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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 >>
  • 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
  • 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