Finland has the highest productivity in the EU and the lowest rich-poor differential. Inequality is not a panacea. According to a 2004 European Commission study, the Scandinavian model is the best protection against increasing income differences and poverty rates.
LONGING FOR THE NORTH
The CDU and SPD seek to save the social state with a rigid “austerity policy.” The social state must be radically changed.
By Harald Neuber
[This article published 11/16/2005 in the German-English cyber journal Telepolis is translated from the German on the World Wide Web,
http://www.telepolis.de/r4/artikel/21/21351/1.html.]
One thing is clear after the end of the coalition negotiations: life will be hard under the coming government. At the start of the two-party discussions, the designated chancellor Angela Merkel announced in early October she would close a budget gap of 35 billion Euros. To reach this goal, the sales tax will now be raised to 19 percent. The CDU and SPD want to save up to 4 billion Euros with the Hartz IV measures. The list (1) of further cuts and savings is considerable. Criticism is loud in the Christian-Democratic camp while representatives of both “popular parties” refer to the alleged necessity of these measures to safeguard the German social state. In October the North Rhine-Westphalia CDU prime minister Juergen Ruttgers urged Angela Merkel to change course. “People may not fall into poverty through no fault of their own,” he admonished.
The debate on the future viability of the social state repeats in a smaller area what has continued for years on the European Union plane. British Prime Minister Tony Blair set the theme (2) on the agenda during an informal summit of European heads of state in Hampton Court near London. The “Future of the European Social Model” was central at the meeting at the end of October.
The “Future of the European Social Model” is a misleading title because thee was no common system when the former EU council president Jacques Delors coined the term “European Social Model” (3) in 1991. For years Great Britain emphasized he deregulation of the social state and restriction of union rights. In Germany, on the other hand, the model of the social partnership with complementary state securities dominates – even if with diminishing success. The Netherlands makes use of elements of both models. The “Scandinavian model” has long unjustly eked out an outsider existence. In states like Norway, Denmark, Sweden and Finland, the state collects more fees than in other regions of Europe. In Sweden the tax burden is at 51 percent of the gross domestic product. In return, the social system is more secure.
ATTEMPTS AT CHANGING COURSE FAILED ON THE EUROPEAN UNION PLANE
The Scandinavian social model was smiled at condescendingly as an anachronism and often sharply criticized in other parts of Europe at the beginning of the nineties. High, earmarked taxes as well as a strong state were scorned at the climax of neoliberal policy. When criticism of unbridled economic liberalization increased at the beginning of the decade, the EU heads of state developed the so-called Lisbon strategy (4) in 2000. By 2010 the EU should become “the most competitive and most dynamic knowledge-based economy of the world.” The causal chain was simple. Education and knowledge should bring growth. Growth should produce employment and social security.
Today hardly anyone speaks of the Lisbon goals any more. With the “liberalization of the goods and services markets,” the most dubious parts of the agenda [including the controversial (5) service guideline (6) of the Dutch EU commissar Fritz Bolkestein (7)] are continued. A last attempt at reviving the Lisbon goals occurred in March 2004. In their customary spring 2004 report, the EU commission criticized the acceleration of this process [Hurdles on the Way to the Strongest Knowledge-Based Economic Area (8)]. At that time there was hardly any more talk of progressive goals like promoting scientific institutions and education. Instead the EU commission supported lengthening working hours. In Brussels’ jargon, this was called “active aging.” The subordination of the achievements of the European unification process – like the Social Charter of 1961 – to all the experiences of the last years should be feared.
THE SCANDINAVIAN MODEL AS COUNTER-EXAMPLE
A closer look at the Scandinavian social model is worthwhile. Relative peace prevails in the high north. The great stability of the Scandinavian model has been documented for decades. The roots of the model overarching the states reach back into the thirties. At that time the northern social democracies united with the middle class center in the long-term development of a stable social pact. The model was first established as a long-term social-political protective wall against the effects of the worldwide economic crisis after the Second World War. The social legislation developed gradually in the Scandinavian area; every individual step was counter-financed by taxes. The success has paid off for the Scandinavian social democracies. Their hegemony was assured at the beginning of the nineties.
The political-conservative and economic-neoliberal renaissance first occurred when the displeasure over bureaucratic paralysis grew. The welfare state threatened to collapse because the personal initiative of citizens was not promoted. Whoever documented a need could expect a comprehensive fringe benefit. Because the system reached the limit of its power-handling capacity, the social democratic parties agreed on a reform at the middle of the nineties. Some saw opportunities in EU membership. Others refused bonds to the union of states. The social system could be preserved uniformly despite different strategies – Sweden and Finland joined the EU in 1995.
The success of the Scandinavian system becomes more obvious with the continual decay of Europe’s social systems. In a recent study (9) the Berlin think-tank Berlinpolis emphasized the differences. In Germany social spending is high but efficiency is low, the researchers concluded. Since the last study in 2000, Berlin skidded from 10th place to 12th place. Great Britain exemplified the opposite trend and climbed from 13th place to 10th place – on account of good labor market numbers. Precarious working conditions in the United Kingdom massively increased after the deregulation of social systems. On the other hand, Norway, Sweden and Denmark are stable in the Berlinpolis study.
The European Union also came to the same conclusion. In 2004 the European commission published a study on one of the sore points of the EU social system: demographic development. This study (10) also concluded that the Scandinavian model is the best protection against increasing income differences and poverty rates. The lessons still have not been learned.
[The notes refer to the article “Sehnsucht nach Norden” in the German-English cyber journal Telepolis.]
The CDU and SPD seek to save the social state with a rigid “austerity policy.” The social state must be radically changed.
By Harald Neuber
[This article published 11/16/2005 in the German-English cyber journal Telepolis is translated from the German on the World Wide Web,
http://www.telepolis.de/r4/artikel/21/21351/1.html.] One thing is clear after the end of the coalition negotiations: life will be hard under the coming government. At the start of the two-party discussions, the designated chancellor Angela Merkel announced in early October she would close a budget gap of 35 billion Euros. To reach this goal, the sales tax will now be raised to 19 percent. The CDU and SPD want to save up to 4 billion Euros with the Hartz IV measures. The list (1) of further cuts and savings is considerable. Criticism is loud in the Christian-Democratic camp while representatives of both “popular parties” refer to the alleged necessity of these measures to safeguard the German social state. In October the North Rhine-Westphalia CDU prime minister Juergen Ruttgers urged Angela Merkel to change course. “People may not fall into poverty through no fault of their own,” he admonished.
The debate on the future viability of the social state repeats in a smaller area what has continued for years on the European Union plane. British Prime Minister Tony Blair set the theme (2) on the agenda during an informal summit of European heads of state in Hampton Court near London. The “Future of the European Social Model” was central at the meeting at the end of October.
The “Future of the European Social Model” is a misleading title because thee was no common system when the former EU council president Jacques Delors coined the term “European Social Model” (3) in 1991. For years Great Britain emphasized he deregulation of the social state and restriction of union rights. In Germany, on the other hand, the model of the social partnership with complementary state securities dominates – even if with diminishing success. The Netherlands makes use of elements of both models. The “Scandinavian model” has long unjustly eked out an outsider existence. In states like Norway, Denmark, Sweden and Finland, the state collects more fees than in other regions of Europe. In Sweden the tax burden is at 51 percent of the gross domestic product. In return, the social system is more secure.
ATTEMPTS AT CHANGING COURSE FAILED ON THE EUROPEAN UNION PLANE
The Scandinavian social model was smiled at condescendingly as an anachronism and often sharply criticized in other parts of Europe at the beginning of the nineties. High, earmarked taxes as well as a strong state were scorned at the climax of neoliberal policy. When criticism of unbridled economic liberalization increased at the beginning of the decade, the EU heads of state developed the so-called Lisbon strategy (4) in 2000. By 2010 the EU should become “the most competitive and most dynamic knowledge-based economy of the world.” The causal chain was simple. Education and knowledge should bring growth. Growth should produce employment and social security.
Today hardly anyone speaks of the Lisbon goals any more. With the “liberalization of the goods and services markets,” the most dubious parts of the agenda [including the controversial (5) service guideline (6) of the Dutch EU commissar Fritz Bolkestein (7)] are continued. A last attempt at reviving the Lisbon goals occurred in March 2004. In their customary spring 2004 report, the EU commission criticized the acceleration of this process [Hurdles on the Way to the Strongest Knowledge-Based Economic Area (8)]. At that time there was hardly any more talk of progressive goals like promoting scientific institutions and education. Instead the EU commission supported lengthening working hours. In Brussels’ jargon, this was called “active aging.” The subordination of the achievements of the European unification process – like the Social Charter of 1961 – to all the experiences of the last years should be feared.
THE SCANDINAVIAN MODEL AS COUNTER-EXAMPLE
A closer look at the Scandinavian social model is worthwhile. Relative peace prevails in the high north. The great stability of the Scandinavian model has been documented for decades. The roots of the model overarching the states reach back into the thirties. At that time the northern social democracies united with the middle class center in the long-term development of a stable social pact. The model was first established as a long-term social-political protective wall against the effects of the worldwide economic crisis after the Second World War. The social legislation developed gradually in the Scandinavian area; every individual step was counter-financed by taxes. The success has paid off for the Scandinavian social democracies. Their hegemony was assured at the beginning of the nineties.
The political-conservative and economic-neoliberal renaissance first occurred when the displeasure over bureaucratic paralysis grew. The welfare state threatened to collapse because the personal initiative of citizens was not promoted. Whoever documented a need could expect a comprehensive fringe benefit. Because the system reached the limit of its power-handling capacity, the social democratic parties agreed on a reform at the middle of the nineties. Some saw opportunities in EU membership. Others refused bonds to the union of states. The social system could be preserved uniformly despite different strategies – Sweden and Finland joined the EU in 1995.
The success of the Scandinavian system becomes more obvious with the continual decay of Europe’s social systems. In a recent study (9) the Berlin think-tank Berlinpolis emphasized the differences. In Germany social spending is high but efficiency is low, the researchers concluded. Since the last study in 2000, Berlin skidded from 10th place to 12th place. Great Britain exemplified the opposite trend and climbed from 13th place to 10th place – on account of good labor market numbers. Precarious working conditions in the United Kingdom massively increased after the deregulation of social systems. On the other hand, Norway, Sweden and Denmark are stable in the Berlinpolis study.
The European Union also came to the same conclusion. In 2004 the European commission published a study on one of the sore points of the EU social system: demographic development. This study (10) also concluded that the Scandinavian model is the best protection against increasing income differences and poverty rates. The lessons still have not been learned.
[The notes refer to the article “Sehnsucht nach Norden” in the German-English cyber journal Telepolis.]
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