5 ms·

One of the most interesting books I read was "The Servile State" by Hilaire Belloc. Belloc suggests that in fact most people when desperate will gladly trade f

One of the most interesting books I read was "The Servile State" by Hilaire Belloc. Belloc suggests that in fact most people when desperate will gladly trade freedom for subsistence. He suggests the natural evolution of class warfare is from unrestrained capitalism to a welfare state, to one which legally compels workers to labor for the benefit of someone else. And indeed that's the system we have in the US, if you listen to folks like Cornell West and look into the prison industrial complex. The way out, as both Belloc and his contemporary Chesterton (Note: I am NOT a Catholic. I am NOT even a Christian. I am not endorsing Chesterton's religious writings) thought was to try to push for an economy of the self-employed. This idea may seem less welcome on a VC site.... But the basic idea is that if labor and capital fight, both get to declare victory, but really Capital wins. The way to win if you are on the labor side is no to play the game, and go into business for yourself as an independent agent, freed from worker protections but also in a relative position of power and freedom compared to where you would be as an employee. Time was when almost everyone was self-employed. The only reason it isn't for everyone is we make it so darn hard in the US. I say that as one who has been in Indonesia and Malaysia for the past six months and I can say that no third world country makes it as hard to be self-employed as we do in the US. Indeed no developed nation does either.....

tomg 15y ago
As a chronically self-employed person, I'm curious why you believe it is so difficult to be self employed in the US. The World Bank lists the US as #4 on the Ease of Doing Business list [1]. Anecdotally, I've found it very easy to do the proper paperwork to become officially self-employed. For under a thousand bucks you can even have someone else do it for you if you're so inclined. Another personal example is how a man I met from Italy could not believe that I owned my own one-man business, as such a thing would be nearly impossible in his own country. [1] http://en.wikipedia.org/wiki/Ease_of_Doing_Business_Index http://en.wikipedia.org/wiki/Ease_of_Doing_Business_Index
- SageRaven 15y ago
  There's paperwork? I was independent pulling in random 1099 work for 5 years and the only extra paperwork I did was "Schedule C". I assume that owning a business proper would require a ton of forms and licensing. But just doing odd jobs for oneself? I didn't think anything special was required.
  - tomg 15y ago
    > I assume that owning a business proper would require a ton of forms and licensing. But just doing odd jobs for oneself? I didn't think anything special was required. You don't need anything at all to do odd jobs under a 1099. I probably should not have said "officially self-employed" as that isn't really a thing. I meant I've gone through the hoops to become a sole-proprietor business. If you wanted to incorporate you basically just file a few forms and sign on a few lines. It does not involve a great deal of paperwork, and even that can be reduced to signing on a few lines if you use an accountant. I'm not an expert but the reason that I believe a lot of people in your position (1099-ing it for N years) incorporate is three-fold: First, liability. Your corp can get sued into bankruptcy but your personal assets are safe. If you're not incorporated someone can sue you directly with more disastrous results. I'm not a lawyer but this is what I'm lead to believe is the case. Second, tax-wise it can be in your favor to be a corp. Third, it just keeps everything separate. Having a company account that I can pay myself out of keeps my books clean.
- einhverfr 15y ago
  There's a difference between ease of getting into business, and the ease of making a living doing it. The debt economy ties people to jobs, particularly because of the fact that if you become self-employed, there will be a few years where you will likely not be able to cover your expenses and we have very little support for that. So unless you are already financially independent, you need financial help from someone else. A lot of the legislation is a bit of a mixed bag. On the whole PPACA makes it easier perhaps to become self-employed because you can forego health insurance during the critical starting time, only to buy it if a real need arises or once one is making more money. On the other hand, the mandate to buy it later, imposes an additional burden on top of things like high self-employment taxes. On the whole I think PPACA does more harm than good because it can be very hard to predict when downturns will be sufficient to cause one to be able to cut health insurance out of one's budget. Finally most of the ease of doing business factors are primarily about corporate business. It doesn't tell you much about being self-employed.
anothermachine 15y ago
could something go wrong when workers are "freed" from protections? https://en.wikipedia.org/wiki/Permatemp#Vizcaino_v._Microsoft https://en.wikipedia.org/wiki/Permatemp#Vizcaino_v._Microsof... https://en.wikipedia.org/wiki/Criticism_of_Microsoft#Labor_practices https://en.wikipedia.org/wiki/Criticism_of_Microsoft#Labor_p... Why overlook unionization as a solution to the Capital-Labor power imbalance?
- einhverfr 15y ago
  The problem is the Capital-Labor divide, not the imbalance. If you are going to look to unionization as a primary solution (rather than a solution of last resort) tackle this problem like they do in Germany: make sure the union has access to the business's financial records, and a seat on the board of directors.
scarmig 15y ago
Working a 8/9-5/6 job is historically an aberration, and never in human history has the majority of workers been employed that way. Even now, as (a small minority of) people in the Global South are moving to that kind of labor, we see that very same system breaking down in the West. People usually work piecemeal and irregular hours, in exchange for locally-valid credit. It's a pipe dream to believe that the height of human happiness and social justice is everyone sitting down at a 9-5 job five days a week so you can pay down the mortgage on housing you overpaid for because everyone else also bought into the same myth. Which is what mainstream political parties in all countries that I know of seem to buy into, just with variations on the theme. I like Chesterton's vision and see it as more emancipatory than the industrial-corporate socialism/capitalism that we have, despite me being a left wing crazy. Will have to check out Belloc.
- tjr 15y ago
  My grandfather worked in carpentry and construction, ultimately working his way up to overseeing construction of bridges. There was a time when you could hardly drive anywhere in St. Louis without crossing over a bridge that he worked on. And doing construction work, he paid for his family's house over the course of about five years. It wasn't a palace, but it was a nice house in a (then) nice neighborhood with a good-sized lawn. Today, people routinely spend twenty or thirty years to buy a decent house. Even dumpy houses in poor locations would likely take well over five years for many people to pay for. Something seems very wrong.
  - deleted 15y ago
    [deleted]
  - ars 15y ago
    It's because we are building so many other things. The price of a house depends on how many people there are to build it (like your grandfather). These days people build all sorts of other things, so the price of a house goes up. But on the other hand you now have so many other cool things that weren't available back then.
- jpdoctor 15y ago
RyanMcGreal 15y ago
The reason capital concentrates and hires labour is that Coaseian transactions costs render a complex economy of independent contractors uncompetitive and infeasible.
GFischer 15y ago
"I can say that no third world country makes it as hard to be self-employed as we do in the US" I don't know what kind of self-employment you're talking about, but in some of the Third World countries it's pretty hard. Here in Uruguay, unless you fall in the special category called "monotributo" (only for very low income), you have to jump through a lot of hoops (or pay a lot for a pre-made company), and pay lots of taxes, most of them are of the kind "pay now, we'll reimburse you later" and are reimbursed in tax credits mostly (not actual money). Of course, you can also work illegally, and that's what most people did, that's why the "monotributo" tax was created, to make people pay at least a little tax and social security. The same happens in Argentina, and Perú had such a huge illegal infrastructure that liberal economist Hernando de Soto made it his field of studies (at the beginning, it took 400 steps to be a legal company in Peru). Professionals (such as engineers and programmers) fall under a different scheme, but it also entails several regulations and you usually always fail something in the eyes of the IRS equivalent (DGI) and have to pay fines.
- einhverfr 15y ago
  Most of my experience here has been in Indonesia and Malaysia.
namdnay 15y ago
"Indeed no developed nation does either" Are you kidding?
ahoyhere 15y ago
"I can say that no third world country makes it as hard to be self-employed as we do in the US. Indeed no developed nation does either....." You are flat-out wrong there, my friend. Someone else pointed out how hard it is in Uruguay. Indonesia and Malaysia are not the whole of all 3rd world countries -- so your travels don't support your statement of "no third world country". I can point out how hard it is all across Europe. Being self-employed in the US is extremely easy. Meanwhile most of those other first-world nations still offer their self-employed people healthcare and other safety net benefits.
- einhverfr 15y ago
  I am sure that's why so many people are self-employed in most of these countries. Also despite the issues in Europe, I understand that in many EU countries (including both France and Germany), there is a higher success rate of self-employment than here in the US.
  - ahoyhere 15y ago
    I can't tell, are you being snarky? I never said it discouraged anything or that people failed. It is simply 10x the complexity, hoops to jump through, legal paperwork, and tax rigamarole.

tomg 15y ago

As a chronically self-employed person, I'm curious why you believe it is so difficult to be self employed in the US. The World Bank lists the US as #4 on the Ease of Doing Business list [1]. Anecdotally, I've found it very easy to do the proper paperwork to become officially self-employed. For under a thousand bucks you can even have someone else do it for you if you're so inclined. Another personal example is how a man I met from Italy could not believe that I owned my own one-man business, as such a thing would be nearly impossible in his own country. [1] http://en.wikipedia.org/wiki/Ease_of_Doing_Business_Index http://en.wikipedia.org/wiki/Ease_of_Doing_Business_Index

SageRaven 15y ago
There's paperwork? I was independent pulling in random 1099 work for 5 years and the only extra paperwork I did was "Schedule C". I assume that owning a business proper would require a ton of forms and licensing. But just doing odd jobs for oneself? I didn't think anything special was required.
- tomg 15y ago
  > I assume that owning a business proper would require a ton of forms and licensing. But just doing odd jobs for oneself? I didn't think anything special was required. You don't need anything at all to do odd jobs under a 1099. I probably should not have said "officially self-employed" as that isn't really a thing. I meant I've gone through the hoops to become a sole-proprietor business. If you wanted to incorporate you basically just file a few forms and sign on a few lines. It does not involve a great deal of paperwork, and even that can be reduced to signing on a few lines if you use an accountant. I'm not an expert but the reason that I believe a lot of people in your position (1099-ing it for N years) incorporate is three-fold: First, liability. Your corp can get sued into bankruptcy but your personal assets are safe. If you're not incorporated someone can sue you directly with more disastrous results. I'm not a lawyer but this is what I'm lead to believe is the case. Second, tax-wise it can be in your favor to be a corp. Third, it just keeps everything separate. Having a company account that I can pay myself out of keeps my books clean.
einhverfr 15y ago
There's a difference between ease of getting into business, and the ease of making a living doing it. The debt economy ties people to jobs, particularly because of the fact that if you become self-employed, there will be a few years where you will likely not be able to cover your expenses and we have very little support for that. So unless you are already financially independent, you need financial help from someone else. A lot of the legislation is a bit of a mixed bag. On the whole PPACA makes it easier perhaps to become self-employed because you can forego health insurance during the critical starting time, only to buy it if a real need arises or once one is making more money. On the other hand, the mandate to buy it later, imposes an additional burden on top of things like high self-employment taxes. On the whole I think PPACA does more harm than good because it can be very hard to predict when downturns will be sufficient to cause one to be able to cut health insurance out of one's budget. Finally most of the ease of doing business factors are primarily about corporate business. It doesn't tell you much about being self-employed.

anothermachine 15y ago

could something go wrong when workers are "freed" from protections? https://en.wikipedia.org/wiki/Permatemp#Vizcaino_v._Microsoft https://en.wikipedia.org/wiki/Permatemp#Vizcaino_v._Microsof... https://en.wikipedia.org/wiki/Criticism_of_Microsoft#Labor_practices https://en.wikipedia.org/wiki/Criticism_of_Microsoft#Labor_p... Why overlook unionization as a solution to the Capital-Labor power imbalance?

einhverfr 15y ago
The problem is the Capital-Labor divide, not the imbalance. If you are going to look to unionization as a primary solution (rather than a solution of last resort) tackle this problem like they do in Germany: make sure the union has access to the business's financial records, and a seat on the board of directors.

scarmig 15y ago

Working a 8/9-5/6 job is historically an aberration, and never in human history has the majority of workers been employed that way. Even now, as (a small minority of) people in the Global South are moving to that kind of labor, we see that very same system breaking down in the West. People usually work piecemeal and irregular hours, in exchange for locally-valid credit. It's a pipe dream to believe that the height of human happiness and social justice is everyone sitting down at a 9-5 job five days a week so you can pay down the mortgage on housing you overpaid for because everyone else also bought into the same myth. Which is what mainstream political parties in all countries that I know of seem to buy into, just with variations on the theme. I like Chesterton's vision and see it as more emancipatory than the industrial-corporate socialism/capitalism that we have, despite me being a left wing crazy. Will have to check out Belloc.

tjr 15y ago
My grandfather worked in carpentry and construction, ultimately working his way up to overseeing construction of bridges. There was a time when you could hardly drive anywhere in St. Louis without crossing over a bridge that he worked on. And doing construction work, he paid for his family's house over the course of about five years. It wasn't a palace, but it was a nice house in a (then) nice neighborhood with a good-sized lawn. Today, people routinely spend twenty or thirty years to buy a decent house. Even dumpy houses in poor locations would likely take well over five years for many people to pay for. Something seems very wrong.
- deleted 15y ago
  [deleted]
- ars 15y ago
  It's because we are building so many other things. The price of a house depends on how many people there are to build it (like your grandfather). These days people build all sorts of other things, so the price of a house goes up. But on the other hand you now have so many other cool things that weren't available back then.
jpdoctor 15y ago

RyanMcGreal 15y ago

The reason capital concentrates and hires labour is that Coaseian transactions costs render a complex economy of independent contractors uncompetitive and infeasible.

GFischer 15y ago

"I can say that no third world country makes it as hard to be self-employed as we do in the US" I don't know what kind of self-employment you're talking about, but in some of the Third World countries it's pretty hard. Here in Uruguay, unless you fall in the special category called "monotributo" (only for very low income), you have to jump through a lot of hoops (or pay a lot for a pre-made company), and pay lots of taxes, most of them are of the kind "pay now, we'll reimburse you later" and are reimbursed in tax credits mostly (not actual money). Of course, you can also work illegally, and that's what most people did, that's why the "monotributo" tax was created, to make people pay at least a little tax and social security. The same happens in Argentina, and Perú had such a huge illegal infrastructure that liberal economist Hernando de Soto made it his field of studies (at the beginning, it took 400 steps to be a legal company in Peru). Professionals (such as engineers and programmers) fall under a different scheme, but it also entails several regulations and you usually always fail something in the eyes of the IRS equivalent (DGI) and have to pay fines.

einhverfr 15y ago
Most of my experience here has been in Indonesia and Malaysia.

namdnay 15y ago

"Indeed no developed nation does either" Are you kidding?

ahoyhere 15y ago

"I can say that no third world country makes it as hard to be self-employed as we do in the US. Indeed no developed nation does either....." You are flat-out wrong there, my friend. Someone else pointed out how hard it is in Uruguay. Indonesia and Malaysia are not the whole of all 3rd world countries -- so your travels don't support your statement of "no third world country". I can point out how hard it is all across Europe. Being self-employed in the US is extremely easy. Meanwhile most of those other first-world nations still offer their self-employed people healthcare and other safety net benefits.

einhverfr 15y ago
I am sure that's why so many people are self-employed in most of these countries. Also despite the issues in Europe, I understand that in many EU countries (including both France and Germany), there is a higher success rate of self-employment than here in the US.
- ahoyhere 15y ago
  I can't tell, are you being snarky? I never said it discouraged anything or that people failed. It is simply 10x the complexity, hoops to jump through, legal paperwork, and tax rigamarole.