The rules and burdens that explain Europe’s economic crisis.
Prime Minister Mario Monti has issued a new “growth decree” to revive Italy’s moribund economy. Among other initiatives, the 185-page plan proposes discount loans for corporate R&D, tax credits for businesses that hire employees with advanced degrees, and reduced headcount at select government ministries.
Will any of this solve Italy’s economic problems? Only in the sense that one could theoretically drain Lake Como with a ladle and straw. Allow us, then, to illustrate why Italy’s economy stagnates.
Imagine you’re an ambitious Italian entrepreneur, trying to make a go of a new business. You know you will have to pay at least two-thirds of your employees’ social security costs. You also know you’re going to run into problems once you hire your 16th employee, since that will trigger provisions making it either impossible or very expensive to dismiss a staffer.
But there’s so much more. Once you hire employee 11, you must submit an annual self-assessment to the national authorities outlining every possible health and safety hazard to which your employees might be subject. These include stress that is work-related or caused by age, gender and racial differences. You must also note all precautionary and individual measures to prevent risks, procedures to carry them out, the names of employees in charge of safety, as well as the physician whose presence is required for the assessment.
Now say you decide to scale up. Beware again: Once you hire your 16th employee, national unions can set up shop. As your company grows, so does the number of required employee representatives, each of whom is entitled to eight hours of paid leave monthly to fulfill union or works-council duties. Management must consult these worker reps on everything from gender equality to the introduction of new technology.
Hire No. 16 also means that your next recruit must qualify as disabled. By the time your firm hires its 51st worker, 7% of the payroll must be handicapped in some way, or else your company owes fees in-kind. During hard times, your company may apply for exemptions from these quotas—though as with everything in Italy, it’s a toss-up whether it’s worth it after the necessary paperwork.
Once you hire your 101st employee, you must submit a report every two years on the gender dynamics within the company. This must include a tabulation of the men and women employed in each production unit, their functions and level within the company, details of compensation and benefits, and dates and reasons for recruitments, promotions and transfers, as well as the estimated revenue impact.
The system does allow certain exemptions—provided your company stays small, or you hire the right gender or in certain areas. Industrial and security firms are exempt from paying into the national fund for temporary unemployment if they have 15 employees or fewer; retail and tourism companies don’t have to start contributing until they hire their 51st worker; and trade companies are exempt until they hire their 201st employee.
Here’s another loophole you might try to jump through: Businesses currently receive tax credits worth up to €15,200 per year per new permanent-contract hire—that being for new employees who are also women or under the age of 35 and live in the regions of Abruzzo, Molise, Campania, Basilicata, Puglia, Calabria, Sardinia and Sicily.
Businesses with no more than 250 employees may also still be enjoying their three-year profit-tax holiday, which was granted in 2010 for small and medium-sized firms that reinvest their profits in forging “networks” for “innovation” with other small businesses nearby.
All of these protections and assurances, along with the bureaucracies that oversee them, subtract 47.6% from the average Italian wage, according to the OECD. Two-thirds of that bite comes before payroll, meaning many Italian workers are unaware of their gross cost to employers.
But you as the employer are aware of them, which may explain the temptation to stay small and keep as much of your business as possible off the books. This gray- and black-market accounts for more than a quarter of the Italian economy. It also helps account for unemployment at a 12-year high of 10%, and GDP forecast to contract 1.3% this year.
Still, who knows: With any luck, you may discover a loophole in Mr. Monti’s new growth decree that will allow you to hire a few more employees without incurring too many costs—provided, one assumes, that all of the new hires are disabled, blue-eyed Sardinians under the age of 35.
… the unsustainable “bubble” is not student debt or subprime mortgages or anything else. The bubble is us, and the assumptions of entitlement. Too many citizens of advanced Western democracies live a life they have not earned, and are not willing to earn.
Any functioning society is like an orchestra. When the parts don’t fit together, it’s always the other fellow who’s out of tune. So the Greeks will blame the Germans, and vice-versa. But the developed world is all playing the same recessional.In the world after Western prosperity, we will work till we’re older, and we will start younger – and we will despise those who thought they could defy not just the rules of economic gravity but the basic human life cycle.
“Retirement ages will have to move to 70, 80 years old,” Benmosche, who turned 68 last week, said during a weekend interview at his seaside villa in Dubrovnik, Croatia. “That would make pensions, medical services more affordable. They will keep people working longer and will take that burden off of the youth.”
The Police and Fire Retirement System was closed to new employees in 1976 because it was so badly underfunded. There are still 1,086 benefactors in the system, only one of whom still works for the city.
The city approved a special tax to fund the pension system in 1981 that currently costs the average homeowner $419 a year. But when the tax revenue proved insufficient, council members in 1997 voted to issue bonds.
The cancer has now spread to the vital organs of the EU. Spain is not a peripheral Mediterranean country. It is not an insignificant player in the political project. It is not a marginal going-along-for-the-ride-and-the-free-money passenger on the euro train. Not only is its economy so large as to be indispensable, but its ties with Italy mean that the Italian economy (which is the third largest in the EU) would be fatally compromised by its fall. “Itexit” is almost unpronounceable, so perhaps it’s fortunate that it will never be required: after Spexit, there would be nothing left to exit from.
Ninety-five high-ranking employees at the General Services Administrationwho are assigned to work from home racked up $750,000 in travel expenses over nine months, documents show, prompting concerns from agency officials and a review of the expenses.
On June 1, market rumors were coming out of a hedge fund luncheon stating that Pimco, JP Morgan, and other financial companies were cancelling summer vacations for employees so they could prepare for a major ‘Lehman type’ economic crash projected for the coming months.
Last week’s layoffs are seen as a sign that Goldman is looking further up the food chain for additional cuts after already slashing 8.5 percent of its work force, or 3,000 people, in the last year. In addition it has cut more than $1.4 billion in noncompensation expenses from its operations over the last year or so.
Last Friday morning, as the latest terrible jobs report came out, here were the recent contents on the White House website dedicated to the issue of jobs. There was a post on how small businesses can get on the federal grant gravy train. There were four or five posts by West Wing celebrities on how they got their first jobs. And a few hours after the dismal employment report came out, up went a post on…female entrepreneurs.
Interspersed in there was some hand-wringing about the report—“Problems in the job market were long in the making and will not be solved overnight,” wrote Council of Economic Advisors Chair Alan Krueger—but the website conveyed the basic truth about this administration. Not only does the Obama team not have, as it has never had, a plan to deal with the Great Recession; it also has no motivation to take action now in the face of economic stoppage. As the economy sinks into the 1%-growth range, if not recession, we’ve got a do-nothing president. In an election year.
Distant bureaucrats want your money with little accountability
What government unit has the right to tax you – your local government, regional or state government, federal government or multinational organizations, such as the United Nations, the World Bank and theWorld Health Organization? The reason the question is becoming more important is that rising numbers of politically powerful persons and institutions are calling for global taxes on such things as financial transactions, tobacco, sugar and carbon emissions.
Returning from a tour of the Arctic coastline aboard a Norwegian research trawler with scientists and government officials, Clinton told reporters that she learned “many of the predictions about warming in the Arctic are being surpassed by the actual data.”
“That was not necessarily surprising but sobering,” she said.
The United States wants to see that change managed by the Arctic Council, an advisory group composed of the Arctic’s closest neighbours, even as other countries are drawn to the region for oil, gas and trade.
Residents in northern Sweden were forced to grab shovels rather than sun lotion on what was supposed to be the first day of summer, as much of the region was left covered in a thick blanket of snow on Friday.
Good news from the Arctic : The gigantic ozone hole has startled the researchers in the past year, has disappeared. Human conduct, however, was not in the game – the weather is responsible for the healing of the shield.
Recently unearthed photographs taken by Danish explorers in the 1930s show glaciers in Greenland retreating faster than they are today, according to researchers.
After the expedition returned the photographs were used to make maps and charts of the area, then placed in archives in Denmark where they lay forgotten for decades. Then, in recent years, international researchers trying to find information on the history of the Greenland glaciers stumbled across them.
Taken together the pictures show clearly that glaciers in the region were melting even faster in the 1930s than they are today, according to Professor Jason Box, who works at the Byrd Polar Research Center at Ohio State uni.
A study published Sunday in the journal Nature Climate Change finds that people who are not that worried about the effects of global warming tend to have a slightly higher level of scientific knowledge than those who are worried. As respondents’ science literacy scores increased, their concern with climate change decreased.
Brussels bureaucrats were ridiculed yesterday after banning drink manufacturers from claiming that water can prevent dehydration.
EU officials concluded that, following a three-year investigation, there was no evidence to prove the previously undisputed fact.
Producers of bottled water are now forbidden by law from making the claim and will face a two-year jail sentence if they defy the edict, which comes into force in the UK next month.
Last night, critics claimed the EU was at odds with both science and common sense. Conservative MEP Roger Helmer said: “This is stupidity writ large.
“The euro is burning, the EU is falling apart and yet here they are: highly-paid, highly-pensioned officials worrying about the obvious qualities of water and trying to deny us the right to say what is patently true.
“If ever there were an episode which demonstrates the folly of the great European project then this is it.”
Ukip MEP Paul Nuttall said the ruling made the “bendy banana law” look “positively sane”.
He said: “I had to read this four or five times before I believed it. It is a perfect example of what Brussels does best. Spend three years, with 20 separate pieces of correspondence before summoning 21 professors to Parma where they decide with great solemnity that drinking water cannot be sold as a way to combat dehydration.
EU regulations, which aim to uphold food standards across member states, are frequently criticised.
Rules banning bent bananas and curved cucumbers were scrapped in 2008 after causing international ridicule.
It is just too damn bad that the USA are walking the same road to perdition.
Right now we have on the books so many laws, rules and regulation, that I can bet you, that at this very moment, anyone of us is in some violation of some law…
I hope those EU paper pushers did it, just to piss off the Greeks, denying them the roots of the word “HYDRO”. You see we bailed you out, but in return “hydro” is now not going to mean what it used to mean…
Two new EPA pollution regulations will slam the coal industry so hard that hundreds of thousands of jobs will be lost, and electric rates will skyrocket 11 percent to over 23 percent, according to a new study based on government data.
Overall, the rules aimed at making the air cleaner could cost the coal-fired power plant industry $180 billion, warns a trade group.
“Many of these severe impacts would hit families living in states already facing serious economic challenges,” said Steve Miller, president of the American Coalition for Clean Coal Electricity. “Because of these impacts, EPA should make major changes to the proposed regulations before they are finalized,” he said.
The EPA, however, tells Whispers that the hit the industry will suffer is worth the health benefits. “EPA has taken a number of sensible steps to protect public health, while alsoworking with industry and other stakeholders to ensure that these important Clean Air Act standards—such as the first ever national Mercury and Air Toxics Standards for coal-fired power plants—are reasonable, common-sense, and achievable,” said spokesman Brendan Gilfillan. [Read Rep. Darrell Issa: Obama's Bad Policy, Harmful Regulations Add to Gas Prices.]
What’s more, officials said that just one of the rules to cut sulfur dioxide and nitrogen oxide emissions will would yield up to $290 billion in annual health and welfare benefits in 2014. They say that amounts to preventing up to 36,000 premature deaths, 26,000 hospital and emergency room visits, and 240,000 cases of aggravated asthma. “This far outweighs the estimated annual costs,” says an official on background.
You see they are doing it for our own good….Right?
We may not have jobs but we will live longer (presumably)
Never mind that on the other side of the globe, China is using 3 times more coal than America.
What is EPA going to do about that? How are they going to prevent Chinese pollution in the air from entering through the American borders?
The report says China’s consumption rose by 11.2 percent last year compared with 3.7 percent in the United States. China’s surge led a 5.6 percent increase in global energy demand, the biggest one-year jump since 1973.
China was by far the world’s largest consumer of coal, taking 48 percent
The Department of Agriculture (USDA)announced that it has awarded $17.4 million for pilot projects that will begin exploring how to establish a market for greenhouse gas (GHG) credits, a key component of a cap and trade system, to help reduce carbon and other emissions that apparently contribute to global warming.
In a cap and trade system, farmers, ranchers, and other agriculture producers theoretically stand to make money by selling credits to other, GHG-intense businesses such as manufacturers and power companies.
The Agriculture Department was getting involved in the establishment of carbon markets, which currently exist only in states like California and the Northeast, was to better integrate the federal government into regional cap and trade systems, so that the government has a better understanding of how GHG offset markets function.
But in reality what is happening in Europe that instituted the cap and trade? Millions of pollution permits in Europe’s emissions trading scheme do very little for the environment….Here is a story from January 2011
European emitters of greenhouse gases, mostly power companies, find it easier to buy in carbon credits from China and India to meet their targets than to cut the emissions of their own operations.
So who loses out? The environment, of course. Instead of the money going to schemes that genuinely tackle emissions and slow global warming, it pays for a scheme in which there is a massive incentive for industrial plants to keep producing the gases they are then paid handsomely to destroy.
What we are doing in America with the coal industry can be compared with what European Union is doing with their Airline industry…. Committing economic suicide
With the European Union’s emissions trading scheme (ETS) set to affect airlines next year, Lufthansa CEO Christoph Franz has warned the cap-and-trade plan will put Europe’s airlines at a competitive disadvantage.
Those additional costs couldn’t completely be passed on to customers because of intense fare competition in the sector, Franz explained. Chinese officials told him during a trip to the country this month they would consider imposing fees on European flights to counter the costs of ETS credits, he added.
Karin Holm-Müller, an environmental economist at the University of Bonn and a member of the German government’s advisory board on environmental policy, said airlines aren’t the first industry branch to fear cap-and-trade arrangements will dull their competitive edge.
“Considerations have been made to some degree about whether individual industries are too affected in competition [by cap-and-trade system],” she told Deutsche Welle. “One could consider how significantly air travel is affected… but in principle air travel should be included in the cap-and-trade system because it offers an additional opportunity to reduce greenhouse gas emissions.”
According to Michel Adam, environment manager for the Association of European Airlines (AEA) in Brussels, airlines from other continents are only affected when they touch down in Europe under the ETS plan.
“If you travel from North America to Asia and your journey includes a stopover at an EU airport, then the whole journey will be covered by the ETS and will have to include its price,” Adam said. “So flying via Dubai or North Africa would be cheaper than flying through the EU.”
Surveys show that many Germans are worried about the future of the euro, but the country’s political parties are not taking their fears seriously. The number of grassroots initiatives against the common currency is increasing, and political observers say a Tea Party-style anti-euro movement could do well.
As a playwright, Rolf Hochhuth knows how to use timing to achieve the greatest possible impact. In the 1960s, he criticized the pope for remaining silent about the Holocaust. When everyone in the world was talking about globalization, he took to the theater stage and unmasked consulting companies like McKinsey as exploitation machines.
Now Hochhuth is campaigning against the euro — and his stage is Germany’s Constitutional Court. “Why should we help rescue the Greeks from their sham bankruptcy?” he asks. “Ever since Odysseus, the world has known that the Greeks are the biggest rascals of all time. How is it even possible — unless it was premeditated — for this highly popular tourist destination to go bankrupt?”
In the spring, he joined a group led by Berlin-based professor Markus Kerber that has filed a constitutional complaint against the billions in aid to Greece and the establishment of the European stabilization fund, which was set up in May 2010. Hochhuth wants the deutsche mark back. “I don’t know if this is possible. I only know that Germany lived very well with the mark.”
It’s an opinion that suddenly places this nearly 80-year-old man in a rather unusual position, at least for him: on the side of the majority of Germans…