5 ms·

Whenever I read about these schemes I wonder ... did it not occur to the people running the governments of these countries that people are not purely economic m

Whenever I read about these schemes I wonder ... did it not occur to the people running the governments of these countries that people are not purely economic maximisers, and that they can attract and retain people by having a country that is fun and comfortable and safe to live in? People in Denmark pay a lot in taxes, but I haven't seen many of them rushing to leave.

alephnerd 2y ago
> People in Denmark pay a lot in taxes, but I haven't seen many of them rushing to leave. The issue is salaries in Portugal are VERY VERY low - they are comparable to Poland, Romania, and Greece - yet their tax burden and cost of living is comparable to Denmark. A 25 year old Portuguese college graduate can immigrate visa free to Denmark and double-to-triple their salary almost overnight. The same can't be said for a Dane unless they immigrate to the US, but they're in the H1B queue like everyone else so it just isn't worth the hassle unless it's a high paying white collar job. The EEC has a massive disparity in incomes, with average monthly wages ranging from €700 to €5,000 depending on the country, and as EEC members tend to have fairly simplified immigration policies between each other, this causes a brain drain in the countries with lower wages.
- intellectronica 2y ago
  Right, but there are two variables in that equation. If the economy were stronger and more productive people could earn higher salaries. Don't get me wrong, I don't like taxes either (I live in Switzerland and pay relatively low rates of income tax) but it just seems like a loser move to decide that the solution is to fiddle with the taxes, rather than figure out how to make it a place people can build a great life in, including salaries, services, fun, comfort, safety ... all the different things that are important to people.
  - alephnerd 2y ago
    > If the economy were stronger and more productive people could earn higher salaries The issue is Portugal is very business unfriendly and human capital is weak. It's hard to make the case to invest in Portugal when you can invest a similar amount in neighboring Spain and get a much better return. Nor do local businesses earn enough to pay comparable to higher income countries in the Single Market - especially because Portugal essentially penalizes large employers This means the only way to make up the salary differnce that is the cause of the brain drain is to decrease taxes for early career Portuguese. Denmark and Portugal are nowhere near the same level of development, and what works for Denmark does not work for Portugal.
    - intellectronica 2y ago
      > business unfriendly and human capital is weak Exactly. So I would focus on improving that, rather than try a quick and desperate trick of tax cuts. Why not collect the taxes and then invest them wisely in great modernised services, for example?
      - alephnerd 2y ago
        Becuase such changes are extremely difficult and take a generation. Easing hiring means pissing off unions, which means you piss off voters and donors. Simplifying entry of foreign businesses and competitors means pissing off small and medium businesses, which means you piss off voters and donors. Shrinking Portugal's notorious bloated public sector will save money, but means firing a significant number of Portuguese, which means you piss off voters. Shrinking Portugal's notoriously large spending on social programs will save money, but means you piss off voters. You can't just "modernize services" overnight. It requires a generation, a lot of capital, and strategy to invest in building a High Tech industry. > Why not collect the taxes and then invest them wisely in great modernised services, for example? Because Portugal has had an elevated debt-to-GDP ratio for almost 20 years now, which makes it extremely difficult to get the capital to do any of the above, which means a significant amount of Portugal's tax revenue is spent on servicing those debts. The average Portuguese gets paid too little, the average Portuguese business is too small to generate significant business taxes, and every individual Portuguese person who has hireable skills has no incentive to be paid a fraction of what they would earn in London, Frankfurt, or Madrid. Lowering taxes for early career Portuguese in order to entice them to stay until they become mid-career is the least bad option of the multiple bad options Portugal has.
        intellectronica 2y ago
        Thanks for describing the complexity clearly. I think I agree now. It's a disappointing solution that is quite possibly better than other options.
  - crubier 2y ago
    PIGS Countries don't have capital available to invest in salaries / services / fun / comfort in the first place, due to historical reasons, the 2010s debt crisis etc. So the move of bringing people and capital by available means (tax breaks) and be less hostile to startups & companies (they have been very hostile and bureaucratic historically) is one of the few things they can do, and it works.
- Moldoteck 2y ago
  Romania total taxes are quite high, because we don't have tax ladders, it's one size fits all solution and it's a lot. It's that cost of living here is smaller and as result it's not that bad
  - alephnerd 2y ago
    Yep, but realistically, Romania (as well as Poland and the rest of Eastern Europe) will end up in the same kind of middle income trap just like Portugal within the next 10-20 years.
    - chucke 2y ago
      Indeed. Portugal got by in Europe while it could advertise its services as significantly cheaper (Italy and Greece did the same). Romania, Poland and all will live to see another nation take its place, and if not finding a way to produce high value add products and processes, face the same kind of stagnation as Portugal.
      - alephnerd 2y ago
        It's already started happening. For example, in Hungary, a lot of Orban's political consolidation was itself due lagging economic growth in the aftermath of the GFC and Eurozone crisis, as well as FDI moving towards cheaper Romania, Bulgaria, and Serbia. Hungary's HDI and GDP growth began stagnating around 2014-15, which was around the time mass dissatisfaction against Orban arose.
        shiroiushi 2y ago
        >Hungary's HDI and GDP growth began stagnating around 2014-15, which was around the time mass dissatisfaction against Orban arose. It's been 10 years, and he's still in power, so I guess the Hungarian people aren't that dissatisfied with him.
        alephnerd 2y ago
outworlder 2y ago
> a country that is fun and comfortable and safe to live in I think Portugal is fun, comfortable and safe. It is a fantastic place if you want to visit. Living there can be an issue. One of the problems, as another comment says, is that salaries are really low. That's probably compounded by the amount of bureaucracy one needs to wade through to do anything, and the overall 'old school' thinking of folks. Generalizing(perhaps unfairly), the Portuguese seem to look fondly at the rear view mirror, but more progressive ideas are not viewed in the same light. You would probably see more people staying if they had a space for their ideas, and a living wage.
- aleph_minus_one 2y ago
  > That's probably compounded by the amount of bureaucracy one needs to wade through to do anything That does not sound like the description of a "fun" or "comfortable" country to live in. :-(
- intellectronica 2y ago
  I've been to Portugal and it's lovely. But I don't think earning a low salary and not having enough is fun. Wouldn't be for me, at least.
- more_corn 2y ago
  My friend created a tech company there because salaries are low. He employs a dozen capable smart professionals. He pays them well for the local economy and arbitrage of tech works means he’s able to offer low rates and high quality on the international market. He’s a rich expat gobbling up a housing unit but also creating jobs. It’s probably a net win for the locals. A cool policy would be every newcomer has to construct (or cause to be constructed) at least one housing unit. If that was a condition of the golden visa everyone would do it and the benefits would be in injecting significant additional supply into the local rental and real estate market preventing supply and demand from raising housing costs.
  - kevin_thibedeau 2y ago
    The US investor visas get abused by elites building their own apartments as "economic development".
itake 2y ago
Is there any place in the world that is "fun and comfortable" that isn't an economic maximiser? Thailand comes to mind, but its only "fun and comfortable" if you're an economic maximiser, bringing western money in. For locals, it is not fun or comfortable. Denmark pays the highest wages in the EU [0], so you can't consider there. [0] - https://nordicbusiness.media/denmark-pays-the-highest-wage-in-the-eu-followed-by-sweden-as-3rd/ https://nordicbusiness.media/denmark-pays-the-highest-wage-i...

alephnerd 2y ago

> People in Denmark pay a lot in taxes, but I haven't seen many of them rushing to leave. The issue is salaries in Portugal are VERY VERY low - they are comparable to Poland, Romania, and Greece - yet their tax burden and cost of living is comparable to Denmark. A 25 year old Portuguese college graduate can immigrate visa free to Denmark and double-to-triple their salary almost overnight. The same can't be said for a Dane unless they immigrate to the US, but they're in the H1B queue like everyone else so it just isn't worth the hassle unless it's a high paying white collar job. The EEC has a massive disparity in incomes, with average monthly wages ranging from €700 to €5,000 depending on the country, and as EEC members tend to have fairly simplified immigration policies between each other, this causes a brain drain in the countries with lower wages.

intellectronica 2y ago
Right, but there are two variables in that equation. If the economy were stronger and more productive people could earn higher salaries. Don't get me wrong, I don't like taxes either (I live in Switzerland and pay relatively low rates of income tax) but it just seems like a loser move to decide that the solution is to fiddle with the taxes, rather than figure out how to make it a place people can build a great life in, including salaries, services, fun, comfort, safety ... all the different things that are important to people.
- alephnerd 2y ago
  > If the economy were stronger and more productive people could earn higher salaries The issue is Portugal is very business unfriendly and human capital is weak. It's hard to make the case to invest in Portugal when you can invest a similar amount in neighboring Spain and get a much better return. Nor do local businesses earn enough to pay comparable to higher income countries in the Single Market - especially because Portugal essentially penalizes large employers This means the only way to make up the salary differnce that is the cause of the brain drain is to decrease taxes for early career Portuguese. Denmark and Portugal are nowhere near the same level of development, and what works for Denmark does not work for Portugal.
  - intellectronica 2y ago
    > business unfriendly and human capital is weak Exactly. So I would focus on improving that, rather than try a quick and desperate trick of tax cuts. Why not collect the taxes and then invest them wisely in great modernised services, for example?
    - alephnerd 2y ago
      Becuase such changes are extremely difficult and take a generation. Easing hiring means pissing off unions, which means you piss off voters and donors. Simplifying entry of foreign businesses and competitors means pissing off small and medium businesses, which means you piss off voters and donors. Shrinking Portugal's notorious bloated public sector will save money, but means firing a significant number of Portuguese, which means you piss off voters. Shrinking Portugal's notoriously large spending on social programs will save money, but means you piss off voters. You can't just "modernize services" overnight. It requires a generation, a lot of capital, and strategy to invest in building a High Tech industry. > Why not collect the taxes and then invest them wisely in great modernised services, for example? Because Portugal has had an elevated debt-to-GDP ratio for almost 20 years now, which makes it extremely difficult to get the capital to do any of the above, which means a significant amount of Portugal's tax revenue is spent on servicing those debts. The average Portuguese gets paid too little, the average Portuguese business is too small to generate significant business taxes, and every individual Portuguese person who has hireable skills has no incentive to be paid a fraction of what they would earn in London, Frankfurt, or Madrid. Lowering taxes for early career Portuguese in order to entice them to stay until they become mid-career is the least bad option of the multiple bad options Portugal has.
      - intellectronica 2y ago
        Thanks for describing the complexity clearly. I think I agree now. It's a disappointing solution that is quite possibly better than other options.
- crubier 2y ago
  PIGS Countries don't have capital available to invest in salaries / services / fun / comfort in the first place, due to historical reasons, the 2010s debt crisis etc. So the move of bringing people and capital by available means (tax breaks) and be less hostile to startups & companies (they have been very hostile and bureaucratic historically) is one of the few things they can do, and it works.
Moldoteck 2y ago
Romania total taxes are quite high, because we don't have tax ladders, it's one size fits all solution and it's a lot. It's that cost of living here is smaller and as result it's not that bad
- alephnerd 2y ago
  Yep, but realistically, Romania (as well as Poland and the rest of Eastern Europe) will end up in the same kind of middle income trap just like Portugal within the next 10-20 years.
  - chucke 2y ago
    Indeed. Portugal got by in Europe while it could advertise its services as significantly cheaper (Italy and Greece did the same). Romania, Poland and all will live to see another nation take its place, and if not finding a way to produce high value add products and processes, face the same kind of stagnation as Portugal.
    - alephnerd 2y ago
      It's already started happening. For example, in Hungary, a lot of Orban's political consolidation was itself due lagging economic growth in the aftermath of the GFC and Eurozone crisis, as well as FDI moving towards cheaper Romania, Bulgaria, and Serbia. Hungary's HDI and GDP growth began stagnating around 2014-15, which was around the time mass dissatisfaction against Orban arose.
      - shiroiushi 2y ago
        >Hungary's HDI and GDP growth began stagnating around 2014-15, which was around the time mass dissatisfaction against Orban arose. It's been 10 years, and he's still in power, so I guess the Hungarian people aren't that dissatisfied with him.
        alephnerd 2y ago

outworlder 2y ago

> a country that is fun and comfortable and safe to live in I think Portugal is fun, comfortable and safe. It is a fantastic place if you want to visit. Living there can be an issue. One of the problems, as another comment says, is that salaries are really low. That's probably compounded by the amount of bureaucracy one needs to wade through to do anything, and the overall 'old school' thinking of folks. Generalizing(perhaps unfairly), the Portuguese seem to look fondly at the rear view mirror, but more progressive ideas are not viewed in the same light. You would probably see more people staying if they had a space for their ideas, and a living wage.

aleph_minus_one 2y ago
> That's probably compounded by the amount of bureaucracy one needs to wade through to do anything That does not sound like the description of a "fun" or "comfortable" country to live in. :-(
intellectronica 2y ago
I've been to Portugal and it's lovely. But I don't think earning a low salary and not having enough is fun. Wouldn't be for me, at least.
more_corn 2y ago
My friend created a tech company there because salaries are low. He employs a dozen capable smart professionals. He pays them well for the local economy and arbitrage of tech works means he’s able to offer low rates and high quality on the international market. He’s a rich expat gobbling up a housing unit but also creating jobs. It’s probably a net win for the locals. A cool policy would be every newcomer has to construct (or cause to be constructed) at least one housing unit. If that was a condition of the golden visa everyone would do it and the benefits would be in injecting significant additional supply into the local rental and real estate market preventing supply and demand from raising housing costs.
- kevin_thibedeau 2y ago
  The US investor visas get abused by elites building their own apartments as "economic development".

itake 2y ago

Is there any place in the world that is "fun and comfortable" that isn't an economic maximiser? Thailand comes to mind, but its only "fun and comfortable" if you're an economic maximiser, bringing western money in. For locals, it is not fun or comfortable. Denmark pays the highest wages in the EU [0], so you can't consider there. [0] - https://nordicbusiness.media/denmark-pays-the-highest-wage-in-the-eu-followed-by-sweden-as-3rd/ https://nordicbusiness.media/denmark-pays-the-highest-wage-i...