It has been a common perception for the last couple of decades that welfare state is an anachronism. It would – so say its critics – make people lazy, incapable of hard work. Neo-liberal main-stream economics and an old tradition of asceticism that merged elements of Christian ethics, anti-capitalism and anti-consumerism, made austerity appear like a solution for many of the West’s problems.
“We have got too fat and lazy, now we must go back to a more ascetic way of life,” was the slogan. The middle-class, and most especially the lower middle-class, was prodded into believing that they were too greedy and unproductive. Welfare state became synonymous with the notion that Western states spoiled their citizens and bred generations of parasites that knew only how to live from other people’s work. It was considered, however, perfectly acceptable that the rich were getting richer and the poor poorer. Because the rich – it was argued – produce wealth, while the poor are a burden. To neo-liberal thinkers, Western poor are not poor enough. They should be as poor as the ones in developing countries like China, who work hard and get paid far less than they deserve. A narrative of the righteous and inevitable exploitation of the workers began, which seems to have no end.
By preventing poor workers to earn more, you prevent them from consuming. If workers earned according to their productivity, the world would be a much more equal and richer place overall. Every worker can potentially be a consumer who wants to buy things that companies make. Nowadays, however, it seems as though every country wanted to export like crazy and give the workers just enough to live. But if every country wants to export, who will be left there to buy? This model naively assumes that if a country runs large trade surpluses there will always be other countries out there that are rich enough to buy. This is a flawed assumption and we see it in the current crisis. The Chinese have realized – and the Germans might eventually realize it, too – that if every country keeps its standard of living low and tries to get rich by running trade surpluses, the countries that run a trade deficit will sooner or later stop buying.
Wage “austerity” is probably one of the major causes of the world’s current woes. But there is also another one. The importance of a functioning welfare system is often underestimated. A few days ago, I watched a TV programme that made me think about how essential a good welfare system is in order to maintain social cohesion and legality.
Journalists of an Italian TV channel reported about the black labour market in Italy. Given the economic crisis and the growing level of unemployment, many young people are ready to accept any kind of job. With a hidden camera, journalists went to bars and pubs in Rome, pretending to be looking for work. Some owners were willing to give them a job, but refused to sign a regular contract, because in this case they would have to pay taxes. Many young people accept to work without a contract, without benefits and secuity. They have no choice, because job opportunities are increasingly scarce and they have to take whatever they get in order to survive.
What is the connection between this phenomenon and the welfare state? Well, it is quite simple. These young people need to accept an illegal job, which is underpaid and gives them no guarantees, because they cannot act otherwise. They could sue the owner who offered them a black job, but they don’t have the time and the financial resources to do that.
In a country that has a solid welfare state like Germany, a worker could sue someone who offered him such a job, because a German citizen would not be afraid of starving. He or she would get money from the state. He would be able to defend himself against the owner, who would be forced by a court either to give the job seeker a legal job or to compensate him or her.
The welfare state is not a system designed for lazy people. It is a way to empower those who are unemployed or looking for a job. Certainly, in a society in which the economic policy is wrong and therefore not enough jobs are created, the large number of unemployed may give the impression that people are lazy. But this should rather prompt us to rethink the economic policy, not the welfare state. If welfare were so bad for the economy, why would countries like Germany, Sweden or Denmark be richer than countries with much less welfare state?
Without a welfare state the powerful become more powerful, and the weak become weaker. People who are in desperate material need have no chance to defend their rights and keep their dignity. They are at the mercy of dishonest employers or of criminal organizations. In Italy, criminal organizations and wicked politicians exploit the poverty of many people by “offering” a little economic help in exchange for votes. This system is a kind of perverted social welfare.
On the other hand, employers exploit their workers, satisfying their short-sighted interest, but damaging the long-term interest of the whole country, because their workers will have less money to spend and the state will have less taxes. The welfare system is therefore an instrument which guarantees a high degree of social cohesion, legality and tax revenues.
People’s lives are negatively affected by the lack of a social safety net. You can see the extreme consequences of this in East Asia. The liberal labour market that exists in Asia, where workers have few guarantees, at first sight helps the economy. But in reality, it deprives the world economy of consumers. People are afraid of being sacked, and they don’t have power to demand wage increases or paid overtime. So, they end up earning less than they produce, and spending less than they could. The simple words “wage increase” have become a taboo, and it seems you are lazy and spoiled if you want to earn more. Moreover, life decisions are made because of the looming fear of poverty. People get married with a certain person for material concerns; the most talented people want to become civil servants, lawyers or doctors, because these are the stablest jobs with a safe income; people work overtime without compensation, sacrificing their social life and their health. And many, many people live far below the standard they deserve for the hours they work and their productivity.
Is this really the world we want our children to live in?