Uncontrolled Immigration Endangers the Welfare State

People ask nervously: Why am I interested in European immigration policy? Because it has the potential to fundamentally shape European society for decades. As I just pointed out, the evidence shows that immigration is one of the most important factors, probably the most important factor, behind the collapse of the British Labour Party -- the one that, "left to their own devices, the respondents would have talked about all night."

If European left parties, like Labour, allow themselves to become closely linked with the unpopular policy of uncontrolled mass immigration (as opposed to controlled immigration of skilled workers needed by industry coupled with asylum for genuine refugees), they may well destroy themselves for decades. After that, European countries will be ruled by a stable majority coalition of the center-right (35%) and anti-immigrant (15%) parties. We are already seeing this happen: the anti-immigrant Swedish Democrats party doubled its support in the 2014 election.

If this happens, result will be a long-term shift to the right which may well herald the end of the European social welfare state as we know it. That is why a dyed-in-the-wool Socialist like Bernie Sanders unapologetically says immigration needs to be kept in check. Bernie Sanders is no fool. Long-term coalitions of the center and farther right will also, of course, also worsen the situation of immigrants. Anyone who can't see this danger staring us in the face is whistling past the graveyard. I think and write about this issue a lot because it seems to me the most important domestic policy issue we face, and I think many people don't yet realize that fact.


The Part-Time Economy

The Economist reports:

The Netherlands consistently ranks as one of the best places in the world to live. Dutch kids are among the happiest in the world, according to Unicef. Some attribute their high quality of life and general good nature to a rather laid-back approach to work: more than half of the Dutch working population works part time, a far greater share than in any other rich-world country. On average only a fifth of the working-age population in EU member states holds a part-time job (8.7% of men and 32.2% of women); in the Netherlands 26.8% of men and 76.6% of women work less than 36 hours a week (see chart).

...and Dutch politics was dominated by Christian values until the 1980s: the focus was mainly on providing state aid (implicit subsidies in the fiscal system) so that women could stay at home with children. 

This changed in the late 1980s, when the state realised that it would be a good idea to mobilise women into the job market. But the cultural conviction that families still needed mothers home for tea-time prevailed, and thus the state worked closely with employers to ensure that the new part-time jobs would enjoy similar legal positions to their full-time equivalents. This has, to an extent, been continued: in 2000 the right for women and men to ask for a job to be part-time was written into law. But Ronald Dekker, a labour economist at Tilburg University, thinks this law is a confirmation of existing practice and therefore largely symbolic, only necessary for certain “archaic industries”. Instead, he reckons the high prevalence of part-time jobs is largely down to the wide availability of good quality, well-paid “first tier” part-time jobs in the Netherlands: jobs often considered inferior in many other countries.

One of the many benefits of welfare states: the system makes it easy for people to adjust the amount of work they do according to their individual wishes and needs.


Inequality on the Rise in Germany and the U.S.

As I anticipated, I got a lot of 'Facebook will steal your soul!!' reactions to the announcement of less blogging and more Facebooking, so I plan to keep blogging as time permits. However, Facebook and Twitter are better for spontaneous link-sharing and discussion, so you're invited to follow me there if you wish as well.

Here's a post I've been meaning to work on for a while, another installment in the series of 'Germany's social problems are more similar to America's than many Germans would like to acknowledge'. First, a short excerpt from an essay (g) by Hans-Ulrich Wehler in Die Zeit, on the government's most recent (and controversial (g)) report on 'Wealth and Poverty in Germany'. Here are a few of his conclusions (my translation):

Even more severe than the inequality in incomes is the inequality in wealth. They show class barriers on the bases of an unprecedented amount of wealth in Germany. In 1970, the top ten percent of Germany already controlled 44 percent of total cash wealth. In 2011, the richest decile controlled 66 percent. In a dramatic process of concentration, the top 10% has acquired control over an astonishing 2/3 of total private wealth in Germany. One hundred billionaires stood at the top of 345,000 millionaires, as measured by wealth. Rich Germany have never been so wealthy as they are now.

The situation is made more drastic by the fact that, for the first time since the 'golden years' before 1914, a generation of heirs will inherit a massive amount of wealth. In the late 1990s, the first billions created during the 'economic miracle' years was passed on to the next generation. Afterwards, however, the process started in earnest: between 2000 and 2010, two trillion Euros were inherited in Germany. Germany's 37 million households have collected total wealth of 7.7 trillion Euro. Of that, 2 trillion were in the hands of households dissolved by death during this decade. For the heirs of the next generation, the next decade will be even more beneficial: the German Institute for Old-Age Care estimates that since 2010, 260 billion dollars have been passed on as inheritance in each year. That means 3 trillion dollars will be inherited during this decade.

Meanwhile in the United States:

WASHINGTON — Incomes rose more than 11 percent for the top 1 percent of earners during the economic recovery, but not at all for everybody else, according to new data.

The numbers, produced by Emmanuel Saez, an economist at the University of California, Berkeley, show overall income growing by just 1.7 percent over the period. But there was a wide gap between the top 1 percent, whose earnings rose by 11.2 percent, and the other 99 percent, whose earnings declined by 0.4 percent.

Mr. Saez, a winner of the John Bates Clark Medal, an economic laurel considered second only to the Nobel, concluded that “the Great Recession has only depressed top income shares temporarily and will not undo any of the dramatic increase in top income shares that has taken place since the 1970s.”

There are still meaningful differences between American and German social-welfare policies, and Germany remains a somewhat more equal society than the United States. But the gap between Germany and the U.S. is certainly not the yawning chasm that some Germans like to imagine -- and it's steadily narrowing, thanks in no small part to the policies of the current German government.


A Trip to the German Welfare Office

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A friend of mine is between jobs now, so I thought I'd accompany him to the welfare office as he applies for benefits. The office in Düsseldorf is called the Jobcenter (in English, of course), which is supposed to show you it's all about getting people back to work, not subsidizing layabouts.

German documentaries had led me to expect a crowded, loud, chaotic maelstrom of frustrated citizens and exasperated bureaucrats, something like Wiseman's Welfare. No soap: the Job Center is housed in a massive, clean, modern building, with freshly-renovated endless white corridors and comfortable blue fabric seats. I was expecting some urban social flair in the form of quaint posters about child abuse, alcoholism, and workplace safety, but the walls were nearly clean. The employees were quite friendly by German standards. You're issued a small paper ticket with a number on it. A Sachbearbeiter (SB) (specialist) comes and announces the next number, crossing it off a laminated display of 0-100. This seemed rather labor-intensive -- what about those infamous red 'Now Serving' signs you expect in every government office? The clients, as they're called, didn't look particularly down-and-out; they would fit in at any middle-class shopping center. About half of them seemed to be foreign, half looked German. They didn't look angry or despairing, just mildly bored. The wait to sign up for 'new customers', as they were called was about 30 minutes.

My friend got the standard package of benefits: a housing subsidy sufficient to keep you in a small apartment (you get to choose which one, as long as it's not too big), a couple of hundred euros as a (very modest) base benefit, and €5 for every job application you send out -- the expectation is that you should send out at least 10 per month. If you want something extra -- a new suit, vacation -- you have to fill out a special form asking for it. You also sign what's called an 'integration contract' in which you promise to try to find work and they promise to help you. You can just waltz right in there and they sign you up -- only later do they check to see whether you really need benefits. After you sign up for the bennies, you're then transferred to another SB who sizes up your potential on the job market and asks what sort of work you'd be willing to take. Depending on your needs, you might be sent on to other SB's who will sign you up for health insurance or co-ordinate schools.

A few caveats: (1) this was an office in Düsseldorf, one of the most prosperous places in Germany; (2) German unemployment is low right now; and (3) lots of 'ordinary' people (students, musicians between gigs, political party leaders) get some form of benefit temporarily throughout their lives. In all, the procedure was professional and the atmosphere much the same as you might expect at any German government office (and noticeably cleaner and quieter than most American government offices). I left thinking that although I'd rather not have to sign up for welfare in Germany, there are certainly worse fates.


Merkel's End Game

Eurozone Unemployment Rates
The New York Times on growing resistance to austerity:

A German-inspired austerity regimen agreed to just last month as the long-term solution to Europe’s sovereign debt crisis has come under increasing strain from the growing pressures of slowing economies, gyrating financial markets and a series of electoral setbacks.

Spain officially slipped back into recession for the second time in three years on Monday, after following the German remedy of deep retrenchment in public outlays, joining Italy, Belgium, the Netherlands and the Czech Republic. In the Netherlands, Prime Minister Mark Rutte handed his resignation to Queen Beatrix on Monday after his government failed to pass new austerity measures over the weekend.

...

It was only in March that leaders from 25 of the 27 European Union countries gathered to sign the fiscal compact championed by Ms. Merkel. Her plan, combined with $1.3 trillion in cheap loans injected into the banking system by the European Central Bank in December and March, raised hopes that the worst of the crisis had passed.

But those hopes have been dashed as growth has faltered and interest rates on the debt of struggling countries like Spain and Italy have shot up to dangerous levels again.

...

Another possibility, which Germany will be under renewed pressure to accept, is some form of common European debt, generally referred to as Eurobonds, which any member of the currency zone could tap. It is a step that Ms. Merkel’s conservative bloc has opposed forcefully, but with more than 17 million people in the euro zone out of work and the unemployment rate at 10.8 percent, the need for urgent steps is growing.

Marie Diron, an economic adviser to the consulting firm Ernst & Young, said Germany could slow down its own drive to balance its budget and do more to encourage domestic consumption. Other European states would benefit if Germany bought more of their goods.

“Austerity has to fit into a wider policy context,” Ms. Diron said.

...

Ms. Merkel has proved herself a masterful tactician time and again. She was adept at working with the Social Democrats as her partner in the previous German government, and Mr. Hollande might be even more amenable than Mr. Sarkozy to ceding French sovereignty in economic policy in exchange for help on growth, Mr. Vaquer from the Barcelona Center for International Affairs said.

“She will have to backtrack on austerity anyway,” Mr. Vaquer said. “Germany can now extract a much more unified Europe in terms of economic governance than it ever could have before.”

I've thought for a while that Germany was eventually going to have to back down on austerity. Vaquer's comments point to the end game: after holding out for years, bringing Europe as a whole to the brink of recession (and shoving many periphery countries over that brink), Germany will finally relent, but not without extracting major sovereignty concessions from the rest of Europe and transferring much more power over economic policy to Brussels.

So perhaps Merkel has known all along that austerity was never going to stick, and that the EU was going to have to become more of a transfer union in to survive. But she held out for years, pretending not to grasp this, in order to put the fear of Yahweh into Germany's European partners. Mildly cunning, ruthless, Machiavellian! Not words that many Germans like seeing applied to their relations with the rest of Europe, but when it comes to protecting its economic interests, Germany behaves like any other country. This episode can, of course, be added to the tu quoque list I recently threw together, when a German criticizes the United States of ruthlessly pushing its economic agenda on weaker countries.


Why Germany's Welfare State Works

The LA Times profiles an ordinary German middle-class couple who enjoy various benefits that most Americans making a similar salary could only dream of [h/t LMGP]:

Every summer, Volkmar and Vera Kruger spend three weeks vacationing in the south of France or at a cool getaway in Denmark. For the other three weeks of their annual vacation, they garden or travel a few hours away to root for their favorite team in Germany's biggest soccer stadium.

The couple, in their early 50s, aren't retired or well off. They live in a small Tudor-style house in this middle-class town about 30 miles northwest of Frankfurt. He's a foreman at a glass factory; she works part time for a company that tracks inventories for retailers. Their combined income is a modest $40,000.

Yet the Krugers have a higher standard of living than many Americans who have twice that income.

Their secret: little debt, frugal habits and a government that is intensely focused on high production, low inflation and extensive social services.

That has given them job security and good medical care as well as well-maintained roads, trains and bike paths. Both of their adult children are out on their own, thanks in part to Germany's job-training system and heavy subsidies for university education.

For instance, Volkmar's out-of-pocket costs for stomach surgery and 10 days in a hospital totaled just $13 a day. College tuition for their son runs about $260 a semester.

Germany, with its manufacturing base and export prowess, is the America of yesteryear, an economic power unlike any of its European neighbors. As the world's fourth-largest economy, it has thrived on principles that the United States seems to have gradually lost.

[One of those, the article points out, is a profound aversion to debt, both on the personal and governmental level].

...

Germany's lower unemployment rate also reflects its orientation toward formal vocational training.

The Krugers' older child, Thorsten, was interested in books from an early age, and prepared for a university education. Their daughter, Nadine, got a vocational diploma in social work that included three years of schooling after high school, with the final year being on-the-job training at half pay.

About one-fourth of all German businesses take part in this apprenticeship program; six of 10 apprentices end up getting hired permanently, said Dirk Werner of the Cologne Institute for Economic Research.

...

The practice, he said, is a key reason why Germany has one of the lowest unemployment rates for 15- to 24-year-olds, about 9.7%, according to the Organization for Economic Cooperation and Development in Paris. In the U.S., the comparable rate is about twice that.

Volkmar and others attribute part of the lower unemployment rate to the German work ethic. Yet Germans, on average, work far fewer hours a year than Americans, thanks partly to five or six weeks of vacation.

The article does a fine job of summarizing why the standard of living of ordinary middle-class Germans is so much higher than that of Americans, despite Americans' higher incomes: government policies consciously reduce the cost of living for the ordinary incidents of life (health care, higher education). German earn less than Americans, but also can spend less on basic necessities of life. Government policy also guarantees everyone enough time off to truly relax and recover. Further, those who don't go to college -- about 75% of the population in developed countries -- are channeled into solid middle-class jobs through internship programs run by public-private partnerships. That is, they are trained to do a job some company needs them to do, without being forced to incur thousands of dollars in debt to get that training.


Germany and the Medium Chill

A while ago, American blogger David Roberts coined the phrase 'medium chill.' It's based on recent research into happiness, which has shown that 'it's unlikely any job advance, material acquisition, or singular event will make you durably happier; the good news is that it's possible to make yourself durably happier without any new job, material acquisition, or singular event.' To do this, you scale down on the amount you work and consume, and concentrate more on social activities, which leads you to 'become more positive, open, and empathetic, to cultivate a resilient wellbeing that weathers changing circumstances.' You give up focusing on the next big career move, learn to live without unnecessary consumer luxuries, and spend more time doing leisure activities you love.

Problem is, you may not be able to live the 'medium chill' lifestyle on your own. You need a social infrastructure that makes it possible to enjoy a basically decent quality of life on a modest income. And that's something that America doesn't provide, except to a small, highly-educated elite. As Roberts notes, 'if you're going to de-emphasize the material in favor of the social, you're going to be talking about places. If we want people to own and consume less privately, we need to provision safe, accessible, pleasant public spaces and resources.' Recently, he also pointed to the role health insurance plays: 

I suspect there are many, many medium chillers who would be happy working 30-hour weeks and trading the extra income for leisure time. Or perhaps they'd like to share a job. Or maybe they'd like to work more when they need money and less when they don't -- just "work and get paid for it" when they need to. Those options aren't workable for most people today because of the specter of health insurance. To deviate from the 40-hour employee model is to take on risk beyond what all but a few brave souls are willing to bear.

...

To me this looks like an argument for universal, single-payer healthcare. Not only would it achieve better health outcomes for less money than the employer-based system, but it would free people to pursue much more diverse working arrangements. It's a step toward "de-formalising and de-bureaucratising labour," as Wilkinson seeks. Work-sharing along the lines of what Germany does would be another nice step. Or if you wanted to get really socialist-freaky, you could go for a guaranteed minimum income.

This is mildly revolutionary advice in work-obsessed America, but, as Roberts notes, reflects reality for most Germans. German society contains dozens of subtle mechanisms permitting most citizens to scale the amount of work they do to fit their current life situation. If the company you work for hits a rough patch, you're more likely to be put on part-time work than laid off. You never have to worry about losing your state-mandated basic health insurance. Both mothers and fathers of children are given an almost absurdly luxurious palette of options for adjusting their work schedules to care for young children. You get over a month of paid vacation automatically. And Germany offers tons of inviting public spaces and cultural options to fill all that free time. Of course, cultural factors play a role here, as well. Assuming you have a decent work record and a good reason to do so, if you visit with your boss and request a lighter work schedule, you're likely to get your wish.

The overall result is that Germans work about 70% as much as Americans do, and much of that difference takes the form of people voluntarily scaling back their workload. Unfortunately, many Germans, hopelessly provincial and blinkered as they are, constantly bitch about the work-life balance in Germany, claim to be overworked and overstressed, and pout like three-year-olds who've just had their favorite toy taken away. They appear to have no idea at all what life is like in countries without these generous social protections built in to everyday life. That's why I return to this theme so frequently...


I'm Against Multiculturalism, Whatever It Means

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John R. Bowen brings some much-needed clarity to the European debate over 'multiculturalism':

But while it is hard to know what exactly the politicians of Europe mean when they talk about multiculturalism, one thing we do know is that the issues they raise—real or imagined—have complex historical roots that have little to do with ideologies of cultural difference. Blaming multiculturalism may be politically useful because of its populist appeal, but it is also politically dangerous because it attacks “an enemy within”: Islam and Muslims. Moreover, it misreads history. An intellectual corrective may help to diminish its malign impact.

Political criticisms of multiculturalism confuse three objects. One is the changing cultural and religious landscape of Europe. Postwar France and Britain encouraged immigration of willing workers from former colonies; Germany drew on its longstanding ties with Turkey for the same purpose; somewhat later, new African and Asian immigrants, many of them Muslims, traveled throughout Western Europe to seek jobs or political refuge. As a result, one sees mosques where there once were only churches and hears Arabic and Turkish where once there were only dialects of German, Dutch, or Italian. The first object then is the social fact of cultural and religious diversity, of multicultural and multi-religious everyday life: the emergence in Western Europe of the kind of social diversity that has long been a matter of pride in the United States.

The second object—suggested by Cameron’s phrase “state multiculturalism”—concerns the policies each of these countries have used to handle new residents. By the 1970s, Western European governments realized that the new workers and their families were there to stay, so the host countries tried out a number of strategies to integrate the immigrants into the host society. Policymakers all realized that they would need to find what later came to be called “reasonable accommodations” with the needs of the new communities: for mosques and schools, job training, instruction in the host-country language. These were pragmatic efforts; they did not aim at assimilation, nor did they aim to preserve spatial or cultural separation. Some of these policies eventually were termed “multicultural” because they involved recognizing ethnic community structures or allowing the use of Arabic or Turkish in schools. But these measures were all designed to encourage integration: to bring new groups in while acknowledging the obvious facts of linguistic, social, cultural, and religious difference.

The third object that multiculturalism’s critics confuse is a set of normative theories of multiculturalism, each of which attempts to mark out a way to take account of cultural and religious diversity from a particular philosophical point of view. Although ideas of multiculturalism do shape public debates in Britain (as they do in North America), they do so much less in continental Europe, and even in Britain it would be difficult to find direct policy effects of these normative theories.

Politicians err when they claim that normative ideas of multiculturalism shape the social fact of cultural and religious diversity: such diversity would be present with or without a theory to cope with it. Nor are state policies shaped by those ideas, which tend to be recent in origin. Quite to the contrary, each European country has followed well-traveled pathways for dealing with diversity. Methods designed to accommodate sub-national religious blocs are now being adapted and applied to Muslim immigrants. Far from newfangled, misguided policies of multiculturalism, these distinct strategies represent the continuation of long-standing, nation-specific ways of recognizing and managing diversity.

Turning to Germany:

...Merkel’s notion that the German government had promoted a multikulti society (as distinct from celebrating colorful Kreuzberg or a Turkish star on the German soccer team) ignores the brunt of German immigration policy, which, until 2000, denied citizenship to those workers, their children, and their grandchildren. In other words, the government and many, perhaps most, Germans had not hoped, as Merkel claimed, that everyone would live side by side. Rather, the hope was that “they” would just pack up and leave.

In this sense Germany has largely followed its longer-term policies for dealing with diversity: German federal and state governments have historically denied that immigration could be of value and maintained a policy of limiting citizenship only to those who could demonstrate German descent. But Germany may also follow the public-corporation model it has arranged with Christian and Jewish groups. A proposed Islamic public corporation would have the legal status to obtain government funding for mosques and would serve as a legitimate overseer of materials selected for Islamic religious education. This promising policy goal, not yet achieved, would recognize and support Islam in accordance with long-standing German principles governing religious diversity, not on grounds of multiculturalism.

I think Bowen has this right. German conservative politicians' attacks on the bogeyman of 'multiculturalism' are meaningless. As Bowen points out, it's impossible to specify what German politicians even mean when they refer to 'multiculturalism'. Their attacks on it are dog-whistles to voters who generally dislike foreigners, nothing more. Further, like so much German political discourse, attacks on multiculturalism have little or nothing to do with policy substance. Immigrants and non-ethnic-German citizens are here to stay, and there's nothing German politicians can do about that. Policies might be tweaked here or there, but not drastically, and in any event it's the civil servants who really run Germany, not the politicians. Attacking multiculturalism is the right-wing counterpart to insisting on a more 'social' economic system. Sounds vaguely principled, shores up certain parts of the base, requires no action whatsoever.


Maximum Surplus Value Extraction

A few more dispatches from across the pond. First, the involuntary multigenerational household is back in the USA:

In other countries, people value filial duty and sticking around the family home, but in America we value independence. You're supposed to -- after you graduate from college -- leave the house. You're supposed to pay your own rent. You're supposed to find a spouse and raise your own children. But lately that process has gotten blocked. The latest census shows that in the age group 25 to 34, 5.5 million Americans are living with their parents.

And here's what's worse: the grandparents are moving in, too.

There is a new phenomenon in America called the multigenerational household. It now accounts for about 16 percent of American households, which is by far the highest it has been almost since the Great Depression, more like since the 1950s...

Meanwhile, even during their paltry two-week summer vacations, Americans have to stay connected:

The majority of Americans expect to stay connected to their office during their summer vacation, according to Regus, a company that provides office spaces, office furniture and communications tools.

How Americans will work while on vacation varies, but three-quarters say they will stay connected in some way.

Sixty-six percent of the 5,000 people surveyed said they will check and respond to email during their time off and 29 percent expect they may have to attend meetings virtually while on vacation.

And a 40-hour work week is the new part-time job:

Americans consider a 40-hour work week as "part time" in most professional jobs and as a sign of a stagnant career, according to a recent study by the Center for American Progress.