend, and if they do it well etc. is a totally separate question.
Brussels isn't even a nice city, what is this even about.
that's just the size of the eu budget but that's a fraction of what EUrocrats control via regulation and via their sovereignity in member states. EU is not a federal state government like the US
Creating an environment hospitable to parasitism is actively hostile to would-be hosts.
The Brussel's folks pay is change.