The Unending Story of the Achievers

THE UNENDING STORY OF THE “ACHIEVERS”


By Bruno Rossmann


[This article published on October 8, 2015 is translatedc from the German on the Internet, http://blog.arbeit-wirtschaft.at.]


Some Austrian politicians are now urging the “sleek” state and the relief of achievers or top earners with the goal of raising performance consciousness. Ideas about the tax system of the future are tied to the unchanging story of the achievers. The achiever myth misjudges firstly that the state has an important role as guarantor of the free enterprise system. Secondly, income from wealth and inheritances without doing anything could bring relief for working people.


In his “Address to the Nation” on October 14, 2009, Josef Proll demanded relief for achievers in connection with the introduction of transfer accounts in the tax system of the future. The achievers, namely those who work, must be eased. Like generations of politicians before them, Proll and Mitterlehner want us to tell the following story: Everything will be fine if only the taxes on “achievers” are lowered, for those well-trained and efficient persons who give their best but do much less than could be expected because of the high tax burden.


If the state would only lower the tax burden, everything would be in order and the economy would flourish. In the past, the achievers were considerably relieved through lower tax rates or expanded bases for assessment because many conservative and liberal politicians believed this story. However the Leviathan still encumbers the achievers – even after the 2016 tax relief. The tax burden is too high. Therefore history takes its course and the demand for further easing for achievers is repeated.



STATE AS GUARANTOR OF THE FREE ENTERPRISE SYSTEM


This demand means achievers must pay lower taxes than those who don’t bring “achievements,” those who don’t work according to Proll or those who can’t work according to Mitterlehner. Achievers must be absolutely relieved because they bring benefits. This picture of achievers flows into a state subsidized by the “non-achievers.” Carried to its end, this logic would mean there cannot be a state any more (not even a trim or sleek state) because this state could not have any revenues for lack of performance. There would be no one zealous for legal security and social protection for the vicissitudes or ups and downs of life, for making education available free of charge, making infrastructure investments and so forth.


The myth of the achiever misjudges that the state has an important role as guarantor of the free enterprise system. In a market economy, achievements are paid for and those with above-average incomes – for whatever reasons – participate strongly in financing the state.


TAXING INCOME WITHOUT DOING ANYTHING


In discussing the question of financing the services of the state with the help of individual contributions, we inevitably face the question whether the poor or the rich should contribute more – absolutely and proportionally – to the financing.


Is it true that the supposed achievers bear a disproportional share of the tax- and fee burden? Is the Austrian tax system just to performance? There is only a slightly progressive redistribution effect of the Austrian tax system.


An enormous distinction exists between poor and rich in the distribution of wealth in Austria. The richest 1% of private households has over 37% of all net assets while the bottom 50% has merely 2.2%. Massive assets cannot be saved in the course of a working life – through performance. Inheritance is far more important for wealth formation than income.


Performance justice requires that income and wealth correspond. The distribution of the tax burden in Austria conflicts with performance justice. Income without doing anything only pays a trifling tax or no tax while income from labor connected directly with performance is encumbered with a high tax. This is particularly true for inheritances and gifts that are not tied to any achievement of the beneficiaries. Therefore a reformed inheritance- and gift tax is a central starting point for more performance justice. Even the EU Commission explicitly recommends that Austria lower taxes on labor in the lower income sector counter-financed by an inheritance tax.


The achiever myth would quickly come to an end if the debate over achievers and their allegedly excessive taxation were waged honestly. But the achiever myth will have a long life and will be used to defend the rich again and again under the pretext of easing the middle class as long as we tell lies or bluff our way through the distribution debate.


MORE JUSTICE NEEDS MORE DEMOCRACY


By Prof. Jorg Reitzig


[This article published August 2, 2016, in Gegenblende 27/ 2016 is translated from the German on the Internet, http://www.gegenblende.de/37-2016/++co++09b9f4c0-5301-11e6-bbb0-52540088cada ]


The theme of social justice has a boom season – in politics, in the general public, and in cultural life. The SPD (Social democratic party in Germany that has wandered from Willy Brandt's legacy) seeks to renew its basic values and follow Willy Brandt again: "Dare More Justice" [1] The Left Party (Die Linke) wants to be a motor for a "revolution of justice" [2]. The Greens tried to sharpen their programmatic profile as a party of social justice with a Justice Congress in June. In 2016, the theme was popular at the Cannes film festival. The Golden palm for the best film went to the British director Ken Loach for his drama about a 59-year old worker who was unfit to work and had to fight for the state social benefits due to him. In his acceptance speech, Loach criticized the neoliberal austerity policy in Europe that plunges people into poverty while a few enriched themselves "in a shameful way" [3].


JUSTICE VERSUS INDIVIDUAL FREEDOM


Justice is a key term in debates over the social future because it gives fundamental orientation for cooperative human life. In its core, the question is what can be justified – in relation to conditions between people and their interest-oriented actions. The recognition of others and the realization that justice can not be reduced to rules codified as rights and laws are central. Justice always stands in a tension with individual freedom. The author Friedrich Durrenmatt once formulated: "There is a world of absolute freedom and a world of absolute justice. These two worlds do not coincide but oppose each other. Both could represent a hell, the world of absolute freedom a jungle (…) and the world of absolute justice a prison (…)" [4].


IS WHAT IS EQUAL NECESSARILY JUST?


The current debate moves between these two poles. It has its origin in the crisis of the Fordist welfare state since the 1960s. For the philosopher John Rawls, the term justice is oriented in the weak persons of society. Rawls argued, "Social and economic inequalities (…) are only just when everyone gains advantages from them, particularly the weakest members of society" [5]. From the view of neoliberal theoreticians like Friedrich August von Hayek, social injustice cannot exist because what is socially just is unclear [6]. In this perspective, social justice is labeled a nonsense word. In its normative development, the idea of justice seems to function "as a demand of the oppressed class and as a reason for its existence" [7].


DYNAMITE FOR SOCIAL COHESION


The concentration of wealth and assets in fewer and fewer hands is the crystallization point of today's justice debates. The 62 richest persons of the world have as much wealth as the whole poorer half of the world's population [8]. In Germany according to a recent report from the German government, the richest 10% of private households possess over 53% of all wealth while the bottom half of society has only 1%. In an empirical study of the Parity Welfare Alliance, 78% of all the interviewed persons considered this unequal distribution of wealth "rather unjust." Only 15% described this state of affairs as "rather just" [9].


Growing social differences are "dynamite for the cohesion of a society" [10], according to the Allensbach institute for Demographics. Therefore it is not surprising that the theme redistribution justice is again on the political agenda [11]. Thankfully the insight is now returning to the SPD that humanity in the 21st century benefits from a much greater production machine than in the initial period of social democracy in the 19th century. There is plenty to distribute and enough occasions for redistributing – for both economic and moral reasons. The prospects for entrepreneurial and wealth incomes are rosy; analyses forecast a growth of 59% by 2018 compared to 2000. However, only a 9% increase is predicted for wages [12].


THE ECONOMY BOOMS, POVERTY GROWS


Nevertheless, people with higher incomes increasingly complain of a justice gap because they don't share adequately in growth or don't receive what they are entitled [13]. The market economy is based on the principle of performance justice, particularly on the labor market. The state gives coaches or private tutors so this message reaches the so-called "low achievers" according to the neoliberal jargon. In 2014, Hartz IV (radical German welfare reform that combined unemployment benefits and income support while sharply reducing the duration of benefits; recently declared in violation of basic human rights by the German Constitutional Court) sanctions were imposed on over a million persons [15]. People must go through official channels even when they are below the subsistence level. The number of homeless hit an all-time record in 2014 with 353,000 people [16]. Electricity was disconnected for around 352,000 because they could not pay their bill [17]. We are witnessing an increasing uncoupling of poverty development from economic development. While the German gross domestic product grew 419.3 billion euros between 2006 and 2013 and the unemployment rate fell from 10.8% to 6.9%, the poverty rate in the same time period rose 1.5 percentage points to 15.5% [18]. The capitalism that was once cushioned by the welfare state has become a victim of interest groups with mammoth wealth and income that have unleashed its authoritarian potential again [19].






MORE JUSTICE THROUGH MORE DEMOCRACY


The relation of justice and freedom must be recalibrated when the economic freedom of a minority leads to the social unfreedom of a growing number of people – at least to a growing social alarm n the middle of society. At the beginning of the 1950s, the constitutional lawyer Hans Kelsen argued freedom means "government for the majority and against the minority if necessary." The self-determination of democracy arises out of the freedom of anarchy. The idea of justice also changes, Kelsen said, from a principle that guarantees the individual happiness of everyone to a social order that protects certain interests, those interests recognized by the majority worthy of protection [20]. In this sense, more justice could require more democracy. Poverty and poor participation are ultimately consequences of flawed social structures, not of individual misconduct.


SOCIAL WEALTH JUSTLY DISTRIBUTED


Promoting equal opportunities instead of redistribution reflects a false opposition. The two are really connected. For the social majority that has little or nothing, social freedom in the sense of unfolding human possibilities is always in a concrete relation to the distribution of social good. The property or wealth tax suspended twenty years ago while explicitly provided in Art 106 of the German Basic Law is an overdue measure for counteracting the mega-trend of inequality in a democratic way that could distribute wealth more justly. At least a minimum of "democratic morality" [21] could be gained. Social majorities exist for this.


NOTES

[1] So der Titel einer Wertekonferenz, die die SPD am 9.5.2016 in Berlin veranstaltete.
[2] Bernd Riexinger: Linke Politik erzwingt Konflikt mit Superreichen, in: Frankfurter Rundschau vom 26.5.2016, (3.6.2016)
[3] ZEIT Online vom 22.5.2016, Brite Ken Loach gewinnt die Goldene Palme, (1.6.2016)
[4] Friedrich Dürrenmatt: Monstervortrag über Gerechtigkeit und Recht, Zürich 1969, S. 41 f.
[5] John Rawls: Eine Theorie der Gerechtigkeit, Frankfurt 1975, S. 31.f
[6] Friedrich A. von Hayek: Recht, Gesetzgebung und Freiheit, Bd. 2, Landsberg am Lech 1981, S.111 f. Es kann „keine Prüfung geben, mittels derer wir entdecken können, was sozial ungerecht ist, weil es kein Subjekt gibt, von dem eine solche Ungerechtigkeit begangen werden kann, und es gibt keine Regeln des individuellen Verhaltens, deren Beachtung den Individuen und Gruppen in der Marktordnung die Position sichert, die uns als solche (...) als gerecht erschiene."
[7] Michel Foucault, in: Michel Foucault/Noam Chomsky/Fons Elders: Absolute(ly), Macht und Gerechtigkeit, Freiburg 2008, S. 52:
[8] Oxfam Deutschland: Ein Wirtschaftssystem für die Superreichen, Berlin 2016, (31.5.2016), S. 2
[9] Der Paritätische: Gerechtigkeit in Deutschland: Einstellungen der Bevölkerung zu Fragen der Verteilungsgerechtigkeit und Steuerpolitik, Berlin 2013, S. 12
[10] Institut für Demoskopie Allensbach in: Renate Köcher: Das Verantwortungsgefühl der Oberschicht, in: FAZ v. 19.2.2015, S. 10
[11] Vgl. Olaf Scholz: Gerechtigkeit und Solidarische Mitte im 21. Jahrhundert, in: Frankfurter Rundschau vom 7.8.2003 (Dokumentation)
[12] Vgl. Böckler impuls 20/2014, S. 4
[13] Vgl. Wilhelm Heitmeyer: Gruppenbezogene Menschenfeindlichkeit (GMF) in einem entsicherten Jahrzehnt, in: ders. (Hrsg.): Deutsche Zustände, Folge 10, Berlin 2012, S. 26f
[14] INSM-Position Gerechtigkeit, (13.6.2016)
[15] Vgl. Bremer Institut für Arbeitsmarktforschung und Jugendberufshilfe: Kurzmitteilung vom 19.8.2014, (15.06.2016)
[16] Vgl. Schattenbericht der Nationalen Armutskonferenz. 10 Jahr Hartz IV, Berlin 2015, S. 16
[17] Vgl. Der Paritätische: Pressemitteilung vom 16. November 2015
[18] Vgl. Der Paritätische: Die zerklüftete Republik, Berlin 2015, S. 4
[19] Wilhelm Heitmeyer, a.a.O., S. 27
[20] Hans Kelsen, Was ist Gerechtigkeit? Stuttgart 2000, S. 14 f..
[21] Axel Honneth: Das Recht der Freiheit, Berlin 2013, S. 14