Crisis of European Social Model: Interview with Danuta Hübner

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The European Forum for New Ideas 2015, “Europe facing the increasing social inequalities, radicalizations and geopolitical dangers” is right around the corner. Is the idea of equal opportunities in the current society really that important?

Throughout the years that I have spent deliberately in politics, I have had an impression that it was demanded from those who won the elections to be better, more competent than voters. A politician could not have been just as any average Joe Bloggs, as there would be no reason for giving the power to someone who would not do it better than we could ourselves. This has radically changed recently.

Every fifth Polish voter voted for an individual who had based his or her campaign on the fact that politicians should be just as everyone else. The main argument supporting the idea of single mandate electoral district was the fact that everyone should personally know their own member of the Parliament. The same candidate, taking part in a TV debate in a very ordinary jacket without a tie, could not fit to a time limit assigned to the participants of the debate and he became such an ordinary person that was confronted with privileged, disembodied politicians. He made an awful impression on the elites, but for ordinary people he won.

Expecting that politicians will be better than voters and that they will from their higher position deal with all issues that an ordinary person is not able to solve, was quite sensible, but the politicians did not comply with these expectations. The fact that they did not prevent the crisis meant that they do not deserve a special treatment. The Greeks moved their incumbent elites away from power. The Spaniards may do it in a couple of months. In Italy furious voters quite consciously voted for a clown, and in Poland, which seems to be resistant to crisis, the voters humiliated President Bronisław Komorowski. Within a couple of hours it turned out how much are stability and predictability worth.

Unfortunately, the reason for all this lies in a complete loss of trust and faith… and the statement, that the politicians whom we have had accepted some time ago as superior to us, are in fact just the same people as we are or even worse. People responsible for the lives of millions of human beings did not pass an exam in a very difficult moment. It turned out, that they also, as average people, do not understand the world and cannot hold back its unpredictability. Their right to be different, which was seen as a greater power, turned out to be false. This is a basic and universal factor, typical not only for Poland.

To what extent was this conviction about politicians’ agency justified? Would they be able to govern the economy even if they were absolute geniuses and there was no conflict of interests?

To some extent, certainly. That is to an extent to which it is governed by law and way in which it is legislated in liberal democracy. The ability to legislate for sure constitutes a driving force. The problem is that this legislation does not always give expected results. Even worse – it usually does not bring them at all. In Spain the government has an absolute majority, but what it has been doing so far did not help the country to overcome the crisis. So it is not a surprise that people do not agree for the government to act in their name any longer. If we use the English terminology, we may say that legitimization on the “input” side still exists, as the governments come from democratic elections, but on the “output” side it is not there, as the results of the governing politicians do not fulfill the expectations.

So at the end of the day, they do not have the driving force, do they? Does it mean that there cannot be any driving force because none of the national politicians can rule the global economy, or that it is potentially possible but the solutions used in Europe for the last couple of years by the Christian Democrats have not been worth much?

This crisis is still multidimensional and I think that when focusing on its various aspects, especially on Greece, we tend to overlook the scale of changes it has caused. Last seven years in the Europe’s history have been the time without a precedent when it comes to the type but also the scale of the reforms. The European Union became much more united, but hardly anyone notices it.

Which dimensions of the crisis we do not see?

People making decisions focus too much on the creation of the stability, and too little on the creation of the conditions conducive to growth. The chances for introducing reforms enabling further growth in the countries which received help from the EU were wasted. The only thing they were expected to do was to make savings and introduce restrictions. The limitations were implemented but contrary to what was expected, the growth did not occur. As it turns out, lots of false assumptions were taken into consideration to create politics for the last couple of years.

The interest rates, apart from the few countries which deal with severe effects of the crisis at the moment, are the lowest in the history. It is really difficult to imagine more convenient conditions for growth. But even in these exceptionally good conditions the growth is really marginal.

Exactly. In 2011 the expression “growth” finally appeared for the first time in the conclusions of the EU summits and in important documents, and the monetary policy was introduced. However, the incentives that normally encouraged the banks to promote their credit actions did not work. The European Central Bank started to promote the monetary policy on a scale which has never been seen before in Europe, endangering itself to claims that it has no right to do so. This policy has brought results only recently in the form of mobilization of the banking sector. There is no cash flow problem – a lot of money is in the European financial institutions – however, they are useless, as without the competitiveness and innovativeness in the structural reforms, along with those on the labour market, the drive to invest is too weak. Here we also face another problem – lack of political will.

This lack of will should not surprise, as the European voters are afraid that introducing structural reforms would completely destroy the European social model and would mark the end of redistribution. The way of dividing the additional wealth is vital. People, even those uneducated ones, do feel it, and politicians know it…

The reforms which Europe needs do not necessarily mean the limitation of the redistribution. And they shouldn’t, because the protecting role of the country is an important aspect of the democratic legitimization. Without it we would not have either the citizenship participation, or the responsibility of the politicians.

However, the present social model in its current form is simply ineffective. Mostly because it is financed from the debt, which means that someone one day will have to pay back this public debt. The Greeks, who for 20 years naively have thought that the membership in the EU (at the beginning EEC) and the European structural funds will give them the level of income and social welfare known in Northern Europe have just convinced about it. They knew, they had no money in the budget, but they were not worrying about it, because they could easily borrow money- up till a certain moment.

This time has come and the correction turned out to be extremely painful. Not only because the loss of a certain level of life is more painful than the fact one hasn’t yet reached this level, but also due to the fact they need to pay back the interest of the taken debts. Greece has today a structural budget surplus: it could have better level of public services than it has, in spite of the fact it needs to keep the financial liquidity.

The provision for maintaining the European social model is making it more efficient, also by transferring some of its functions onto the European level. People do feel it and when asked directly about it, they say that they want Europe to be responsible for the employment, fighting the poverty and social infrastructure. Unfortunately, these are in majority exclusively competences of the member states of EU, so it is easy to imagine what kind of resistance it meets. Even in the places, where the European programs are supposed to be only an addition, it turns out they are not fulfilled on the national level.

So does it mean that the main problem pose the governments of the member states?

I don’t know if we can simplify it in this way. This is rather a problem of old patterns of thinking than protecting competition. Still, too few people are aware of the fact that the European social model is an expression of the concept of human rights, which is more European than national, as these rights are supposed to be, after all, universal.

Does it mean that the social model should not be universal? Maybe introducing a given product to the European market should depend on the minimum wage on the level of 5 Euro daily. As the transfer of the responsibility from the national level to the UE level seems to be a simple reserve of growth, which enables Europe to maintain the level of equity and social solidarity, to which we got used to in the second half of the 20th century, maybe for the following couple of years or several years but not forever.

The growth reserves are much higher. And Europe develops instruments which should mobilize these reserves at the national and local level. Moreover, improving the quality of regulations and limiting their scope, which is an important part of the Juncker plan. These reserves are not limited to the finances, because huge resources are in the human capital area.

The only question is whether the future economic growth will need such a great involvement of the human factor. In the 20th century the industry had to employ millions of workers, and as a result of the stock exchange market crash in 1929 the richest Americans became less rich in comparison to the rest of the society. After the last crisis I haven’t noticed anything like that: no one lost his fortune, whereas the poorer part of the society became relatively even more poor. And it may stem from the fact – however brutal it may seem – that they are redundant. This process started around 20 years ago and at the very beginning the “globalization” was put to blame, because for several years it was profitable to close a factory in the United States or in Europe and open it in China, India or in the Philippines. But in a few years time, when workers in those countries will begin to ask for decent working conditions, it will turn out that it is even cheaper to install further machines. The global production will grow but global employment may decrease.

That is true, for the next couple of years we may be forced to deal with to the economic growth which will not be accompanied by the increase of the employment. Therefore, the ability to change qualifications and the ability to find oneself in new circumstances are so important nowadays. These skills increase the individual and general competitiveness, because they are related to the innovativeness. One of such skills is courage, as every change and challenge is related to risk and fear. I have the impression that the major challenge of the social policy and current politicians is to help to overcome this fear or even better to eliminate its causes. In the context of global competitiveness, there is no other online casino way than to focuse on the improvement and the innovativeness, but unlike in the past they will not happen thanks to exceptional individuals, but thanks to entire teams of such people. Today, the innovativeness is a wider phenomenon and it is shared with others. Therefore, we should create proper conditions facilitating finding a partner to enable joint introduction of innovation.

When we talk about the innovativeness, a story described in August last year by Gazeta Wyborcza daily is worth mentioning. One of the students of the Wrocław University of Technology designed a machine for issuing invoices. However, the National Center for Research and Development rejected the request to co-fund the creation of the prototype – as it was stated in the decision, the introduction of such devices would cause reduction in number of employees who issue invoices in shops. And even though the officials of the NCR&D did not act in accordance with their mandate, which ought to be supporting the innovativeness, and not protection of the employment, it is difficult to deny they were right. This problem is particularly acute – in a few years time the process of constructing a car which does not need a driver will be finished. It is an innovative solution and definitely will help a lot of people, but on a global scale, hundreds of millions of people will lose their jobs.

This is not the first such case. I”ve read a letter, I do not remember precisely who wrote it, if it was written by the American senators or by all members of the Congress. Anyway, in the 19th century they protested against trains which were supposed to destroy the whole United States…People have a natural tendency to look at novelties in a short time perspective and to focus on losses, and not on profit, which these novelties may bring. These first are obvious, and the latter ones only hypothetical, however, potentially much more significant. The role of governments is to amortize this interim period of introducing a change. And, in general, that is all that can be done, as the market will always foster the novelties and more effective solutions, no matter how harmful it may be for particular groups. The market does not love everyone, but we haven’t found a better mechanism to organize the economic life.

Let’s amortize interim periods, let’s help people to adjust to the changing conditions… It seems a pretty conservative attitude to me. Doesn”t the situation require more complex (and radical) solutions? For instance, maybe we need a progressive taxation of income from capital postulated by Thomas Pikett on the one hand, and on the other payment of the citizenship retirement pension, called in English demogrant, so that people could survive without work (in times, when there is always less work to be done) or in order not to be afraid to change their profession, which you support so eagerly?

I’m not entirely convinced whether the Pikett’s reasoning is entirely correct, as he makes very strong assumptions within the inequality and its interpretation. However, he has a great achievement in introducing new way of thinking about the inequality, which is not limited to the discrepancies only in the income. Introducing the taxation of one’s property is a solution. The property ensures security and it probably does determine someone’s life opportunities. The equality should be analyzed within the scope of access to the things which are important for every human being. Ensuring the access to all this what determines the quality of life, does not have to be seen as the amount of income and discrepancies in income. People may have different level of income and live in a world that does not let anyone fulfill himself, and then you do not feel the discrepancies. Therefore, it is so important to ensure public services on a good level: i.e. safe streets (including pavements) and good schools.

Poland is not similar to other countries when it comes to social exclusion: the richest Polish oligarchs are poorer than Czech oligarchs, not to mention the Ukrainian or Russian ones. But public services are insufficient, what was recently shown by Jan Sowa: to get from Suwałki to Zgorzelec by train one needs 25 hours, and from Zgorzelec to French border, it’s more or less the same distance, but across Germany one needs 11 hours. In Germany a train ticket for three person family costs 40 euro, in Poland a couple of times as much.

We still suffer from this perspective of a country “working its way up”, which has a budget as it is, but our needs are similar to the ones from countries with much higher level of income.

But having so huge budget limitations, did we really need to spend money on trains that go from Warsaw to Cracow 5 minutes faster? Wouldn’t it be better to spend this money on trains from Suwałki to Zgorzelec to cover this distance at a reasonable speed?

I’m careful in drawing such conclusions. I only hope that there is a reasonable explanation for making such a decision, although I know that in Poland we still think in terms of a given sector, and that the person undertaking such decision did not take into consideration all other ways of spending such money. This is the main weakness of the Polish state: not seeing that everything is linked. And it should be the main motto of the political, governmental and parliamentary activity.

You are speaking as if you were the politician of the opposition, and, in fact, you are representing the ruling party, which governs the country for the last 8 years.

When you talk to people from the Civic Platform, everyone agrees that we need to think globally, plan in a long-term perspective and act reasonably in general. But when you need to take the final decisions, a lot of additional factors need to be taken into consideration, and the most important one is this that there is not enough money for everything. We are really making a very fast civilizational step forward. 70 years ago we started from the scratch. But it shouldn’t be an explanation, but a motivation to extremely hard work. Because the fact that a train goes to a given city is the key to mobility of this society, and on this fact depends if the unemployment will be at the level of 5% or 20%. Fortunately enough, the society begins to enforce reliable work, because it is perfectly informed – basically thanks to social media. The result of this fact is that the social consultations are no longer just a mere formality.

The European citizens’ initiative is also worth mentioning. It is enough to collect one million of signatures in order to make the European Commission to initiate any legislative change or any rule of law. Up till now 49 such initiatives have been undertaken. In some cases the required one million signatures was collected, in other cases these were two millions, and in some not enough signatures were collected. But it means that ca. 50 million people in Europe wanted to have influence on political decisions which are ultimately made in Brussels.

When it comes to the decision on the legalization of marihuana, the greatest number of signatures was collected in Poland….

Oh, really? I didn’t know that, that is interesting…

The article was originally published in Polish in the XXth issue of Liberté!

Translated by: Urszula Gałecka-Sobiech

Danuta Hubner