The left wing of Capital demands more inequality......

Mike Ballard swillsqueal at yahoo.com.au
Sat Nov 23 16:54:01 MST 2002


Social Democratic and Green mix in Germany to demand
more inequality:


<http://www.wsws.org/articles/2002/nov2002/germ-n22_prn.shtml>


World Socialist Web Site www.wsws.org

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WSWS : News & Analysis : Europe : Germany

Top German official demands "more inequality"
By Ulrich Rippert
22 November 2002
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In a rare moment of candour, a top government
economist has publicly stated what Germany’s corporate
and political elite has long been discussing in
private and is now implementing as social policy.

“We need more social inequality in order to get more
employment,” Wolfgang Wiegard stated in Berlin last
week. Wiegard, who heads the “Expert Council for the
Assessment of the Overall Economic Development” (SVR),
spoke at a press conference called to present this
official body’s annual report.

The Expert Council, which consists of five economists,
is required by law to deliver a report on the German
economy to the federal government every November. The
government must deliver a reply to this report before
parliament within two months.

Professor Wiegard raised his provocative demand for
“more social inequality” quite deliberately in order
to justify a 20-point program that amounts to a
declaration of war on the working class. The sweeping
attacks planned by the Schröder government in
connection with a further “reform” of the labour
market were “insufficient”, Wiegard said. He demanded
a general lowering of all wages and salaries, an
extension of the low-wage sector, more labour
flexibility, a 12-month limit to regular unemployment
benefits and further cuts in social security, which is
to be “reformed” and “integrated” with unemployment
aid (a form of support lower than regular unemployment
benefits, but still above social security).

In their report, the experts expand on these points:
“In order to increase the incentive for people on
social security to enter the regular labour market,
the base rate of social support should be lowered for
those who are able to work.... Those who cannot find
employment on the regular labour market must be
compelled to make their labour power available to
communal employment agencies in order to maintain
their level of support.”

Any future wage increases are to remain “below the
growth rate of labour productivity” and collective
agreements on wages and conditions should contain
clauses providing for their possible repeal. In order
to prevent workers from going to court over salary
discrimination, the unions should agree to a
two-tiered system with lower starting salaries for the
formerly unemployed.

In addition, the Expert Council puts forward the
following demands: more short-term work contracts,
less protection against unfair dismissal, strict
adherence to the EU Stability Pact, more privatisation
on the federal, state and municipal levels, general
introduction of university fees and further tax cuts
for companies.


A fundamental political change

The Expert Council is known for its pro-business line,
and its reports have always been tailored to the needs
of the corporations. Before, however, they never
openly confessed to the social implications of their
demands, but rather justified them as inevitable,
though merely temporary evils. Now Wiegard elevates
social inequality to a political goal in itself.

His call for “more social inequality” is part of a
political sea change. During the entire post-war
period, economic and social policies in Germany were
directed towards social compromise. After the
experience of fascism and the Second World War, the
aim of overcoming social antagonisms was even
incorporated into the new West German constitution.
According to article 20, the “Federal Republic of
Germany is a democratic and social federal state”.

In all standard textbooks, the “principle of social
justice and the welfare state” was elaborated as a
fundamental constitutional norm. The task of the
state, according to this interpretation, was to
eliminate or allay social problems and poverty. The
state had the obligation to promote the well-being of
all citizens alike and to share economic burdens
equally among all members of society. It was obliged
to bridge the gap between rich and poor in order to
reduce social tensions.

There is hardly another country in which social
harmony and social justice have been written and
spoken about as extensively as in Germany. Only 13
years ago, the reunification of the country was
praised as a triumph of the market economy, a system
whose superiority, it was claimed, stemmed from its
ability to combine freedom and democracy with ever
growing wealth for all members of society.

Wiegard’s call for social inequality as a remedy for
unemployment amounts to an admission that these
conceptions have failed. He inadvertently acknowledges
that capitalist property relations are coming into
ever-sharper conflict with the social needs of the
people. Furthermore, his choice of words amounts to a
threat. He speaks on behalf of an influential section
of the economic and political elite that is determined
to enforce the interests of the rich and privileged,
regardless of the social cost.

Across the Atlantic, one can see the consequences of
such a development. According to official statistics,
the 13,000 richest families in America possess nearly
the same amount of wealth as the 20 million poorest
households. Their income is 300 times higher than the
average wage or salary. During the last 30 years, the
average yearly income of the 100 best-paid CEOs has
risen from $1.3 million—39 times higher than the
average wage—to $37.5 million—more than a 1,000 times
higher than the average wage.

This concentration of wealth at one pole of society
was bound up with a deep-going decay of the
traditional forms and institutions of democracy. The
United States is now ruled by a plutocracy. The
super-rich are calling the shots in the White House,
Congress, the judiciary and the media.

Wiegard essentially demands that Europe follow the
same path. Low wages, growing social inequality and
misery on a mass scale, however, lead to a rapid decay
of society. Such conditions are irreconcilable with
democracy, because they can only be brought about by
overriding the interests of the majority.

It is worth noting that Professor Wiegard does not
belong to the old camp of right-wing economists of the
neo-liberal school. Rather, he has been a member of
the German Social Democratic Party (SPD) for 30 years.
He is also a member of the public services union
Ver.di and has repeatedly referred to his “radical
days” as a member of the SPD youth organisation in the
1960s. He was only nominated by the SPD-Green
government as a member of the Expert Council last year
and took over its presidency in the spring of 2002.
Wiegard personifies the role of the SPD and the trade
unions, which do nothing to oppose the offensive of
the right wing and who are themselves systematically
destroying social and democratic rights.


Claims versus reality

To back up his call for social inequality, Wiegard
puts forward a number of arguments that have since
been repeated reverently by the media as the last word
of economic science.

His central thesis is that the social security budget
has been depleted due to a population that is
demanding just too much.

This is a lie. In reality, the social security budget
has been systematically plundered to satisfy the
demands of the rich, while the right to social support
for those in need has been drastically reduced in
recent years. In addition, growing poverty affects the
social budget for various reasons. One is the
increasingly large number of low-wage jobs that are
exempted from social security contributions—the worker
cannot live on his or her salary while the employer
pays no taxes on it.

The social budget in Germany is financed exclusively
through taxes on wages and salaries, while other forms
of income—yields on stock, rent, investments, etc.—are
not taken into account. One measure that could put the
social budget on an even keel would be a corresponding
tax on all forms of revenue—something the Expert
Council rejects as a matter of course.

In other words, the problems affecting social
expenditures have been caused by precisely the same
medicine that professor Wiegard now proposes to
administer in double and triple doses.

Meanwhile, another governmental body, the “Working
Group on Tax Estimate”, has conjured up the spectre of
a looming national bankruptcy. It predicts that the
state will collect €31.4 billion less in taxes than
originally projected by the government for 2002 and
2003. The German finance minister points to the
effects of the downturn in the world economy in order
to repeat the call for social cuts and low wages.

Again, reality is turned on its head. The state
collects less tax revenue because of a sweeping upward
redistribution of wealth undertaken in the tax reform
of the SPD-Green government in 2000. According to
estimates of the Tax and Finance Ministry, the taxes
paid by companies decreased by 20.1 percent from 1999
to 2002, while income and sales taxes rose by 2.4 and
8.9 percent respectively.

The picture becomes even clearer when one looks at
some details of the tax reform. Prior to this reform,
a 30 percent corporation tax was levied on dividend
payments, while profits not paid out by a company were
taxed 45 percent (40 percent since 1999). However,
following the tax reform, all profits, whether paid
out or not, have been taxed at a universal rate of 25
percent. Then a special treat was offered to business:
if companies decided to belatedly pay out profits made
prior to the tax reform, they could claim the
difference between the tax paid then (45 or 40
percent) and the new rate (25 percent) from the Tax
and Revenue Office. Billions were thus handed out by
the state to the corporations, who of course rushed to
take advantage of this opportunity.

According to the Federal Bank of Germany, in 2001 the
Tax and Revenue Offices paid out a net sum of €426
million more to businesses than they collected in
corporation tax. In the same year, taxes on profits
went down from €76.7 billion (2000) to less than €56
billion. State revenue from corporation tax payments
decreased from €23.6 billion (2000) to €2.1 billion
(2001).

National wealth has almost doubled during the 1990s,
having increased to nearly seven billion euros.
However, almost half of this total belongs to the top
10 percent of all households. The situation of
households with little or no property has remained
virtually unchanged.

These facts alone refute the reactionary talk about
more social inequality as a remedy for the crisis.

One thing must be said to the credit of Professor
Wiegard, who perceives social reality solely from the
perspective of his university lectern and his columns
of figures. At least he has chosen the right words.
“More social inequality” is what the current
development of society is all about. It is the battle
cry of a social layer that has grown rich during the
stock market boom of the past decade and now feels
threatened by the economic decline. These
people—aggressive, ruthless and interested in nothing
but their own personal gain—are determined to defend
their privileged social position with all means at
their disposal.

The history of great social changes demonstrates that
they will heed neither warnings about the social
consequences of their actions nor appeals for
restraint. There is only one way to counter this
ruthless upper layer and its political
representatives: the building of a social movement
from below, based on the large majority of the working
people and on the principle of social equality.






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