A Teachable Moment for Americans: Solidarity as a Shared Value in European Identity

Speaking at the Schloss Bellevue palace in Berlin, President Joachim Gauck used a televised speech in February 2013 to make the case for more European integration. At the time, calling for “more Europe” in terms of shifting still more governmental sovereignty from the state governments to that of the Union was not a very popular task. Further limiting the power of his message is the fact that the German presidency is largely ceremonial , unlike the office of governor in an American state. Nevertheless, Gauck was determined to put the contemporary condition of the “European project” in favorable perspective. The most striking—and even effective—aspect of his speech is his repeated references to “European citizens.” Had he used “Germans” instead, he would have subtly undercut his own message. The prime minister of the E.U. state of Britain at the time would never have used the term, "European citizens." Nor would he have agreed with the E.U. value of solidarity and especially the ensuing social policy. The American media tended to follow suit, rather than covering the otherness of the other—the European Union as having a societal political value that has been very recessive in the United States. In this regard, I contend, the American media companies let down the American people, who would have stood to benefit from the wider perspective that would have enriched American political debates from the tyranny of the hegemonic value ensconced in American culture: that of the self-sustaining individual ideally in the state of nature, economically speaking. Reporting on the principle of solidarity would have given Americans the acccurate picture of the E.U. as being more than just a trading "bloc." This point in turn could have resulted in Americans coming to the realization that the E.U. is equivalent to the U.S.—both being empire-scale federal systems wherein governmental sovereignty is split.

Acknowledging the fiscal and structural imbalances that gave rise to the debt crisis in several E.U. states  and the problems entailed in “patching up” the problems by emergency measures, Gauck nonetheless pointed to non-economic elements of the European project that were also in crisis. “It is also a crisis of confidence in Europe as a political project. This is not just a struggle for our currency; we are struggling with an internal quandary too.”[1] This problem was predicated on the point that the strengthening of a European identity comes out of a recognition of shared values, rather than in differentiation from other cultures outside of Europe.

Too often, Europeans have artificially restricted their values to their particular state. Typically, Europeans would preface a self-referential remark with, “In my country,” only to describe a custom or value that is by no means limited to, distinctive in, one particular E.U. state. Even in saying “more Europe means a European Germany,” Gauck risked falling into this trap, at least in terms of keeping Europe as secondary. More in line with his thesis would have been the expression, more Europe means more European. More European in turn means more of a consciousness of values that European citizens (and residents) share, whether or not people in Africa, Asia, or America happen to esteem those values too. So the question facing European citizens is this: What values do you share?

From an American perspective, the salience of the value of solidarity held by Europeans would be so obvious, were it made transparent by the American media, because solidarity has been such a recessive value in the United States. Ironically, World War II was perhaps the last time solidarity in terms of “we’re all in it together” was explicitly pushed and acknowledged in America. Even then, the value was more in terms of sacrificing for a common purpose rather than seeing to it that the most vulnerable among us do not fall through the cracks in terms of sustenance. In Europe, solidarity has more of a social welfare quality.

Moreover, whereas Americans have tended to apply human rights only to the harm caused by tyrants abroad, Europeans have tended naturally to extend to the value to covering the basic sustenance rights of one’s own fellow citizens as well. The shift needed for a stronger European identity has included becoming aware of the duty to apply the value domestically to other Europeans rather than merely to people in one’s own state, or “country.” By implication, “European Germans” would feel solidarity with starving “European Greeks.” This element twas largely missing from the austerity response of E.U. finance ministers to the debt crisis from 2010 to 2012. So even in the E.U., the principle can succumb to greed and interstate clashes of economic interests. I submit, therefore, that “more Europe” involves not only a stronger value-fueled-identity, but also more fiscal redistribution at the federal, or E.U., level. Put another way, Europeans surely have more shared values than that of austerity. It is a pity that the American media failed to capture this point in reporting on Greek austerity, which more closely resonates with the values dominant in the U.S.

1. Ian Johnson, “German President Joachim Gauck Uses Major Speech to Call For “More Europe,” DW, February 22, 2013.

Slovak Resistance to Expanding the E.U. Bailout in 2011

Richard Sulik, Parliament Speaker of the Slovakian legislature, argued that the only real solution to the debt crisis in the E.U. was rigorous enforcement of the E.U. regulations on budget deficits and public debt. He had been particularly angered by his state, the second poorest in the E.U., having to bail-out a richer state that had consistently violated the E.U. regulations. Additional debt, he insisted, was not a way out for the PIGS. Slovakia, after all, had to adhere to strict limits on everything from budget deficits to inflation rates in order to be able to adopt the euro. “Now when I see what is being allowed for Greece and Italy, it really makes me angry,” Sulik admitted. “We have to pay because of this double standard. It’s a real injustice.” Indeed it was. Bailing out Greece so the state would not default effectively rewarded that state government for profligate spending and tax avoidance in violation of the E.U. regulations.  

Solely from the standpoint of debt, adding more was not a viable way out, according to Sulik. “The more we let [states] violate the rules, the worse things will get,” he said. So he opposed expanding the bailout. Undoubtedly putting a chill in the halls of banks in rich states such as France and Germany, he bluntly stated, “Greece has to go into bankruptcy.” This would demonstrate that the E.U. was not an agency of the big banks holding questionable semi-sovereign state debt.

At the very least, having a state government official resist the interests of the big banks and their politicians in the “core” states was in the interest of a fuller debate within the E.U. as a whole on how to deal with “bad” states. In fact, potentially at least, a state like Slovakia could serve as a check on plutocracy gaining a foothold in the E.U. According to Sulik, it simply was not fair to ask poor Slovaks to bailout the big banks and richer states—even apart from the latter’s violation of the E.U. regulations. In short, the E.U. should not have been run in the interest of French and German banks. At the same time, giving each state government a veto would have been a recipe for E.U. impotence at the federal level.

If the bailout had to be expanded to obviate a financial collapse of the E.U., then having one hold-out could have been a very expensive price to pay to avoid giving the E.U. additional competencies in fiscal matters. Were a qualified majority needed to augment E.U. competencies, Sulik's argument could still win the day--but his points would have to be sufficiently persuasive among the poorer states. If the banks' interest must be satisfied in order to avoid financial collapse, enough of the neutral states could turn from Sulik, who might otherwise be able to prevent the E.U. from avoiding catastrophe.

Source:

Gordon Fairclough, “Slovak Official’s Delay of Rescue Fund Vote Poses Problem for Euro Zone,” Wall Street Journal, September 6, 2011. 

Balancing Budgets: Italy vs. Wisconsin

In what could be dubbed a tale of two states, Scott Walker of Wisconsin bragged about bringing the budget into balance without raising taxes while Silvio Berlusconi broke his pledge not to raise taxes in order to balance his budget for 2013. Walker relied on spending cuts and constricting the collective bargaining of government employees, while Berlusconi agreed to a package of tax increases, spending cuts and fewer labor protections to make up for $76 billion (54 billion euros) by 2013. The tax increases include raising the value-added tax from 20 to 21 percent and imposing a “solidarity tax” of 3 percent on state residents who earn more than $420,000 (300,000 euros). The latter tax would run through 2013. At a news conference in August, 2011, “Berlusconi acknowledged that he had pledged never to raise taxes, but that the attention of world markets had forced him to do so.” Was breaking his pledge a vice or a virtue?

Scott Walker would undoubtedly say “A VICE!” To be sure, there is merit in Walker’s feat in balancing a government’s budget without asking more from residents in terms of taxes. However, there is also merit in Berlusconi’s decision to “spread the pain” fairly even to the rich. Solidarity is a value that implies that we are all in it together so everyone sacrifices—not just those least able to do so. Choosing a spending-cuts-only approach wherein sustenance of the poor is compromised while the rich are not asked to contribute evinces not only a certain set of priorities, but also a certain value-set, which is antipodal to the principle of solidarity. From this standpoint, Berlusconi’s breaking of his pledge can be pardoned.

However, if excess government spending (i.e., not affecting the sustenance level) exists, it may be unnecessary to raise anyone’s taxes to balance a budget. To be sure, legislatures can pad lobbyists’ pockets by inflating budget items, and it is virtuous to cut such spending particularly to balance a budget. Also, labor unions can gain excessive power and demand too much from governments as well as workers. For example, in Wisconsin even part-time temporary instructors at public junior colleges must pay union dues amounting to a significant part of their pay per class. Someone teaching one class for one term only has different interests than a career instructor who teaches full-time at a college, yet the teachers’ union does not discern this difference. The problem comes in when a supermajority in government goes beyond correcting for such excess power in seeking to balance the budget on one segment of the population while another segment is allowed to go unaffected. The basic principle of fairness is violated in such a case.

The core principle not to be violated by any government may be put as follows: Instead of affecting the safety net on the sustenance level, taxes should be raised on those residents able to afford the additional tax. Being able to afford a tax justifies not depriving the poor of basic living requirements such as food, shelter and medical services. Contributing where one is able without undue hardship and a human right to sustenance can be said to be the two pillars of the principle of solidarity. Without this principle, a society is merely the sum of parts—a mere aggregate wherein selfishness rules rather than bows to a higher good. That is to say, solidarity thwarts misordered concupiscence while being necessary for genuine society.

Source:

Rachel Donadio, “Italian Senate Approves Austerity Plan,” New York Times, September 8, 2011.

Inequality in Corporate Capitalism: Beyond Redistribution

I contend that a concern that too much income or wealth is concentrated “at the top” in the U.S. does not necessarily translate into a demand for redistribution; rather, the inequality itself may be thought dangerous to the viability of a representative democracy (i.e., a republic form of government) and inherently unfair. Even though redistribution may be entailed as large banks and business corporations are dismembered, ridding the system of the concentrations of wealth does not in itself mean that those “at the bottom” should or would necessarily become richer. For example, to say that CEOs should not be allowed to make millions of dollars, especially when their companies or banks lose money, does not imply redistribution because there is no claim that the compensation be directed to others for their benefit. The point is that the compensation itself is unfair. Indeed, saying that corporate capitalism is itself unfair because some people benefit beyond what they deserve is not to say that their benefits should be redistributed; rather, the point is simply that such benefits should not be allowed.

The Occupy Wall Street protesters should have started out by demanding that corporate capitalism be extirpated or expunged from the American society and polities without demanding redistribution. Neither corporate downsizing nor selling off businesses or divisions would necessarily entail redistribution to the lower and middle classes. I suspect the beneficiaries of the transition would be stockholders (while upper echelon executives see less almost immediately in cash and stock income). Even though lower and middle income people could gain, the real driver behind the decrease in the economic inequality would be that the super-rich are not so rich. This is not to say that economic equality would be the goal; talent and effort justify more compensation. The problem is when the system is tilted so the inequality in compensation is allowed to far beyond its legitimate basis. To the extent that the system of corporate capitalism was itself in the protesters’ crosshairs, then simply redistributing wealth to momentarily mitigate the amount of economic inequality would fall short.

In fact, the protesters would have been more credible (and successful) were they to have distanced themselves from the topic of redistribution because they would quite obviously stand to gain from it. In refusing to police the “redistribution” signs opened the protesters up to a conflict of interest wherein their own private interests could be seen to bias their claim to acting for the good of the whole.

Sadly, the protests were enervated from within by a lack of resolve to focus on a few key points; the movement’s own failure to delimit itself in terms of demands allows for such competing agendas as redistribution to emerge and gain a footing. The Wall Street Journal dispatched reporters in five cities to interview over 100 protesters. “The picture that emerged is a motley conglomeration of people with widely varying goals—and some with no clear-cut goals at all other than to denounce greed.” There is “a tolerance—and, sometimes, sympathy—for causes well outside of the mainstream.” Inside the demonstrations, “there is broad acceptance of a wide range of opinions and agendas—even those that occasionally border on the absurd.” This atmosphere provided the context in which redistributive agendas could encroach on the more fundamental point that corporate capitalism itself should be replaced with something perhaps more akin to Adam Smith’s version (i.e., not necessarily with socialism).

Douglas Schoen, a former strategist for Bill Clinton, surveyed 198 protesters in New York City. Schoen reports his results as the following: “The demonstrators believe in redistribution of wealth, government-provided health care and education no matter what it costs, increased regulation and protectionist trade legislation.” Schoen concluded the protesters were well to the left of the independents needed by the Democrats to win the White House in 2012, so his summary may be biased to show the movement in a less than favorable light. For instance, he missed the objectives voiced by some of the protesters to eliminate the “legal person” status of a corporation—and, indeed, corporate capitalism itself. Even so, his survey shows that it redistributive goals were among the protesters’ agendas. The same thing can be seen in a report in the Huffington Post.

According to the Post “The gap separating the richest 1 percent of Americans from the rest of the country has emerged as arguably the single most prominent rallying cry of the Occupy Wall Street movement. . . . The Occupy protesters identify themselves as "the 99 percent" —referring to the majority of the population that has had to contend with limited economic and social opportunities while money continues to accrue to the very wealthiest citizens.” The “limited economic and social opportunities” intimate a desire for redistribution from “the very wealthiest citizens.”

To be sure, if the economic/political power of “the very wealthiest citizens” is a threat to the republics (and unfairly gotten), a tax on them would be justified and this implies redistribution through government spending. Even so, that spending can be for the good of the whole rather than funneled to the poor exclusively means that the redistribution can be to the whole rather than from X to Y within the whole. Furthermore, the redistribution itself would not be the point, and as such would only be a temporary byproduct as the concentrations of excessive private wealth that constitute an inherent threat to the viability of representative democracy are rendered innocuous to the body politic (and the economy). 

While not without merit, the ancillary “redistributionist” demands brought with them a certain opportunity cost in foregone focus. In fact, I would not be surprised to find that pro-business groups funded “redistribute” signs amid the protests; it was undeniably in the business interest to discredit the demand that the modern corporate form itself (including the “legal person” doctrine) be made illegal beyond a certain cut-off in assets and/or revenues. This demand is particularly toxic to American business because both corporate capitalism and its sordid impact on the American system of representative democracy are front and center, and thus at risk in themselves. It is not about limiting a CEO’s bonus or taxing corporations more for entitlement programs; rather, the mega-corporation itself—as an economic template—is the target. In short, the protesters missed a great opportunity to make the focused claim that extreme economic inequality itself is inherently unfair (i.e., without adding into the mix the virtues in redistribution) and that modern corporate capitalism itself causes it and leverages it in corrupting the halls of government with still greater inequality as a result.

It is the inherent unfairness of extreme economic inequality, rather than any of the benefits from redistribution, that lies at the root of the rise again to populism and is the basis of the complaint; the system of modern corporate capitalism is culpable too as the structure or conduit through which the inequality is magnified. The extent of the inequality can be seen in the following comparisons: the total income of the top 1% is the same as the total income of the bottom 60 percent, and the total wealth of the top 1% is the same as the total wealth of the bottom 90 percent. That is, one percent of the population has as much wealth as ninty percent have.The wealth of the one percent is thus extremely concentrated. 

On October 26, 2011, the Huffington Post reported some statistics on the degree of economic inequality in the U.S. at the time. The report is worth quoting at length:   

“Income for the wealthiest Americans has nearly tripled since 1979, while remaining relatively stable for the rest of the country, according to figures released this week by the Congressional Budget Office. The numbers offer a striking illustration—the latest one in a long series—of how wide the gap has grown between America's richest citizens and everyone else. For the richest 1 percent of Americans, income rose a full 275 percent between 1979 and 2007, —accounting for inflation—according to the CBO. For the poorest 20 percent of Americans, meanwhile, income rose just 18 percent in the same time period. For the middle 60 percent of earners—that is, the 21st through 80th percentile—income grew by just under 40 percent. And for the 80th through 99th percentile, income grew by 65 percent. That's a rapid climb, but the top 1 percent experienced a rate of growth more than four times as fast.”

“Above all else, the CBO's figures suggest that the richer you are, the richer you'll get over time. But this is far from the first report to reach that conclusion: Numerous studies have shown that America's very highest earners have been steadily pulling away from the rest of the population for a generation. Even as income for the richest 1 percent has nearly tripled since 1979, wages for the lower and middle classes have hardly moved. . . . Today, the 400 richest people in the country control more wealth than the bottom 50 percent of households, and the U.S. ranks roughly alongside countries like Uganda, Cameroon, Ecuador and Rwanda  in terms of the gap between its poorest and wealthiest citizens.”

It is highly probable that the extent of the inequality in wealth had arguably surpassed that which could be justified in terms of fairness (i.e., from more compensation for greater effort and talent). Behind the figures lay a system of corporate capitalism that had furtively rendered the republican form of government into a plutocracy (i.e., ruled by and in the interest of wealth). This is the point—not that more income should be redistributed within the existing system.

In conclusion, redistribution short-circuits the more fundamental demand that the political economy itself be re-configured—rid of the mega-corporations and the billionaires—because the system itself has become inherently unfair as evinced by the extreme inequality in income and wealth. Besides being unfair in terms even of Adam Smith’s moral sentiment, mega-corporate (rather than small and medium business) capitalism engenders or facilitates concentrations of wealth even after they have become dangerous to both the economy and democracy. The systemic risk to which the market is vulnerable is that the system itself is geared predominately to further increase those concentrations at the expense of economic justice and political democracy. In other words, corporate capitalism knows no limits within itself concerning concentrations of capital. Regarding externally-imposed limitations, the large corporation inherently seeks to enervate any extrinsic obstacle, including legislatures and regulatory agencies. The mega-machines will continue to amass capital unless the large corporation itself becomes the target and is found by a threshold of people in a society to be irreconcilable with fairness and accountability. Efforts to merely refine the existing system will surely founder. In other words, the point is not increased redistribution, even if that is a byproduct in the transition.

See related essays: "Occupying Wall Street: A Self-Regulated Protest?" and "Protest Movements 101"

Sources:

Alexander Eichler, “One Percenters’ Income Nearly Tripled In Last Three Decades: CBO,” The Huffington Post, October 26, 2011. http://www.huffingtonpost.com/2011/10/26/income-inequality_n_1032632.html

Douglas Belkin, Tamara Audi, and Danny Yadron, “Protests Put Democrats in Bind,” The Wall Street Journal, October 25, 2011. http://online.wsj.com/article/SB10001424052970203911804576651410222669534.html

The Flemish and Walloons: Worlds Apart?

I contend that the cultural differences between the Flemish and Walloons within Belgium have been exaggerated to such an extent that the state government of Belgium has been paralyzed and solutions have eluded the Belgians. Reducing the fear-induced swelling of the admittedly real differences within Belgium may therefore facilitate relief from the paralysis. In other words, the added perspective from viewing the cultural differences as less traumatic can help the Flemish and Walloons to either live together or, ironically, be able to separate. That’s right—a more realistic assessment of the differences can actually facilitate the separation of Belgium into two (or three) E.U. states (or Flanders joining the Netherlands and Wallonia joining France—and the German-speaking area joining Germany). Exaggerating differences can snuff out consideration of such alternatives and enable continued paralysis.

To be sure, distinctions can indeed be made between the Flemish and Walloons; we can’t simply assume that the overall Belgian (or European) identity relegates the regional distinctions. "I am Flemish first, Belgian second," says Pascal Francois of Aalst.  Another Flemish man says, “it’s a toss-up when I’m in Belgium.” Even though I am a citizen of the U.S. rather than the E.U., I can relate.

I regard myself as a Midwesterner first, Illinoisan second. Being a Midwesterner essentially means to me having imbued the intrinsic down-to-earth culture of my native region of Illinois, which, as mostly rural with only a medium-sized city as its de facto capital, is distinct from Chicagoland (which is less Midwestern than the other regions). To be sure, “the Midwest” is a broad area in mid North America that transcends political categories. The label goes far beyond geographic connotation, for “the Midwest” stands for a certain “home-grown” (rather than foreign) culture wherein honesty (and bluntness), prudence, populism, and humility (and stubbornism) are particularly valued. The Midwest is known as “the heartland” because of these ethical virtues. In Illinois at least, being a Midwesterner can be readily identified with one's specific region because the cultural values are more immediate than the political identification associated with being an Illinoisan. So being a Midwesterner is to being Flemish as being an Illinoisan is to being Belgian. So too, being an American is as being a European, even if the emphasis differs. Ideally, a federal system proffers political expression to each of these respective identities. Unfortunately, fear and the related intransigence (or stubbornness) can block full expression of one or more of the levels of cultural identification.

In the case of giving political expression to regional identification in Illinois, fear of change has gotten in the way. For example, the Illinois Senate could represent the regions (i.e., clusters of four or five counties), hence facilitating their expression. Given how much the regions differ, the result has been a deficit in political identification within Illinois. Because the republic is quite heterogeneous (including linguistically, which, by the way, by no means exhausts the ways in which cultures can differ), I did not grow up identifying myself as an Illinoisan. In fact, the regions in Southern Illinois have more than once attempted to secede from Illinois due to economic, political and cultural differences—mainly from Chicago (whose culture is foreign even from the vantage-point of the two other regions in Northern Illinois). In my late twenties, I visited Southern Illinois once from the North. Even though I am not from the Chicago region, I felt at the time how strange it was that the place was “Illinois.” You’re not Illinois, I thought to myself, this place is different and far away. The people talk differently. Unfortunately, I did not have a regional political identity on which to rest this intuitive reaction of semi-foreignness. Perhaps the Walloons feel a semi-foreignness when they are visiting Flanders (and so too, the Flemish, when visiting Wallonia), though in their case, unlike mine, regional political identification can fortify the regional cultural bases of “home.”

In short, I can understand why a Belgian might identify as Flemish or a Walloon first and want to give political expression to it, given the cultural diversity within Belgium. Such identification is not a bad thing in itself. Of course, whereas there are regional dialects (and some unique vocabularies) in Illinois, Flanders and Wallonia enjoy different languages—indeed it can even be said that these regions enjoy standing for Dutch and French, respectively. Even as language is a major point of difference between the two regions, this basis can indeed be exaggerated, playing on the generalized fear by emphasizing the standing for over simple enjoyment. Il est facile de craindre.

For example, The Telegraph reported in 2010 that “Pascal Smet, the schools minister for Flanders, has horrified [the Walloons] by suggesting that Flemish children, who are Dutch speakers, should learn English as their second language, rather than the French spoken by two fifths of their countrymen in Wallonia.” While being horrified constitutes an over-reaction, Pascal Smet must have known in 2010 that he had “picked a broader fight” under the reasonable rationale that English should be learned because it is becoming the common language of the E.U. "I note that the engine of European integration is sputtering. One reason is that we do not speak the same tongue, hence my plea for a common European language," he said according to The Telegraph.

Of course, Smet could have satisfied his purpose by proposing that English and French be taught to the Flemish kids. His needless insensitivity alone can be seen to have inexorably fomented an exaggerated response. According to The Telegraph, “Smets proposal that children in Flanders can dispense with French [has] deeply angered Belgian Walloons already fearful over their fate and Belgium's future after Flemish separatists won the largest share of the vote in elections.” In other words, even sensible proposals involving the languages can escalate, fueled by the more generalized fear in the context of mistrust.

In short, already-stark differences existing between the Flemish and Walloons are easily exaggerated, creating a self-fulfilling prophesy of separateness wherein people have a knee-jerk tendency to over-react. This can be seen as well where the Flemish and Walloons come into close contact. At least in the short run, integration can provoke flash-points.

According to the BBC, “Flemish defensiveness is at its sharpest near Brussels. The capital, which used to have a Dutch-speaking majority until the early 20th Century, is now overwhelmingly francophone. Its population is spreading outward in search of greenery and cheaper homes - a move that many in the Flemish suburbs find threatening. Liederkerke, a traditionally working-class town 15 miles (25km) west of Brussels, is one of many suburbs that have seen an influx of both rich expatriates and African immigrants.” It is strange that Walloons from the south of the state would be compared to expats and African immigrants.

The cultural differences within Belgium should not be construed as though they were a microcosm of cultural differences within the E.U. or even internationally. For example, the BBC avers that the “cultural divide between Europe's Germanic north and Latin south has run through the middle of Belgium since the Roman Empire.” However, Flanders is not exactly Bavaria, nor is Wallonia populated by Spaniards and Sicilians. That is to say, perspective ought to be maintained in assessing the extent of the cultural differences within a small E.U. state. Let’s not get carried away.

                                               BBC

Of course, as I suggest above, cultural differences do indeed exist between the Flemish and Walloons. Among the relevant factors, economic differences have fueled the continued salience of the regional identities—indeed, in exaggerating them as well. Luc De Bruyckere, chairman of the Ghent-based food group Ter Beke and vice-president of FEB, Belgium's main employers' federation, for example, “points out that Flanders has a very tight labour market, while Wallonia is suffering from 17% unemployment.” Remi Vermeiren, a former chairman of the banking giant KBC, contends that Flemish people "believe more in a market economy" than Walloons. However, I have met Flemish who have stressed the European socio-political virtue of solidarity (which is virtually absent from the American political lexicon).

Therefore, I suspect that the economic ideological differences between the Flemish and Walloons are overstated. It is not as though the Flemish have adopted Sarah Palin’s view of capitalism while the Walloons have adopted a command-and-control economy akin to that of the defunct Soviet Union.

Furthermore, economic disparities have fomented prejudice, which has the effect of exaggerating cultural differences and inhibiting viable solutions. According to the BBC, “Flanders indeed has wealth, a hard-working population, and beautiful, world-famous cities - like Bruges, Ghent and Antwerp. Many there are asking why their taxes should prop up what they regard as a lagging, mismanaged region.” Are the Walloons really not “hard-working” and not able to manage themselves? Such assumptions do not necessarily follow from economic differences. More likely, regions differ economically because their dominant industries are different and perform differently. Even so, Roger Vandervoorde, 65, a retired sales director, for example, told the BBC, “Walloons should be responsible for what they do.” Prejudice drips off this statement, reflecting more on his state of mind than any lack of responsibility among the Walloons. Besides exaggerating cultural differences, such prejudice can impact political recommendations and reactions, which have in turn have exaggerated the differences.

According to the BBC, “resurgent Flemish pride is based on much deeper forces than just material wealth.” Specifically, “The sense of Flemish identity is all the more acute as it was suppressed by the French-speaking elites that ran Belgium after the 1830 revolution. The constitution was written in French. A Dutch version, written a century later, was not given equal legal force until 1967. As the Dutch-speaking majority demanded recognition, it was mainly pressing claims against the Belgian state.” Accordingly, “a wide majority in Flanders reject Flemish separatism. Most people just want more autonomy within the Belgian state.” This autonomy can be read as a reaction from having felt oppressed (or a fear of potential oppression in the future).

The generalized fear interlarding the Flemish is evident in the following observation from the BBC: “Wallonia may be poorer, but it is part of the 200m-strong francophone community. The Flemish are not standing on the shoulders of a friendly giant next door - and can be irked by Walloon cultural self-assurance.” Lest such fear be given too much leeway, the Flemish might recognize that Flemish conservatives have been dominating the Belgian state government of late and that both Belgium and France are states in the European Union. The ECJ, for example, is fully capable of restraining an imperialistic France intervening in Belgium on behalf of the Walloons.

Similarly, a generalized fear has interlarded the Walloons too. This can be seen in the Walloons’ reaction to Vandervoorde’s claim (perhaps made on the basis of his prejudice), “The best would be a confederation, with each part responsible for itself and only a few small matters handled federally.” Perhaps reacting subconsciously to the prejudice in addition to the proposal itself, “the Walloons are digging in their heels. They regard confederation as secession in all but name, and insist on keeping tax and welfare policies at federal level." The Walloons’ political reaction, in other words, may not simply be a desire for continued redistribution. At root, the fear might be that of being rejected. Such emotional/political fear need not exaggerate the perception of cultural differences or natural reactions to them.

Federalism, and even separation, can be natural reactions to real cultural differences. De Bruykere has a point in urging, “We have to organise ourselves in such a way that the different problems can be answered. One size fits all is not a solution.” While this dictum pertains especially to empire-scale unions such as the E.U. and U.S., it can also apply to heterogeneous states such as Belgium and Illinois. Just as the Chicago region ought not dominate the other regions of Illinois, Flanders ought not dominate Wallonia. That the two republics are themselves states in empire-level federal systems can be expected to relegate the “shock” thought to ensue from the partitioning of either Belgium or Illinois.

Even as prejudice can exaggerate the salience of extant cultural differences, being in an overarching federal system can be an asset in dealing with them. Belgium being a state in the E.U. can take some of the pressure off the Belgian government by having a more activist E.U. presence in the state (e.g., dealing directly with Flanders and Wallonia). Alternatively, the E.U. can facilitate Belgium in reconfiguring into two states or in splitting off into the Netherlands and France. Accordingly, Belgians, whether Flemish or Walloon, can afford to take a breath and gain sufficient perspective to stop clutching in fear to what has been at the very least a rather uncomfortable status quo.

Sources:

BBC News, “Rich Flanders Seeks More Autonomy,” September 30, 2008.

Bruno Waterfield, “Flemish-Speaking Belgian Minister Wants English To Be Europe’s ‘Common Language’,” The Telegraph, September 27, 2010.

Related Essay: "On the Belgium Stalemate: The E.U. to the Rescue?"

The French Socialist Party’s Proposal of a Universal Income Amended: An Economic Floor Providing Economic Security to the Poor

Benoit Hamon, “riding to victory” from political obscurity on a proposal to “pay all adults a monthly basic income,” defeated the recent Prime Minister, Manuel Valls, in a presidential primary runoff election of the Socialist Party in the E.U. state of France.[1] Although “Hamon wasn’t as tainted as Valls by Hollande’s unpopularity” because Hamon had “rebelled and quit the government in 2014,” whereas Valls served more than two years as Hollande’s prime minister in the state legislature, Hamon’s “proposal for a 750 euros ($800) ‘universal income’ that would be gradually granted to all adults also proved a campaign masterstroke. It grabbed headlines and underpinned his surprise success in the primary’s two rounds of voting.”[2] I submit that the proposal, although flawed from the standpoint of economic security, fits well with the industrial world of global capitalism.

Under Hamon’s proposal, the no-strings-attached payments could be made to more than 50 million adults in the state. The “no-strings-attached” aspect is crucial to the provision of economic security, which is itself of significant psychological and financial value to people who are either unemployed or live from paycheck to paycheck. Put another way, the lack of conditionality can give such people a more stable peace of mind that could not but improve the quality of life generally in the daily life of a town or city in interpersonal dynamics. The temptation would be to begin to insist that the money be used for A, B, and C, but not on X, Y, and Z. Even such salubrious conditionality would undercut the stability afforded by the faith that the money would be come every month necessary—come hell or high water. I submit that Western peoples tend to discount the value of financial assurance or stability—essentially the provision of a floor or net that can be relied on—just in terms of the foregone anxiety alone.

The problem is that Hamon meant the payments to go to every adult, irrespective of income and wealth. A wealth person with a good income already has financial security, so adding a floor of 700 euros would be a waste of money from the standpoint of providing economic security. So the cost of the program, which Hamon reckoned to be at least 300 billion euros ($320 billion), can be reckoned as excessive, given the purpose of the program. In other words, taxpayers need not pay so much to make sure that every person has at least an adequate amount of economic security. Lest it be said that the middle- and upper- economic "classes" would then have little self-interest in supporting the proposal, I would simply point to value of the peace-of-mind in knowing that should financial ruin, such as from an economic recession (or depression), injury, or illness hit, economic security would be maintained. Simply knowing this can lighten the step of even a wealthy person, since none of us can say with complete certainty that tomorrow will be like today.


Given the destructive competition that is a part of life in advanced industrial states, the rationale for the claim that every person should be financially secure from hardship is valid. That Hamon proposed a tax on robots to help finance “the measure’s huge costs” points to his rationale for why a modern society cannot simply rely on jobs and even unemployment insurance to provide economic security.[3] Automation has permanently removed many manufacturing jobs, both in the E.U. and U.S. Additionally, the financial incentive of companies to move factories to low-wage, non-developed and newly-developed/industrialized countries like Mexico and China, respectively, means that employment in industrial countries can no longer be relied on to provide economic security to a significant segment of populations, for not everyone is going to go to law- or business-school and graduate—even if education were tuition-free.

Abstractly put, the logic of global capital is not in sync with the fact that in any society, a portion of the adult population is oriented to blue-collar rather than white-collar work. Even if the E.U. were to become a manufacturing utopia, some people, such as the disabled, would still lack economic security, and thus stability, were jobs the exclusive means of providing it. 

In short, the nearly “post” industrial world cannot simply become a world of lawyers, physicians, accountants, and business managers, whereas everyone needs food, shelter, and access to medical care. Providing even a very low floor would pay dividends for everyone as society would be a more civil place, and the cost need not be so much as would be needed to pay 700 euros to every adult, regardless of whether the security is needed. In fact, perhaps 1000 euros would then be an option. Life is too short to sweat the small stuff, yet some people must and their lives are painful for lack of financial security.

Financial worry is like an internal, perpetual war to the poor person, eviscerating life of its pleasure. Quality of life matters, and not just for the poor. How people you interact with are doing in terms of anxiety due to hardship—whether deserved or not—can easily ruin your day, whereas being around calm people can make your day. No man is an island, and in modern society economic interdependence has its drawbacks. Giving other people the psychological security of a financial floor each month can indeed pay dividends to the payers without the floor necessarily being raised so high that the beneficiaries can take advantage of the blessing of security made possible by others.

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1. Associated Press, “Hard-left Candidate wins French Socialists’ Presidential primary,” Foxnews.com. January 29, 2017.

2. Ibid.

3. Ibid.

The Wealth of 8 People and 3.6 Billion People: Utilitarianism Applied

As of the end of 2016, eight people held as much wealth as the 3.6 billion people who make up the world’s poorest half. Just a year earlier, a similar study had “found that the world’s richest 62 people had as much wealth as the bottom half of the population.”[1] Part of the difference in these findings is due to new data gathered by Credit Suisse. Put another way, the richest of the rich were richer than had been thought. In this essay, I want to call attention to the sheer magnitude of the wealth involved, as it pertains to the richest.
Forbes’ 2016 list of billionaires has Bill Gates, the founder of Microsoft, with a net worth of $75 billion, followed by Amancio Gaona, the founder of Inditex, at $67 billion. Warren Buffett came in third with $60.8 billion.[2] I could go on, but these three figures are sufficient to raise the question of how much is enough. By the calculus of greed, which is the love of gain itself—as in more and more ad infinitum—this question can only be extrinsic. In terms of use, however, the question is ripe, for there is indeed a limit to how much a person can realistically consume.
In terms of declining marginal utility, wherein a person does not get as much pleasure out of the fourth or fifth ice-cream cone in a row as from the first, it takes a lot more money added to $67 billion to trigger pleasure than to $100. Add $1,000 to $100 and you have made the guy’s day, but add $1,000 to $67 billion and you might get a yawn. Pareto claimed that no such interpersonal comparisons of pleasure can be made, but I think Bentham was correct in making this point. Whereas Pareto relies on the valid point that pleasure itself is not quantifiable, Jeremy Bentham (whose 18^th century mummified body absent his head sits in an open closet in a university-building’s hallway in London) stressed the declining marginal utility as it pertains to very different quantities of wealth.
Bentham, whose utilitarian ethics gives primacy to the greatest good (i.e., pleasure, which he viewed as happiness) for the greatest number of people. Distribution from the rich to the poor is in line with this ethic, given the fact that a poor person would get more pleasure, or utility, from $1000 than the pain of the rich man who is now without the $1000.

Even just the gigantic sums of accumulated wealth themselves, such as Warren Buffett’s $60.8 billion—holding aside the question of added utility/pleasure from adding more wealth to the base—are not efficient, so to speak, in terms of utility/pleasure. “In my entire lifetime,” Warren Buffett said, “everything that I’ve spent will be quite a bit less than 1 percent of everything I make. The other 99 percent plus will go to others because it has no utility to me. So it’s silly for me to not transfer that utility to people who can use it.”[3] Because other people could use the money to derive more pleasure/utility, there is indeed an opportunity cost in the rich holding such vast sums. In other words, the retention of billions of dollars does represent a harm in that people who could really use it are deprived of it.
Admittedly, Buffett’s invested funds have led to pleasure from added productive enterprise and even innovation. The assumption of added productive uses can be questioned, however, as presumably alternative means of raising capital exist. An enterprise strategically oriented to expanding could go to a bank, for example, were Buffett’s invested funds depleted by voluntary or involuntary redistribution. In fact, banks would presumably have more money to lend to the extent that people receiving the redistributed funds deposit some portion (even the added consumption would go to existing businesses, thus giving them more retained earnings to invest in expansion and innovation). Furthermore, Buffett could have redistributed some wealth to the poor in the form of stocks and bonds, which would give the poor more economic security given the dividends and bond payments are on a base of wealth. In general, such means of increasing productive enterprise and innovation would be more in line with the greatest good for the greatest number of people, given declining marginal utility.
To be sure, Bentham warns that if redistribution crosses a threshold, the rich will not be motivated to create more wealth by work or investing more funds. The total “pie” would thus decrease; other things equal, there would be less pleasure/utility all around. We humans react more to losing $1,000 than to gaining $1,000, Bentham points out. Additionally, a rich person may be emotionally agitated if he or she feels that the redistribution is unfair—even stealing. This is in spite of Buffett’s point that very little utility relative to billions of dollars accrues to a rich person. However, Buffett’s statement suggests that losing a lot of money to redistribution—admittedly voluntary in his case—need not trigger the pain of loss. Even considering such pain to exist and be material, it must surely be less than the pleasure on the other side of the redistribution, given declining marginal utility. In Buffett’s words, other people can get more use out of the funds, and this added pleasure (which was not in Buffett’s holding of the wealth) is more than any pain in losing the wealth (given the pleasure that Buffett would still have from even just 1 percent of his wealth!).
From another perspective, owning tens of billions of dollars can be deemed to be excessive in not being justified in terms of property-rights theory. I have in mind John Locke’s labor theory of wealth. A person gains a natural right of ownership by “mixing” his or her labor with the asset, such as land. If you till the ground and plant the corn, you have earned a property right, or exclusive claim, on that land and its corn. It would be unethical for other people to trespass and consume from the corn.
Applied to founders such as Gates, Gaona, and Buffett, the question is whether having wealth of tens of billions of dollars is proportioned to the labor (and even risk of loss) put into the respective foundings. This question pertains to executive compensation—are CEOs who are also founders paid inordinately because of their power and status in their respective organizations?—and to stock ownership—is there a public interest in limiting the amount of stock-value one person holds in a company?  The public interest, if one exists, would presumably borrow from the Bentham’s point that billions of poor people would get more pleasure, or utility, from the redistributed surpluses than all the pain (if any) inflicted on the richest of the rich from the loss of some of their stock-wealth. Given that only so much wealth can be consumed by any single person, there would presumably be more than enough wealth remaining such that the richest would not suffer.
In conclusion, sound theoretical reasons support the claim that the eight richest people in the world should not have as much wealth as 3.6 billion of the poorest. Just as it is difficult for the human mind to conceive of billions of people, the same applies to billions of monetary units. Accordingly, it is difficult to grasp the sheer vastness of the imbalance. From this basis alone, the inequality can be deemed problematic. As this point is itself in dispute—perhaps in part because some people simply hate government—I have not gone on to prescriptions on how the problem can or should be solved. In other words, just establishing that there is a problem is a task in need of theoretical justification and argumentation. My essay here is a flawed (e.g., too limited) attempt to fortify the position that the massive inequality of wealth is indeed a serious problem, ethically speaking. That is to say, the holding of such huge sums as I’ve cited above is not justified by the efforts expended to “get the ball rolling.”

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[1] Gerry Mullany, “World’s 8 Richest Have as Much Wealth as Bottom Half of Global Population,” The New York Times, January 16, 2017.

[2] Ibid.

[3] Jonathan Stempel, “Gates Charity to Sell 60 Million Berkshire Shares, as Buffett Urged,” Reuters, January 18, 2017.

California Fiscal Policy: The Crowding-Out Effect

In the U.S. Constitutional Convention of 1787, some delegates expressed the concern that giving the General (federal) Government the authority to tax income would eventually result in a “crowding out” of the ability of state governments to raise revenue. Over two hundred years later, in 2012, California had cut its budget by 20 percent over the previous three years and was still faced with a $16 billion deficit.[1] Unlike Greece, California cannot avail itself of bailout funds from the federal level. Additionally, the Federal Reserve, like the European Central Bank, is barred by statute from bailing out a state government. Even as the U.S. Government places certain requirements on California’s budget that make it more difficult for the Government of California to make cuts, it could not avail itself of the bailout (TARP) that had benefitted Wall Street banks and the Michigan auto industry.

The complete essay is at Essays on Two Federal Empires, available at Amazon.

1. “California Governor Calls for Higher Taxes, 4-day State Workweek to Fill $16 Billion Gap,” NBC News, May 14, 2012. 

The E.U.: The Growth Union

In relying only on austerity and cheap bailout loans, the German-led strategy has proffered a false sense of European integration in the E.U. Even as expanding the bailout funds to roughly 800 billion euros and strengthening the E.U.’s means of enforcing limits on state deficits and debt are along the line of continued incremental shifts of governmental sovereignty from the state governments to that of the E.U., the related austerity (and recession) sparked a populist backlash in several states. At the state level (and this level has a major role at the E.U. level—unlike in the U.S.), the state-rights (i.e., anti-E.U.) parties have been the beneficiaries even if they could not gain outright majorities. The National Front in the state of France is an obvious example, as it captured 18% of the vote in the run up to the general election in 2012.  Other things equal, such a spike translates into brakes on further European integration in the medium term.

Different takes on the E.U. and austerity: Sarkozy, Hollande, and Le Pen of France    NYT

The full essay is in Essays on the E.U. Political Economy, available in print and as an ebook at Amazon.

Political Ideology in a U.S. Federal Healthcare Budget: Disentangling Redistribution, Government and Federalism

A shift in power from the U.S. Governments to those of the states is distinct from a redution in the size of government. These are distinct, albeit not disparate, unrelated, goals. Shifting power does not in itself imply or mandate a reduction in the size of government. For example, in shifting public health-care policy, an expansion of government could result if enough states develop programs further-reaching than what Congress had enacted.  Of course, as per the nature of federalism, particularly in an empire-scale instance, the resulting health-care programs would differ from republic to republic, given the innate heterogeneity that exists at such a scale.

There is a saying in politics: Elections have consequences. In 2011, the impact of the 2010 election was particularly obvious in that the Republicans had gained control of the legislatures of Wisconsin and Ohio as well as the U.S. House of Representatives.  While the governments of Wisconsin and Ohio were going after public-sector unions (or restricting them to reduce government deficits), the House Republicans had their eyes on health-care.  Rep. Paul Ryan, an up and coming Republican from Janesville Wisconsin—a town with high unemployment after the auto plant there closed—was producing a budget that he claimed would cut $5 trillion over 10 years. His proposal reflected, or conflated, two salient traditional Republican aims: to shift power from the U.S. Governments to those of the states and to reduce the size of government.

Because restoring a balance of power to a federal system is distinct from decreasing (or increasing, for that matter) the size of government, it is important to distinguish them in Rep. Ryan’s proposal. The New York Times points to the two aims in observing that “while saving large sums for the federal government, the proposals on Medicaid and Medicare could shift some costs to beneficiaries and to the states.”[1] Shifting costs to the beneficiaries involves or implies a reduction in the size of government, while shifting costs to the states impacts the balance of power in the federal system. It is in the public interest for such items to be distinguished in debate and legislative votes because the people could want one without the other.

Under Ryan’s proposal, according to the paper, “Medicaid would be transformed into a block grant, with a lump sum of federal money given to the states to care for low-income people. States would be given more discretion over use of the money than they have under the current federal-state partnership.”[2] Even though increased discretion adds to the power of state governments relative to the federal, or general, government, block grants maintain state dependence. In fact, if health-care is not among the enumerated powers of the U.S. Government, it could be argued that lump sum payments to the states for health-care are unconstitutional; otherwise, spending for the general welfare would eviscerate even having enumerated powers at all.

Regarding the “size of government,” The New York Times reports that “(f)or future Medicare beneficiaries — people now under 55 — Mr. Ryan’s proposal calls for the federal government to contribute a specified amount of money toward the premium for private health coverage. Under the traditional Medicare program, the government reimburses doctors and hospitals directly.”[3] The “specified amount” element is “less government” than is an open-ended entitlement.

At the time of Rep. Ryan’s proposal, Medicaid and Medicare were open-ended entitlements. Anyone who met the eligibility criteria was entitled to benefits. Under a fixed lump sum, Republicans say the federal government could better predict and control its costs under Medicaid and Medicare, which as of the beginning of 2011 insured more than 100 million people and accounted for more than one-fifth of the federal budget. Unless the states would pick up the added costs (which would shift the taxing and spending federal balance), beneficiaries of these programs would be at risk for more of the costs if health-care costs rise.

Rep. Jan Schakowsky, a Democrat and a former executive director of the Illinois State Council of Senior Citizens, said “Mr. Ryan and the Republicans are declaring war on entitlements — and war on the elderly and the poor. . . . Beneficiaries will end up paying more.” The New York Times also reports that as of 2011, “(a)bout half of Medicaid recipients are children. Nearly two-thirds of the money spent on Medicaid benefits is [sic] for low-income people who are 65 and older or disabled.”[4] For his part, Rep. Ryan said “he was not cutting Medicaid and Medicare, but rather slowing their growth rate. Furthermore, he insisted that if health costs for a group of patients exceeded the federal payment in a given year, the insurer would have to absorb the cost.”[5] Finally, Rep. Ryan “claimed his proposal is equitable because Medicare would pay less on behalf of higher-income beneficiaries, and they would pay more of the cost of their health coverage.”[6]

Whether the beneficiaries or insurance companies pick up the slack, the fact that public funds would not be used means that government would be reduced from what it otherwise would be. Yet if the states pick up the slack, the balance of federalism rather than the size of government would be changed. Moreover, in addition to the size of government (and federalism) elements, the matter of redistributive justice is involved. It is no wonder that these elements are conflated in the public sphere.

I contend that legislative representatives have an obligation to more clearly distinguish the elements of federalism, the size of government, and redistribution in public policy proposals. A desire to shift power to the states can be better distinguished from the questions of redistributive justice and the related matter of the size of government (and latter two can be better distinguished, since, for example, government could be expanded in a way that helps or hurts the poor, for example). Democracy itself would be improved were the people, either directly via a referendum or indirectly through representatives, able to decide on the three elements one by one. In fact, a decision for greater federalism would mean that questions of the size of government and redistribution would be decided on both the state and the federal level.

1.Robert Pear, "G.O.P. Blueprint Would Remake Health Policy," The New York Times, April 4, 2011. 

2. Ibid.

3. Ibid.

4. Ibid.

5. Ibid.

6. Ibid.