Tag Archives: Welfare

Guest post: Our immoral economies (Bjarne Braunschweig)

For our second guest post in this discussion about economics, here’s my dear buddy Bjarne Braunschweig. He cites Klaus Werner-Lobo and Jesus of Nazareth as the main influences on his economic thinking, and everyone who knows him knows he cares a lot about Fair Trade. As always, comments below are open for your questions and comments.

Mattan and Michael both talked about the downside of planned economics and I agree with both of them. As Michael wrote, it would need an extremely smart, quick and moral observer standing above everything, but as history has shown, dictators who saw themselves as just that have failed to live up to their own ideologies.

Michael stated that systemic problems within existing systems ought to be recognized, and then we should try to figure out how these can be overcome. Mattan wrote something quite similar: “We should see how permissive we can get, how much we can let people run their own life – and then see where and if it fails and how can we fix it in the least disruptive way.” They described the “system” in different words: Mattan called it freedom for oneself, and Michael simply called it the system of the society we – at least in Germany – live in right now.

My problem is: We already have seen our system fail again and again and again.
If you’re looking at 2008 and the devastating “minus” on the stock-markets or if you look at how Greece is crumbling into little pieces of foreign policy-intruders, you can see it, feel it, sense it.

And what are we doing? Nothing but to curl up in our own little nests of comfort – built of money – which we want to keep as comfortable as possible, by any means necessary. We fail to look at the system itself or the big picture. When I am talking about “this system” or “our system” I am talking about the free market, which is run by enormous companies and governments cooperating with each other. This may not be true for all the markets and economics of every country, but we have infiltrated even the smallest and poorest countries with our “Diet Coke and Snickers” ideology and we are thereby undermining the free and less stable markets in a lot of African and South American states.

Our system is failing. Right now.
Freedom for us and the free market? How about freedom for everybody.

The situation in Germany is grand! We have public schools, for which we do not have to pay. We have a lot of universities at which we can study for free. We have a welfare system, which is failing in some cases to provide personal freedom and dignity, but provides money in exchange for sending a few letters of application per month. There is a serious problem, though. A so called “new lower class” is rising in Germany. What they lack most is not money, but education and perspective. But that is a topic, as Michael also said, that should be addressed in a different post. And seriously, we talk and cry, while we are standing above most of the worlds population in almost every way possible. Health care, schools, money, we have it.

And as much as I see the need of people in this country who try to get a job which does not leave them empty inside, perhaps even heartbroken, I also see people suffering on a much greater scale in so many parts of the world, such as east Africa or China.

We have freedom of speech. We have freedom of religion. We have the right to speak up against injustice.
An estimated 70 to 75% of the world’s population does not.

As Michael stated, we as the wealthy people – living among, beside or away from the poor – have certain responsibilities. We have power, in one of the few currencies power can come in: money. And with great power comes great responsibility. “We are all capitalists: we all agree that where the market works, it should remain, because we realize that free enterprise is a necessity for our freedom and that the free market, where it works, is the only moral way for people to interact in their skills, abilities, time, needs and wants”, said Mattan so passionately (emphasis mine).

The problem is: morality and economics often do not go together. Stephen J. Levitt, economist and co-author of Freakonomics, says: “Morality, it could be argued, represents the way people would like the world to work – whereas economics represents how it actually does work.”

And that is, from my point of view, the problem which makes me so angry and lets our system fail so often in so many different ways. We fail to bring together decent moral standards we use in everyday life in our own (wealthy, democratic) countries – like equality – when we are exploiting workers in so many other countries. We fail on such an enormous scale to apply decent standards of morality to our economic system: Speculation on food prices, modern colonialism in the form of land-grabbing (where people from all over the world buy huge pieces of land in Africa and South America), and not enough money and no sign of ethically right treatment for the people who make our clothes and raise our food. That is exploitation and a new form of slavery. We made those people dependent on our money but we fail to pay them enough.

Our economics system itself is indeed corrupt and the only reason it still exists is because we do not want to see the evil we are doing. The longer we deny that, the longer we live a lie in our wealthy, comfortable homes.

Why are we responsible for children dying in Africa, while we are living in Germany? There are a lot of reasons, but sticking to economics, it’s because we exploit the farmers and manufacturers there and pay them hardly enough to survive on their own, let alone to support a family. Because we export our left-over food and milk and sell it for only a small fraction of what the food costs if it is produced in Senegal itself, for instance. Because we only look at our own well-being, our own freedom and our own human rights.

We don’t need thoroughly planned economics, because that would not work and is an insult to freedom itself. But maybe we should finally see where the system and the free market itself fails and that people should always matter more than money.

On systemic problems (a response to Mattan)

In his guest post, Mattan Mamane argued that any form of central planning of the economy should be avoided, and only turned to when necessary. I have to say, I tend to agree with this approach. But first of all, I think there’s a case to be made for placing severe limitations on freedom when it comes to economics, because such limitations are already – actually, always – necessary. And second of all, there is planning and there is planning – not all planning is the same.

Now, I feel I lack some of the historical background knowledge that Mattan brings along. I can be ignorant sometimes, as I form my opinion in discussions more often than in deep reading. But if I’m not mistaken, the important insight of socialism is that there are certain dynamics in an unrestricted market which severely, systemically, and systematically limit the freedom of vast swathes of the population.

The idea of basing the economy on central planning is not a good one, that’s for sure. It depends on the planners being very smart, very well-informed, very quick, and very moral. With any of those missing, people will suffer. But obviously there are many economies, most economies really, which are based on many individuals making individual decisions without central planning, but within a set of rules and systems designed to protect societies from some of the ills of unlimited capitalism. I said “most economies” but it’s really all modern states, as modern states have laws and modern governments manipulate the economy in all kinds of ways. It’s really a question of how.

Mattan brought up a good example: privatization. Privatization of public institutions can be good, but the calls in the #J14 movement to end privatization in Israel are justified: the kind of privatization pushed there by Netanyahu and others is not the right kind; calls for tenders are tailored towards single corporations or individuals with large sums of money. As a result, privatization is used to drive more economic centralization and harms the competition needed for a free market; instead of a single government carrier for public services, we get a single private carrier, without the checks and balances of public oversight nor those of multiple private shareholders.

So it’s not privatization itself that is good/bad, it’s how you privatize that can be a great thing or a really bad thing. In the same way, combatting economic centralization or poverty can be done in good ways and in bad ways, and I think Mattan’s suggestion of focussing on freedom is a very good one.

However, I would caution Mattan and others from believing the oft-repeated claim that everyone is better off in a USA-style capitalistic society. Perhaps they are when compared to economies based on central planning, but the modern state is a very new thing as far as history is concerned, and we probably have all kinds of economies to try out. I think it is key to recognize systemic problems with existing systems, and try to figure out how these can be overcome.

One systemic problem of capitalistic societies is poverty. Here I mean relative poverty: being poor compared to the people in your society – not some absolute idea of poverty compared to the whole planet. We are all encouraged implicitly or explicitly to be innovative, take charge of our future, and be the very best we can be. Poverty, as I understand it, is a feature of the system of modern society: the existence of a category of person who, from birth, is not so likely to achieve those things which we should all aspire to. Perhaps some people are poor because they somehow have less potential, by nature, but this is not what I mean.There are many brilliant people born into poverty, who simply have the odds stacked starkly against them from the start. ((I believe that people’s ability is affected very much by their schooling and upbringing; specifically, I think that a traumatic childhood – such as that experience by most of us in unjust factory-like child-correction institutions mockingly called “schools” – is key to limiting people’s ability in most areas. But that’s a topic to be tackled separately.))

The measures taken against poverty are many and varied, and some are better than others. Welfare, at least as I know it in Germany, is not a very good one, in my opinion. Under this system, people have access to a living stipend if they meet certain criteria, the main type of welfare being available to people who are unemployed. Even assuming the stipend is enough to keep them from being poor, this system still limits their freedom: they have to go through embarrassing, even humiliating bureaucratic procedures on a regular basis and are forced to take a job, any job, even one they would hate. Such a system makes poverty slightly less awful without making it go away, and diminishes people’s freedom in the process.

Does this mean that welfare as a whole is a bad idea? I don’t think so. The German system just isn’t a good way of doing it. Perhaps all welfare systems ever tried aren’t good, but that doesn’t mean a good one can’t be created.

What I beg you to realize is that systemic problems in an economic system are never “somebody else’s problem”. They belong to everyone in that system, whether you happen to mainly benefit from it or mainly suffer. Like me, you probably have that image in your mind of a self-made man insisting that he made every single cent by his own hard work and wits, insisting that nobody ever helped him, outright raging that he doesn’t owe anybody anything. I’m sure many wealthy and successful people feel this way; if they didn’t personally make the fortune but rather inherited, they might feel this way on behalf of whatever ancestor did. But those who feel this way are deluding themselves. We live within complex social systems which can empower us to do great things or condemn us to lives of hardship. Sure, some measure of luck and some measure of ability are involved – but they do not exist in a vacuum. If you benefit from a system and that same system makes others suffer, their suffering is your problem, and you are benefitting from it whether you like it or not. I don’t mean to say the wealthy or successful are evil or something – just that no matter what they think, they bear a responsibility for the poor and the failures.

I think we have to take responsibility over the systems we live in and be brutally honest with ourselves about what they do right and what they do wrong. And when we recognize a wrong, we have to be creative and find a way to fix it while doing as little wrong as possible. It’s not easy, but it seems to me like an interesting challenge, and I believe it is the right thing to do.

 

I have one or two more guest posts lined up to continue this discussion. In the meantime, comments are open. What do you think about all of this? Are there good ways to improve capitalism? If so, what are they?