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One of Estonia's first "e-residents" explains what it means (qz.com)
235 points by lukebennett 8 months ago | hide | past | web | favorite | 173 comments



I incorporated in Estonia few years ago because of what their promo materials say. It’s a total shitshow unfortunately and while it’s true that you can do everything online, it’s not what you think. All user interfaces are straight from the 90s, only the most basic forms are in english and they want to know everything about your business while setting ridiculous limits. For example, you need to have half of your capital available always. If you end the year even with 49% of your capital, you have to submit a report how you are planning to fix the situation. This is highly limiting requirement for any startup. When you need to do anything else than submit the most basic forms, you have to fill in forms that are available only in estonian. If you need help, good luck finding a person who can serve you in english. Don’t get me wrong, estonian people are very nice and will try to help you but the language barrier is very awkward to deal with.

If you plan to incorporate in Estonia, make sure you hire a local accountant because you really can’t decipher their accounting requirements yourself, put the lowest amount of capital required in (2500€) and mentally prepare for overall frustrating experience.

I applaud Estonia for all the efforts they have put into rising from the ashes of russian control but if I knew back then what I know now and had to make a choice now where to incorporate, I would skip Estonia.


Just having a legal address for your legal entity now costs EUR 300-500 a year for e-Resident, depending on whom you ask. They have added ridiculous "official local contact person" requirement this year, and consulting firms have immediately jumped on the bandwagon with additional 100-300 EUR row in the price list.

My bank account I have opened by traveling to Estonia, in Swedbank, was closed "due to inactivity" after two years, despite I was paying 5 or 10 EUR a month for the account. Yes, my account was inactive, waiting for a chance to receive money when suitable, so what???


I can also chime in that avoid Swedbank like plague. I tried them first but after submitting them with 6 months of personal bank statements and getting back an offer for CC with 300€ credit limit I went straigth to LHV which has been fantastic. Let's just say that CC limit wasn't 300€... I'm considering using LHV for other projects as well because they have APIs, everything works and they even work with cryptocurrency companies for what it's worth.


> They have added ridiculous "official local contact person" requirement

Is this similar to US "registered agent" requirements [1], or is it somehow more involved/restricted?

[1] https://en.wikipedia.org/wiki/Registered_agent


No, it's not even an agent. It's simply a contact god knows what for (for receiving documents they claim), like it can help in the case first person in question doesn't want to be contacted. Basically it duplicates legal address functionality, and even given that I was successfully contacted by email when Estonian tax or statistics board wanted me to correct reporting mistakes.


One more thing to remember is even though you cna have a company incorporated in Estonia if you mostly operate it from another country you may still need to pay your taxes locally (depends on country, consult your tax advisor).


Great comment.

That capital requirement sounds like a way to give the local banks capital from rich foreigners to make loans and get tax revenue.

I know India restricts how much Indians can spend abroad and Mexico has complained about capital flight.


Not sure if there are additional requirements for e-residents, but for the standard end of the year accounting requirements you don't need to have cash. There's a general net worth requirement, which can pretty easily be filled with company owned equipment like a laptop and smartphone.


"If the net assets are less than half of the share capital or less than the minimum capital requirement of EUR2,500 regarding private limited liability companies and EUR250,000 regarding public limited liability companies, the shareholders must decide on:

(1) The implementation of measures as a result of which the net assets would form at least half of the share capital and minimum capital requirement Or (2) Dissolution, merger, division, transformation of the company Or (3) Submission of a bankruptcy petition"

http://www.ey.com/Publication/vwLUAssets/Doing_business_in_E...

Put in 100000€ and you will need to have 50000€, not 2500€. You will need quite many laptops and phones for 50k€ ;)


So don't put in the money as share capital.


Thanks for touching on some of the things I was expecting to read in the article.

> you need to have half of your capital available always

What does this mean, in a bank account?


No. Basic bookkeeping. Equity = Assets - Liabilities. Assets can be "cash in a bank account", tangible stuff you buy to your company, intangible things (product you are building, ip, patents, etc). The "below 2500" rule kicks in as a safeguard when your equity (assets-liabilities) have dropped below 2500, to avoid approaching 0 "soon".


Yes. If your balance at the end of the year isn't half of your starting capital, you need to tell estonian government officials how you are planning to recover from this horrible failure. I didn't know this on my first year and we just made a small investment at the end of the year that made the balance to drop at horrific 40% level which triggered alarms in the government. If you fail to satisfy them with your plan, (if I understood right estonian-only materials), they can declare your company bankrupt. I know it sounds ridiculous but welcome to Estonia I guess. Though I do doubt that the officials would close your business unless you actually go bankrupt but it's still a hassle and feels very controlling to explain your business to a government at this level.


I realize it’s annoying, but the requirement to register “lost” share capital is a common one in Europe.

Think of it as a warning flag to potential lenders. The default assumption in society is that limited liability corporations have enough assets that it’s safe to sell them something on credit, i.e. invoicing rather than cash. Forcing companies to register the fact that their equity is negative provides an easy way for vendors to look up this warning flag.

I’m not directly familiar with Estonian law, but I’ve run a couple of Finnish companies. If the law is similar, it’s not that the government registry would be actively filing for bankruptcy if you have negative equity, but it does create potential liability for board members if the company goes bankrupt and the board failed to register negative equity when the information was available to them.


This is a good point. However for me the annoyance is not about reporting the decrease, it's the fact that if capital drops below 50%, government is now in control whether they exercise that control or not. I would understand something like 10% but 50% is just ridiculous to me.


I think the confusion here might be "starting capital" vs "registered share capital". You should set the registered share capital to the minimum allowed 2500 eur. Even companies making hundreds of millions of euros in revenue set usually set it to 25000 eur. You can then invest any amount over that as your actual starting funds without increasing the registered share value.

That way the company is only required to own at least 2500 eur in assets, which should not be a problem for any serious business.


Solid advice. I was stupid enough to follow the process estonian gov had laid out and it really didn't make this distinction at any point so I registered our full capital as share capital.


If one didn't have this background knowledge, one might hesitate to enter a totally fictitious number on this form.


What's the fictitious number? You do need to show proof that you have the 2500 € in a bank account.


If the actual number is 100000, then 2500 seems fictitious?


The confusion here stems from the multiple meanings of the word "capital".

The logic is identical to for example founding a company in the UK: https://www.gov.uk/limited-company-formation/shareholders

You pick a "name value" and number of shares when founding, for example £1 x 500 shares. This is the "share capital", and official maximum liability of the founders for the company's debts. It also defines the smallest unit of ownership that can be assigned to a person. But of course the actual starting investment, assets, and the market value of the shares can be much higher.

Estonia doesn't use the concept of "number of shares out of total shares", but instead "euros of ownership out of total share capital". For a typical small business you would set it to 2500 EUR and can split ownership at 1/2500 granularity.


It's just a matter of how you want to structure the balance sheet.

You can have 2.5k€ share capital and 97.5k€ free capital. This is usually a better arrangement than having it all in the share capital which is "bound" equity. (Bound is probably not the right English word for this — I only know the terminology in Finnish.)


I agree, 50% seems arbitrary. Finnish law only requires registration of negative equity.

In practice the difference between 10% and 50% is only 1000 euros though, assuming your company is registered with the minimum required share capital of 2500 €.


No, it doesn't have to be cash in your bank account, as martkaru explained in the other comment.

I can start a company and declare a really expensive couch as it's assets in the balance and it would be ok.


This is not necessarily the case everywhere and for all legal forms. In Germany there's a "Unternehmergesellschaft" which only requires assets of 1 Euro. It is supposed to turn into a GmbH eventually by accumulating 25k in assets. However it is illegal to simply add an expensive couch as this would be a "verdeckte Sacheinlage" which I believe also exists elsewhere as "concealed/hidden contribution in kind" (IANAL)


I just got an email from the embassy that the eResidency documents are ready to pick up. I wanted to set up a company right after, but this sounds like a really bad news.

But I'm wondering, do you use any of the government certificated services who should help you to do all of this? Like LeapIn and similar? Or do you manage everything by yourself?

Also, anyone else has a similar experience?


Use LeapIn, so much easier. Or maybe you could start just by yourself and as you grow introduce LeapIn, they do help a lot setting you up though.


Citizenship or residency? The two are drastically different.


Sorry, E-residency documents. Edited the comment.


2500€ doesn't seem like a huge amount of capital for a businesses. Probably less than a months wage for most developers.


Can I ask what you saw as the benefits of incorporating in Estonia?


I had a similar experience. The ID card in particular was the biggest hurdle. I gave up on it.


I'm still unclear of the benefits.

Could anyone shed some light: What can we do with it that we can't do now? Let's say that I'm a solo entrepreneur or small SaaS owner from a developing country (e.g from Asia, Africa or LatAm) -- basically, typical HNer who's not from Europe/US.


From the article, the author is able to be on the board for an Estonian company and take payment in Euro as a consultant. He can also e-sign documents.


> take payment in Euro as a consultant

Isn't it relatively easy to open a Euro denominated account in most countries?


For an individual it is, not so much for a company


I don't know about other countries but in India it is fairly simple to open one for a company (they are called FCNR accounts). I don't see any government having issues with foreign income making its way to local businesses.


e-residents also have access to Estonia's "estcoin" once it's released: https://medium.com/e-residency-blog/were-planning-to-launch-...


I wish they would first translate all the necessary documents to run a business in Estonia to english, and after succeeding in that, then jump into creating new financial instrument for the new brave digital world.


It is basically a way to make it easier for entrepreneurs to do business in the Eurozone and take advantage of Estonia's generous corporate tax structure. It's mostly a legal / financial device, you can't use it for travel or citizenship purposes.


Are there any real benefits for citizens of other European nations?

For example, I run a small B2B company in the UK - would there be any benefits to incorporating in Estonia?


0% tax on retained earnings.


OK, I can see how that would be a big draw for some companies. Doesn't help me personally though, since I take everything out.


I'm within the 1st year of e-residency + incorporation.

Here're a few of my experiences.

1. Setup is not as straightforward as they claim, but it's still quite easy. It compares well to what I've seen in France (LegalStart, CCIs, etc.) and the USA (Clerky/C-corp, Delaware, etc.). Actually there's no (printed) paper work because all is digitally signed with your e-residency card—only that is a big plus.

2. Running the company is similar to a C-corp but it's 10x easier than an SAS in France—where you've to register for, know about, and manage nearly 10 different tax agenda. It's also 2x to 5x cheaper to run than in USA and France.

3. However, it's true that banks are lagging a little behind but to their defence they face AML/KYC requirements, and e-residency is a lot of randomness for them—needless to say (?) that banks are risk averse.

For comparison, note that Clerky was launched in 2013 to streamline the legal paperwork for C-corps when e-residency started in 2014. And see how long it took before Stripe partners with Silicon Valley Bank (SVB) for its Alpha program.

- So I feel like banks do a good job although there's room for improvement.

4. Internationalisation of some institution's websites has bugs—basically your preference for english is reset to Estonian once in a while, but most of it is translated in English (and Russian and Finish?).

5. Some institution's websites are old looking but it's not worst than in Delaware or in France. So far, institution's websites are quite clear. For comparison: when paperwork in e-Estonia is done with digital signing, in 2017 I still had to (surface) mail or fax documents to France's and Delaware's institutions, sometimes with credit card number written in clear, or with a check enclosed—this is prehistory.

6. For the legal setup and accounting, I use LeapIN. So far they're very professional, their website has an extensive Q&A and knowledge-based section—that I read. Their pricing segments are clear. And they seem to have a growth mindset—reach out for more advice on how to onboard and their price.

7. Money-wise I was unaware of the 50% social capital requirement left on your account at the end of the fiscal year (note that it also exists in France and, by inference, probably in some other European countries)—maybe they could communicate more on that, it's not nice to figure that out later.

- Still, so far I feel I've got value for my money and I can pull out if needed—no commitment which isn't the case of many B2B SaaS solutions with long term contracts (if we compare).


> I can pull out if needed

According eesti.ee, it will take around six months to close limited liability company in Estonia. So yes, technically you can pull out but if it's anything like other more obscure legal procedures in Estonia, good luck. Conveniently this is not mentioned anywhere in the nice looking promo sites either ;)


Yes, I read something like that too :-) It's definitively not clearly mentioned and we could (still) qualify the procedure as 'obscur'. Though the same would hold for France- or Delaware-based comps.

Generally:

- on boarding is easy and relatively cheap,

- off boarding is more difficult.

And if you want to close then:

1) you better do it right—it's a process with rules that can take weeks if not months;

2) you gotta pay unless you declare the business bankrupt;

3) it takes a lot of off-the-path back-and-forth exchanges with people that have limited incentive to help you.


Musing here, but would E-stonian residents have any protection / recourse under GDPR?


GDPR applies to "EU residents". Unless you also had a residency permit and were residing in Estonia, it wouldn't help.


I signed up and got my ID delivered to my local embassy ... but they never replied when I tried arrange the appointment to pick it up (I got heaps of "your ID is in the embassy!" reminders via email however). Oh well, I'm sure it's useful if you manage to get it.

Anyone picking their ID up in Vienna have a different experience?


Just show up.


You don't make an appointment, you just turn up during the alloted times.


Maybe you don't need an appointment, just go there to get it?


The article claims that Japanese PM Shinzo Abe and French PM Emmanuel Macron are Estonian “e-residents”. Has anyone seen any non-Estonian reports which support this claim?


I did find a German news article from 2016 saying that Angela Merkel is an Estonian e-resident - presented to her by the Prime Minister of Estonia. So it seems plausible, but that it's something presented to them as a symbolic PR stunt.

"On Thursday, Prime Minister Roivas will present Merkel with an e-residency card - allowing the chancellor to become a digital resident and try out Estonia's digital solutions firsthand."

http://www.dw.com/en/in-estonia-merkel-and-roivas-talk-russi...

There's an Estonian story with photos about that here:

http://estonianworld.com/technology/angela-merkel-becomes-es...


But she didn’t “sign up” for residency, they “presented” it to her which is a whole different scenario.


I don't think it's a different scenario. Even the Estonian press says Shinzo Abe was presented with his e-residency, rather than him applying:

https://news.err.ee/115597/japanese-prime-minister-becomes-e...

"Abe's e-residency card was presented to him by Taavi Kotka, the Deputy Secretary General at Estonia's Ministry of Economic Affairs, currently on a visit to Japan.

Kotka told ERR that e-residency was Estonia's gift to Abe, which he accepted."


- Are there any good (easy to use) payment processors available in Estonia (like Stripe) ?

- Is your startup governed by specific laws for data privacy etc.

- What about legal disputes, arbitration. How does that work for startups based out of Estonia ?


1. There is EveryPay https://every-pay.com/ . You need to open an account in the LHV bank first before receiving payments. (disclaimer: me and our dev team built their tech platform)

2. All the EU data laws apply.

3. I guess it depends on how you specify it in your contracts, you could do the disputes/arbitration wherever you want. There is an overview of dispute options here: https://www.eesti.ee/en/entrepreneur/legal-aid/resolution-of... . For example, if you have a customer not paying their invoices that are below 6400 euro you could file an a request in E-toimik/E-file (a paperless court system) and the collection is automatic. You could also sue people "online" there. (disclaimer again, I lead the software architecture/development work on the E-file project.)


LHV is for the merchant account, it's needed for EveryPay.

Their price structure is not fully pay as you go:

- there're no setup fees; but

- there's a fixed monthly fee—a so called terminal fee of 20EUR; and

- then there're the transaction fees—about 2.2% which is much less (!) competitive than Stripe's fees in the EU—1.4%.

Although I like what I've seen so far, as an app-developer, the fixed monthly fee wasn't acceptable. Plus, interaction with LHV was kind of painful (in this particular case, english was an issue).


True, but EveryPay has 1 day settlement, instead of Stripe's 7 day settlement in the EU area, if that matters.


Ok

And back to LHV, I've seen the PayPal account verification deposit (two payments of a few cents made to one's account) appear extremely fast on the account—I think it was less than one hour.


We're successfully using Braintree for about 4 years now and I know several other Estonian startups who do as well. https://www.braintreepayments.com


+1

A bit of back and forth for the KYC process, but the onboarding process and the team are quite good and to the point.


"Specific laws for data privacy": GDPR at the least.


No Stripe unfortunately..


I have several friends from russia that wanted to build their startups in a global way, at least not in russia (receive and send money across borders is a nightmare - basically everyone in the country doing it illegally). And they decided to became e-residents. What's now? All their funds are blocked and accounts are closed in one day without notice.


"Estonia wants to be a role model and leader for a different way of seeing the world: a world that is more open, meritocratic and reflective of the demands—and opportunities—of the 21st century."

Meritocratic seems highly promoted in many circles (seems like on first glace a good idea as opposed to say, despotic), but in a meritocratic world, what happens to the dumb and/or lazy (unmeritable?) people.


> in a meritocratic world, what happens to the dumb and/or lazy?

They don't get to run things?

Put another way: assuming you're going to have some sort of hierarchy, and you will, how would you want to organize that hierarchy? Merit seems like the least bad way to do so.


"Merit" is not a quantifiable characteristic. All your plan would do is give the power to the people who define "merit."

It's like you're advocating for correctpersonocracy. Put another way, literally every government that has ever existed would call itself a meritocracy.

The actual word 'meritocracy' comes from a book that warned about the dangers of creating easily-gamed draconian systems that needlessly exclude people from the process of governing. I wish as many people would read the book as use the word.


> "Merit" is not a quantifiable characteristic.

It's not? What are SAT scores, school grades, entrance exams for the civil service, election results, income etc.?

I would say that these are all ways for society to quantify merit.

Did you mean perfectly accurately?

> literally every government that has ever existed would call itself a meritocracy.

Nope. Most governments used to call themselves monarchies and would have bristled at the idea that they'd have to somehow demonstrate merit to justify their power. Their power was justified by heredity, and in fact, I'd think that if you suggested that they needed to do demonstrate their merit, you might end up short a head.

> The book

Yep. Have to admit I didn't read it, but I did read what the author wrote:

"It is good sense to appoint individual people to jobs on their merit."

What he objects to is the following:

"It is the opposite [of good] when those who are judged to have merit of a particular kind harden into a new social class without room in it for others."

So merit-based selection: good. Ossified class system: bad. I think Trump, May and Johnson are ample evidence that we leave plenty of room for the incompetent to get a chance at the reins, even if we generally try to organize ourselves by merit.

And so exactly the fact that we can't quantify merit with perfect accuracy, and have multiple domains, helps us avoid the problems Young mentions, though here as elsewhere we aren't at all perfect.


Your comment just proved the other guys point. You name drop a few politicians for not having "merit" because you disagree with them.


Nope. There are plenty of politicians I disagree with that are competent. Kissinger, for example.

These are incompetent.


Lol. Kissinger. Right.


And by book you are referring to "The Rise of Meritocracy"?

https://en.wikipedia.org/wiki/Meritocracy#Etymology


Undoubtedly


I haven't read it (yet) but it was described and exerted in a recent BBC podcast on voting patterns in Brexit/Trump elections:

https://www.bbc.co.uk/programmes/b09tcvp4

Some interesting people interviewed and points raised.


> exerted

"exhorted", perhaps?


Thanks, I actually meant "excerpted". Passages from the book were included in the podcast. I lazily used a phonetic spelling without checking.


I think I like a new phrase/idea I heard from Jordan Peterson recently. "Hierarchies of competency". This seems to me like a better idea of how society can arrange itself. Society needs to be able to have different people have different amounts of power in different domains, but those hierarchies don't have to be built on violence and raw power. Maybe "hierarchies of competency" could be a stable, positive way to organize at least some parts of society.


Competency in what? The best person to make decisions may not be the best person to talk about those decisions in front of a camera, or the best person to inspire confidence in those decisions in a nation of (by definition) less-competent people who (again by definition) would have made the decision differently.


Yep, any way you have of measuring competency is going to be inadequate and subject to gaming.

And it may be exactly the fact that you can't measure it accurately that makes it not "harden into a new social class without room in it for others."


Well, for example, take the medical profession. There are of course many problems with how doctors are trained and licensed. The AMA might do well with a shake up. But in America you are not getting a license to practice without demonstrating a huge amount of skill, dedication, and competence. Your cousin who is already a doctor doesn't just get to say, "You are in". Or you just have to pay some large amount of money to the right person.


um.. it costs a LOT of money to become a doctor in America.


Do you really want dumb people in the process of governing? I think we had enough already.


Let's take a small municipality and play.

I'll take town board/administrator form of government, you take "meritocracy."

In my form of government the board members run for office periodically. The ones who get the most votes win. Then they hire a professional bureaucrat to handle the day to day business of keeping a municipality up and running.

Here's what I've got:

* a discrete (and anonymous!) method to determine who will become the board members

* local community members who campaign and are subject to citizens by virtue of elections

* at least one professionally-trained bureaucrat who more likely than not is competent in the job and given the power by the board to make day-to-day decisions like hiring and firing people

So... How does your meritocracy function?

What's the way you measure and get consensus on community leaders' merit?

How are those leaders held accountable?

How do you ensure at least one of those leaders is trained in a relevant field as opposed to being trained only in the art of rhetoric (shout out to Socrates for this question)?

Edit: clarification


> What's the way you measure and get consensus on community leaders' merit?

I find the model of liquid democracy enticing: Every decision is voted on by the people of the community and because that would be overwhelming you can delegate your vote (in general, for a certain topic or just for a single vote) to someone you trust, like an expert in that area. Maybe people might get a little money for voting so experts who vote with many votes can do this professionally in full time.

So now you have people competing for the expert status for certain topics (like health care or foreign affairs) and everyone in the community can have direct influence on the outcome of every decision. Every bit of power is earned and most decisions are effectively made by trusted experts.


How does that address the problem of complacency? Won't most of us just permanently delegate our votes?


No, would you? People want to decide and vote, at least in areas that they are interested in. See most referendums world-wide or the participiant rates in Switzerland.


> What's the way you measure and get consensus on community leaders' merit?

Dunno, elections, maybe? Seems like a common way to get community consensus on personell decisions. For things like public office. So people get to vote for who they think is best suited, who has the most merit. And for lower level positions, you could have entrance exams and a mechanism for promotion that takes into account job performance.

And for the economic sphere, we could let people vote with their wallets...


"Indeed it has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time." (Churchill, quoting anonymous)


Sadly, merit is a terrible qualifier. Humans have proven time and again that they are appallingly bad judges of “merit”, and this holds whether they are doing so on an ad-hoc/heuristic basis or by some systematic quantification: both approaches are wide open to intrinsic bias and systematic discrimination, and this routinely happens on scales from the job interview to national elections.

As for democracy, however, what we don’t have (yet) is anything demonstrably better. A meritocracy will not be an improvement over a democracy. The critical function of a democracy is affording the governed a guaranteed means to evict bad adminstration.


Ordering implies nothing about distribution.

You could have a system where winner-takes-all, and the second best on down starves. You could also have a system where the upper half is rewarded with 10% more than the lower half. Both of these could be described as meritocratic.

Beware of those who use the label of meritocracy to advocate for winner-take-all, as well as those who denounce the concept by equating it to winner-takes-all.


Is it bad if they just fall by the wayside? If one puts forth zero effort, they should get zero reward.


"fall by the wayside" is a bit hand wavy. Do you mean they become poor, broke, with nothing to loose, ripe for a revolution? Or that they are killed by automated drones when they come over the fence of your/my/our/their gated community?


if they were prone to revolution, you'd think "get a danged job" would be the path of least resistance (pun fully intended).


I've been thinking about this with respect to America's future. Basically, suppose people want a revolution. Well, that would require a competent leader to make the mob effective. This is the rub, if you have leadership skills then you make bank and would be in 'the system'.


One thing US politics has been phenomenal at is ensuring that there will never be organized resistance to the government. Divide and conquer is the name of the game. I do not think it's a coincidence that politicians seem to have been focusing on issues that are increasingly incendiary, arguably in lieu of more relevant issues.

When the country is split down partisan lines, it ensures that any action taken will also be cast in this light and demonized accordingly. And even better for the status quo, it can also be used to get people to even vote against their own interest. How many people voted for Hillary or Trump because they thought 'yes, this person truly represents my interests and views'? How many voted for them because they thought 'oh dear god the [other person] winning is simply unthinkable!'?

How did the American revolution happen? Aside from having a huge number of competent leaders, it was framed as a unified citizenry 'us' versus the outsider English politicians 'them'. And this is a general theme of revolutions. It is 'us' versus 'them' when 'us' is the people and 'them' is a detached government. Yet in the US 'us' means one half of the population and 'them' means the other half while the government seemingly works to further antagonize this divide.


> I do not think it's a coincidence that politicians seem to have been focusing on issues that are increasingly incendiary, arguably in lieu of more relevant issues.

I do not know whether you intend to, but "this is not a coincidence" sounds like it implies a conspiracy.

I believe it is a coincidence, but in the same way that evolution is based on coincidence. Random mutations create by coincidence an organism that is better adapted to its environment, hence it survives. There is no need for a conspiracy to arrive at a political system like ours (it's just stabler than average and thus survives), just like how evolution does not need an intelligent designer to come up with intelligent designs.


Divide and conquer is a strategy as old as they get. The US government has also been outed engaging in such in the past to help stabilize themselves. COINTELPRO is probably the most well known example of this - a program that lasted through 4 political administrations. Faced with the rising political influence of groups ranging from civil rights protesters, to the Communist Party of the USA, the FBI engaged in an extensive and far reaching program designed to "increase factionalism, cause disruption and win defections". The Wiki entry [1] gives a decent intro. The program was only revealed after a number of activists burgled an FBI field office and hit the jackpot.

So, our system is already absolutely a product of exactly what I'm describing. Now let's zoom forward to today. Congressional approval in the US ranges from the low teens to the single digits. [2] Think about that for a minute. That means upwards of 90% of people are dissatisfied with the most basic functioning of our government. If we weren't so divided among one another, our government would be replaced in short order by democratic consensus. But with what..? That question even gives politicians a sort of cognitive dissonance to put themselves as the 'good guys.' It's entirely possible we could, in retribution, elect individuals that could cause immense harm to this nation.

So you're a politician. What to do when you want to help ensure you and your fellow party members continue to get elected, even when 90% of people think you're doing a bad job. What do you do? You could do a better job, but that's tough - you need and rely on "donations" to get into and stay in office and the unspoken promises of those "donations" are a large part of the reason people think you're doing such an awful job. Making people despise and distrust the other group so much that they are willing to vote against their own self interest is one very obvious solution. Let's go back to COINTELPRO and look at some of its intended effects:

- 1. Create a negative public image of activists by publicly smearing their character

- 2. Break down organization by spark internal conflicts and exasperating racial tension.

- 3. Restrict the ability to groups to protest by using infiltrated agents who promote violence and lawless behavior at protests.

- 4. Restrict the ability of individuals to participate by engaging in surveillance, false arrests, and character assassination.

[1] - https://en.wikipedia.org/wiki/COINTELPRO

[2] - https://realclearpolitics.com/epolls/other/congressional_job...


The implicit assumption here is that American firms actually higher leaders based on some kind of objective leadership skills (and that the market will suck them all up).

I'm guessing whoever wrote this hasn't grown up poor/discriminated against, didn't beat their peers and find themselves never-the-less judged/ousted because they "weren't of the right background/proper means/cultural fit".

And remember, all it takes is a few key leaders. And that includes those who may have been part of the system but were unjustly ousted...(or those who just think they are getting a wiff of the winds of change and want to be on the right side)

/I'm not making any actual prediction of revolution the US incidentally. I'd be inclined against any theories of imminent revolution. Just pointing out that simple theories of "it wouldn't happen here because of our fake-meritocracy" are pretty off the mark.


The problem with your statement is that many people did and continue to do exactly what was stated going from rags to riches. Elon Musk is probably the most well known example. Now one of the most influential business and technological leaders in this nation, he immigrated from South Africa with little more than to rely on than his ability, motivation, and work ethic. A soft spoken immigrant with a slight speech impediment and South African accent is not exactly what you'd call 'the right background/means/cultural fit', yet it posed little issue.

More fundamentally the problem is that in America there is a very distorted sense of self. A total of 4% of Americans think they are less intelligent than the average American. [1] And so the vast majority of people in this nation who are not particularly meritorious think they absolutely are, or at the worst no less meritorious than average. Yet that, no matter how you measure it, is simply not the case.

[1] - https://today.yougov.com/news/2014/05/11/intelligence/


Elon Musk is the exception used to sell you the american dream.


The reason I chose Elon Musk is because he's a household name and most people are familiar with his story. However, 67% of all "high-net-worth" Americans are self made, with only 8% directly inheriting their wealth. [1] If you consider only men (as women have an easier time marrying into wealth) it's 76%.

I used to be more aligned with what you're saying. An eye opening paper for me was this [2]. I ran into that when actually searching information on the chiseling out of the middle class. And that paper does describe that. In 1979 the middle class controlled 46% of all income, and the upper/rich classes controlled 30%. Today (well at least today as of 2014) the rich and upper class control 63% with the middle class left with 26%. There's even been a chiseling out of the middle class as a whole declining from 38.8% of society to 32% of society.

But the eye opener is this. This is the change in the size of each economic group between 1979 and 2014:

- Rich: 0.1% -> 1.8%

- Upper Middle Class: 12.9% -> 29.4%

- Middle Class: 38.8% -> 32%

- Lower Middle Class: 23.9% -> 17.1%

- Poor or Near-Poor: 24.3% -> 19.8%

If you're concerned that partisan bias may be tilting those numbers (as such figures are certainly subject to a variety of different interpretations), wiki has a section on the political stance of the Urban Institute [3]. Beyond that, that paper is quite readable and their methodology very transparent. It's extremely eye opening.

[1] - https://www.fa-mag.com/news/most-millionaires-self-made--stu...

[2] - https://www.urban.org/research/publication/growing-size-and-...

[3] - https://en.wikipedia.org/wiki/Urban_Institute#Political_stan...


Is the "size" of the economic groups given in population or income/wealth?


Population.


This is exactly my point, the rare exceptions are the ones capable of actually pulling off a real revolution; they get sucked into the American Dream.

This leaves everyone else without effective organization. Look at all the occupy stuff that was supposed leaderless; did it accomplish anything?


There are objective things like 'people follow you'

Why are you making assumptions about me?

What if leadership isn't about beating your peers, but about using influence to bring people together?


> American firms actually higher leaders

American firms actually hire leaders.


That describes a ton of populist leaders throughout history though. Sometimes it is more beneficial to raise a mob and usurp power than to stay withing the system.


History has been defined more by classes and royalty and rich familes, and America has more people that have risen based on their ability to execute. My claim is that this creates a release valve of sorts where people that can execute can rise in ranks.


> History has been defined more by classes and royalty and rich familes, and America has more people that have risen based on their ability to execute.

Can you be sure that this assertion is true of both the past and the future?


I suspect there is a not insignificant subset of males especially that would find the idea of anarchy more exciting than the humdrum of job-seeking and (worse) job-doing.


Again...

As per my other response re: your apparent implicit belief in a labor theory of value, now you're espousing the implicit belief that a labor market must tend towards full employment, and at a wage level that makes revolution unattractive.

If I might make the observation, your positions seem to be littered with false beliefs/understandings.

I'm assuming another one of those false beliefs would be that you'd be in the relative merit camp under any such meritocracy...


You must be exacerbated... so I apologize. But, what exactly is false about this. It stands to reason that getting a job sounds a lot easier than starting a revolution for most people.


Only if your economy has jobs. Let's say AI revolution brings 90% unempoyment: then it's easier to revolt than to find a job, if:

- you still can: you are not yet a slave, with the ruling class + machines not yet fully in control

- you have a reason to revolt: your life quality is low, because society does not give a damn about the losers

With those being true, a revolution should happen well before reaching those high unemployment figures.


[flagged]


Despite the propaganda, statistically the United States has one of the lowest starvation rates on Earth at .58/100,000 - half that of Norway.

The majority are not homeless but rather shut-ins, uncared-for elderly or suffering from other mental health issues.


I accept your argument that few are starving like a national geographic picture. Instead we have merely undernourished schoolchildren in the richest country in world history.

As for the adults, maybe we can write sleep outside until you freeze, get shot/stabbed, or jailed where you're threatened with sexual assault and are in general treated like a disease until you acquire enough money to escape the poverty trap and possibly mental help, the least funded area of America's inhumane medical system that is one of the top reasons people go broke.


The root cause of childhood hunger is more often than not either criminal neglect or parental/financial incompetence than actual cost.

I personally grew up in a single minimum wage income household, which supported 2 adults and 3 children. I'm very familiar with dubious food. That said, it is quite reasonable to meet the caloric needs of a grade school-age child in the United States with little regard for taste or variety for roughly a dollar a day. Adding some variety and nutrition to that wouldn't be much more. Formula for very small children averages between about $40-$100 a month so they are a little more expensive, but you did specifically say school children.

There are 50 lb bags of rice at my local grocery store for $15. I have bought them before, they're short grain and not very good so you wouldn't want it everyday, but in a pinch you can meet your caloric necessities with rice for basically cents.

I actually don't have a very strong sense of taste, and manage to get by on ~$3-$6 of food a day, my diet consisting largely of over-hard eggs, canned fish and canned string beans. I am quite confident I could get by on half of that if need be.

As far as homelessness goes, I don't have reliable statistics on this, but depending on where you get your statistics between 20 and 70 percent of America's homeless have mental health issues.

I am perfectly aware that this is anecdotal, but I have a friend who worked for an organization that housed homeless in unoccupied Homes and Apartments. According to her, the majority wandered off because they did not understand what was going on. In Minnesota no less, it's cold.

My point is simply that there is a sizable portion if not majority who cannot be helped without stepping on their personal freedoms, because they won't allow it, for better or worse.


Good lord, thank you for this. It astounds me how completely off-the-mark progressive thinking around poverty is - probably because it's a) not data-driven in the least, and b) primarily championed by people who grew up middle class.

Poverty in the US is NOT the same as poverty in Somalia. It's not even the same as poverty in Estonia. Childhood hunger is the best example - malnourished children in the US are in that state because of abuse.

Anyone that grew up in a truly shitty North American neighbourhood in the last 20 years knows - the people that were suffering were not suffering because of a lack of resources. They made bad decisions, or had health problems, or were abuse victims.


This is a very helpful comment thanks for posting. However, I would posit that financial incompetence is something we can avoid by removing financial barriers to decent food. If a child wants a snack, and those snacks were free, then how good you or your parents are with money wouldn't matter. We can implement systems that don't rely on individual competence to achieve end results we want in that vein.

As for the homeless, I would posit for that 20-70% with behavioral issues, we can start at least by offering medicare for all so their symptoms can be treated. Secondly, for the 80-30% who are merely unhoused, the solution for them works quite well!


> canned fish and canned string beans

Careful your sodium intake, rinsing the beans can reduce it by 40%, outta luck for the fish.

(good comment btw)


There is actually little evidence that sodium is bad for you, and the advice to avoid it comes from people like the AHA who are basically just trying to sell you breakfast cereal.

https://www.healthline.com/nutrition/how-much-sodium-per-day


You are correct.

Excess mortality is often hard to pin on its actual cause. If you can imagine 100 people in 2 alternative universes. One in which they are well fed, have access to medical treatment, get normal sleep. Another in which they are tossed on the street where they eat poorly, sleep poorly on a cold corner and live poorly.

In the second universe they don't drop dead of being poor on the spot or tomorrow they just gradually die a lot sooner.

Its much harder to drum up enthusiasm to fix. There is a 60% chance that 7 out of 10 of these people will die an average of 10-20 years sooner than it is to save someone who will die next week.


As a resident of Norway I'm interested in this statistic, please name the source.


Who's starving?


What if they exert maximal effort, but achieve zero results?


Kind of like any venture where you try as hard as possible and yet fail ?

Kind of like an athlete in the olympics who ends up losing by a fraction of a second? Idk, they don’t get the gold right?

txsh 8 months ago [flagged]

So, in your world, the best software developer gets paid the most (gold), the second best gets paid less (silver), the third best gets paid the least (bronze), and everybody else works as slaves because they're losers.


Could you please not post like this? It leads to low-quality flamewars, and there's specifically a guideline against it:

Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize.

https://news.ycombinator.com/newsguidelines.html


"As you all know, first prize is a Cadillac Eldorado. Anyone wanna see second prize? Second prize is a set of steak knives. Third prize is you're fired." - from Glengarry Glen Ross


There's capitalism in a nutshell.

Except first prize was granted by your parents and upbringing. Second prize was partially because of parents and upbringing, but with a bit more luck.

And bronze? Yeah, well they're just lazy and bad and they deserve what little they have - cause the Gold and Silver earned what they have.


And this goes all the way back to the proverbial Adam and Eve?

Don't we then all have the same ancestors and therefore all equal opportunity?


"Don't we then all have the same ancestors and therefore all equal opportunity?"

Just about every study done on the subject shows that the family you're born into has a HUGE effect on how successful you'll be in life.


Yes, and presumably some parents work hard to give their children a good future and some do not.

Is this irrelevant? Why is it not acceptable for someone that had better parents to do better?


That's because children are seen as innocent. We can blame someone in poverty of "making bad choices"... What choice is there for a newborn to make bad choices?

Yet, we have little issue,society speaking, condemning a baby and their family to a life of poverty to continue that cycle.

Or should we say that the newborn/baby deserves lack of medical care, substandard food or hunger,substandard housing, less/lacking education? If you believe they deserve that, can you explain what actions a baby can do differently?


Hard work of the parents doesn't really factor into it. It's the social standing of the parents. A single mom who works 2 jobs works harder than most of us on this board. Yet, our kids are going to have it much, much, much easier than hers would.

"Why is it not acceptable for someone that had better parents to do better?"

If your whole schtick is about "meritocracy", then having people start out better by default defeats that entire thing.


One thing about meritocracies - someone gives the merits and demerits.

Why do they deserve that power? What checks and balances exist to prevent them from entreanching themselves and family/friends?

Follow the money and power.


1. I didn't bring religion into this. You did. 2. I reject to what amounts to a nice story with no basis in fact. If I remember my judeao-christian studies, the woman was less than the man in those stories.

3. It is evident that even being born, not all babies are equal. And that's before we consider socioeconomic status.

Should humans be considered as equal? Of course. However its quite easily demonstrated that people aren't.

This is reductio ad absurdio.


I think you can ignore the religious mention and in good-faith (ha!) take their point to be that we ultimately have common ancestors. Then respond that your family has a strong effect but it's not the only one.


Suppose a average married couple had a child and also adopted a rock. By your reasoning, the rock would perform exactly as their living breathing child, right?


Please don't do this here.


What's so wrong with pointing out someone else's absurdity?


It was a tacit insult taking the form of an argument. That adds no information, it just lowers discussion quality and encourages worse from others.


No, if you could guarantee that only people who contribute nothing would be affected by this, and there would be no edge cases (people with disabilities, etc)

Also, "zero effort" is subjective - is playing video games all day zero effort? I would say so, but some Twitch streamers would disagree.


How do you feel about China's forays into social scoring that limits the choices available to those with indiscretions (unpaid fines, etc). They can't fly, access particular services, etc.

If the limitations/rewards vary based on who is in power, I can see that becoming quickly challenging. Internet access could be deemed a reward, for example.


It never ceases to amaze me how most people in capitalist (all) countries continue to work under the folk-belief of a labor theory of value.

How much effort you put in has, at best, a second order relation to reward.

Far stronger effects are supply, demand, mechanism of action, distribution of initial resources, and social factors.


I thought the idea of a labor theory of value wasn't related to the actual effort you put in, but more that value is related to how much average social labor would be currently invested to acquire or produce something. So if you have a machine you can pull a lever to produce 10 items in 1 second, each of those items acquires 1/10th of a human-second of value.

I get though that those other conditions matter more in terms of the actual price though. Marx distinguished between "value", "use-value", and "exchange-value", the latter being price, the second being required for value or exchange value, and the first being used as the basis of comparison between goods. I took it to mean that exchange value is like temperature while value is like heat.

Can you elaborate? I'd like to know more about how these different theories interact.


It's pretty shocking. What becomes _infuriating_ is when they say this while also defending their right to own the product of that labor because they were there first or happened to present capital in the right place at the right time.


It sounds like you are not a fan of landlords or am I misunderstanding something.


Setting up a rental is actually a lot of work that is upfront and has a ton of risk. You also need to pay taxes, so it's not based on effort at steady state. Steady state is based on cashflow management.


This ignores that major developers can absorb a lot of risk and aggregate. It also ignores that foreclosures on ordinary people can be snapped up by banks and developers. It also ignores that tax abatements are very popular and often extremely undeserving. Near where I live, tax abatements are granted regularly and come out of the school budget.

If the housing market keeps going up, where's the risk? You'd have to be the dumbest man in NYC real estate to lose money like the president's son-in-law. Small time landlords are a slightly different ballgame, but it's still bizarre that we allow individuals to speculate on where people live and and extract money from the less wealthy in this fashion.

EDIT: Also, what other job requires work up-front, but then nearly none? Landlords are famous for terrible upkeep. Even in communities where problems are generally fixed, most of the time, the landlord just collects a check until a problem pops up. They only have to work for rare serious problems and for managing move-in move-out.

EDIT2: The craziest thing is that we see that they do this and still collect 25%+ of ordinary people's incomes for an invisible service that is merely holding intellectual property. It's as though people pay to live in a castle keep with no services, pay the local lord, and justify giving 25%+ taxes on top of what you give to the actual democratic government (typically less to much less) because the lord is somehow a great symbol of the economic system.


I'd suggest you do some reading on investing in and managing real estate.

It's a lot of work with a lot of risk.


Correction: Japan PMs name is Shinzo Abe (not Shinto)


> can open Estonian bank and securities accounts

Does anyone know how well this works in practice for US citizens?

I've been led to believe that FBAR requirements are so onerous that most non-US banks would rather turn away US citizens than take their business.


I'm not an accountant, but wouldn't a foreign business with an associated bank account count as a foreign person?

I mean I'd assume that incorporated businesses in Germany (e.g. GmbH which roughly translates to LLC) would count as a German person and the same for Estonia. You as the owner would still have to do your taxes and FBARs on the income you receive and what you have in your accounts. But I wouldn't expect to file FBARs for the business.


There might be some questions about beneficial ownership of the company, but maybe?

My original question was more along the lines of the individual with e-residency opening a personal bank account.


Anyone remeber Cyber-Yugoslavia?

http://www.juga.com/


Yeah, it bitrotted : http://www.juga.com/list.php


and most likely broken in already - http://www.juga.com/idpage.php?id=23%27%22


Does being an "e-resident" make you subject to the GDPR? So you can tell e.g. Facebook and not have to lie about your country of residence?

If so, I could see this becoming very popular over the next few years...


>Japanese prime minister Shinto Abe was the first

err...

>My e-Residency is not a passport. It’s more than a tourist visa, and far less than citizenship.

what? Slip that into the last paragraph? What is it exactly?


I saw that too, and personally thought it was probably not deliberate, but it could be a poke at his uyoku leanings.


What Estonia's e-residency actually means.

Let's assume you have a startup and you want it to be registered in Estonia, paying taxes and using the Estonian banks for financial purposes.

1. With e-Residency you can't enter Estonia, you need a separate business or travel visa [1]

2. At present, it’s still necessary to travel to Estonia in order to apply in person for an Estonian business bank account. [2]

3. Good, fancy and catchy name "e-Residency" is actually an infinite loop of bureaucracy. You can't remotely open a bank account, you need to travel personally to Estonia, and you have a chance that banks will approve your application. But you can't enter Estonia with this "e-Residency" for this to happen.

[1] https://e-resident.gov.ee/faqs/about-e-residency/#coming-to-...

[2] https://medium.com/e-residency-blog/banking-for-e-residents-...

And this is just a little tip of the iceberg, there are a lot of articles about real experience of e-residents of how unfriendly for "e-residents" the banks in Estonia are. And without a bank you can't make your startup work.

Today it's just better with the same level of bureaucracy to open a company in other, more startup-friendly countries that grant a residency and have decent, more digital-friendly banks.

I hope something will change in near future, the main idea of e-residency is actually really amazing.


> You can't remotely open a bank account, you need to travel personally to Estonia

Unless you're from US, you can open bank account remotely

http://www.zdnet.com/article/borderless-banking-estonias-e-r...



Maybe I'm too cynical, but also looks like a nice way to e-vade taxes?


How so? It explicitly says[0] that is not possible..

0. https://apply.gov.ee/


e-Residency doesn't but you could set up a company in Estonia and I've read that basically all b2b transactions would be untaxed, and simply holding money inside the business would be untaxed (from my interpretation of their website) which would allow you to have a basically tax-free business in the EU which could then forward the cash to some offshore entity in any way you'd like.


Sure, that's possible. A pretty similar scheme is possible in pretty much every other EU country as well. In Estonia you can take your sweet time with transferring the money offshore, in other EU countries you have to do it yearly so it looks like you have no profits on the yearly report.


Given the date I thought this might be fake, but it seems the program is real:

https://en.wikipedia.org/wiki/E-Residency_of_Estonia

That said, the article also claims "Shinto" Abe was the first person to enter the program, but besides mispelling his name I can't find any other reference to him being involved with it at all.


Technically, it only claimed he was the first prime minister to do so, but the sentence was ambiguous.


Ah, you're right - my mistake.


Actually I did find this:

https://news.err.ee/115597/japanese-prime-minister-becomes-e...

That's surprising.




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