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just stumbled across the blog entry “It Isn’t A Popularity Contest” by new zealandish blogger bananabob about democracy and welfare in NZ. he asks “we have too many people in new zealand on the benefit. what causes these people to be on the benefit?” my reply:

a good way of getting people off the benefit would be to create a bunch of new jobs. easy, isn’t it? probably it isn’t as all parties usually claim to be trying just that, and hard.

but let’s look at it from a different angle. is there enough work? i don’t know in NZ but if it’s anything similar to austria there’s more work than people could possibly handle! e.g.:

(1) even wealthy people in AT do a lot of work on their own in their spare time: they iron their shirts, they repair their houses, they manage their finances, they do their washing, they assemble their IKEA furniture, they sort out the stuff on their attic. why don’t they pay a service company for doing that? too expensive. (in austria taxes and social benefit costs add maybe 110% – don’t know the exact number but you get the point – to the cost of a working hour.)

(2) even if somebody pays someone to do such services, eg. a cleaning woman, they do it moonlighting. (dear finanzamt, i admit: mine does!) thus the work isn’t contributing anything to the welfare system, the work doesn’t count as such. probably more people build their houses or renovate their flats with the help of unofficial workers or even on their own than people legally contract construction companies.

(3) recently my digital camera broke. it had just a tiny mechanical problem, all the electronics were still working. yet canon austria told me that repair would exceed the 400 euros it was worth. why? because labour is so expensive. so i throw it away and buy a new one, and all the added value goes to japan or whereever it is manufactured. compare the working hours (disregarding all those expensive parts!) it takes for an entire camera to the few hours to fix that mechanical problem. what a waste of resources.

(4) as labour is expensive every company tries to have as few employees as possible. that way it is not unusual to queue for 10 minutes in a supermarket or to wait far too long until the waiter passes by in a restaurant or to find nobody giving you advice when purchasing a tv set in an electronics store. anybody having experienced “service” in asian countries will have noted the difference!

(5) the german car-maker MAN has a truck factory in austria and another one in turkey, both producing the same quality standards. in turkey they have maybe double as many workers and far fewer machines. why? labour is so expensive in austria that machines and the energy they consume are cheaper. (which makes factory production in austria much less adaptive to market changes by the way, workers can be trained for changing purposes, machines can’t.)

see my point? there’s work for everyone. they would just have to lower (or extinguish – trying to exaggerate to make the point) labour taxes. income taxes go up to 50% in austria (less for low incomes).

ok, where does the money come from then? has to come from somewhere, especially if we don’t want to give up our welfare system.

resource taxation. in return we could raise energy and resource taxes, which would be imposing taxes on something unwanted (pollution) instead of something wanted (labour). but that wouldn’t make up the loss from labour taxes entirely. we would have to also raise capital and inheritage taxes. both are forms of “income” without “labour”, thus bad for an economy. a third factor is an automatical one: cheaper labour results in

a) better balance of trade (see digital camera example and mainly by higher competitivity of austrian goods in export markets),
b) raised attractivity to foreign industry-investments (ok, i admit higher capital taxes will also have an inverse effect) and
c) austrian companies (especially labour intensive industries such as textile industry) moving their production to eastern europe or asia less probably.

any party that heads in this direction and wants to reach those goals within a decent transition period (evolution, not revolution) gets my vote. in the moment the austrian greens are closest to my expectances, promoting a “social-ecological tax-reform“.

Keine Angst vor Energiesteuer“, austrian energy agency
Energy Taxes and Subsidies in Denmark“, insitute of local government studies denmark
international energy price information, US government, campain site of german environmental organisation BUND
Benzinpreise und Öko-Steuer“, umwelt- und prognoseinstitut heidelberg


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