Which is better: helping the working poor through regulations on business, mandating employee benefits, and cushy hire-and-fire terms . . . or through higher unemployment benefits, assistance to families, or other direct aid?
Both yield unfortunate consequences.
Italy’s employment policies protect workers, on paper. Whatever the ostensible worker salary is in the country, the mandated benefits cost the employer more than twice as much.
This proved a problem for businessman Fabrizio Pedroni, whose factory near Medona hasn’t made a profit in five years. He blames high taxes, heavy regulatory burden, and low worker productivity. So, while his employees were off on holiday, he packed up his factory and shipped it to Poland.
Actually, the tail end of his move was stymied, for a while, by a hasty union blockade. Pedroni cited this as evidence for his need to bug out in secret. Had he announced the plan, the government would have just taken the property for the benefit of his employees. “I had three options — either close, move the factory, as many other businesses have done, or shoot myself in the head.”
Meanwhile, a new Cato study shows that in 16 of our United States, a “combination of food stamps, temporary cash grants, WIC, and housing assistance is worth a pre-tax value more than $30,000” to families that qualify. For some, it’s much easier to live well unemployed than employed.
No wonder unemployment persists. And economic recovery is so slow.
In both cases, programs to help everyday folks hurt them in the long run, undermining productivity, increasing dependence, and scuttling the source of progress: business enterprise.
This is Common Sense. I’m Paul Jacob.