It's been the Eurozone summer of discontent, but it could soon be more like an eternity of global disaster if we don't act soon.
That's the thought that should send shockwaves through the entrepreneur community if the warning of Financial Times writer, Komal Sri-Kumar, is to be heeded.
His article in the FT last week made it clear. It's time to get real. It's time to Vive Le Revolution. It's time for entrepreneurs to lead it. Why? Because the future of Europe is now in the hands of politicians, and that's becoming a worry.
It spells grave dangers, not just for the UK Economy, but the future of Europe as a global superpower. The truth is the EU’s progress is being sacrificed on the altar of political ambition. Politicians that will tell the electing public anything they want in order to get voted, but when those promises become law, its business and entrepreneurship that looks likely to suffer. I refer mainly to the new French president Francoise Holland, featured in the FT article this week entitled ‘Europe losing battle against debt crisis’.
The new French president's bid to come up with 'policies for the people' is definitely seductive. But ironically his bid to help the people will only serve to kill off the EU, a system set-up to protect them in the first place. There's the irony. His idea to impose 70% taxes on the rich spells suicide for the EU, rather than helping it. His policies on welfare are impossible to sustain if we are to compete with China, the US and whoever else. His view on employment law will do more harm than good.
Now don't get me wrong, I'm all for helping people, giving them a leg-up. But just encouraging them to stay there and not move forward, while penalising the rich and progressive is madness. It's bad business sense. One of the biggest threats to the EU is not just unemployment, but the unemployment of a new generation, that once out of work, have to be helped out by the working tax payer. That may seem fair, but where's the incentive for anyone in that? Where's the motivation? Where's the injection of ambition for a new breed of graduates desperate to make their mark? Where's the incentive for the business person to invest? What kind of example is that to set?
The truth is employment law is making it almost impossible to hire and fire. Jobs aren't being created because companies are scared of the liability of taking on someone on if they want to get rid of them. The irony is, more jobs will be created if you make it easier to fire someone, simply because there is less red tape, and you don't have incompetent people sitting in jobs when a good person could replace them.
As the article points out, the debts Europe is clocking up is not from spending but from its weakest countries managing its workforce policy. "The EU powers should recognise that the principal weakness of the Italian, Spanish and Greek economies is not large fiscal deficits, but high labour costs," says the FT article.
Now imagine, you're a multi-million earning business guru and you have to be faced with these costs, and the double whammy of a 70% tax bill. You'll just move elsewhere, or worse, you'll hide it by hiring clever accountants. In another news story this week, it was revealed more than US$32 trillion is hidden from the world in unpaid taxes in offshore tax havens. Yep, US$32 trillion. Just to get that in perspective that's almost the equivalent of the GDP of a superpower, like the US or Japan. Enough to power an entire country. That's what you lose once you give people reasons to hide tax.
Now think what you could do with that money. Invest in jobs, invest in creating more wealth, invest in opportunity. Now even I am sounding like a politician.
But I think anyone can see if you took this money and invested in the unemployed, gave them prospects, gave them hope. If you were able to use that money to turn those disaffected into money-spinning entrepreneurs, we wouldn't have a society panicking about how to fund its welfare, it would fund itself.
What we need is a different mindset, not different taxes. Different laws on employment, not the same - laws that protect the employer from its risks. We need different incentives that encourage the optimistic and driven. Instead of giving the rich a reason to avoid heavy taxes, give them a tax they'll pay.
That's the only way to get the EU out of the grave it is slowly digging for itself. Now the Olympics is here, it's not just in the medal table the Eurozone should look to outpace the giants of the US, China and emerging markets. And we're not going to do it by encouraging our workforce to stay warming up at the starting line, while penalising those that go for gold.
William Berry is a serial entrepreneur and in 2006 was named a Young Gun by Growing Business. He is the founder-director of accommodationforstudents.com, conferencevenues.com, and Vincentbond.com. William is also CEO of the new video start up p6.com, based in California.