Very little of what I have written below is original. In many cases, there are already national or E.U. policies attempting similar changes, but which have been stalled, ineffective, or deprioritized. The goal here is two-fold: first, to put these ideas together as part of one policy vision, and second, to illustrate the scale of the changes required for Europe to have a prosperous future (risks be damned!).

It is in that very spirit that I post these policy recommendations. Do I expect that some of them are wrong? Yes. But for a thing to improve it must first be proposed. Publishing this is an invitation to build on, critique, and challenge my ideas.

To tell me why I am wrong, you can either highlight the offending text and leave a (public) comment (works better on desktop/tablet at the moment), or you can click the “respond” button above to write a post in response. Clicking on highlights shows the associated comments.

Finally, if you see one of your own ideas below, the answer is yes. I stole it.

Europe is struggling. As a block, its GDP has barely crawled upward since the 2008 financial crisis, when growth diverged sharply from its counterpart across the Atlantic. The reasons are myriad: an aging population dependent on dwindling state pensions; increasing capital costs and energy prices; crushing competition from China across almost all manufacturing categories, like cars, chemicals, and renewable energy; and a failure to lead in any major high-tech industry.

Traditional industrial policy is unlikely to compensate for these deep structural challenges. Interventions must instead address fundamental weaknesses and establish competitive advantages. The former includes allowing much greater labor flexibility, redistributing pension and healthcare costs, and putting Europe back on a path to population growth. The latter includes eliminating legal and regulatory risks associated with starting a new business, pushing the cost of energy as close to zero as possible, funding the buildout of long-lasting Internet and AI infrastructure, accelerating permitting and offering regulatory exemptions for growth industries. This document proposes such interventions in the German context.

Labor

Labor laws in almost all modern countries seek to offer workers security by keeping them in their jobs. This approach made sense when individual roles often existed for decades, and when undifferentiated manufacturing jobs composed a large share of the economy: when an employer could easily replace an employee, collective bargaining and legal protection were the only way to protect wages from a downward competitive spiral.

Today, the sectors that most determine a developed country’s future both change rapidly and employ almost entirely skilled workers. The policy goal in this environment should not be to keep people in their jobs, but to match the right person to the right job as quickly as possible. Quitting and firing should be encouraged, particularly in the first decade of the worker’s career. The length at which a person remains in a job for which they are not suited (to the degree that is measurable) is the metric policy should seek to minimize.

Skilled workers should be subject to a labor regime with the following characteristics:

Employers should be able to fire skilled workers without cause, but could be required in such cases to pay three-month severance (laws preventing employers from engaging in discrimination and from firing a member of a protected group—e.g. parents on parental leave—should still apply).
Employees who quit should receive unemployment benefits as quickly as those who are fired.
Robust state financial support should be easily accessible to employees who have worked in a job for any length of time, with the duration of that support corresponding to the length of the employment period.
Legislation should permit collective bargaining, but should limit the power of workers councils to veto company or significantly slow management decisions. Similarly the government should remove restrictions on working hours (but maintain the requirement that employees are compensated for extra time). The latter is particularly important for leading-edge tech companies, where long hours with relentless colleagues is a feature, not a bug.

The benefits of such an approach are as follows:

It allows firms to quickly remove poor-fit employees, who, studies show,⁰ reduce the productivity of, and degrade the work environment for, other employees.
It maintains a larger number of available positions to job-seekers, which would otherwise be occupied by poor-fit employees. This would improve productivity at the same recorded level of unemployment.
It gives employees more freedom to leave jobs where they feel unsatisfied or exploited, increasing pressure on employers to maintain healthy work environments.

Social Support

The goal here is to increase revenues and decrease costs by redistributing the responsibility to pay into the system. Policies should incentivize people to work past retirement age, and generate a greater share of income from wealthier citizens. Proposals include:

Allow people who choose to work past their retirement age to accept partial pension payments: This allows them to earn more than they would from their pension alone, but reduces costs to the pension system.
Forbid private health insurers from rejecting applicants for pre-existing medical conditions: Allowing private insurers to offer much lower prices by only accepting the wealthiest lowest-risk patients leaves the statutory insurer responsible for the most expensive patients and the least revenue.
Raise the salary cap for statutory healthcare: Germans who subscribe to statutory health insurance must pay a percentage of their income up to a maximum income of (Beitragsbemessungsgrenze) is 69,750 Euro/year (as of 2026). Beyond that cap, health insurance is effectively a regressive tax, with the wealthy paying a decreasing portion of their income. The public health system can increase its revenue while decreasing the percentage it charges to lower-income residents by significantly raising the income cap.

Population & Migration

According to my research assistant, ChatGPT, Germany requires another ~7 million working-age people in order to have an economically healthy population distribution by 2045.⁰ Immigration is the only way to accomplish this. The country already offers visas and a generous path to citizenship to skilled migrants who receive job offers (largely from developed countries), but it’s extremely slow to certify those in the most critical professions, and it cripples the economic potential of its humanitarian immigration pipeline by preventing new asylum seekers from working for 18-24 months.

A strategic, national-interest-driven immigration policy would focus on maximizing both the number of immigrants and the speed at which they become economically productive. European countries should recruit skilled and trainable workers globally, starting with the asylum application pool, and ensure that they receive work permits within two weeks of arrival. Practically, the policy goal is to increase the German population and tax-payer base while meeting its legal obligations.

It’s well-known that Germany suffers from critical shortages in skilled labor, but the categories within that classification each suggest an opportunity. More than half of the deficit is in mid-level jobs that require vocational training, such as electricians, plumbers, transportation workers, and various types of in-home care work. These roles could be suitable to immigrants with a wide range of education levels and limited local language skills. Policymakers should develop programs to recruit and train asylum seekers, and most critically, to ensure they have work authorization. In doing so, they could (honestly) reclassify some number of migrants as job-seekers, not refugees (while preserving their asylum rights), redirect them into productive activities and reduce the administrative and political burden on the asylum system.

Many aspiring immigrants already possess desperately needed skills, but face bureaucratic hurdles to applying them. Certification for doctors, pharmacists, and nurses in particular must be fast-tracked. Once these certification obstacles are rectified, Germany and other European countries should actively recruit foreign skilled professionals from outside the EU by offering relocation grants, certification test preparation, and job placement services. Those who agree to work in underserved communities should also be offered tax income tax rebates (German medical professionals should also be eligible for such rebates).

Germany could supercharge this policy by actively publicizing job categories for which it is recruiting within non-European countries, and should offer to certify training programs within those countries cost-free in order to ensure a supply of pre-trained applicants. Such programs, if successful and well-publicized, could encourage would-be asylum-seekers to train in third-countries before continuing to Germany.

Absorbing new residents at the rate necessary will stress the already struggling education system and housing stock. Both concern existing German citizens to an even greater degree, and I will therefore discuss them in the next section. To help mitigate this burden, migrants who claim asylum in Germany could be required to pay an integration tax paid out of future income for a defined period. Is this unjust? Yes. Is it a practical solution that balances the interests of all stakeholders? Also yes.

For this to work, German officials must explicitly reject the notion that immigrants are a cultural and economic threat. Europeans have a stark choice: accept people from other parts of the world or watch their populations shrink and their pensions and social programs disappear. This fact is a political opportunity to recast humanitarian immigration as a profitable, self-interested imperative, measured in effectiveness by the speed at which new entrants become economically productive.

Education

A recent episode of The Daily mourned the so-called promise tech companies made to a generation of young students: learn to code and you will get a high-paying job. Today, unemployment among computer science graduates is about double other STEM fields. Entry-level software engineers are struggling to find jobs across the Western world as offshoring and AI exacerbate shock of the post-covid layoffs, which left an over-supply of experienced developers in the job market.

This notion of a promise not kept is misguided, and it represents a fundamental problem with how we understand the relationship between education and labor.⁰ There is no promise. All clearly definable jobs are increasingly insecure, first because training groups of people to do them makes each of those people more replaceable, and second, because they are the most obvious targets for rapidly improving automation. The well-paying, static, 30-year profession no longer exists in most industries. Our assumption must be that no high-value job will last for more than five years, and that all professionals must constantly retrain to remain relevant. The new education paradigm should focus on teaching 1) fundamental thinking skills—like math, science, and analytical writing— and 2) how to continuously and opportunistically identify ways they can add value and retrain accordingly.

Housing & Transportation

Germany must offer more housing in a way that is sufficiently equitable and preserves the social dynamics of its cities without massively distorting the market. It can do so with a combination of creative financing and investments in transportation.

Cities can allow for healthier housing markets while protecting communities by encouraging direct ownership (in addition to some of the existing protections). Long-time residents should benefit, not suffer, from the increasing value of their homes. Policy proposals include:

Increase the proportion of the low and middle-income families that own their homes by eliminating the transfer tax and offering government-subsidized low, fixed-rate mortgages for first-time home buyers.
Pass laws that require massive corporate landlords to allow long-time tenants to purchase their apartments at market rate.
In exchange for permitting each purchase, offer corporate landlords subsidies to build new, low-cost housing.

Robust public transit can mitigate housing scarcity both by reducing the land area assigned to cars and by making cities more accessible to people who live farther away. In addition to traditional investments in transit infrastructure, I propose:

Dynamic parking fees that change daily based on demand: Such fees would both generate revenue and increase utilization of public transit systems, improving the financial sustainability of bus lines, subway, and light rail services. Parking fees are preferable to congestion pricing because they significantly reduce the number of drivers who commute into the city while placing minimal pressure on taxis and car services. Residents with special disability or professional requirements could receive special exemptions
A review of parking needs every five years, with the goal of raising parking fees and eliminating low-utilization parking spaces to clear space for new housing and recreational areas.

Infrastructure

Energy and data transmission infrastructure are critical inputs to the growth industries of the future. The declining costs of renewables and the increasing appetite among large companies to invest in energy generation create a large (and time-bound) opportunity. Extraordinarily wealthy companies need electricity to power datacenters. By aggressively clearing bureaucratic obstacles to developing both, the government can leverage private funds to drive down the cost of power, benefiting everyone from chemical manufacturing companies to struggling households.

German legislators should pass laws streamlining the consultation process for energy and datacenter infrastructure projects. The federal government should be responsible for approving construction. Local communities should have a period of no longer than three months to comment on proposed developments, and should have no legal power to prevent projects from proceeding. The government should also be able to use eminent domain laws to acquire private land as necessary.

With these powers in place, Federal officials could offer hyperscalers rapid permitting in exchange for the following:

They must build enough power generation capacity to support their own demand. They can do this with either renewables or small modular reactors.
They must agree to sell into the public grid at market rate.
They must agree to throttle workloads on occasion when communities need more power in other parts of the grid.

European firms should not only enjoy the same terms, but also state subsidies for all long-effective-life aspects of data infrastructure, including conduits for fiber optic lines, buildings, and energy management equipment. Unlike advanced chips and networking equipment, which must be updated frequently, these long-lasting assets provide perpetual value that is robust to both speculative bubbles and changes in computing paradigms.

Startups

American firms have enormous advantages. The size of the American market allows companies to expect much larger returns, allowing them to raise them far more capital. Equity-driven compensation causes large exits to re-pollinate the ecosystem with a new cohort of angel investors. Lax labor laws reduce the risk of attempting to scale a new company, while frequent acquisitions by the largest firms significantly de-risk startup jobs for employees. It is possible for Europe to recreate these effects through policy. The goals should be as follows: easing market entry, reducing risk, and cultivating an equity cycle.

E.U.-countries should offer a standardized company legal structure that founders can form online, in less than an hour, without a notary or other administrative checks (like the IHK name check). Chamber of commerce registrations should not be required, and localities that require local registration should accept an output from the central register. Share sales should be free and recorded digitally at the regional level. This structure should ultimately replace most other business structures.

Businesses under 100,000 EUR in annual turnover should be exempt from most regulations unless they operate in high-risk fields, like medical devices and certain industrial controls. Firms under 10 million EUR in annual turnover should be subject to standardized Block-wide regulatory regime. This approach would dramatically accelerate and de-risk market entry and business scale-up across the whole E.U. without significantly restricting the ability of countries to regulate their economy as they see fit. It is particularly important that these regulatory simplifications cover labor law so that companies can easily hire across the block, not just sell.

Governments should further incentivize the distribution of equity. Last year, Germany offered workers a way to defer tax payments on employee stock ownership plans. This was an important step and long overdue step towards creating the capital flywheel that drives innovation. E.U. countries should maximize this effect by excluding the first two million euros from capital gains taxes on earned (not purchased) shares. Doing so encourages equity sharing and helps to create a new class of angel investors.

YOLO Europe

Germany needs more people, more housing, more energy, more flexible labor, and a bigger market all at the same time. Advancing on all fronts at once makes each individually more viable. We need more immigrants to increase the tax-paying population. We need more homes and more jobs to absorb those immigrants. We need to create those jobs by building generation capacity and datacenters. We need to match that power and compute to innovation for the technology sector to remain relevant.

The challenge is the political will to take risks. Inviting in more immigrants makes many voters anxious, reconfiguring labor rights will introduce temporary precarity, fast-tracking permitting for energy and data infrastructure will require stepping on toes. But avoiding these risks will leave Germany and its neighbors unable to maintain the wealth and influence to which they have become accustomed. The only choice is to go all-in.

Save Germany!

Europe needs more YOLO

Comments