How to Save the SPD: Universal Basic Income

Here's the problem:

1.     Anyone who's paying attention can see that 95% of the migrants who came to Germany in 2015 are going to integrate into the German social welfare system, and probably 50% will never leave it.

2.    This is going to piss off working- and lower-middle class Germans, who will still have to work 40 hours a week to make a wage only 20% higher than welfare. Uwe says: 'Why do I have to I bust my ass working in some shitty supermarket for an asshole boss while Firduz hangs out on the street corner getting free money from the government for doing nothing?'

The answer: Universal Basic Income. Abolish Germany's ludicrously complex welfare system, and just give everyone, say, € 900 per month. Enough to subsist on, but not much more. 

This plan will have some side-effects, of course, but it won't be such a huge change, since everyone in Germany is already entitled to a basic income -- they just have to prove they're unemployed and have no more assets. Under the new plan, everyone gets it. 95% of the useless welfare bureaucracy will vanish, providing huge savings to the German state.

Most importantly, UBI will remove, or at least greatly reduce the envy factor. Uwe will probably continue to work, since the UBI won't pay enough for any luxuries, such as a private washing machine, cars, or vacations. But since he is also getting what Firduz is getting, he will feel much less resentment.

If the SPD had any sense at all, it would stop futzing around with idiotic nanny-state schemes nobody cares about (sexist advertising) and come out loud and defiant in favor of UBI. 


The Unstoppable Decline of the SPD

Tombstone

Politico watches the German Social Democratic Party circle the drain (from 38% of the vote in 2002 to 22% today, with no end in sight):

“Questions of fair distribution of money and resources are no longer at the forefront of social democratic politics,” said Matthias Micus, a political scientist at the University of Göttingen.

“Being ‘left’ the way the SPD understands it today is no longer primarily about economic questions, but much more about cultural issues like gender politics, the protection of minorities, or when it comes to cultural diversity or immigration,” Micus said.

However, he added, the traditional SPD electorate — the working class — does not really care about those topics.

“This has led to an estrangement of the SPD from its traditional electorate,” Micus said.

You don't say.


Nordic Social Democracy Is The Only Desirable Future

Anu Partanen, a Finn, explains why Nordic social-democratic policies enhance individual freedom and flourishing, don't inhibit innovation, and are the only way forward in a world in which full-time jobs with benefits are vanishing: 

But this vision of homogeneous, altruistic Nordic lands is mostly a fantasy. The choices Nordic countries have made have little to do with altruism or kinship. Rather, Nordic people have made their decisions out of self-interest. Nordic nations offer their citizens—all of their citizens, but especially the middle class—high-quality services that save people a lot of money, time, and trouble. This is what Americans fail to understand: My taxes in Finland were used to pay for top-notch services for me.

When I lived in Finland, as a middle-class citizen I paid income tax at a rate not much higher than what I now pay in New York City. True, Nordic countries have somewhat higher taxes on consumption than America, and overall they collect more tax revenue than the U.S. currently does—partly from the wealthy. But, as an example, here are some of the things I personally got in return for my taxes: nearly a full year of paid parental leave for each child (plus a smaller monthly payment for an additional two years, were I or the father of my child to choose to stay at home with our child longer), affordable high-quality day care for my kids, one of the world’s best public K-12 education systems, free college, free graduate school, nearly free world-class health care delivered through a pretty decent universal network, and a full year of partially paid disability leave.

As far as I was concerned, it was a great deal. And it was equally beneficial for others. From a Nordic perspective, nothing Bernie Sanders is proposing is the least bit crazy—pretty much all Nordic countries have had policies like these in place for years.

But wait, most Americans would say: Those policies work well because all Nordics share a sense of kinship and have fond feelings for each other. That might be nice if it were true, but it’s not, as anyone who has followed recent political debates about immigration or economic policy in Nordic countries understands....

Nordic countries are well-ranked when it comes to helping facilitate starting a business. At the most basic level, what the Nordic approach does is reduce the risk of starting a company, since basic services such as education and health care are covered for regardless of the fledgling company’s fate. In addition, companies themselves are freed from the burdens of having to offer such services for their employees at the scale American companies do. And if the entrepreneur succeeds, they are rewarded by tax rates on capital gains that are lower than the rate on wages.

Nordic economies go through cycles like all countries, and they make mistakes like everyone else—Finland is in the midst of a recession right now, whereas the Swedish economy is doing phenomenally well. As in any region, some Nordic companies eventually crash and burn, and others never get off the ground....

In an age when more and more people are working as entrepreneurs or on short-term projects, and when global competition is requiring all citizens to be better prepared to handle economic turbulence, every nation needs to ensure that its people have the education, health care, and other support structures they need to take risks, start businesses, and build a better future for themselves and for their country. It’s simply a matter of keeping up with the times.

Americans are not wrong to abhor the specters of socialism and big government. In fact, as a proud Finn, I often like to remind my American friends that my countrymen in Finland fought two brutal wars against the Soviet Union to preserve Finland’s freedom and independence against socialism. No one wants to live in a society that doesn’t support individual liberty, entrepreneurship, and open markets.

But the truth is that free-market capitalism and universal social policies go well together—this isn’t about big government, it’s about smart government. I suspect that despite Hillary Clinton’s efforts to distance herself from Sanders, she probably knows this. After all, Clinton is also endorsing policies that sound an awful lot like what the Nordics have done: paid family leave, better public schools, and affordable day care, health care and college for all.

The United States is its own country, and no one expects it to become a Nordic utopia. But Nordic countries aren’t utopias either. What they’ve done has little to do with culture, size, or homogeneity, and everything to do with figuring out how to flourish and compete in the 21st century.

In the U.S., supporters of not only Bernie Sanders and Hillary Clinton, but also of Donald Trump, are worried about exactly the kinds of problems that universal social policies can help solve: worsening income inequality, shrinking opportunity, the decline of the middle class, and the survival of the ordinary family in the face of globalization. What America needs right now, desperately, isn’t to keep fighting the socialist bogeymen of the past, but to see the future—at least one presidential candidate should show them that.


To the Middle Class, Germany is Broke and In Decline

[I'm cross-posting this from the immigration blog, since it seems to fit here too]

One of the slogans that pop up in the migrant crisis is that German exports are booming and the country is rich, therefore it can and should accept millions of new migrants.

True, unemployment is low and exports are booming. But that has nothing to do with how ordinary middle-class Germans see their country's financial position. Chancellor Merkel and her party have long sung the praises of the 'lean state', (Schlanker Staat). This translates, as a practical matter, into severe budget cuts in the public sector and privatization. Of course, the German Social Democratic also did party did its part to hollow out the German welfare state in the early 2000s, under Chancellor Schröder. They still haven't recovered from the damage that step did to their reputation.

The result is that many ordinary middle-class Germans experience their country as broke and in decline. They grew up in a country with a solid welfare state and well-funded public services, and have steadily watched those things disappear, slowly but surely, as a result of successive waves of budget-cutting and privatization. Germany doesn't have enough teachers, enough cops, enough university places, enough preschool places, enough money for street repair, for school repair, enough money to keep the trains running on time. 

Some cases in point: In the past decade or so, Germany has cut (g) 16,000 police jobs all over the country, including 3,300 in the most populous state, and 2,900 in Berlin. This comes at a time when violent crime in Germany has been increasing steadily. These cuts explain why migrant shelters are (under)staffed by poorly-trained private security forces working in precarious jobs for minimum wage.

According to a recent confidential government report which a German newspaper had to sue to gain access to, 12,000 bridges in Germany (g) need renovation. 3.8 million square meters need urgent repair, a task that will cost tens of billions of dollars. Since local governments don't have the money for the repairs of their streets, they are turning to private industry (g). The national train concern Deutsche Bahn has increased prices every single year for years at a rate higher than the inflation rate (g), while at the same time on-time performance is reaching historic lows (g).

Germany also doesn't have enough teachers. In Germany's most populous state, Northern Rhine-Westphalia, there is a current deficit (g) of 3,560 teaching jobs to handle current student needs, and other federal states have similar problems. The problem is so severe that many German newspapers have created special 'teacher shortage' (g) rubrics to report on the situation. And these projections are based on the needs of current students, without taking into account the arrival of hundreds of thousands of migrant children who will need years of labor-intensive remedial instruction. A leading German newspaper recently asked readers (g) to comment on the state of the public schools their children go to, more than 70% half said the schools were in bad condition, 90% said they had been called on to donate time or materials to repair their children's schools, and many said they didn't let their children use the bathrooms in school because they were so dirty and dangerous.

German governments at all levels have gotten out of the business of building state-subsidized affordable housing. They are not only not building new apartments, they are selling the ones they already own. As a result, rental prices and homelessness have increased (g) in Germany regularly over the past 10 years. According to a recent study, 39,000 more people started living on the street in Germany over the past two years: 'The Federal Working Group for Help for the Homeless expects by 2018 a further 61 percent increase in homeless people. By then, around 540,000 people will have no place to live. The cause for the increase in homelessness are, according to the group, high rents and the increasing poverty of lower income groups.' And Germans are angry about increasing rents. A 2013 study (g) by a tenants' association showed that 90 percent felt that there were not enough affordable apartments in large cities, that 97% believed subsidized housing should be maintained, and 89% felt that the state was not doing enough to provide affordable housing. And this was, of course, before hundreds of thousands of new migrants began competing for low-income housing with government vouchers in their hands.

This might be a good time to mention that real wages in Germany have been stagnant for years, and that many new jobs being created are part-time contract labor with no benefits. It is true that Germans still have an excellent standard of living in many ways, but perceptions matter, and lots of Germans perceive that costs are exploding while their incomes stagnate.

This is the needed background to the current immigration debate. Politicians of all stripes warn that Germany must avoid a situation in which middle-class Germans have to compete with hundreds of thousands of refugees for affordable housing and public transportation, and in which the special needs of migrant children drains resources away from German children. This is already happening, and will get much worse in the coming years. Training teachers and building new affordable housing takes years. Further, it will only happen if there is the political will to spend tens of billions of dollars to do it. That does not exist.

So far, Angela Merkel and other mainstream German politicians appear convinced that middle-class Germans will willingly accept competition for housing and scarce public resources and a further reduction in their standard of living, all so that the 'lean state' can accommodate hundreds of thousands of foreigners on the cheap.

I think those politicians are wrong. If middle-class Germans become convinced that their political leaders care more about the needs of foreign newcomers than struggling middle-class Germans, things will get very ugly indeed.


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

767px-Carl_Spitzweg_017_(Der_arme_Poet)
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.