We get thoughtful articles like this mixed with shitposting. I agree that shitposting drives short term engagement, but it could very well reduce influence among the “cognitive elite. “
"In many European countries, companies with more than a certain number of workers – 50 in the Netherlands, 5 in Germany – are obliged to create a works council" - That's not correct; in Germany, a works council may be created in companies with more than 5 employees but only if the workers want to. Works councils are a thing mostly in large companies, while they're basically absent in small firms; around a third of the total workforce is covered by work councils.
Richard, thank you for this meticulous case — and for surfacing Garicano's work, which deserves far wider attention. The comparative data is genuinely arresting: 7 months average restructuring cost per employee in the US versus 62 in Spain. That's not a policy gap; it's a different civilization.
Applying the Tension Transformation Framework, though, I'd push past the economic diagnosis to the identity one — because here's the paradox your piece doesn't quite name: European labor law isn't irrational. It's the perfectly rational output of Victim identity operating at the institutional level.
The TTF distinguishes between external shock tensions and identity-strategy tensions. Europe's labor stagnation isn't primarily a technical policy failure — it's a recurring dysfunction produced by an identity organized around threat and protection rather than creation and possibility. Works councils, Sozialauswahl, 52-month severance floors — these aren't economic mistakes. They're precisely what Victim identity builds when it gets political power: systems designed to freeze the present against the future.
What makes Audi's story so revealing is that the Creative response emerged anyway — just outside Europe. A future E-Tron built in Mexico isn't market failure. It's Architect identity routing around Maladaptive institutions, exactly as the TTF predicts.
The deeper irony: European labor law was designed to protect workers. But by institutionalizing Victim identity as economic policy, it has produced precisely the stagnation that leaves workers most vulnerable. Protecting the job you have is not the same as building the economy that produces new ones.
Denmark and Switzerland, as you note, found the Creative path: labor flexibility plus public safety net. That's not a compromise — it's Architect identity applied to social policy.
Keep in mind that while CA labor law is crazy left in many ways, it’s also a Gold Rush state with weirdly libertarian/frontier holdout laws as well. So yes, the employment taxes suck, the meal and rest break laws are nitpicky landmines for even the most generous of employers, and they have stupidity like the rebuttable presumption of retaliation if you take any “adverse employment action” against someone within 90 days of them making any sort of employment complaint…
…but it’s *also* true that California has a strong public policy of supporting people’s fundamental right to engage in their profession, consistently prohibiting almost all non-competes, many non-solicits, even some confidentiality agreements if their effect is to block you from doing your profession elsewhere. They also heavily limit trade secret protections for similar reasons.
All of that means that while hiring and firing in CA sucks, you’re also far more free in CA to take a job, learn, improve, then go work somewhere better (or found your own company) without fear that your old company will sue you or force you to drop out of your field/industry.
It's worth distinguishing "being fired" from "laid off" or "let go". In America, "fired" typically means "for cause", as in the person being fired committed some misbehavior such as showing up drunk or stealing from their employer. Being "laid off" or "let go" has no such implication. I means that for whatever reason business needs changed and the employee was no longer needed. This is relevant because in America's job markets it's easy to get a new job if you were laid off, but if you were "fired" for cause then you might not. But I suspect in Germany because it so hard to get "fired", that anyone who does has a hard time getting another job, because you would only be fired for cause. So you end up with a very different culture in the labor market. In America, there's usually a much more active job market so people who get laid off can get another job relatively easily. Which reinforces relaxed labor rights, and this culture that it's ok if you got laid off. In places where it's hard to get fired, it's also hard to get rehired, because being fired carries more prejudicial implications.
There are well-supported alternative explanations for the EU–US gap that your post doesn't consider. IMF work attributes most of the EU-US GDP-per-capita gap to slower European productivity growth, with mechanisms like internal-market fragmentation and weaker capital markets/VC for scale-up. Labor mobility fricitons are also a factor, but not the deciding one.
Demographics are a plausible contributor as well. The US is materially younger (US median age ca. 39, German median age ca. 47) and has had stronger population growth via immigration.
None of this says employment protection has zero costs, but you haven’t shown it’s the “best explanation”.
There could be a way of this if countries would give more freedom to independent contractors. In the Netherlands, for example, this has become quite popular: apparently people like the freedom this provides. But, not surprisingly, the government has cracked down on this, calling it "bogus employment". Other European countries are no better: https://grok.com/share/bGVnYWN5_a62bd731-4ff2-4599-a45d-2535e0b8ee8a
Also the old world 1 factory town idea no longer limits job opportunities as much…with small businesses and remote jobs etc. This better enables folks to walk away from bad job situations/vote with their feet…vs fighting for safety etc where they feel stuck. Am thankful we have more choices in what job/products we “buy” like food at a grocery store…
I often think about Labor Unions solving difficult problems that are no longer that bad. Like if moving is really expensive and there is one factory in your town, you are completely at their mercy. That does not describe life in the US, but it did during the hey-day of unions. Today Exit is stronger than voice, and exit has never been easier.
Politically to make a change here, we're going to need a deal that does help equalize the power of capital and labor. The problem with labor protections as they exist, is they don't actually solve the problems they pretend to and the effects of those policies are terrible. So let's solve those problems.
The answer is no fault un-employment. You quit you get unemployment, you get fired you get unemployment. You do gig work while you look, you can still get your unemployment. You have a bank of unemployment that you fill up by working, and longer you work the more you have. The less you take the earlier you get social security. You can quit and take it day 1, no questions asked. The second issue, is we can help people move from places with high unemployment to areas with low unemployment. A once every 10 years moving voucher. We have to pair this with zoning reform so some one from Iowa can move to SF, but really this better balances power between capital and labor. If your boss is shitty, or working conditions are bad, you can leave easily. So employers have reason to treat you well. Exit is stronger than voice, let's facilitate exit. Then companies are punished for treating their workers badly, but have flexibility to find new ways to treat them well.
We get thoughtful articles like this mixed with shitposting. I agree that shitposting drives short term engagement, but it could very well reduce influence among the “cognitive elite. “
You mean the Epstein stuff? Without that, he’s just another boring neoliberal.
Good piece. Please square this with your claims that the smarter people are left of center.
I mean the dissident right/post liberals want unions too.
"In many European countries, companies with more than a certain number of workers – 50 in the Netherlands, 5 in Germany – are obliged to create a works council" - That's not correct; in Germany, a works council may be created in companies with more than 5 employees but only if the workers want to. Works councils are a thing mostly in large companies, while they're basically absent in small firms; around a third of the total workforce is covered by work councils.
A thermotrvkelear bomb has just hit the NLRB.
Richard, thank you for this meticulous case — and for surfacing Garicano's work, which deserves far wider attention. The comparative data is genuinely arresting: 7 months average restructuring cost per employee in the US versus 62 in Spain. That's not a policy gap; it's a different civilization.
Applying the Tension Transformation Framework, though, I'd push past the economic diagnosis to the identity one — because here's the paradox your piece doesn't quite name: European labor law isn't irrational. It's the perfectly rational output of Victim identity operating at the institutional level.
The TTF distinguishes between external shock tensions and identity-strategy tensions. Europe's labor stagnation isn't primarily a technical policy failure — it's a recurring dysfunction produced by an identity organized around threat and protection rather than creation and possibility. Works councils, Sozialauswahl, 52-month severance floors — these aren't economic mistakes. They're precisely what Victim identity builds when it gets political power: systems designed to freeze the present against the future.
What makes Audi's story so revealing is that the Creative response emerged anyway — just outside Europe. A future E-Tron built in Mexico isn't market failure. It's Architect identity routing around Maladaptive institutions, exactly as the TTF predicts.
The deeper irony: European labor law was designed to protect workers. But by institutionalizing Victim identity as economic policy, it has produced precisely the stagnation that leaves workers most vulnerable. Protecting the job you have is not the same as building the economy that produces new ones.
Denmark and Switzerland, as you note, found the Creative path: labor flexibility plus public safety net. That's not a compromise — it's Architect identity applied to social policy.
Keep in mind that while CA labor law is crazy left in many ways, it’s also a Gold Rush state with weirdly libertarian/frontier holdout laws as well. So yes, the employment taxes suck, the meal and rest break laws are nitpicky landmines for even the most generous of employers, and they have stupidity like the rebuttable presumption of retaliation if you take any “adverse employment action” against someone within 90 days of them making any sort of employment complaint…
…but it’s *also* true that California has a strong public policy of supporting people’s fundamental right to engage in their profession, consistently prohibiting almost all non-competes, many non-solicits, even some confidentiality agreements if their effect is to block you from doing your profession elsewhere. They also heavily limit trade secret protections for similar reasons.
All of that means that while hiring and firing in CA sucks, you’re also far more free in CA to take a job, learn, improve, then go work somewhere better (or found your own company) without fear that your old company will sue you or force you to drop out of your field/industry.
It's worth distinguishing "being fired" from "laid off" or "let go". In America, "fired" typically means "for cause", as in the person being fired committed some misbehavior such as showing up drunk or stealing from their employer. Being "laid off" or "let go" has no such implication. I means that for whatever reason business needs changed and the employee was no longer needed. This is relevant because in America's job markets it's easy to get a new job if you were laid off, but if you were "fired" for cause then you might not. But I suspect in Germany because it so hard to get "fired", that anyone who does has a hard time getting another job, because you would only be fired for cause. So you end up with a very different culture in the labor market. In America, there's usually a much more active job market so people who get laid off can get another job relatively easily. Which reinforces relaxed labor rights, and this culture that it's ok if you got laid off. In places where it's hard to get fired, it's also hard to get rehired, because being fired carries more prejudicial implications.
There are well-supported alternative explanations for the EU–US gap that your post doesn't consider. IMF work attributes most of the EU-US GDP-per-capita gap to slower European productivity growth, with mechanisms like internal-market fragmentation and weaker capital markets/VC for scale-up. Labor mobility fricitons are also a factor, but not the deciding one.
Demographics are a plausible contributor as well. The US is materially younger (US median age ca. 39, German median age ca. 47) and has had stronger population growth via immigration.
None of this says employment protection has zero costs, but you haven’t shown it’s the “best explanation”.
There could be a way of this if countries would give more freedom to independent contractors. In the Netherlands, for example, this has become quite popular: apparently people like the freedom this provides. But, not surprisingly, the government has cracked down on this, calling it "bogus employment". Other European countries are no better: https://grok.com/share/bGVnYWN5_a62bd731-4ff2-4599-a45d-2535e0b8ee8a
Also the old world 1 factory town idea no longer limits job opportunities as much…with small businesses and remote jobs etc. This better enables folks to walk away from bad job situations/vote with their feet…vs fighting for safety etc where they feel stuck. Am thankful we have more choices in what job/products we “buy” like food at a grocery store…
I often think about Labor Unions solving difficult problems that are no longer that bad. Like if moving is really expensive and there is one factory in your town, you are completely at their mercy. That does not describe life in the US, but it did during the hey-day of unions. Today Exit is stronger than voice, and exit has never been easier.
Politically to make a change here, we're going to need a deal that does help equalize the power of capital and labor. The problem with labor protections as they exist, is they don't actually solve the problems they pretend to and the effects of those policies are terrible. So let's solve those problems.
The answer is no fault un-employment. You quit you get unemployment, you get fired you get unemployment. You do gig work while you look, you can still get your unemployment. You have a bank of unemployment that you fill up by working, and longer you work the more you have. The less you take the earlier you get social security. You can quit and take it day 1, no questions asked. The second issue, is we can help people move from places with high unemployment to areas with low unemployment. A once every 10 years moving voucher. We have to pair this with zoning reform so some one from Iowa can move to SF, but really this better balances power between capital and labor. If your boss is shitty, or working conditions are bad, you can leave easily. So employers have reason to treat you well. Exit is stronger than voice, let's facilitate exit. Then companies are punished for treating their workers badly, but have flexibility to find new ways to treat them well.