by Deborah Liebart. First appeared on DisputatioMagistrorum. DOI: 10.5281/zenodo.3232961
Rising inequality in Europe[1] and the United States, draconian austerity policies, growing pauperization of the middle classes, freeze of social benefits in the UK for the fourth year in a row, reform of the NHS, retirement points in France, the future of social policies looks bleak… it is the future of our societies, of the social state and of democracy which seems today threatened.
The HBAI annual report reveals in March 2019 that 3.7 million British children live in absolute poverty for the period 2017-2018, compared to 3.5 million in the previous period. The introduction of universal credit[2] could further worsen the situation of the most precarious[3], “long-term” poor, as shown by the conclusion of the study conducted by the Institute for Fiscal Studies (IFS) which concludes that almost two millions of people will lose more than 1000 pounds a year with this policy measure, in the first place, disabled people, self-employed and low-income families, with little or no savings…
The universal credit aims to rationalize social assistance by merging housing allowance paid directly to the social lessor or owner, tax credit, family allowances, and unemployment benefits.
The last report of IFS concludes that this has affected and / or will affect 11 million people, in a country where 14 million, or one fifth of the British population already lives in poverty according to the UN[4] report by Philip Alston, head of poverty and human rights department, which predicts that 40% of British children will live in poverty by 2021…
While it is possible that this has a positive impact on certain categories, the structural choices put in place during the design of universal credit are likely to have serious repercussions for the most insecure, particularly, in the industrial areas adding to the precariousness and “zero hour[5]” contracts, credit purchases increasing their level of indebtedness…
This raises the question of the vulnerability of precariousness to temporal dynamics. Even if the average effect is the same, it raises the question of the non-ergodicity of the real economy contrary to current dominant economic theories[6]. In other words, payment deadlines directly affect the lives of the most vulnerable, even if at the end of the average period, the entire amount due is paid. Each delay signifying for populations living in “just-in-time”, new recourses to the loan, sometimes to the “loan shark”, to continue to make current expenses, but also overdraft fees by banks, consumer loans reminding the causes of the subprime crisis… Precariousness, unlike economic theories, lives in real time, day by day, with no forecast in the medium or long term, this distortion of temporalities being no doubt part of the impossibility of current models to provide functional solutions, effective and sustainable… In some British neighborhoods, there is a return of “gas meter” which works with coins or with a prepaid card to avoid unpaid bills and the cutting-off of gas by the provider… To these difficulties are added the system of spare bedroom tax taxing superfluous living space by a system of reduction of social assistance up to 14% per room vacant after the departure of a child … which adds further difficulty to the difficulty[7].
Facing this situation, NGOs are mobilizing by denouncing the austerity policies and pointing the finger at the failure of states to their obligation to protect people from hunger. In the Cambrigdeshire and in Oxford, Human Rights Watch (HRW) estimates that tens of thousands of families do not have the minimum, with food banks already running at full capacity. Schools, hosting children in situations of undernutrition and therefore of deconcentration difficult to reconcile with learning, live only from charities fighting against food waste and recovering unsold from supermarkets. At the same time as the NGOs, the community of caregivers is raising the alarm, poverty leading to a worrying development of the “markers of poverty”: obesity, diabetes, suicide, mental illness linked to isolation, to inactivity, to the dehumanization of human being in a system depriving the most precarious of their means of sustenance, but even more of their dignity in a model that has made desperation, a normal condition. Facing austerity, the populations mobilize offering to Europe a series of spontaneous popular reactions more or less organized, more less violent, having globally in common to refuse any political or trade union leader. In 2012, major protests and / or general strikes take place in Great Britain, Portugal, Spain, Belgium and Luxembourg[8].
In Italy, in 2013, “il movimento dei forconi” fought against austerity, unemployment, cost of living, taxes and the power and desire of the elite to accumulate ressources. Five years later, “le mouvement des gilets jaunes” defy political world and French media world. At the origins of the movement, the carbon tax on diesel, the fuel of the poor. Subsequently, differents claims develop: the criticism of tax policies, the reform of the ISF (tax on the Fortune) depriving the state of revenue but also charities, living in part thanks to exemptions to the ISF, the rise in the cost of living, the privatization of Aéroport De Paris, a criticism of power and governance by the elites, and more generally a mistrust of the population vis-à-vis of his government, a phenomenon of representation crisis already observed in various European countries since the financial crisis of 2008.
Greece, after ten years of austerity policy, having left a bled dry population, must return on the financial markets, at the moment when the government has committed for 2019-2020 to make new cuts in budget, (retirements and new tax increases), but also, after discussions with its creditors, to liberalize the public electricity service.
As a researcher in the social sciences studying European solidarity systems and tax models over the centuries, the development of such precariousness in the very heart of 21st century Europe has a particular appeal for me because the living conditions of these populations echo my work on past centuries. It is a crisis of economic ethics which should concern all actors and political leaders, whatever their leanings. It seemed clear that States had found solutions that were certainly imperfect and perfectible, but at least viable to help the most vulnerable.
How did we get there in Europe, and more widely in the West? How and why the fifth world power and behind it, Europe and the entire West, rely more and more on NGOs and charities to feed their poor, to take charge of their solidarity[9]?
The answer lies in the “fable of the free market”, a symbol of contemporary neo-liberalism. If the free market is the cornerstone of conservative discourse and more generally of general policies, the left having adopted the conservative language arguments for several decades, a simple glance at the reality of the political decisions taken, is enough to show that he is in fact only the straw man of the system. Behind the conservative speech, the protectionist barriers are reborn from all sides, as shown by the latest battle between the United States and China on the mobile telephony, which reminds the dieselgate. The “Huawei case”, (espionage accusations, true or false), is actually hiding a fact: the free market, the economic optimum, (since Gournay and Smith), “laissez-faire, laissez-passer”, may be limited by laws and national policies when economic interests of its first supporters, the United States, loose the dominant position in a market. It is interesting to note that the dominant economic discourse may be swept away today by its most ardent defender. In fact, it is not new, this happens regularly since Reagan…
In Europe, after decades of austerity by both conservatives and socialists, the situation is explosive. More broadly, it is at the global scale that the indicators are in the red, on the issues of inequality but also of climate and food self-sufficiency, making it appear an urgent reality. While the various crises have usually been dealt with separately for decades, it now appears obvious relationships between phenomena of inequality, poverty, the crisis of biodiversity and the extinction of species,…, as being each different parts of the same trend, a world living on credit, on the bequest of the future generations on one hand and on the other hand on the poverty of the mass as a means of enrichment of a small number always coming from a same social background without any possibility of social mobility for the others. In this sense, the slogan “gilets jaunes” in France, “end of the month, end of the world, same fight” remains the most interesting and the most relevant of all that we have seen in recent months.
The question is to know how, in 80 years, Europe has been able to move from the French CNR program, from the implementation of Beveridgian policies in Great Britain, from Bismarckian policies in Germany… to the progressive disengagement of State on the issue of social ills. In other words, how was the liquidation of the welfare state, its principles and its values begun?
Galbraith[10]‘s work is worth re-reading today in order to understand how the transition from the protective welfare state to the predatory state took place. The predatory state is a particular form of government that ensures that a small number of citizens benefit from the entire system of the welfare state, without really participating at their proper level, always under the guise of strong economic arguments : employment blackmail or relocations, massive defiscalisation of large companies in exchange for job creation real or fake… This is what Galbraith denounces in the United States under the name of “republic-enterprise”, as an institution, in which the economy is governed not by the free market, but by a coalition of industrial lobbies financing the electoral campaigns, and thus assuring their dominant position on political power, with the aim of emptying the welfare state of its essence and capturing its redistributive component for their benefit. The most glaring example is undoubtedly the pharmaceutical industry setting exorbitant prices for essential drugs, a price largely borne by national solidarity through the mechanisms of social security. More recently, the obligation, in France, of schooling from the kindergarten participates in this policy, by allowing private schools, under contracts, to be subsidized by the State and to capture a share of national wealth and therefore of public taxations. This is also the case of the Competitiveness and Employment Tax Credit, which allowed large companies to benefit from tax advantages in return for job creation which, even when the objectives were not achieved, did not entail any sanction or refund from the beneficiary companies, and whose definition on the website service-public.gouv.fr is inbelievable : “The tax credit for competitiveness and employment (CICE) is a tax benefit that concerns companies employing employees and is equivalent to a decline in their social contributions ».
Behind the liberal discourse supporting the idea that the creation of employement it is not up to the state, it nevertheless appears that it is up to it to subsidize large companies and through tax cuts to take over a share of cost of labor, which could be summarized as : public money absorbing the negative externality of work, in others words, the salary of the employee … for companies not only generating profits but distributing them in dividends to its shareholding, rather than investing in the structure or increasing wages … Long would be the list …
All this on public money, on taxation, on solidarities… To be clear, it is not the privatization of state-owned enterprises that we are witnessing today, this step has been taken several decades ago, it is the privatization of the State itself, to the advantage of a handful against the largest number that impoverishes, thus explaining the rise of inequalities, the widening of wealth gaps, the degradation and over time the disappearance of the “middle class”, in a society more and more bipolar, where great wealth meets great poverty. The same mechanism is at work for the ecological crisis … The image of these 1500 private jets arriving at Davos, at the bedside of a sick, asphyxiated planet, would be a joke on its own, if it were not so sinister and so cynical.
And if finally, it was not the solidarities that cost the taxpayers so much but their deviation for the benefit of a few? And if in the end it was not the welfare state the problem, but rather its predation, its capture in a few hands?
Once the fact is made, we have to define new policies, new directions to strengthen this state and reinject a little social justice, tax, ethics and dignity into the cogs of the system. How? Perhaps by trying to make again the state a major player in the economy, and no longer just a subsidizer “hands-tied”, placing it in the center of political power, decision-making, but also at the center of economic power, why not, for example, by the reshaping of the actual State as an investor one, described by Mazzucato, a state that invests formally and contractually in venture capital, and which, like any shareholder, withdraws from its investments returns when the structure generates profits.
A state that would return to its fundamentals of protection of the common good and its citizens, a welfare able to protect, to help by creating re-injectable wealth in education, health, and the dignity of being. At risk if nothing is done to see dark times again fall on Europe, at the risk of seeing the demons of violence of all kinds reappear, the middle class having always been an important element of the social equilibrium[11].
In a future post, we will question how the original European project was deviated from its initial objectives and emptied of its ambitions…
[1] https://www.lemonde.fr/economie/article/2019/04/02/inegalites-les-ecarts-de-revenus-ont-augmente-partout-en-europe_5444517_3234.html
https://www.ofce.sciences-po.fr/blog/croissance-et-inegalites-dans-lunion-europeenne/
[2] https://www.francetvinfo.fr/monde/europe/la-grande-bretagne-et-l-ue/grande-bretagne-l-allocation-unique-est-un-echec_2928463.html
[3] https://www.theguardian.com/politics/2019/may/12/welfare-children-poverty-low-income-families
[4] https://www.ohchr.org/FR/NewsEvents/Pages/DisplayNews.aspx?NewsID=24636&LangID=E
[5] http://www.ires.fr/publications/chronique-internationale-de-l-ires/item/5189-royaume-uni-les-contrats-zero-heure-un-ideal-de-flexibilite
Lean management, just-in-time, micro-jobs en Allemagne… le modèle séduit en France, facilité par la loi El-Khomri et les ordonnances travail d’E. Macron…
[6] https://ergodicityeconomics.com/lecture-notes/
[7] https://www.monde-diplomatique.fr/2019/01/LENOIR/59397
G., Orwell, Le Quai de Wigan, 10/18, Paris, 2000.
[8] https://www.francetvinfo.fr/economie/crise/crise-europeenne/de-la-grece-a-la-france-les-europeens-dans-la-rue-contre-l-austerite_169557.html
[9] https://www.lemonde.fr/economie/article/2019/04/02/inegalites-pourquoi-l-europe-avance-a-tout-petits-pas-sur-le-social_5444547_3234.html
[10] Galbraith, J., K., The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too, New York, London, Toronto, Sydney: Free Press, 2008.
Galbraith, J.K., L’Etat prédateur. Comment la droite a renoncé au marché libre et pourquoi la gauche devrait en faire autant, Paris, Seuil, 2009.
[11] https://lecourrier-du-soir.com/attali-previent-tout-se-met-en-place-pour-declencher-des-revolutions-dune-extreme-violence/
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