written on Monday, February 26, 2024

This will be a slightly different post. It has to do with the country I am living in with my family: Austria. More importantly it has to do with some some observations and of mine about how this country functions.

There is a rather famous quote about Vienna: “If the world once ends, I'll move to Vienna, because that's where everything happens fifty years later”. It has been attributed to Gustav Mahler who lived at the tail end of the 19th century. It might also have been said by anyone else or about a different city. Yet as a description of Vienna is highly accurate — even today — and it in many ways describes the culture here. While Austrians might argue that Vienna really does not represent the country, the fundamentals of that mentality are inherent to Austria's culture. Austria is a very conservative country that chooses to disregard progress for as long as it can get away with. It's not always stuck in the past. There are definitely exceptions to the rule but in many ways this conservatism is the backdrop to every day decision making. The way I like to portray what is happening here is that there is a strong desire for “stability” and fear of the unknown. Austrians prefer to miss out on a fad over adopting something too early.

While a country is defined by its borders, the culture is defined by it's population. So we need to define what an “Austrian” is. That turns out to be rather complex and this complexity matters a lot. Austria is a country of 9.1 Million people. Let's take a news article from a few days ago: “4,9 Million Austrians travelled for vacation in 2023” according to Statistics Austria. When you read a statistic like that, you can extrapolate that this refers to residents in Austria. Austria has almost 20% foreigners; in Vienna that number is 35%. Those foreigners are divided into EU citizens, refugees (and those applying and waiting to be processed) and other third country nationals. They have vastly different permissions and rights. It's comparatively easy to get a visa or work permit on paper (called “Aufenthaltstitel”) but it can involves a lot of bureaucracy to actually get one. Even as a dependent of a EU citizen it can take months to get your permit processed, particularly in Vienna despite the fact that EU law requires this to take effect immediately. The MA35 authority in Vienna responsible for permits is well known for lack of service quality.

Citizenship on the other hand is shockingly restrictive even ignoring bureaucracy. You need to earn well above the national mean to be entitled to it, the minimum waiting time is 10 years (can be shortened to 6 years in many cases) and you need to have certificates that demonstrate that you can speak German on B1 level or higher. Simplifications for children are almost non existing. You also cannot be abroad for more than 20% of the time which sometimes is an issue for business travellers. It also requires you to renounce other citizenships when you want to become Austrian. This leads to the other definition of “Austrian”: someone with Austrian citizenship. Austria has some of the lowest naturalization rates in the EU. Except it also has a citizenship through the backdoor. If you are a descendent of a holocaust victim, you are entitled citizenship through a special process which does not require renouncing nor does it require residence. Unsurprisingly this has lead to the number of people applying for citizenship this way being around half of the granted citizenships since this law has been introduced.

Austria is a country that needs permits for everything and in some cases these permits are bizarre. Case in point: to operate a monetized YouTube channel you need to register with KommAustria. To register with KommAustria you need to be an Austrian, EU citizen or registered refugee. As a third country national (Russian, US citizen, Canadian etc.) there is only a way to operate an illegal YouTube channel and just assume nobody will mind (as many do). There are a lot of these weird rules, and many have to do with residence status. Austria accepts a lot of refugees every single year. While they are waiting for their status to be processed, they cannot be employed but are given money by the government. Due to how the law is structured, even if you want to sponsor such an applicant for a visa, you cannot. There is literally no process. Because the refugee system takes years and years at times, it means there are people who go to school, learn the language and have no legal status. Ultimately Austria ends up deporting a lot of asylum seekers who did not get their status granted. Yet many of them companies would be happy to have as employees.

It's not just YouTube channels that need permits. Did I mention that there are permits everywhere? If you want to sell SaaS software, you need to apply for a permit and that's a rather simple one anyone can get. But don't you dare to try to become a tailor or confectioner. For the privilege of operating your own tailor business or pâtisserie you need to be a master in tailoring or confectioneries. I'm not a tailor, so no clue how long that takes, but the regular path to becoming a master is a three year apprenticeship that ends in an exam. So if you are an Ukrainian refugee who can tailor, even if you have the right to work, good luck becoming a tailor. You can already guess where all of this is going: it's the breeding ground of small scale corruption and problematic work situations. It's not too infrequent that you see people being registered as a business manager for the purposes of providing permits that itself is not really working for that business. Once you have a business, the rules in which you can operate it are also limited. Mandatory time keeping for employees, maximum opening times for stores, all kinds of limits for what endeavours are possible with the business license. Even if you are entirely alone in your store, you cannot open it whenever you want. Even if the store is exclusively operated by robots, it would not be allowed to open on a Sunday and not for more than 72 hours a week. Some things are completely unavailable to foreigners unless they are EU citizens or refugees. Can't be a policemen, can't operate a restaurant (you need a middleman), can't have a chimney sweep business (someone please explain this one to me).

What else do you need permits for? Well one of new things that has been thrown in recently has been the packaging directive of the European Union. A sender of a package has to “license” the packaging to send it to an end user. The license fee then goes to local waste management. So far, so good. Unfortunately in the case of Austria you need to go to a notary to register your “Representatives for packaging and single-use plastic products”. You can take an educated guess how many foreign companies want to jump through these hoops. Some sellers refuse to sell to Austria (it's a small country after all), others pay for excessive fees from third parties that can provide such services. Established local sellers are happy and supportive, after all less competition from other countries.

Taxation is very much the same story. High income taxes, income dependent social security contributions, value added tax etc. All these things drive up the cost of doing business and encourages a healthy shadow economy.

Alongside all of this sits a political system in which politicians see themselves as kings that give out gifts to the population. Rather than lowering taxes, they rather give out all kinds of subsidies.

You might be able to see a pattern here. This conservatism is in a way really just protectionism. Which is a valid way of live, but all of this really prevents innovation, and it also as a lot of unintended side effects. Quality of life in Austria might be great, but I am pretty sure that the country as a whole greatly eats into it's existing capital to retain that. While Austria might want to pretend like the world is not changing, the reality is that it has no control of what happens elsewhere. There are lots of countries in need of entrepreneurs, that are more welcoming to people. It's also aging and businesses know that immigration is absolutely vital to the functioning of the country.

All in all it really feels like Austria is a country containing a population that is afraid. Afraid of new things, afraid of the unknown. As the collective organism that it represents it's deeply suspicious. This is not just politics, it's the natural culture. Even foreigners who move to the country over time assimilate to this line of thinking. Those who made it through the layers and layers of bureaucracy will start to defend it. After all, once you invested that time and money it also helps you against competition.

Austria today takes part in a much more connected world. It's embedded in a free trade union, it's depending on international products and immigration. I find it ironic that Austria has a ton of human capital, it's still a very attractive destination for immigrants, yet it throws away so much potential. It got dealt an amazing hand but it's just to afraid of playing it.

Clearly Austria will not become a libertarian wonderland and it should not be. There is no appetite for large scale deregulation and that is absolutely okay. But there is a version of this country that stays true to its actual values and can achieve better outcomes. Maybe one day we will see a political landscape that is just a bit more courageous.

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