[Debatte-Grundeinkommen] Wolfson

[Leon Segers]

Dear Dr. Jenner,

I largely agree with your analysis. Your point that the main problem of the monetary crisis is a crisis in the real economy is in full accordance with my own analysis. The solution however that you propose i.e. a policy of isolationisme, a policy of closing off the rest of the world will not work, can not work and it also is undesirable on a political and on a human level, and even dangerous for world peace, as I see it.

The future is dark

The fact is that multinational enterprises set the market standard that is gradually put upon the rest of the economies, also the regional and local ones. They, the multinationals play the global game and the rest has to follow; this is a thread for our economies and societies because it will wear out our knowledge and our skills in the future and bring us to poverty.  As this is the case the power of that players has to be broken and the global market has to be cut off, to free a way for your proposals. The alternative is that Europe will lose her prosperity and her social achievements as you say.

This will be the case as we do nothing. But besides the economy also the environment cannot survive as we do not change our system profoundly; this concerns not only the waste of raw materials and natural values but also the huge (environmental) costs of transportation that is included in the system as runs now and as will run more and more in the alternative of not changing our society more in the direction of autarky as you propose.

So your alternative is technical speaking logical and inevitable as we do not change the very fundamental reason of the actual, as you see it disastrous development.

Basic income as a nessecity

Being in this environment of ours i.e. “the basic income movement” I will suggest to think the basic income idea over again and now on a global level.

Suppose a basic income will be implemented in let say Germany and in China. In Germany the costs of labour will fall very much (basic income “grows” in the wages and above all the costs on the wages will disappear). In China the basic income is much lower ( z.B. € 10.000,- against € 1.000,-) so the Chinese wages will fall only a bit. That means that the comparative production costs of labour will change quite a lot in favour of the Germans and quite some globalisation will be reversed, only by the working of the market.

At he same time the taxes can not be longer on labour as it is now by income tax, but they have to be laid on products i.e. raw materials and scarce natural resources. This also will bring the economy more in accordance with the ecology as recycling will be profitable and sustainability will also on an economic level become more profitable. At the same time nursery, education, arts and other personal services will get relatively speaking a lot cheaper.

So implementation of a basic income will found our economy and also our society on a new basis that will be compatible with the ecological system and also will bring a bit rest in the transnational dragging of all kinds of stuff that takes place now. It will automatically lead to a more local and simple economic system that is logical and transparent for people and is more democratic in essence. The basic income itself only can accentuate this development, it will be a real “cultural impulse” as in title of the movie of Häni and Schmidt.

Basic income as a solution

The mere introduction of a unconditional basic income will bring back the lead of society from an economic to a cultural focus and will stop the perversion of the labour market by the poverty-trap on a global scale.

The result of that kind of revolution will bring back the local price-structure in the lead and not a global price-structure as it is now. This means that not Europe has to be closed for the world but that the relative favourisation  of the global enterprises has to be stopped. It will be revolutionary also by making the people capable to choose between working for a boss or for himself.

Essential is to lay taxes on goods, not on incomes and paying people for their living in accordance with their own standard of living and their own way of living. In this way the problem of the northern and southern parts of Europe can be resolved independent of the Euro.  Inter-European trade can develop itself on its own way and more or less solidarity between European countries will determine more or less harmonising of living standards or ways of living within Europe, and the urge to assimilate (with the Germans), as it now seems to be the case, will disappear.

 

Dear Mr. Jenner I hope that I made myself clear. By the way I don’t understand that this model is not understood or hardly brought forward by economists up till now. It is very urgent to start with implementing a basic income now for economic reasons. By the working of the international system as I described it, the most urgent is implementing it in Europe (in the rich countries first of all).

By the way, as the monetary system has to serve the real economy, financial problems will disappear also, because the role of money will diminish especially on the global scale that now causes mainly our monetary problems. As it was always the case a Tobin tax would help a lot also.

 

 

Maastricht, 19 april 2012                                                            Leon J.J. Segers

Op 17 apr. 2012, om 19:17 heeft Dr. Gero Jenner het volgende geschreven:

> 
> Open letter to Lord Wolfson
> With reference to the prize winning question of how to get out of the Euro
> 
> Dear Lord Wolfson
> 
> Please let me enjoy the platonic pleasure of an idealist by presenting my own proposal for your prize riddle even after the deadline has expired two months ago. Hopefully, you will still be interested in the problem, as it has – at least in my view – not really been satisfactorily solved. I venture to say that it could not possibly be solved as it was framed in merely technical terms. You asked the public for what could be done to ensure an exit from the Euro at minimal costs. The answers obtained are certainly as good as they can possibly be. However, they do not really approach the core of the question which, I am afraid, lies well beyond money. The American Great Depression was arguably the most dramatic breakdown of a monetary system history has ever witnessed in times of peace, but the true cause for the sudden devaluation of the Dollar clearly lay outside the sphere of money. As Marriner Eccles, then governor of the FED and second powerful man after Franklin D. Roosevelt would later put it. „As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth… to provide men with buying power equal to the amount of goods and services offered by the nation’s economic machinery.“ Eccles goes on to prove that this condition was no longer assured at the end of the 20s. As we know it was substantially by non-technical measures regarding the overall functioning of the economy, that the Great Depression was finally overcome.
> 
> The breakdown of the Euro – a tragedy
> 
> So my point with regard to your prize winning question is pretty much on the same line. I am convinced just as you are that there is no way to avoid the final breakdown of the Euro. However, I consider this to be no less than a tragedy since it deals a tremendous blow to the idea of a United Europe and could, for many years to come, turn the continent into an insignificant player in global affairs. Nevertheless, this tragedy is due to happen, and one among the six proposals offered in answer to your prize winning question will presumably be adopted. During a time of transition the return to their own currencies will result in great hardship but in the end it will give a substantial boost to Greek, Italian, Spanish and Portuguese economies. They will be free to devaluate and thus restore at least part of their competitiveness to levels obtained before the introduction of the common European currency.
> 
> How far will competitiveness be restored?
> 
> However, nobody should believe that this is a recipe to restore former health. History seldom if ever can simply be switched back to a previous stage by a mere sleight of hand. Lost competitiveness will not easily be regained even if there is no barrier to devaluation. Just think of your own country! For more than a century Great Britain had been the epicentre of world-leading industries and inventions. By now, however, most of these have gone, and nobody believes that by merely devaluating the English pound the country would revert to its old glory. Economic success is not just a matter of technical adjustment. Obviously, English people are by no means less intelligent than 150 years ago when the British Empire had reached its apogee. Nor are they less industrious. But they fight against what I would call a difficulty of temper that befalls all those who once enjoyed their time of greatness. You don’t make an aristocrat work in the gutter just to keep up with the Joneses. In order to be competitive against the Asian tsunami of cheap production, the countries of the southern periphery would have to fall back to a life of utter austerity, which means to a life of the type still prevailing in Chinese factories. Let their daughters work for 12 or more hours in industrial barracks, let natural environment be ruthlessly exploited, in other words, let life be solely devoted to material gain. That’s exactly what southern Europeans, brought up in a tradition of siesta and wellbeing, will by no means be ready to accept. According to all previous historic experience they will rather shrink into economic insignificance and even decay before turning into economic animals just for the economy’s sake.
> 
> I blame Europe
> 
> Mind you, I don’t blame the Chinese. They just follow the time-honoured path of capitalistic ascent where they are already so advanced as to be likely to become our betters after a short lapse of time. I blame Europe for its utter blindness! By now we should know about the inevitable consequences of such a race to the bottom. Europe will end up de-industrializing just as Great Britain has done and the United States has finally come to perceive. In a recent article given to the SPIEGEL, political scientist Francis Fukuyama made the following statement. “We have unthinkingly embraced a certain version of globalization that assumed we had to move very quickly into this post-industrial, post-manufacturing world. Doing so, we forgot that the whole reason real socialism never took off in the US was the fact that the modern economy seemed to produce middle-class societies in which the bulk of the population could enjoy a middle-class status. They worked in industries that were abolished in our countries and transferred to countries like China“.
> 
> It’s not the Euro, it’s certainly not merely money
> 
> So let me stress my argument once again. The introduction of a common currency at a much too early stage of European integration has turned out to be a damaging political error. Yes, a political error, not a technical one. The large socio-economical differences between European countries did not permit monetary unification. In other words, money is not at the core of the problem – neither for the southern periphery nor for its comparatively successful counterpart in the north. Germany, at present, has become a kind of schoolmaster for the rest of Europe. But how was this miracle brought about? After all, it is hard to forget that, until after the start of the century, Germany was still held to be the “sick man of Europe”. But then there was Chancellor Gerhard Schröder – a left wing politician. He bowed to the demands of globalization as right wing Margaret Thatcher had done some three decades earlier. Against the protests of Labour Unions he slashed social benefits in order to make Germany a more competitive player. Soon afterwards exports rose to unexpected heights while employment rates soared.
> 
> Germany will not rewrite the course of history
> 
> To be sure, this was, and still is, a story of success. But there should be no doubt as to a more sobering truth. Germany won nothing better than a temporary victory. Whatever our country does, it cannot possibly reduce its loans, its social system and environmental standards to Chinese levels. So its only lasting chance to retain a competitive edge is its technological advance. But even in this respect Germany will not be able to contradict the general course of history. Britain has lost its technological prominence against newcomers – as has the United States in most of its once leading industries. To my mind there is no hope whatsoever that Germany will be an exception to the general rule. For China will be even more successful than Japan some decades ago in first reaching and then overtaking Western countries in research and development. Unless war decelerates their breathtaking ascendancy, the Chinese will soon be our equals if not our masters for they can send more than one billion hard working pupils to be trained in their schools and universities - people who want nothing more than to live a better life than their elders. With its shrinking population of 80 million, most of whom (like the fore mentioned aristocrat) already had their good time in the past, Germany, on the contrary, has little chance to keep pace even if a dozen or more chancellors like Gerhard Schröder were to reduce incomes and slash social benefits for the least privileged to still deeper levels.
> 
> Globalization tears Europe apart
> 
> So what can and should Europe do? Finding the right technical formula for getting out of the Euro is important enough. But it is, certainly, not a way to save the European project. Such a formula will not get Europe out of its predicament which is of far greater weight than just the untimely Euro. The basic problem is globalization! Of course, if we consider the latter to be an incontestable verdict passed down on us from either heaven or hell, it is futile to hope for an escape. Not only will the United States lose its industries and finally its status as the world’s leading superpower, Europe will be forced to submit to the same inexorable fate. First, the southern periphery loses its competitive edge – as, in fact, has already happened. Then, somewhat later, the northern belt will hand what still remains of its industrial heritage to the Far East. And all those wise politicians in Berlin and Brussels will shake their heads and unanimously proclaim that, unfortunately, there is just no alternative.
> 
> But is this really the truth? I think we should ask ourselves whether globalization in the shape of merciless competition that gives victory not to technical intelligence and environmental consciousness but to the cheapest provider, really is and must be the fate determining Europe’s future.
> 
> A prize for saving Europe from further decay
> 
> Let me suggest to you that after offering a prize for the best idea to get out of the Euro, you should honour the best idea how to save Europe from de-industrialization and final decay. An appropriate answer to this question seems to me even more important than a technical solution to the Euro conundrum. I am sorry to say that the answer has meanwhile become much more difficult than it was some three decades ago. At the beginning of the 90s about 80% of Germany’s trade was still with its European neighbours as only a mere 20% of its exports went to the non-European world. At that time costs of production as well as income levels in German industries were still largely determined by competition within Europe itself. Asian labour and production costs could still be safely put aside as of no consequence. However, not content with its prominent role within Europe, Germany wanted its industries to be global players – and this ambition forced it to pay more and more attention to costs and prizes on outside (non-European) markets. Its machinery, cars and pharmaceutics were no longer competitive as soon as Asian producers offered equivalent goods at much lower prizes.
> 
> The greed for more and more profit
> 
> The turning point was approached before the end of the century. Surely, the European continent – like its American counterpart – was and is far big enough to provide for nearly all its nutritional and industrial needs out of its own resources in intelligence, people and raw materials. Those shortcomings as still exist, for instance in the energy sector, could be compensated by renewable energy sources in the near future. So, as in the United States, it is by no means an outside and ineluctable force that made Europe choose the way of outsourcing ever larger parts of its production beyond its borders. It was and is mere greed for more and more profit that leads western countries on a path of gradual self-erosion.
> 
> All of us will be losers
> 
> Dear Lord Wolfson. Let me assume for a moment that you already raised the question as how best to change direction in order to stop Europe’s erosion. And let me further presume that the following would be the prize winning answer. This answer would, I am sure, ascribe a chief role in any change of direction to Germany and its political leadership. My country would have to re-orientate its economy versus Europe instead of becoming more and more dependent on global markets and their relentless pressure. Germany should no longer reduce production and labour costs in order to remain competitive on the global scene, for this is a race to the bottom which it will and cannot win in the long run. The only result of such a misled policy will be Europe’s further disintegration. Even if Germany’s neighbours were willing to follow the Teutonic example gradually dismantling all previous social achievements, they would still end up as losers for a quite simple reason: Industrial capacity everywhere in the world is expanding at such a rate that large parts of its already existing structure are put at risk - just think of the American rust belt. In such an environment of overproduction hoping for a successful rebirth of industries in Greece, Italy, Spain or even France, seems to me rather absurd.
> 
> European independence
> 
> But the whole picture instantly changes as soon as European countries decide to (gradually) free themselves from the shackles of global markets and exclusively rely on the common European market as their outlet for production and source of consumption. In such an environment returning to national currencies would not – as it certainly does under present conditions – put the whole European project in jeopardy. Europe would be saved at the very moment that it saves itself from outside pressure. Greek products, whether merely agricultural or not, would immediately regain much of their competitiveness as they need only compete with products of the Union itself, but not with the whole outside world. Certainly, Germany would at first time be a prominent loser as almost a third of its industrial output is presently directed to non-European markets. And – what is perhaps much harder to accept - Germany would have to renounce its present status as global player. Nevertheless, advantages would, in the long run, by far outstrip all short term losses, for Germany could rely on a secure European market for its products.
> 
> But that is not all. The chief argument for such a reversal to the idea of a truly United Europe is the maintenance and safeguarding of Europe’s acquired social achievements and industrial strength. The race to the bottom would be definitely stopped. Germany would save the European project which it is now well on the way to destruction.
> 
> Is this more than utopia?
> 
> Is Germany ready to make this concession? Not yet. There are tremendous obstacles on the way of European reconstruction. Just to mention one of the more obvious objections: American products nowadays largely consist of Asian components, so that warding of the impact of cheap Asian goods would entail protection against American products as well. But Europe – and first of all Germany - trembles at the mere thought of antagonizing the United States. For the time being there are no German and hardly any European politicians (apart from foolish xenophobes of the extremist right and some French leftists) that dare come up with such a proposal. I am confident, nonetheless, that the situation will fundamentally change in the years to come. The United States themselves will gradually awaken to the dangers of de-industrialization. Protectionism, once the main policy of this country from the Civil War up to the middle of the twentieth century, is no longer an ostracized term in political discourse. Probably, the US will take the initiative with Europe then taking its chance. Let’s hope that this turnaround will come soon – sooner than Europe’s disintegration! In this case - but in this case only - the breakdown of the Euro would not seriously endanger the prospect for a politically unified Europe.
> 
> Yours sincerely
> 
> Gero Jenner
> 
> _______________________________________________
> Debatte-grundeinkommen Mailingliste
> JPBerlin - Politischer Provider
> Debatte-grundeinkommen at listen.grundeinkommen.de
> https://listi.jpberlin.de/mailman/listinfo/debatte-grundeinkommen

-------------- nächster Teil --------------
Ein Dateianhang mit HTML-Daten wurde abgetrennt...
URL: <https://listi.jpberlin.de/pipermail/debatte-grundeinkommen/attachments/20120419/c2c615f6/attachment.html>