2005/04/17 - Jorge Valín - Libertad Digital

Not One Single Law Against Employment

The goal of freedom and social welfare necessarily leads to eliminating state intervention. We must not fight just to copy some other country. Our effort needs to focus on getting the state off our backs, stopping it from intervening in everything and having each of us take responsibility for our own actions.

Have you ever asked yourself to what degree state intervention hurts the economy and society?

According to the World Bank, if an entrepreneur wants to start a company in Spain, he will need to go through 6 legal procedures, 3 steps to register his property and a final 23 manoeuvres to bring his commercial contracts into effect. All of this takes 4 months with an initial cost 16% more than Gross GDP per capita (about 3,000 euros not including subsequent administrative costs). At this point, the entrepreneur can rent an office, invest in machinery… What does the entrepreneur gain for the time, money and effort his has paid out? Nothing except less capital for his company, less useful production and less capacity to satisfy his clients –up to this point, and before doing anything, the entrepreneur has worked exclusively for the state’s bureaucracy.

What’s more, the entrepreneur has to follow laws (high taxes, keeping up licenses, absurd inspections) that only serve to enrich the state. In this way, the state is a feudal lord to be paid its tribute under threat of fines and jail to get its consent, without anything in return. It should not surprise us to learn Spain’s black economy is more than 20% of GDP!

Let’s look at it from the consumer’s viewpoint (the person buying from our entrepreneur). What extras has the consumer gained from the state’s intervention in this affair? Nothing, and more likely the opposite, he has lost: the entrepreneur will have to raise the price of his products in a legislated and rigid market. Again according to the World Bank, Spain’s Hiring and Firing Index, which measures the flexibility in regulations governing relations between employers and employees, is extremely low. Its rigidity scores 69 out of 100 when the OCDE average is 34.4. This means university graduates, immigrants, unskilled labor… have a major barrier to entering the labor market and being hired. Add this to the numerous barriers thrown up by unions to keep out “new invaders”. This is how one union member once defined immigration to me. He felt the moral obligation to defend his “acquired rights” so “they don’t rob” jobs.  

Imagine how prosperous we would be without the State forcing us to pay taxes. We could do whatever we felt like, depending only on our effort and achievement, and free from having to support any extortioner. 

If we compare the same World Bank data with other countries where state oppression is lower, like the United States or New Zealand, the results are clear: more freedom means higher living standards and more wealth. Statists insist this is not true and cry foul, saying it is all a plot against the people! Reality tells a different story. Countries like Germany, Sweden and France are nothing more than oligarchies ruled by the state and lobby groups that together enslave the average citizen: France, Belgium and Sweden hold down the top three spots in the magazine Forbes’ annual Tax Misery Index; in Holland every person has to pay tax to the state according to the amount of trash he or she produces. A part of Dutch workers’ cell phone bills is taken by the state; Germany compels its citizens to pay for having a television; France has forbidden foreign film makers from advertising their movies; Sweden has banned people from painting their houses without a “painting license”… the list is unending.

The goal of freedom and social welfare necessarily leads to eliminating state intervention. We must not fight just to copy some other country. Our effort needs to focus on getting the state off our backs, stopping it from intervening in everything and having each of us take responsibility for our own actions. This is the only way to create a prosperous, growing and free economy.