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To: VeritatisSplendor
VeritatisSplendor said: "Sarkozy is not only going to allow people to work overtime, the extra hours worked will be TAX FREE! This is a brilliant reform. France is about to see its economy turbocharged."

If the government subsidizes something, then you can expect to get more of it. In this case, the harried workers who are working so hard to keep the employment head-count down, will now be provided an incentive to work even more hours.

The incremental economic incentive is presumably going to come from existing government revenues.

Let's presume that the restaurant in the article is open 70 hours per week. That means that it would be staffed by two 35-hour waitresses for each of two work-shifts.

If we suppose that the restaurant owner is better off under the new system, then we might see him shed an entire shift. The remaining two waitresses will then provide the same level of service that presently exists for the full 70 hours. Two waitresses will be highly paid. Two will become unemployed. The employer will see little net change and the government will give up revenue which might previously have been used to pay unemployment to waitresses.

The unemployment rate might increase to include as much as half of the present work-force. It is only the unhappiness of that large unemployed and income-less group that will force a change to the new system, probably back to where they presently are.

8 posted on 07/14/2007 10:46:44 AM PDT by William Tell (RKBA for California (rkba.members.sonic.net) - Volunteer by contacting Dave at rkba@sonic.net)
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To: William Tell
The incremental economic incentive is presumably going to come from existing government revenues.

Existing government revenues won't change. The extra hours now worked will not provide the government with additional future revenues.

If we suppose that the restaurant owner is better off under the new system, then we might see him shed an entire shift. The remaining two waitresses will then provide the same level of service that presently exists for the full 70 hours. Two waitresses will be highly paid. Two will become unemployed. The employer will see little net change and the government will give up revenue which might previously have been used to pay unemployment to waitresses.

Sarkozy's proposal is a pure, unadulterated supply-side inducement to increase production. It will allow people to work (produce) more and allow them to keep everything they earn above 35 hours. A very powerful inducement, indeed.

As the author mentioned, had the owner been less harried she might have convinced him to have dessert and another glass of wine. As it is, she lost several euros of income and profit.

Why Sarkozy's proposal would spur a business owner to cut his hours in half and lay off 2 employees is beyond me and hasn't proved the case when marginal tax rates have been cut in the U.S.

9 posted on 07/14/2007 12:04:47 PM PDT by BfloGuy (It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect . . .)
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