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Alliances Against Poverty November Conference, Brussels. The Pre-Conditions for a Transformative Agenda in Social and Employment Policy Jeremy Leaman (Loughborough University, UK; EuroMemo Group; [email protected]). Critical Juncture in Development of the ‘social state’.

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Alliances against poverty november conference brussels

Alliances Against PovertyNovember Conference, Brussels

The Pre-Conditions for a Transformative Agenda in Social and Employment Policy

Jeremy Leaman

(Loughborough University, UK; EuroMemo Group; [email protected])


Critical juncture in development of the social state
Critical Juncture in Development of the ‘social state’

  • ‘European social model has already gone’ Mario Draghi (Wall Street Journal 24.2 2012).

  • Exaggerated but significant restatement of neo-liberal intent

  • Europe remains the socially and fiscally most committed region, yet its systems have been under attack since the 1970s

  • Delors’ vision of social dimension to cushion effects of Single Market now largely rhetoric

  • Welfare costs remain prime target of NL attack


Crisis as opportunity
Crisis as ‘opportunity’

  • Opportunity of Keynesian renaissance thwarted by embedded NL demonisation of state debt Thus >>>

  • Sovereign debt ‘crisis’ became opportunity to continue the weakening of the social state through

  • a) The commodification of key services:

  • b) Privatisation, outsourcing, ‘competition’

  • However: a) NL objectives not yet fully realised and

  • b) are causing long-term economic damage and generating strong opposition


Persistence of delusion
Persistence of Delusion

  • Fatal cocktail of capital market deregulation, monetarism and neo-liberal supply-sidism has ‘deformed’ Europe (JörgHuffschmid)

  • ‘decoupled’ monetary from real accumulation (Altvater)

  • Generated boundless ‘liquidity factories (K.Philips)

  • Promoted an unprecedented redistribution of gross (market) income in favour of capital, thus:

  • Compounding need for state remedial transfers


Inequality in european economies distribution of national income 1980 2005
Inequality in European EconomiesDistribution of National Income 1980-2005

Gross Wages Ratio

Gross Profits Ratio



Neo liberal de accumulation
Neo-Liberal De-Accumulation

UK: Ratio of Net Assets to Annual GDP 1920-2008


Challenge to progressive forces
Challenge to progressive forces

  • We need to Halt the ‘deformation of Europe’ through neo-liberalism

  • Defend and protect surviving elements of social provision

  • Maintain and restore the social state as badge of European civilization

  • Re-establish the ambition to create a pan-European architecture/ set of norms based on social justice, international solidarity and the right to secure employment


Preconditions for transformative a genda
Preconditions for Transformative Agenda

  • Societal change engineered by Neo-liberalism is multi-dimensional

  • Reversal thus requires holistic solution

  • Not just choice of new technocratic policy-mix

  • Preconditions are thus political, economic and cultural


Political preconditions
Political Preconditions

  • Strategic alliance of progressive forces to match interest lobbies of capital, built around commitment to the centrality of public goods to social cohesion and the ‘courageous state’ (Richard Murphy) >> Encouraging:

  • International Cooperation and Solidarity

  • A Trans-National Politics to Match transnational capital, committed to

  • Regulation and Harmonisation (to decent levels)


Economic preconditions
Economic preconditions

  • Prioritisation of economic recovery over fiscal consolidation, c.f. post-war debt reduction

  • Control of strategic gate-keepers in finance, extractive industries, retail monopsonies

  • Primacy of qualitative growth and full employment

  • Reduction of demand asymmetries in EU/ EU17, convergence through Fiscal and Clearing Union

  • Reduction In Disparities Of MARKET INCOME


Socio cultural preconditions
Socio-cultural preconditions

  • New expectations of what ‘stable growth’ means

  • Lower expectations of rates of return: addiction of pension and investment funds to Ponzi-capitalism

  • Reduction in private debt as vehicle for growth >

  • State debt historically reactive (Figure next slide)

  • Cultivation of consensus concerning public goods and taxation as necessary conditions for social cohesion and civilization (Wendell Holmes, Adolph Wagner)



Fiscal preconditions
Fiscal Preconditions

  • Social policy without a coherent fiscal policy is not feasible OR

  • NL dismantling of public social provision is pre-programmed by weak fiscal culture

  • EU Fiscal Policy: an object lesson in failure in the face of Globalisation, MNCs and the MS as ‘competition states’ where:

  • Tax reductions are deployed as supply-side inducements to MNCs and HNWIs (high net-worth individuals)


History of eu non harmonisation of taxation
History of EU Non-Harmonisation of Taxation

  • Acquistax harmonisation only affects VAT

  • No established commitment to progressive income tax

  • No established standards of taxable income or assets

  • No established minimum/ maximum rates of direct taxation . The Result is >>

  • Tax and regulatory arbitrage by MNCs


Tax competition accelerates after 1990
Tax Competition Accelerates after 1990

  • No tax conditionalities in Copenhagen Criteria beyond VAT and some excise duties

  • EU ignored move to flat tax regimes in pre-accession Baltic states 1994/95 and the sharp reductions in corporation tax throughout CEE

  • Irish tax ‘piracy’ only began after 2000 >>



Asymmetries
Asymmetries

  • All EU countries affected by shift from direct to indirect taxation and a gradual decline in tax ratios (as % of GDP)

  • CEECs are characterised by both heavy reliance on indirect taxes and lower average tax ratios

  • RESULT: a) lower resistance to shocks and reduced ability to redistribute; b) some countries are chronically vulnerable to shocks and to pressure on social expenditure; c) capital imports


Lessons of failure
Lessons of Failure

  • Without fiscal convergence and strengthened public finances, the European (social) project is doomed

  • Requirements for change/ recommendations:

  • 1) Commitment to progressive taxation

  • 2) Harmonisation of scales of progression

  • 3) Harmonisation of PIT and CT rates

  • 4) Shared standards for calculating tax bases


Harmonisation
Harmonisation

  • 5) Commitment to transparency, country-by country-reporting, formulary apportionment

  • 6) Bi-lateral deals with secrecy jurisdictions should be rescinded (UK, Germany with Switz)

  • 7) Tax-avoidance should be outlawed and Tax Havens in Europe and overseas put out of business

  • 8) Harmonisation of European wealth taxes


Harmonisation 2
Harmonisation 2

  • 9) Removal of the anomaly of non-taxation of aircraft fuel

  • 10) Tax competition and ‘tax poaching’ should be eliminated

  • 11) Stability and Growth Pact/ Fiscal Pact should be reformed to prioritise convergence of member states’ productivity and external balances

  • 12) Reform of the ECB


Employment priorities
Employment Priorities

  • Full employment is a primary public good

  • End to the scourge of youth unemployment and the ‘wage scar’

  • Convergence to higher participation ratios via expansion of childcare and pensionable parenthood (as public goods)

  • Expansion of training and re-training to establish critical mass of skill (craft skills as source self-esteem)


Investment priorities
Investment Priorities

  • Reverse decline in Investment Ratio

  • Prioritise education, training and skills as ‘social capital’

  • Prioritise public infrastructure

  • Sustainable technologies

  • Low carbon transport systems


Reduce democratic deficits
Reduce Democratic Deficits

  • Establish answerability of key institutions (Commission, European Central Bank)

  • Empower European Parliament BUT ALSO

  • End the ignorance of elites through the promotion of a critical and active civil society

  • ‘Our ignorance is their power’

  • ‘Our understanding is our power’

  • Evidence of that influence: Andrew Haldane (Bank of England) honoured Occupy movement


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