9 ms·

Who the welfare state protects shapes a country’s financial openness

42 points by kome 2mo ago

alephnerd 2mo ago
> Where redistribution runs vertically and broadly, the welfare state absorbs global finance shocks... If this was true, then the Eurozone crisis would not have been as severe as it was in Portugal, Spain, Italy, Greece, and France - all countries with broad and large social assistance programs. --- Also, the HN title is editorialized, the correct title is "Who the welfare state protects shapes a country’s financial openness"
- mono442 2mo ago
  The crisis was largely artificially engineered because Germans believed that Southern Europeans were "lazy" and needed to be made an example of. The ECB could have brought government bond yields down from the beginning and most of the problems could have been avoided.
  - 3748949494 2mo ago
    surely buying bonds will save you when you are running 8% yearly deficits to buy votes with welfare payments
    - mono442 2mo ago
      There's no natural law saying that budgets have to be balanced. Most countries run constant deficits.
      - rayiner 2mo ago
        Are you serious about this?
      - SubmarineClub 2mo ago
        Governments being able to borrow money (to run that deficit) relies on people believing that they will be paid back. The more the debt grows, the less likely people are to believe they’ll get paid back. The other option is endlessly printing money, which causes hyperinflation and you get an Argentina/Turkey/Weimar Republic situation.
    - johnvanommen 2mo ago
      The author writes for Jacobin. Of course it’s promoting Communism.
      - ahartmetz 2mo ago
        Stop the hyperbole. Jacobin is more like social democrat (what most nominally social democrat parties used to do, but aren't doing anymore). That's about two significant notches less communist than communism.
        xhkkffbf 2mo ago
        Two tiny notches.
        ahartmetz 2mo ago
        One is a dictatorship (well that is how it turns out every time), the other is a democracy, for starters. If that is not a huge difference to you...
        johnvanommen 2mo ago
        > Jacobin is more like social democrat ”The goal of socialism is Communism.” - Lenin It’s always sold as “a little bit of socialism.” Every country, every time in history. The author of this transparent propaganda is a student in a college. When I was his age, I was a socialist too. It’s just youth and inexperience.
        fsckboy 2mo ago
        >Jacobin is more like social democrat they always tell you who they really are: look up les jacobins in the French revolution.
  - gruez 2mo ago
    >The ECB could have brought government bond yields down from the beginning and most of the problems could have been avoided. Is that sustainable? Argentina's predicament is basically caused by a variant of this. The Peronists gave handouts to buy votes, funded by money printing (ie. "The ECB could have brought government bond yields down"), but that has consequences and turned Argentina into an economic basket case. Of course, you might argue the EU doesn't have this problem because it's stronger economically and other states can prop them up, but that begs the question, why should member countries like Germany fund Southern Europeans's fiscal profligacy?
    - kingleopold 2mo ago
      sorry but whatever Ger/FRA doing right now is %100 not sustainable. Future growth potential is so bleak and so low chance, along with population crisis, aging natives too. They literally need miracle, like one that exist in stories
      - bgnn 2mo ago
        Germany and France will pull thd other European countries down worh them.
  - ahartmetz 2mo ago
    Did anyone say lazy? I think the attitude was more like "irresponsible": Taking on debt with no hope of paying it off.
    - rayiner 2mo ago
      And are the Germans wrong?
      - polotics 2mo ago
        Yes the Germans were wrong. Artificially low interest rates were won with the switch to the Euro, and German and French banks were the lazy careless agents, not the Greek Hotels chain or Italian restaurant taking on the cheap money under the false assumption pushed by same banks that the 2000's would be an era of ever growing prosperity and European integration.
    - mono442 2mo ago
      Money is debt. It can't be ever paid off, it has to constantly increase. Just look at the us public and private debt. It almost always only increases.
  - deleted 2mo ago
    [deleted]
  - bodiekane 2mo ago
    That populist narrative was popular on social media, but the truth is the exact opposite. Germany had relatively reasonable debt and government spending relative to taxes. Italy had entirely dysfunctional spending and Greece was essentially a house of cards built on fraud. Without the Eurozone, Greece would have faced bankruptcy and/or hyperinflation, but instead they got bailed out by the rest of the EU. Check out Michael Lewis's book Boomerang that covers the distinct problems Iceland, Ireland and Greece faced. The TL;DR on Greece is a country with massive social spending and tiny tax receipts, that took out massive and entirely unsustainable debt thanks to the other Euro countries and then inevitably was unable to pay it back. Germany was the hero who saved the EU from complete implosion, but instead of being thanked they get misplaced anger for being the only responsible ones in the room.
    - polotics 2mo ago
      classic generalization: no one I know blames all Germans, but they do blame specific banks and even individuals who profiteered and allowed the conditions for the crash to develop
- alistairSH 2mo ago
  That is the HN title?
  - nickff 2mo ago
    I believe that it was changed after the comment you have replied to was posted.
- dlcarrier 2mo ago
  Fun fact: The 2008 financial crises resulted in the US bailing out foreign banks more than domestic ones. They prevented a larger Eurozone crisis, because it would have brought down the US, too.
baggy_trough 2mo ago
Where is the supposed austerity?
- strictnein 2mo ago
  Austerity has become the boogeyman word for anytime a country doesn't increase spending as much as they originally planned or as much as some others think they should. An author who writes for Jacobin probably has a significantly different viewpoint on the term vs someone who works at a central bank.
ck2 2mo ago
in the US it protects the corporations so they don't have to pay a living wage * https://www.washingtonpost.com/business/2026/07/22/amazon-gig-companies-see-spike-workers-snap-medicaid-study-shows/ https://www.washingtonpost.com/business/2026/07/22/amazon-gi...
- amazingamazing 2mo ago
  Given that you cannot force someone to hire anyone at a given wage what is the solution? At best all you can say is that if you decide to hire, it cannot be lower than some minimum, but often this results in no job at all.
  - ben_w 2mo ago
    While true when minimum is set too high, the level it is set to generally takes this into account so that "too high" is not reached over the entire jobs market.
  - autoexec 2mo ago
    > At best all you can say is that if you decide to hire, it cannot be lower than some minimum That's pretty reasonable. Nobody should be working 40 hours a week at a job and not make enough to support themselves. Any company who can't afford to pay their employees at least that much is a failure who deserves to be out of business.
    - SubmarineClub 2mo ago
      > Nobody should be working 40 hours a week at a job and not make enough to support themselves. So it’s better that they don’t get hired at all and live entirely off support of the (forced) largesse of the tax payer? As one of those tax payers I’d much rather they work and earn at least something.
      - autoexec 2mo ago
        That's a false dichotomy. Those workers can get hired by a competent business who can afford to pay a living wage and doesn't need the government to subsidize their labor expenses.
johnvanommen 2mo ago
> “The pattern invites us to read welfare as macroprudential policy, part of the toolkit that keeps financial openness politically survivable. Where redistribution runs vertically and broadly, the welfare state itself absorbs the shocks of global finance. Where it runs horizontally, protecting established insiders while the rest carry the risk, governments buy stability at the financial border instead. Capital controls work as a cheap, imperfect substitute for redistribution. They calm an exposed society without asking anyone at the top to pay.” Their analysis will yield false conclusions because they’re completely ignoring a number of variables. For instance, the USSR had capital controls for financial and political reasons. The article assumes that politics plays no role, only finance. Wall Street influences US financial policy, but so does politics. The laziness of this research is shocking, so I looked up the author. He’s an author for the Communist blog “Jacobin.” Why is this on Hacker News? This paper is flimsy propaganda. https://jacobin.com/author/martino-comelli https://jacobin.com/author/martino-comelli
bebe839494 2mo ago
Saying country like Norway has open economy without capital controls is just not true. Try to leave that welfare paradise, you are still on hook as tax resident for extra three years after leaving!
- deleted 2mo ago
  [deleted]
- citadel_melon 2mo ago
  Taxes on income is not usually what people mean by capital controls. Usually they’re talking about free flow of capital between currencies. But even by your unconventional definition, Norwegians have it easy compared to US citizens. The US demands those renouncing their citizenship to “sell” (a deemed sale) their assets and pay capital gains. If you move abroad without renouncing your citizenship, you still have to pay income tax.

42 points by kome 2mo ago

> Where redistribution runs vertically and broadly, the welfare state absorbs global finance shocks... If this was true, then the Eurozone crisis would not have been as severe as it was in Portugal, Spain, Italy, Greece, and France - all countries with broad and large social assistance programs. --- Also, the HN title is editorialized, the correct title is "Who the welfare state protects shapes a country’s financial openness"

mono442 2mo ago
The crisis was largely artificially engineered because Germans believed that Southern Europeans were "lazy" and needed to be made an example of. The ECB could have brought government bond yields down from the beginning and most of the problems could have been avoided.
- 3748949494 2mo ago
  surely buying bonds will save you when you are running 8% yearly deficits to buy votes with welfare payments
  - mono442 2mo ago
    There's no natural law saying that budgets have to be balanced. Most countries run constant deficits.
    - rayiner 2mo ago
      Are you serious about this?
    - SubmarineClub 2mo ago
      Governments being able to borrow money (to run that deficit) relies on people believing that they will be paid back. The more the debt grows, the less likely people are to believe they’ll get paid back. The other option is endlessly printing money, which causes hyperinflation and you get an Argentina/Turkey/Weimar Republic situation.
  - johnvanommen 2mo ago
    The author writes for Jacobin. Of course it’s promoting Communism.
    - ahartmetz 2mo ago
      Stop the hyperbole. Jacobin is more like social democrat (what most nominally social democrat parties used to do, but aren't doing anymore). That's about two significant notches less communist than communism.
      - xhkkffbf 2mo ago
        Two tiny notches.
        ahartmetz 2mo ago
        One is a dictatorship (well that is how it turns out every time), the other is a democracy, for starters. If that is not a huge difference to you...
      - johnvanommen 2mo ago
        > Jacobin is more like social democrat ”The goal of socialism is Communism.” - Lenin It’s always sold as “a little bit of socialism.” Every country, every time in history. The author of this transparent propaganda is a student in a college. When I was his age, I was a socialist too. It’s just youth and inexperience.
      - fsckboy 2mo ago
        >Jacobin is more like social democrat they always tell you who they really are: look up les jacobins in the French revolution.
- gruez 2mo ago
  >The ECB could have brought government bond yields down from the beginning and most of the problems could have been avoided. Is that sustainable? Argentina's predicament is basically caused by a variant of this. The Peronists gave handouts to buy votes, funded by money printing (ie. "The ECB could have brought government bond yields down"), but that has consequences and turned Argentina into an economic basket case. Of course, you might argue the EU doesn't have this problem because it's stronger economically and other states can prop them up, but that begs the question, why should member countries like Germany fund Southern Europeans's fiscal profligacy?
  - kingleopold 2mo ago
    sorry but whatever Ger/FRA doing right now is %100 not sustainable. Future growth potential is so bleak and so low chance, along with population crisis, aging natives too. They literally need miracle, like one that exist in stories
    - bgnn 2mo ago
      Germany and France will pull thd other European countries down worh them.
- ahartmetz 2mo ago
  Did anyone say lazy? I think the attitude was more like "irresponsible": Taking on debt with no hope of paying it off.
  - rayiner 2mo ago
    And are the Germans wrong?
    - polotics 2mo ago
      Yes the Germans were wrong. Artificially low interest rates were won with the switch to the Euro, and German and French banks were the lazy careless agents, not the Greek Hotels chain or Italian restaurant taking on the cheap money under the false assumption pushed by same banks that the 2000's would be an era of ever growing prosperity and European integration.
  - mono442 2mo ago
    Money is debt. It can't be ever paid off, it has to constantly increase. Just look at the us public and private debt. It almost always only increases.
- deleted 2mo ago
  [deleted]
- bodiekane 2mo ago
  That populist narrative was popular on social media, but the truth is the exact opposite. Germany had relatively reasonable debt and government spending relative to taxes. Italy had entirely dysfunctional spending and Greece was essentially a house of cards built on fraud. Without the Eurozone, Greece would have faced bankruptcy and/or hyperinflation, but instead they got bailed out by the rest of the EU. Check out Michael Lewis's book Boomerang that covers the distinct problems Iceland, Ireland and Greece faced. The TL;DR on Greece is a country with massive social spending and tiny tax receipts, that took out massive and entirely unsustainable debt thanks to the other Euro countries and then inevitably was unable to pay it back. Germany was the hero who saved the EU from complete implosion, but instead of being thanked they get misplaced anger for being the only responsible ones in the room.
  - polotics 2mo ago
    classic generalization: no one I know blames all Germans, but they do blame specific banks and even individuals who profiteered and allowed the conditions for the crash to develop
alistairSH 2mo ago
That is the HN title?
- nickff 2mo ago
  I believe that it was changed after the comment you have replied to was posted.
dlcarrier 2mo ago
Fun fact: The 2008 financial crises resulted in the US bailing out foreign banks more than domestic ones. They prevented a larger Eurozone crisis, because it would have brought down the US, too.

baggy_trough 2mo ago

Where is the supposed austerity?

strictnein 2mo ago
Austerity has become the boogeyman word for anytime a country doesn't increase spending as much as they originally planned or as much as some others think they should. An author who writes for Jacobin probably has a significantly different viewpoint on the term vs someone who works at a central bank.

ck2 2mo ago

in the US it protects the corporations so they don't have to pay a living wage * https://www.washingtonpost.com/business/2026/07/22/amazon-gig-companies-see-spike-workers-snap-medicaid-study-shows/ https://www.washingtonpost.com/business/2026/07/22/amazon-gi...

amazingamazing 2mo ago
Given that you cannot force someone to hire anyone at a given wage what is the solution? At best all you can say is that if you decide to hire, it cannot be lower than some minimum, but often this results in no job at all.
- ben_w 2mo ago
  While true when minimum is set too high, the level it is set to generally takes this into account so that "too high" is not reached over the entire jobs market.
- autoexec 2mo ago
  > At best all you can say is that if you decide to hire, it cannot be lower than some minimum That's pretty reasonable. Nobody should be working 40 hours a week at a job and not make enough to support themselves. Any company who can't afford to pay their employees at least that much is a failure who deserves to be out of business.
  - SubmarineClub 2mo ago
    > Nobody should be working 40 hours a week at a job and not make enough to support themselves. So it’s better that they don’t get hired at all and live entirely off support of the (forced) largesse of the tax payer? As one of those tax payers I’d much rather they work and earn at least something.
    - autoexec 2mo ago
      That's a false dichotomy. Those workers can get hired by a competent business who can afford to pay a living wage and doesn't need the government to subsidize their labor expenses.

johnvanommen 2mo ago

> “The pattern invites us to read welfare as macroprudential policy, part of the toolkit that keeps financial openness politically survivable. Where redistribution runs vertically and broadly, the welfare state itself absorbs the shocks of global finance. Where it runs horizontally, protecting established insiders while the rest carry the risk, governments buy stability at the financial border instead. Capital controls work as a cheap, imperfect substitute for redistribution. They calm an exposed society without asking anyone at the top to pay.” Their analysis will yield false conclusions because they’re completely ignoring a number of variables. For instance, the USSR had capital controls for financial and political reasons. The article assumes that politics plays no role, only finance. Wall Street influences US financial policy, but so does politics. The laziness of this research is shocking, so I looked up the author. He’s an author for the Communist blog “Jacobin.” Why is this on Hacker News? This paper is flimsy propaganda. https://jacobin.com/author/martino-comelli https://jacobin.com/author/martino-comelli

bebe839494 2mo ago

Saying country like Norway has open economy without capital controls is just not true. Try to leave that welfare paradise, you are still on hook as tax resident for extra three years after leaving!

deleted 2mo ago
[deleted]
citadel_melon 2mo ago
Taxes on income is not usually what people mean by capital controls. Usually they’re talking about free flow of capital between currencies. But even by your unconventional definition, Norwegians have it easy compared to US citizens. The US demands those renouncing their citizenship to “sell” (a deemed sale) their assets and pay capital gains. If you move abroad without renouncing your citizenship, you still have to pay income tax.