> 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"
>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?
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
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.
Your "often" is not borne out by actual econometric studies. The actual rate of minimum wage that produces dead-weight loss is much higher than most minimum wages in the USA.
In any market, there is wide range of possible clearing prices with cost of production as a floor, and marginal value as a ceiling. Which price the market settles on is often a function of bargaining power as much as productivity. Minimum wage regulation is a heavy-handed way to change that bargaining relationship.
The actual problem in the US is housing costs, but most people are around social media knowledge level in this area, and just blame the first thing in front of them. Raising wages will do nothing to lower housing costs, which eat the largest chunk of everyone's pay.
This is what happened in the UK but not immediately, it’s only in the current government where the minimum wage (especially for young people) got hiked massively in the context of a weak overall economy that the effect on job creation became obvious.
Now it’s quite bad though, a whole generation of 16-20 year olds entering the job market and there’s just no jobs because you can hire a 30 year old for the same money
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.
> 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.
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.
It seems a little bit cherry-picked that you selected an article about people on food stamps and federal aid during a global pandemic, which saw absolutely massive amounts of people lose their jobs.
It's because the most massive costs an American has like healthcare, child care, and higher education are free or vastly less expensive in Europe. Americans spend all their time at work for a very impressive number on their paystub while they're still one accident or illness away from homelessness or bankruptcy. Europeans get higher quality of life/happiness scores and spend far less time slaving away for their boss. Just because the number on your paycheck is bigger, it doesn't mean you're winning.
Not sure we do have better quality of life in Europe. We may have in the 2000s, but we're in decline relative to the US. Even if you take things like healthcare into account:
US average disposable income is $67,000, while it's $32,000 in the UK (with higher rents in the UK than the US).
> “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.”
> 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"
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.
>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?
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
surely buying bonds will save you when you are running 8% yearly deficits to buy votes with welfare payments
There's no natural law saying that budgets have to be balanced. Most countries run constant deficits.
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.
The author writes for Jacobin.
Of course it’s promoting Communism.
That is the HN title?
I believe that it was changed after the comment you have replied to was posted.
Where is the supposed austerity?
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-gi...
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.
Your "often" is not borne out by actual econometric studies. The actual rate of minimum wage that produces dead-weight loss is much higher than most minimum wages in the USA.
In any market, there is wide range of possible clearing prices with cost of production as a floor, and marginal value as a ceiling. Which price the market settles on is often a function of bargaining power as much as productivity. Minimum wage regulation is a heavy-handed way to change that bargaining relationship.
The actual problem in the US is housing costs, but most people are around social media knowledge level in this area, and just blame the first thing in front of them. Raising wages will do nothing to lower housing costs, which eat the largest chunk of everyone's pay.
This is what happened in the UK but not immediately, it’s only in the current government where the minimum wage (especially for young people) got hiked massively in the context of a weak overall economy that the effect on job creation became obvious.
Now it’s quite bad though, a whole generation of 16-20 year olds entering the job market and there’s just no jobs because you can hire a 30 year old for the same money
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.
> 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.
> 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.
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.
> Given that you cannot force someone to hire anyone at a given wage what is the solution?
The author writes for Jacobin, which promotes a failed ideology where you CAN force people to “hire anyone at a given wage.”
It’s an advertisement for a failed ideology.
It seems a little bit cherry-picked that you selected an article about people on food stamps and federal aid during a global pandemic, which saw absolutely massive amounts of people lose their jobs.
Doesn’t feel objective.
Is that why wages in the US are double those in europe or more
It's because the most massive costs an American has like healthcare, child care, and higher education are free or vastly less expensive in Europe. Americans spend all their time at work for a very impressive number on their paystub while they're still one accident or illness away from homelessness or bankruptcy. Europeans get higher quality of life/happiness scores and spend far less time slaving away for their boss. Just because the number on your paycheck is bigger, it doesn't mean you're winning.
Not sure we do have better quality of life in Europe. We may have in the 2000s, but we're in decline relative to the US. Even if you take things like healthcare into account:
US average disposable income is $67,000, while it's $32,000 in the UK (with higher rents in the UK than the US).
The median salary in the US is $43k for the latest year I see data (2023). Median salary in the Netherlands and Germany was €44-48k or ~$50-55k.
We might make half as much (rather less for me actually) because of our specific industry, but that's not generally true.
What does that matter when cost of living is commensurately expensive?
> “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