I'm sympathetic to your general point but it doesn't seem very relevant to this discussion.

It's one thing to have employment law where you can't hire/fire people at will. I agree that's relatively inflexible and I'd prefer the American model (as a European). There's no free lunch here, you either need to pay for this out of your taxes (as in France), or pay lower taxes and save for the unexpected loss of job yourself (as in the US).

It's an entirely different thing that a company can't meet its basic contractual obligations, i.e. the ability to pay salaries. That's a case where a contract was made, there seems to be something very wrong with basic US corporate law that would allow this to happen, i.e. a company should have enough assets on hand to pay salaries in the event that it goes bankrupt.

In most of Europe companies are obligated to insure against this eventuality. I can't drive a car on public roads without insurance, why should a company be allowed to operate if it isn't insured against failure to meet its basic contract obligations?

> I'm sympathetic to your general point but it doesn't seem very relevant to this discussion.

That you should judge the economy as a whole instead of picking one aspect and extrapolating what "our values are".

Europeans tend to view issues through a classist lens. That society is split up into the workers, and the capitalists, and that your ranking in the social hierarchy is solidified.

For better or worse, we don't see it that way. Today you're a worker, tomorrow you're a business owner. I would say America has more workers-turned-entrepreneur than anywhere else in the world. We have more millionaires who came from "worker" background than anywhere.

I've seen it first hand on multiple occasions. I've seen immigrants come to this country with nothing, work incredibly hard, build a business from scratch, and turn into employers in their community. It's the story of my family and many others here.

If the barrier for these immigrants starting a business was anything like complying with EU regulation - I promise you these businesses and their communities would not exist.

> Europeans tend to view issues through a classist lens. That society is split up into the workers, and the capitalists, and that your ranking in the social hierarchy is solidified.

And yet social mobility between the classes (they exist in the US too even though you don't necessarily think in terms of them) in many European countries is better then in the US. Especially the nordic countries. Pretty much the only EU countries doing worse then US are UK and Italy and the difference between US and UK is much smaller then US and Finland for example.

Maybe we Europeans are a bit pessimistic when it comes to our economic futures but in terms of the chance of making from poor to rich (or vice versa) in many places we are doing better then the US.

https://inequality.stanford.edu/sites/default/files/Pathways...

There's some truth here but it seems we're comparing apples to oranges considering Finland is the size of a US city. I wonder how a top US city compares to Finland for example, or the EU as a whole compares to the US in class mobility.

I don't understand what you think any of this has to do with the topic of unpaid wages owed to workers.

Do you think a critical part of the American success story is the ability of these workers-turned-entrepreneurs to skimp out on paying them the wages they owe?

To answer your original question

> why should a company be allowed to operate if it isn't insured against failure to meet its basic contract obligations?

Because it is meeting its contractual obligation. The liquidation preferences were already part of the corporate bylaws when the employees joined. If the agreement was violated then we have a court system to work it out.

The founders screwed up here and in this iterative game of prisoners dilemma their next venture won't be so easy. But I don't think we can point at this scenario and draw any systematic conclusions. The companies that would need this insurance are the one's that can afford it the least. Which is why "startups" have this profile of high risk and most likely a total bust.

Having the option to work in a high risk environment is important because as individuals we all have a different risk profiles. And if you look at our public listed companies some of these risks have payed off immensely.

Since the context of this thread is the oddity of the American system compared to most other western countries, yes, of course you can draw systematic conclusions. Workers aren't systematically unable to get their final paycheck in most other western countries.

There's a small flat corporate tax for this sort of thing, which addresses your point that startups would need to pay higher insurance rates for this. The insurance is run by state. The reason should be obvious, because you still want innovation and new companies, so it amounts to a net subsidy from big corporations to small ones.

Unless you think unpaid wages are some big part of US GDP it's pretty hard to argue that the lack of this is some huge part of the US's success story.

There's also no limit on working in a high risk environment. There's just a higher bar to being able to form a limited liability corporation.

Sure, you can work with a bunch of people and if it all collapses none of you get paid, but you don't get to do through some arrangement that looks like a normal job. They need to explicitly sign up for that, e.g. as co-founders or through some other painfully obvious mechanism, not just some clause in the bylaws that nobody working at Starbucks is ever going to read.

> Workers aren't systematically unable to get their final paycheck in most other western countries.

How is a one-off event systematic? This is a chapter 7 bankruptcy. The employees become creditors and participate in the liquidation. If the founders were using bankruptcy intentionally to not pay wages then it becomes a matter for the department of labor. All these employees are eligible to collect unemployment in the state they're employed.

These guys spectacularly crashed and burned for this to happen. Starbucks wouldn't file a chapter 7, they'd restructure and wages wouldn't be effected. If you want judge the entire US economy from this article and draw parallels about how this makes Americans and Europeans fundamentally different then you're painting with too broad of a brush.

Quite a bit of nonsense in what you tell.

Of course it is cheaper for you to hire in Serbia than in France, it is a poorer country with lower cost of life. That's about it.

What does "harder to hire" in France even mean? You make a contract and someone starts working for you on the following day. Actually, you do not even need to make a written contract, just have him come to work and pay him, that's enough to define employment.

What is so risky about firing in France? If you fire someone with a good reason, you have to pay him the astounding, horrific, monstrous amount of... 1 week of pay per year of service. If you fire him for no good reason, that is not much worse, you risk (as in, that's if you really screw up (or get screwed)) a few months of pay and that's it.

You can make provision as much as you want, there is no way it is going to cost you more than the difference between 40k and 100k (I take your numbers, which are also off, but that's another problem). Let alone every year for every employee.

I am always amazed at the so much praised risk-taking entrepreneurship (which is prone to brag about its boldness and how it deserves to be rewarded for the huge risks it takes)... who hates nothing as much as the smallest existing risk. I've come to think that it is probably afraid of its own shadow when it walks down the street.

> since French companies aren't paying for health insurance

What? Of course they do. How do you think the health insurance and other services are funded? It is just fixed by law and not depending on the mood on the employer.

You can ramble on as much as you like, but your decision can be summed up as just "it is cheaper to hire someone in a poorer country", which is nothing new. You did not choose to avoid France to go to Germany or Switzerland, you chose an Eastern country, you chose Serbia where the average salary is 6 to 8 times lower!

The correct answer in your case is to give your employees ownership or give them shares or find investors or increase your social safety net to be suitable for underfunded startups.