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Comment by mtts | Hacker News Reader

A classic among businessmen all over Europe (I'm Dutch).

And it's wrong(1).

When you spend 3000 Euros to hire someone who nets 1500 Euros, the difference is not "stolen" by the government, it's what you pay to have access to a pool of highly educated potential employees who get free(ish) health care, childcare, pensions that you as an employer don't have to worry about.

There are of course places where such taxes are not levvied, but it's a mistake to assume an employer can simply pocket the 1500 Euros difference as employees will demand higher salaries so they can save up for their own medical care, child care and pensions.

(1) Except the bit about maternity leave: it may not be three years (!) all over Europe but even if it's a mere six months it's enough to cause small businesses to be very reluctant to hire women in the child bearing age.

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You're right, the money is not stolen and the comparisons to other countries/systems are sometimes very odd. But if you take away 50% from everybody, the assumption has to be that everybody wants to buy all the same things in the exact same amount and quality.

The government takes away your "right" to find your own balance between opportunity and security. The government takes away your choice and your power as a consumer to discriminate between different suppliers, which causes those suppliers to be worse than they might otherwise be. For some things, like health care, the assumption is broadly correct, if the quality controls work (that's a big if). For most other things it is not correct at all.

Not everybody wants to retire at the same age or at all. Not everybody wants to secure the same pension or start saving for it at the exact same time of their life. Not everybody wants to go to university. Not everybody wants to have children or send them to the exact same (mostly broken) type of school.

Not everybody wants to buy expensive protection against being fired or getting sick for a week. Not everybody wants to support the local opera house, museums, the government's very own TV network or that network's very own classical orchestra. Not everybody wants to subsidise railway lines to remote parts of the country or the post office there.

And then there's the problem that some groups of people that are close to the government or belong to well unionised traditional industries are getting a lot more out of it than everybody else. The system isn't driven by need, it's driven by affiliation. Affiliations are a complex web and hence entitlements are organised in an extremely complex and ineffecient way that makes people want to stay put once they have a achieved a certain entitlement status.

At the end of the day, we're paying 50% into government coffers and yet we have widespread poverty in many European countries because the poor are a minority without much of a say in anything.

I'm not arguing for letting people go hungry, untreated and homeless when they cannot help themselves. I'm arguing for redistributing money instead of forcing canned buying decisions on everybody. I'm convinced that catching those who fall does not take 50% of all monies earned.

There is not "widespread poverty in European countries". "Widespread poverty" is what they have in Africa. In Europe the poor are kept fed, housed and clothed precisely because the admittedly very large and inefficient in many ways governments spend some of the tax money they bring in to keep them that way.

This causes problems, to be sure, in that it disincentivises some, but not all wellfare recipients from trying to escape their poverty, but it prevents people from dying of hunger in the streets, which is, imho, a good thing.

I would say that the differences in poverty between Africa, and Europe have more to do with the extreme difference in wealth than with the difference is social welfare systems.

> But if you take away 50% from everybody, the assumption has to be that everybody wants to buy all the same things in the exact same amount and quality.

Not really. It's a matter of risk pooling and public good. In health insurance, for example, it's understandable for a healthy person to pay a premium higher than the value of the services he actually receives. In exchange, if he suddenly gets in a car accident, an expensive procedure may be affordable. Additionally, his disabled neighbor may be able to afford his otherwise extremely expensive care. This sort of scheme only works effectively when everyone participates, especially the healthy, low-cost folks, who bring down the cost for everyone else.

The same or similar concepts apply in unemployment insurance. Someone with a stable job may not feel he needs unemployment insurance, but paying into the system makes the system possible. If only the unemployed and underemployed paid for unemployment insurance, we wouldn't have such a thing.

With education, things are a little different. There are some people who will never have children to benefit from paying for public education, but these people indirectly benefit from living in an educated society. I don't have children, but I'm more than happy to contribute to public education, since I value literacy not only in myself but in others.

Arts (e.g., your TV, symphony, and museum examples) are basically an extension of education, though I suspect some people would probably argue against me there.

Infrastructure in rural areas is expensive, but in my experience, at least, those rural areas are often poorer than the more urban areas. Your options seem to be (a) cut those people off from society, (b) subsidize their infrastructure, or (c) pay them to move elsewhere. I think (b) is the most reasonable option.

In the end, the people in the most need generally have the least to offer, so the people with the most to offer either have to subsidize, or the least have to go starving. Universal, progressive taxation seems like a very reasonable way to accomplish the goals of a civilized society.

I don't know if what I am saying contradicts you, but health insurance certainly can serve a rational purpose even if everyone that bought it was young and healthy. You premium simply needs to cover the average cost per subscriber plus some profit for the provider. It can (and possible should) also function the way you describe with the lower cost subscriber subsidizing the cost of the higher cost subscribers. But that is not an inherent part of insurance.

Agreed, that's a huge part of health insurance, and that's why I would never consider dropping coverage. But in practice, wouldn't health insurance almost have to subsidize the expenses of high-cost folks at the expense of low-cost folks? Actuarially, you'd have to manage to get exactly the average cost from each subscriber (plus an equal or proportional amount of profit) in order for that not to happen.

Now I'm assuming you're strictly talking about health insurance (though the same concept applies to homeowner's insurance, etc.), but isn't subsidizing high-risk/high-cost subscribers inherent in some forms of insurance? Take a pension, for example. Some people will live much longer than expected; some will die a year after they retire. The only way to account for this, other than periodically adjusting each retiree's income based on how unhealthy they are, is to pay for the pension of one ancient retiree with the funds from one who died young.

If those things are predominantly healthcare, police protection, civil administration and national defense, then yeah, actually it's a pretty good assumption that everyone wants those things. The cultural items you cite are tiny as far as expenses, and presumably the're popular enough to resist periodic efforts to cut their funding. Any quibbles about apportionment and overhead from the government would be dwarfed by the inefficiencies of breaking them out of gov't (see the US healthcare system).

Nail on the head.

Did you see the chart in the article? Did you read the bit in the article where he declared that he considers 30% fair?

According to the chart, Hungary takes 50% more than the Netherlands. Are there any objective metrics at all that suggests that Hungarians are 50% better educated, have 50% better health and child care or 50% better pensions?

Stealing might be an inflammatory word, but what's going on in Hungary (and, indeed, many other European countries) certainly isn't a mutually beneficial transaction.

Hungary might be an outlier but right after it comes France and I'd say that the French get quite a lot for their money.

So like most things, "it's complicated". This article oversimplifies to the point of it being flat out wrong.

And not only that, it's completely unoriginal, being an exact transcript of what every shopkeeper in Europe will tell you after you've bought him a few drinks.

Look, my post isn't about Europe, but Hungary. And here, we do not get enough for our money. When you go to a hospital, you're scared to death. Okay, I didn't write a dissertation. It does simplify things, yes it sounds like whining. But it's very original. :) It is how I felt when I first wrote it in Hungarian, and I was sober. I wanted to buy beers, but they refused to sell it after 10 pm. Why? It's now legal to drink, but illegal to buy at night. My overall point is that the state is like an elephant in a porcelain store.

The problem you are facing is that very few people are familiar with your situation and so they take what they understand from their country or what they see in the news about some other country on the same continent as yours and they apply that view to your post. So it's no surprise that even with so many comments, very few have anything to do with what you wrote.

I don't understand Fidesz - or their motivations. I don't have the context (I'm rather new to living in Hungary) but it looks to me like they think they can tax their way out of the hole the socialists left behind. The fact that we have the highest VAT in Europe now seems to corroborate with this view.

The problem is - it doesn't work. People just find ways around the taxes. They have to do so. People need to eat and live and if they do everything above board they will not make it.

So as I read your post - I was bemused, trying to picture this Hungarian who pays all his taxes.

High taxes are not a Fidesz invention. It was always like this since 1989. In fact it was Fidesz who won the elections by lying they will reduce burdens. Of course, the did the opposite. They increased them, and completley destroyed the whole economy. Now we have the VAT world record: 27%. All three rating agencies downgraded us to junk, the Forint is done. It's a huge problem for millions of people who have depts in CHF or Euros. They are basically screwed, big time. I wouldn't be surpised, if it was our PM and friends shorted the Forint.

As for paying the taxes? Some people do have to. You may go to jail if you're in the way of people who have good political connections.

So then the problem isn't taxes but what your government does with them?

Fine, I can see that. But your post barely says anything about this problem, focusing instead on how much it is you would have to pay.

Which is exactly what every shopkeeper does after you buy him some drinks. Hence the confusion :-)

The problem is very clear. Burdens or legal businesses are high. This gives illegal business (that our goverment doesn't stop, being extremely corrupt themselves) a very unfair advantage. It's like boxing with an opponent who has a gun. This is the problem.

And yes, also, that when you get sick of it all, and go the hospital that is financed with your tax money, not those, who do not pay the taxes, you are literally scared of the conditions. You are walking on tiptoes in piss.

This is basically what I can whine about when you have paid me a drink.

Do you realize 50% of a Hungarian salary is way less than 30% of a Dutch one?

The problem here is that Hungary's cash salaries are much cheaper than average, whereas Hungary's non-financial compensations are merely quite cheaper than average.

The only systemic problem described in the article is that private bosses have to shoulder the burden of helping mothers and older workers. Helping them is a societal decision, it ought to be supported by society: if you want to help pregnant women, let bosses fire them, then have the government compensate them with tax money coming from all companies, not only from those which hire child-bearing-age women.

No, not fire them. You shouldn't be able to fire someone just for having a child, that's a terrible disincentive for talented women to join a business (and also for people to have kids, which damages society as a whole).

Simply have the state pay their wages while on maternity leave (and the father's on paternity leave). That's how it works in Canada. Works well.

I don't know the best solution, and I bet there's no perfect one. But for many qualified jobs, employees are not easily interchangeable. You cannot replace and reemploy women based on their family needs without disrupting the business needs. Unless you provide employers with a solution to this, there's a disincentive to employ women in non easily replaceable positions.

The point in the article is more subtle than that. AIUI that's what happens in Hungary too. But he has to hire someone else whilst she's on maternity leave (and though it's not mentioned, that recruitment process itself could potentially be quite expensive), and then, when she comes back, he now has to fire that replacement person (which is slightly tricky, as Europe doesn't have 'at will' employment practices, so either there'll be severance payment involved, or he could hire someone on a more temporary basis from the outset, but that's almost certainly going to be at a higher rate). And then, the mother has accumulated holiday days all the time whilst off on maternity, so will either take them all off at the point of official 'return', and thus he'll have to be paying two people for the job at that point (or else she doesn't take them all at once, but takes them in large chunks over the next few months, making it even trickier to have someone else cover).

How does Canada handle those parts?

I don't really understand why maternity leave is a problem. The employer can hire someone for a specified time, say three years, then take back the young mom. In Hungary a lot of companies do this, and the new hires themselves are usually young women, who'd like to take the maternity in a few years, anyway.

It's a problem when businesses still have to pay the employee's salary while she is on maternity leave in addition to the salary of her replacement. Also, there is a lot of productivity lost during the transitions. If it were me, I would prefer to keep the "replacement" rather than hire the old worker back. Apparently you can't do that in Hungary.

It's a problem when businesses still have to pay the employee's salary while she is on maternity leave in addition to the salary of her replacement.

This is not true, the maternity is paid by the state. He mentions the high taxes as another problem, but in fact that's why they are that high, it's the same problem looked from the other side.

Also, there is a lot of productivity lost during the transitions.

It's common here, that women on maternity take a correspondence course or learn languages, etc. Often they are more skilled at the time of their return.

The law is like that because companies are much more powerful than the individuals. They have to take you back, that's fine, but still they can (and often do) offer you a position 300 km from your home, or exclusively in night shifts, effectively force you to quit.

I concede point one, I guess I didn't completely understand the guys complaint.

As for point two, just because she's more skilled doesn't mean there isn't a productivity loss. It takes a little while to get settled (back) into a job. If the employee on maternity leave has been taking correspondence courses, good for her, but her replacement has spent that time working at the actual job. If the replacement has been doing good work, I would rather keep him/her rather than hire back the original worker, who might be "out of the groove" after a long maternity leave.

"It's common here, that women on maternity take a correspondence course or learn languages, etc. Often they are more skilled at the time of their return."

If they can learn a language or take courses, why can't they come back to work?

You can learn a language at home by using Rosetta Stone software, and take correspondence courses also by staying at home. It's hard to take a baby to work. Small children require attention in fits and spurts that are not conducive to doing work that requires long periods of concentrated cooperation with other adults.

Don't underestimate the difference between The Netherlands and even a seemingly well developed country like Hungary. Our GDP per capita (PPP) is over twice theirs. What could you still do with half your income? Arguments that hold here don't just carry over to there.

But they do. The philosophy of the system is the same, just the details, the macroeconomic variables are different. Hopefully they will even out in several decades. The Netherlands are a good example of what we are trying to achieve. (I live in Lithuania, a country with a similar GDP (PPP) per capita to Hungary.)

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