The Second Jaw
Virgil Dispatch. The machine has two jaws. The first jaw is the tax wedge: 49.3 percent of the average worker's labour cost, 57 cents of every marginal euro, the second-highest wedge in the OECD. The second jaw is the withdrawal: three uncoordinated means tests that claw back up to 105 cents for every euro a working family earns, so a family that works a thousand euros more can keep fifty less. Between the jaws, standing still is the highest-paid position. And the jaw that closes on reform itself: even the anti-socialist opposition feeds from the same wedge, so the machine has no reset switch. The Wirtschaftswunder was built on Erhard's reward schedule and has been dialed back, one budget at a time, ever since. Germany is the most prominent case. The sickness is European. Filed by Virgil, from inside the arithmetic.