> I know the situation in Germany will be quite different to that in the US, but the reason we have a shortage of nurses is that the pay is not decided on supply and demand in order to have enough of them, but rather as a political decision.
Totally and this is the danger of state-controlled markets. Capitalists have a point here. I tend to argue that at least in democratic societies people have some control over it, whereas in a free labor market they don't. But in practice, like so many things democracy is supposed to fix, people largely aren't concerned with it.
> Of course it is. Teaching an employee on your systems/way of working costs money and is an element in the decision of whether or not to hire an employee. This decision affects demand and therefore price/wages.
Definitely, stickiness works both ways. We've all probably encountered situations where someone's made themselves virtually unfireable because no one can do the things they can. I think generally people characterize that as some kind of selfishness or at least a labor antipattern, but I tend to view it as a rational response to a lack of financial stability: if your employer can completely destabilize you financially, it's pretty rational to take drastic steps to guard against that.
Suffice to say it's complicated; far more complicated than the supply/demand curves charts you get in econ 101.
---
I'll add that my prescription generally is:
- Enshrine the right to organize
- Require equal profit sharing across all employees
- Require significant worker representation on corporate boards
- Heavily tax relatively high salaries, e.g. if everyone makes $1m then 0 tax. If one person makes $100k and 99 others make $1, insane super tax them down to $100 (include tricky stuff like bonuses or whatever)
- Heavily tax nationally high salaries with a progressive income tax
- Heavily punish tax dodging
- Set the minimum wage to a living wage and pin it to the CPI
Interested to see how quickly you can completely destroy productivity and an economy with your policies. It just sounds like communism with extra steps.
Eh, it's really just Germany+, and they're a pretty productive country. For example, profit sharing is "stock compensation" rephrased and not terribly uncommon [1]. Some of the most productive companies like Apple, Facebook, Google, Microsoft, and Amazon pay with stock.
As in with a constitutional amendment? Because the NRLA already guarantees this.
> Require equal profit sharing across all employees
Germany does not do this and neither should the US.
> Require significant worker representation on corporate boards
Germany does not do this and neither should the US.
> Heavily tax relatively high salaries, e.g. if everyone makes $1m then 0 tax. If one person makes $100k and 99 others make $1, insane super tax them down to $100 (include tricky stuff like bonuses or whatever)
Germany doesn't do this and neither should the US.
> Heavily tax nationally high salaries with a progressive income tax.
The US already does this, as the US does not have a flat tax rate for income tax.
> Heavily punish tax dodging
Addressing symptoms not causes. Reduce tax avoidance by simplifying the tax code. It's that simple.
> Set the minimum wage to a living wage and pin it to the CPI
I don't know how to say this without sounding super condescending but, if you want to have a discussion, please contribute to it in a meaningful way. You aren't asking questions, citing sources, or even making good new points. Beyond that, you're really uninformed.
Here's an example where you could have done even a little token searching; the title of this article is "Workers on Corporate Boards? Germany’s Had Them for Decades" [1].
Another example is when you write:
> Addressing symptoms not causes. Reduce tax avoidance by simplifying the tax code. It's that simple.
It truly is not that simple. There's a reason tax codes are complicated and broadly speaking, it's that you have to choose winners and losers to simplify them and that's politically and policy-wise very, very difficult.
I'm sure you'd like to dispute that, but the way you'll dispute it is with normative, opaque statements like "it's that simple" or "terrible idea" which will take you 8 minutes. The way I'll engage is by searching the internet and citing a post, and asking good questions to keep the conversation going. That will take an hour.
I'm not gonna do that, and I think this breakdown makes it clear why. I think you should keep in mind what you're asking of people you're having a discussion with, either implicitly or explicitly, and how your responses indicate what you're expecting to get out of a discussion. From where I sit, you're not looking to learn anything or to inform me of something, you're looking to win an argument. Sometimes that's productive but it's surprisingly rare, and besides that, I'm not interested. I haven't learned anything from you over the 3-4 threads you've chased me down on, but I do feel a little worse about humanity, and I get enough of that already.
And overall, I'd urge you to take a moment to consider the damage you do by logging onto public forums and spreading your ill-informed, normative opinions around. It greatly reduces the signal to noise ratio, and because it takes a lot of time to respond to things like this, it effectively DoS's productive conversations. I love a good internet argument as much as the next mega-arrogant software engineer but, we need to keep in mind the effect that has.
What is all this research you are talking about you doing? I don't see it. You've provided two links in response to two of your many points. You've made claims like "this is Germany+" without actually supporting that claim. The burden of proof is on you to prove this is Germany+ (as the one making the claim), not me.
I have no interest in winning the argument, I have an interest in the truth and sound fiscal and social policies that result in a good balance of strong economy + innovation + lack of exploitation.
For all the things in the discussion that you claim Germany does that make its economy stronger, you need to demonstrate that. For all the things in the discussion that Germany is not doing, you need to justify why they are good, as the one making the claim that they are good ideas. You have not done so. You made a list, and are now claiming everyone else is arguing in bad faith when they ask you to justify that list. My response was not very high effort because I was not actually responded to a thoroughly sourced list. It was just a list.
You accurately stated that I was incorrect about co-determination in Germany. I read your point as "majority representation on boards", when what you actually said was "significant" – an error on my part. Germany does indeed do that, and as such the policy would indeed fall under "Germany+". However, I maintain that amongst all your other bullet points, the only other point that 1. Germany does 2. US does not is living wage. And one (good) argument for why the federal minimum wage is not particularly looked after / updated is because the US is a federation of strong states, so minimum wage is better handled by states individually (which they currently do). Cost of living in Montana is very different from NYC.
Nice, this is great! I now feel like digging in might be productive here.
> You've made claims like "this is Germany+" without actually supporting that claim.
I wasn't like, making a legal statement or whatever. You're arguing "this is communism with extra steps" and my point generally is that these prescriptions largely exist in democratically socialist, productive, EU countries. There are actually not that many communist countries that aren't also authoritarian so, I don't think the "communist" characterization is super useful. But, either way I'll expound.
- Enshrine the right to organize
You wrote that the NLRA already created this "right", but it's been hobbled by the Taft-Hartley act [1] and subsequent legislation in multiple states [2].
On the other hand, Germany (like many other EU countries but unlike the US) has ratified the "Right to Organise and Collective Bargaining Convention", which, well it's in the name [3].
- Require equal profit sharing across all employees
Profit sharing is pretty common across EU countries, but it takes different forms and certainly isn't equal. The coop corporate structure is closer to my thinking here but, admittedly it's not mainstream yet.
- Require significant worker representation on corporate boards
We covered this one but, yeah generally the idea here is for workers to have a big say in how their company is run. Definitely not the majority though; my personal preference would be that there were no majority and representation would be equally divided between workers, c-suite/owners, and shareholders, but baby steps.
- Heavily tax relatively high salaries, e.g. if everyone makes $1m then 0 tax. If one person makes $100k and 99 others make $1, insane super tax them down to $100 (include tricky stuff like bonuses or whatever)
High CEO pay is (variously) subject to tax penalties in Germany [4] [5]. And it seems to be working; their ratio of CEO pay to average worker pay is 136x, just over half the US' at 265x [6]. That's not wonderful and I'm sure there are other factors but, these problems are tricky and one policy probably won't fix it all in one fell swoop.
It's also worth saying CEO pay is generally bad and not meritocratic [7].
- Heavily tax nationally high salaries with a progressive income tax
Germany's 3rd tax bracket is higher than anything in the US and kicks in around $69k (USD) [8].
- Heavily punish tax dodging
Germany does this a little [9] [10] but, obviously not enough. Re: simplify the US tax code, no administration since Reagan has done this, for reasons outlined here [11] [12]. TLDR tax prep is big business, and--like I said before--our tax code does a lot, and changing it creates winners and losers.
- Set the minimum wage to a living wage and pin it to the CPI
Germany has a comparatively high minimum wage of €9.35 ($11.33), but I don't know enough to say if that's a living wage or not. Something that's nice about their (relatively new, 2015) law is they have to update it at least every 2 years [13].
- Abolish "right to work"
I've been wrong about what this is called my whole life. Apparently what I mean is "at-will employment". Mea culpa. But, still the US has it and Germany doesn't. We should get rid of it.
---
OK that's my prescriptions. I do feel like what I've described is the natural evolution of democratic socialist policies in the EU, exemplified not just by Germany but other big EU countries as well and definitely don't qualify as communism. But I think a lot of people think democratic socialism is communism so, maybe we just have a definitions problem.
I'll quickly respond to your minimum wage point and say that you can peg minimum wage to a State's CPI, and cities can create their own minimum wages. New York/New York City do this, for example. I wouldn't say that States are handling this well; 1 in 4 kids grows up in poverty so, something is off.
Thank you for the comprehensive response. One overall point I'd like to make is that I think it is much more constructive to cite things that indicate the policies are having a good impact, not just sources showing that the policies exist. I have not done either in this response, however, as most of my questions/responses are about the theory, not the practice. For example, below I talk about CEO pay. You have pointed out that Germany has policies in place that reduce the gap between CEOs and their average workers, but I think first we need to determine why the gap is bad, if at all. Some gaps are fair, some are not. Anyway I have tried to be thorough with my responses, and have condensed our talking points into more cohesive groups when sensible.
-- re: unions
Right to organize is not the same as "right to force people to join a union". That is what right to work laws prevent. Anyone should be able to join a union. Any group of workers in any industry should be able to form a union. Unions should not be able to force people to join their union. This is a gross violation of individual liberty.
Right to organize and right to work are not conflicting goals. If unions need to force workers to join them, they're arguably not good unions.
I agree that unions are important. But unions are not universally good – they sometimes have serious downsides. Any push for unions need to be met with a measured understanding of this. Do you have a solution for the problem that unions with too much power are actually bad for the economy in that they stifle competition and decrease efficiency? Monopolies in general are bad, and that includes monopolies on labour.
-- re: profit sharing
You can start a coop in the US today. But a coop is not the end-all-be-all of business structures. I'm fine with people starting coops. In fact I think that's great. But requiring it has the potential to stifle innovation / (constructive) risk-taking while fixing a problem that doesn't need solving (because labour can already join coops if they want). There are many companies that want to re-invest profits into CapEx or similar, which becomes more difficult with a profit-sharing structure.
-- re: co-determination
Probably don't have a problem with this as long as it is not majority. Haven't thought enough about possible negative ramifications of such policies though. Want to steel man the counter?
-- re: CEO pay
I agree that executive compensation seems out of wack, but my real issue is that I don't understand how the problem exists, and am wholeheartedly against slapping band-aids on things until I understand the underlying cause. You seem to be taking the stance that wildly different pay is always bad, which I cannot agree with. Fair pay is pay which is proportional to the value delivered. If you are delivering 100x the value than the average worker, you should get paid 100x more. To be completely frank, I don't even think it is a requirement that people should be paid the same rate for the same work, but that is an argument we don't need to get into, as the aforementioned idea of "fair" comes before that anyway.
What I mean to say here is: assuming a free and competitive market, you'd think disproportionate executive pay (disproportionate not to other employees but to the value being delivered by the executive, as to my mind this is what fairness is about in business) would result in a company that is less competitive than one which is not overpaying its executives. So how did this come to pass? To my mind the only options are: 1. markets aren't actually competitive 2. American CEOs actually are delivering 256x the value of their average worker.
If 1, my preference would be to find ways to solve the underlying problem and make the market more competitive rather than this band-aid solution. If 2, then again I don't think there is a problem that needs solving.
There is a 3rd option that disproportionate (again, wrt value delivered, not wrt other workers) executive compensation somehow makes a company more competitive, but I don't see how that could be the case.
-- re: taxes
For someone that seems to be a bit of an idealist, you don't seem to be following through here. I don't think "tax prep's lobby is strong" is a good reason to not simplify the tax code. It's a reason it might not happen, but if simplifying the tax code is good we should strive to do that anyway. Everyone in US government always trying to find the middle ground is why we have settled on a bunch of highly mediocre yet expensive solutions to many (most?) of our biggest problems. Hell, the best tax prep is literally helping you avoid taxes, so clearly if tax avoidance is the problem then they are a big part of it. Are you actually talking about tax evasion when you say dodging? If so I agree that this should be punished, but again, this is something the US is already doing. You can serve jail-time for evasion.
With regards to progressive income taxes, I stand by my point that we already do this. Sure, Germany's brackets are higher (as are many other places), but in this case I don't think "other people do it" is a good argument. I think the de-facto "fair" way of taxing people is with a flat tax. If you choose not to do a flat tax, you need a good argument for why not. Once you have that argument, it should also be able to justify somewhat specific (evidence/reason based) brackets, not arbitrary ones.
-- re: minimum wage
I stand by the idea that states can determine their own minimum wage and that this isn't something the US federal government needs to concern itself with. If states are not doing so, residents need to make a change in their own state. To this end though (supporting the idea of states with real autonomy), I do think it is important that the federal government has policies in place (not exactly certain what form they would take) that allow people to more easily "vote with their feet", i.e. move to another state if their current one isn't treating them well. Competition is often pretty great at improving things, and I think that includes competition between states. I'm still fine with a US federal minimum wage, but I don't think it should be pegged to an average US CoL, as again, different regions have wildly different CoLs. Pegged to inflation / purchasing power makes sense though.
-- re: at-will employment
Disagree strongly with this one. If I can hire someone for any reason, I should be able to fire someone for any reason. Just like you can start a job for any reason and you should be able to quit for any reason. Besides, even when you try to prevent this with regulation, most of the time you end up being able to fire people anyway by finding some stupid reason that's valid, which you just have to sit on for a while. There is no possible way such a policy is good for the economy and therefore society. You end up with HR people who's job is to just find excuses to fire the people that you want to fire anyway, and that certainly isn't productive. It also requires involving more bureaucracy to provide the oversight in judging when reasons are valid or not.
I think one of the big reasons Silicon Valley is in California and not anywhere else in the world is Cali's great combination of 1. at-will employment 2. unenforceable non-competes. It is a great combo that supports individual liberty while also encouraging innovation. You can fire me for any reason, but I can immediately go to a competitor and put my skills to good use. Together it is a great balance. One without the other and you have serious downsides:
• At-will, w/o non-competes: good. Mobility encourages competition and innovation, relationship between employer/employee is a balanced one.
• At-will + non-competes: bad – employers can screw employees even when they're not working for them, violates individual liberty without the worker getting anything for it.
• No at-will, w/o non-competes: bad – chilling effect on hiring + training. Employers don't want to invest in employees if they will struggle to fire them without a corresponding incentive for the employee to stay where they are.
• No at-will + non-competes: bad – stifles competition/innovation by discouraging mobility of the workforce on all fronts.
> One overall point I'd like to make is that I think it is much more constructive to cite things that indicate the policies are having a good impact, not just sources showing that the policies exist.
I was responding to your assertion which was "It very much does not sound like Germany+." Further, the EPI article says right up top:
> Why it matters: CEO pay is not just a symbolic issue. High CEO pay spills over into the rest of the economy and helps pull up pay for privileged managers in the corporate and even nonprofit spheres. Because pay for top managers—CEOs and others—is not driven by their contributions to economic growth, this pay can be reduced and others’ incomes boosted if we can figure out a way to restrain CEOs’ market power. Importantly, the most direct damage done by excess CEO pay is to shareholders. Since shareholders are a relatively privileged group themselves (if not as privileged as CEOs), they could potentially wield power in this situation; policymakers should try to figure out how to enlist shareholders in the fight to restrain excess managerial pay.
> Right to organize is not the same as "right to force people to join a union".
I'll try and skip to the end here and say that the union system isn't optimal. It would be a lot better if we had a solid social welfare state and, coop-style profit sharing and worker representation on corporate boards, and better laws protecting workers. But here we are. All of this stuff is to enhance the financial and collective bargaining power of unions so they can effectively advocate for workers (note I specifically didn't say "their members", as unions represent everyone, members or otherwise).
Right to work laws are meant to undermine unions' collective bargaining leverage, and they've worked [1] (those WSJ studies are real bad, anything could've caused those effects). But besides that, you can also choose to just pay agency fees, not contribute to the union's political activities, and not become a member, even without right to work laws.
> re: profit sharing
Can you cite some things here? You write "a coop is not the end-all-be-all of business structures" and "requiring it has the potential to stifle innovation" without any kind of backing. Plus, I'm not at all saying cooperatives are perfect. I think they're a good way to achieve profit sharing, but there may be other models that are better. I'd caution against the stock comp idea though; that turns into short-termism really quickly.
> co-determination
I can imagine some pitfalls a-la term limits in governments, where when they're so short you don't allow anyone time to build experience. I think compared with the management or investment classes workers have less experience making company-level decisions, and that could have some weird effects. Boards also aren't perfect, you can bribe and blackmail people. But I think in the aggregate that probably doesn't have a big effect. I'm just spitballing, I haven't read anything.
> re: taxes
Haha I haven't been called an idealist in a long time, thank you :) I don't think the US will do even a single thing on this list and is doomed in probably a dozen ways. Maybe that's why my list comes off as idealism: if you're sure you won't get anything on it, it doesn't matter what you put on it.
But re: taxes, Paul Ryan tried his whole career to simplify the tax code. Libertarians have been pushing a flat tax for a generation or more. People come out of the woodwork when things like happen [2] [3] [4] and are generally (and understandably) a little flighty at "various" winners and losers [5].
Re: tax evasion/dodging/etc., I mostly mean it all but, in particular corporate tax avoidance should be fixed [6].
Re: progressive income taxes, as you point out the US tax system is really complex. Our income taxes are progressive. But many of the taxes we pay aren't, or are very barely progressive (property taxes are generally either 1, 2, or 3% for example)--e.g. many states have a flat sales tax as their largest revenue source.
But broadly the goal here isn't to technically meet the definition of a progressive income tax, it's to bring down income inequality. Progressive income taxes can do this, but not if the net effect is to lower taxes--such as it has been in the US [7].
So I'm not saying we should do it because other people do it. I'm saying we should do it because it will work and studies show it will work, but we have to do it right, because we've been doing it wrong, and that's made it not work.
re: minimum wage
I don't care if the federal government sets the minimum wage to a living wage and pins it to CPI or if each state/district/territory does it relative to their CPI. To me that's completely beside the point.
> it is important that the federal government has policies in place... that allow people... move to another state if their current one isn't treating them well
I think theoretically this seems like a good idea, but in practice it's not that common. People aren't gonna take their kids away from their grandparents or leave their whole friend/family network because minimum wage is $1.50 higher 2 time zones away. Really this is just like, a privilege measure. Yeah if you're an NBA player you want to play in Miami or Orlando because they're bigger markets with no income tax. But if you're a roofer in Massachusetts? Moving might not even be an option.
Broadly federalism claims to solve a lot of problems but, due to a mixture of weird politics, baked-in shortcomings and geography, it's pretty ineffective most of the time. There were some cases (gay marriage, slavery, weed) it was super effective, but when you consider all the possible policies, it's batting like .00009. I actually wish federalism could work, in particular I think it's really well-suited to gun policy. But gun policy is actually a really good case study for why federalism just doesn't help.
re: at-will employment
I love this topic because I think it's like, one of those icebreaker topics--you quickly learn a lot about someone's world view from their answer to this. I do think that it seems to make a lot of sense that, as you say, "If I can hire someone for any reason, I should be able to fire someone for any reason." But here are my issues with it:
- Can you hire someone just because they're the same religion as you, or fire them because they're not, or not hire them because they're not?
- What about being gay, or ugly, overweight, or disabled? What if you're a strip club? What if you're a synagogue?
- The power balance between employers and employees is completely different. If an employee quits without warning, it's pretty rare that that employer's housing, health care, retirement savings, college savings, and food supply are threatened. If my employer fires me, it's very likely all those things are threatened, immediately.
You can see how all these things really add up in the aggregate. So much so that we had to amend the Constitution to prevent it for certain groups. But discrimination is still a huge problem, in no small part because many people believe "If I can hire someone for any reason, I should be able to fire someone for any reason." And firing or not hiring is a huge deal to people. Your entire life grows out of your ability to have money--your ability to make friends, your ability to have romantic relationships, your ability to have kids, your ability to save for retirement, etc. etc. It's such an important part of life, and we really need to take it more seriously than essentially, yolo.
> most of the time you end up being able to fire people anyway by finding some stupid reason that's valid
Eh, this can happen but, when there are laws against it, a couple of wrongful termination lawsuits chill that pretty quickly. Ask any hospital lawyer.
> California, etc.
I wouldn't mind seeing some studies about this. You might laugh at this, but I'm innately suspicious of a lot of top-down planning in a policy, and I think there is definitely a ladder-pulling dynamic to putting so many regulations on small businesses. Generally I try and advocate for cutouts for really small businesses--you shouldn't have to jump through a bunch of hoops to open a bar where only you and your family work there for example--but there are serious ill effects in the aggregate absent regulation.
I would say that the only reason at-will employment + unenforceable non-competes works is that the market for software engineers is bonkers and has been for a while. You can imagine it's probably not a party for like, the ops people.
Edit: I might be broadly wrong about relocation [8] but, still I think because it's almost entirely for job reasons, the point about not relocating for State policies holds.
Totally and this is the danger of state-controlled markets. Capitalists have a point here. I tend to argue that at least in democratic societies people have some control over it, whereas in a free labor market they don't. But in practice, like so many things democracy is supposed to fix, people largely aren't concerned with it.
> Of course it is. Teaching an employee on your systems/way of working costs money and is an element in the decision of whether or not to hire an employee. This decision affects demand and therefore price/wages.
Definitely, stickiness works both ways. We've all probably encountered situations where someone's made themselves virtually unfireable because no one can do the things they can. I think generally people characterize that as some kind of selfishness or at least a labor antipattern, but I tend to view it as a rational response to a lack of financial stability: if your employer can completely destabilize you financially, it's pretty rational to take drastic steps to guard against that.
Suffice to say it's complicated; far more complicated than the supply/demand curves charts you get in econ 101.
---
I'll add that my prescription generally is:
- Enshrine the right to organize
- Require equal profit sharing across all employees
- Require significant worker representation on corporate boards
- Heavily tax relatively high salaries, e.g. if everyone makes $1m then 0 tax. If one person makes $100k and 99 others make $1, insane super tax them down to $100 (include tricky stuff like bonuses or whatever)
- Heavily tax nationally high salaries with a progressive income tax
- Heavily punish tax dodging
- Set the minimum wage to a living wage and pin it to the CPI
- Abolish "right to work"