However, that same effect is attained by a simultaneous increase of exemption and reduction of the gross minimum wage. That move reduces red tape and the pumping around of subsidies and taxes.
(8)Hotz & Scholz (2000:36): “The second attractive feature (…) is that with employer subsidies, there is a tighter link between work and the after-tax, after-transfer return to work than there is with the EITC. With the EITC, almost all workers who receive the EITC get it as a lump sum after filing their tax return. As mentioned earlier, there is anecdotal evidence that workers have a vague understanding that their “refund” is somehow work related, but it is extremely unlikely that a significant number of EITC recipients have a clear understanding of the credit’s structure. There would be a much tighter link between policy and paycheck with employer subsidies.”
However, that same clarity is attained by a simultaneous increase of exemption and reduction of the gross minimum wage.
45. After 35 years of mass unemployment:
An advice to boycott Holland
Summary
Jan Tinbergen helped create the Dutch Central Planning Bureau (CPB) after 1945, and Dutch society has benefitted enormously up to this very day in 2004. The Dutch situation has also been an example to the world. But there is a down side when the CPB adopts a wrong theory and when policy becomes misguided. Economic theory is created by people, the behaviour of people can also be described by Public Choice theory, and good theory need not get properly adopted. Dutch society suffers huge problems, which problems do not exist just by themselves, but they can also be judged from the angle of the failure of co-ordination. It can be established as a fact that the directorate of the CPB has been censoring economic science for almost 15 years now, so that society is in a suboptimal state. The mechanisms in Dutch society apparently are too weak to solve this issue. The stress in Dutch society even causes the breakdown of the mechanisms that might work otherwise. With 9-11 there is the new terrorism that increases the stress. That stress in Dutch society is highlighted by political landslides and political murder so unexpected of this country. The censored theory originally provided a solution to Stagflation, but it can also help to resolve the social and economic problems following 9-11. The censored theory would be relevant for other nations as well. For theoretical and practical reasons the censorship must be resolved at CPB itself. Given the weak mechanisms in Dutch society to protect the integrity of science in the preparation of policy, it becomes rational to advise an international boycott of Holland. Economic sticks and carrots are strong incentives to motivate people to stop and think. An international boycott of Holland would likely induce the Dutch to restore the integrity at CPB as intended by Tinbergen.
Introduction
This May 1 2004, the European Union enlarges with the new member states of Central Europe. This is a joyous occasion to celebrate and it is also an occasion to look back at the past and ahead to the future to see what lessons can be learned.
One of the important issues to consider is unemployment. Unemployment is a horrible economic disease since it threatens the very existence of the unemployed person and his or her family, and it increases the stress in society as a whole. France and Germany still have unemployment levels of almost 10% of the working force, the new member states wish they were so lucky. It is not obvious that the Enlargement will generate the creative energy to resolve the problem, and some people fear that there will only be additional problems. Hence at the occasion of the Enlargement it is proper to try to determine what can be done.
In 1989-1990, I wrote Colignatus (1990a), “After 20 years of mass unemployment: Why we might wish for a parliamentary inquiry” as an internal note of the Dutch Central Planning Bureau (CPB). The abstract and summary are reproduced in the appendix to this chapter below while the full text can be found at my website. We are now 15 years further and this explains the first part of the title of this paper: “After 35 years of mass unemployment”.