The yellow vest protests currently rolling across Europe will make history mainly because they show that we have finally seen democracy hit a stopping point. Up until now, the voters could be bought off with more free stuff and promises, but after decades of this, the voters are now seeing how it all translates into the daily life that they experience.
For most people, notions like new laws, taxes, and regulations exist in the abstract. They hear something, assume a certain figure added to an amount they do not quite understand, and because these are sold to them under emotional guises, accept that it is socially correct and will make them look good to support these things, so they do.
Only many years later — as the yellow vest types have just experienced — do they discover what this means. For them to understand that, they have to grasp an inkling of the passage of goods through an economy. That in turn requires that they understand not just taxes, but the costs of government.
Take a $100 table. Workers grow trees, those are then cut down, made into boards, built into tables, and finished with gloss and maybe one of those puffy tops that are trendy nowadays. In theory, the efficiency of trucks and power saws, assembly lines and mass production, and computer-guided sewing will make these handy inexpensive tables.
However, the EU passes just one tax or regulation. Keep in mind that this is one of many because in each election season politicians must demonstrate that they are “doing something” about the problems that the media, desperate to sell ad space, makes into a frenzy and public figures like academics, needing to stay relevant, hype into a crisis. That means passing laws.
This regulation adds very little to the cost. Let us say that it is an environmental restriction on efficient chemicals, a demand for affirmative action, or a labor law. It requires implementation at all levels. This means that the companies who grow trees, the people who cut trees, the firms that cut boards, the assemblers of the table, and all of the suppliers for parts and chemicals must abide by this regulation.
That means that the cost of the regulation multiples by six for each of those parties. Like the value-added tax (VAT), at every level where raw material gains value by being refined or manufactured, this regulation must be implemented, which requires two clamshells: the public part and the private part.
This clam centers around the market, but the top clamshell exists within government. Every regulation passed requires the creation of or addition to a bureau to enforce it, the hiring of bureaucrats to administer it, giving high salaried jobs to experts and managers to oversee the bureaucrats, and of course the employment of lawyers to defend it and adjudicate cases arising under it.
In addition, the clam grows a few appendages. There may be room for new journalists to cover this specific market, maybe even a magazine for dealing with this regulation, and of course the creation of experts who know how the law works and can advise for hundreds of dollars an hour on how to work around it so as to avoid expensive lawsuits, fines, and jail terms.
The bottom clamshell proves more elusive to our minds because it exists in private industry. To rephrase Newton, for everything that government does, an equal and opposite reaction occurs at every level of industry. All six of those companies will be hiring bureaucrats to interpret the rules, experts to guide them, and lawyers to protect the company from government and its legal powers.
Let us be optimistic and say that this only increases the cost of the table by a few dozen cents, since there are millions of tables made each year. However, these changes occur per regulation and also in response to any taxes or policies that government implements.
When government decides that affirmative action is the law, each company needs to have lots of smiling black, brown, and Asian faces in its worker pool or if a lawsuit comes, it will have no defense. Each will hire a diversity administrator, and each of those will have a staff. These people will be well-paid because there are never enough of them so they can demand high prices.
In fact, government will have created many good-paying jobs. Each lawyer, bureaucrat, or administrator needs to have very specific qualifications so that if a lawsuit comes, the company has a good defense. This means that all of them will get very high salaries for not doing much of anything except putting their name on documents.
The workers in each company will be paid less. The shareholders want profit to the stay the same and rise, but these new experts demand high salaries, and it is rare to find people with the exact experience and education required to make one of these experts, so… the owners look at the people they can easily replace: the workers who actually make the blesséd tables.
For each job role that hacks together wood, sands surfaces, or polishes grain, you can find many people who are qualified. More are arriving each day, and some of the work can be done overseas, so the salaries go down. That money goes to the diversity administrators, lawyers, paperwork-filing clerks, paralegals, and a few new layers of manager.
Consider how hard these jobs are to fill. To get the right diversity administrator, you need someone with at least a master’s degree, experience in the field, and credentials as a diversity expert with the right current education classes on those topics taken and material memorized.
That diversity administrator will spend her time reading magazines from the field, going to conferences, and staying on top of the diversity news. This might take all of four hours a week, and she will have another four hours of meetings and calls at the job. The rest of the time she can just drive around in her newish car, shopping or doing whatever, because it is better to look busy by being out of the office than hanging out at a desk all day. Empty desks means active employees.
She will do this for twenty or twenty-five years, then collect her pension and retire. The government will then pay her for another forty years or more of life and pass that cost on to the taxpayer directly and indirectly. Directly, tax filers will pay more; indirectly, so will companies, and they will pass that cost on to the consumer.
At this point, our $100 table costs more like $140 and may have some corners cut to keep it price competitive with imports. The workers will find themselves being paid proportionately less, so that $140 table to them will be equivalent as percentage of income to a $5000 table to the experts, diversity consultants, and lawyers.
In the meantime, everything else they buy will go up in cost because every other industry will face the same new demands. Those demands will happen at every level, so just like there were six companies adding cost on to the table, that salmon for dinner, bottle of wine, dentist appointment, or pack of cigarettes will gain six or more layers of cost.
Hurting the worker even further, the actual value of the currency — what people will pay to borrow it internationally — goes down, since the market recognizes that an additional 40% of nonsense cost has been tacked on, and they have no interest in paying for that. Demand goes down, and so the currency loses purchasing power, so even if the worker has higher numbers of cash, he has less effective money.
These workers listened to their unions and Leftist politicians who claimed to represent them, and so they have a solution: demand more. They demand more from the state, which approves new laws and promptly passes on the taxes to the worker, making the salaries drop further relative to purchasing power while raising the costs of goods, making sure they do not sell abroad as well. The worker also finds that the higher numbers of monetary units in his pension, welfare, benefits, or entitlements check also purchase less, so he can look forward to a future of living in a basement on a fixed income, hoping that the currency value does not fall further and the price of the cat food he eats does not go up even more throughout his retirement.
Social programs of this nature came about in the 1840s and quickly became popular because there are more people with zero experience or capacity for management, law, economics, and multiple levels of thinking than there are people who have those things. The oblivious win out, and everyone else starts going along with it, knowing that someday the system will run out of money and there will be hell to pay, but hopefully not before they retire.
That day has come for the West. Europe is broke; it will not be able to afford the massive benefits already promised to Boomers. The USA is in the same boat. Importing lots of third world people to pay it all off in taxes did not work. In fact, nothing will work. This is the end, and the voters finally see how royally they have screwed themselves all these long years.