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Economic Policy

Policy on Employment and the Job Market

The time has come for the industrialized nations to say goodbye to the dream of „full employment“. Given the ever higher level of automation and the ever more vigorous entry of the large populations of the countries of the Third Word and the former „Eastern Bloc“ into a globalized process of production, the quantity of goods that would need to be produced in order to maintain conditions of full employment in Europe would represent a quantity no longer either materially necessary or objectively marketable.

If we wish to maintain conditions of peace - both between and within individual states - we cannot afford to allow the (German) population to slip into the condition of a society composed of „first-class“ and „second-class“ citizens: that is of those who have work, and those who are forced to „sleep under bridges“.

In periods of full employment, indeed, it still made sense to exert pressure on „scroungers“ and „social parasites“ to take up the work opportunities offered them.

We live, however, in times of enduring mass unemployment, and in such times „pressure“ is the least appropriate of ways to maintain social peace. For such pressure, exerted on those who are in principle willing to work but for whom no work is available, will tend to cause illness, to make those suffering it actually less capable of working when work becomes available, to increase the rate of criminality, and to lead - in extreme cases - to drug-addiction and suicide.

There is only one possible way out of this situation: those obliged to exist in a condition of unemployment must be provided with the financial means required in order that they may structure and employ their „free time“ in a meaningful and constructive manner.

Examples of such „meaningful and constructive use of free time“ here would be: voluntary work in clubs, social-service facilities, political parties, art and culture (to name just a few possibilities).

Such activity serves to preserve and maintain the professional skills of the person in question, to challenge him or her to keep up with new technical developments, to cultivate punctuality and reliability, and to increase the unemployed individual’s sense of his or her personal worth through the participation in socially useful labour.

Small-scale business would also profit from this solution, since it would mean that current rules on tenure of employment could in large part be relaxed, short-term or specifically project-related job offers becoming much less problematical affairs.

Another decided „plus“ here from the economic viewpoint would be a clear rise in domestic demand for goods and services. Because a person without means, living entirely on social security, has indeed great need for various economic goods but no money with which to acquire them. As a consumer, he or she practically does not exist.

Now, it would clearly constitute an action quite against the spirit and ideal of general social solidarity to accord to all the unemployed the wherewithal that they need to maintain a life of dignity and constructive activity while those citizens fortunate enough to have full-time remunerated work have to acquire this same wherewithal „in the sweat of their brow“.

The solution here has to consist, then, in the payment to all of a basic income belonging to each citizen simply by right of being a citizen. This basic income would be paid out to each citizen in equal amount, quite regardless of age, of other income-sources, or of ability to work.

The amount of the basic income in question must be so set that the style of life that it permits to those receiving it is no „grand style“ indeed, but nonetheless a life involving a standard and dignity of living significantly higher than that presently enjoyed by recipients of social security or „welfare“. The most sensible procedure by which to calculate this amount would most likely be its determination as a fixed percentage of the total social product.

Such a basic citizen’s income would also greatly simplify matters in respect of wages and contracts of employment: the whole issue of „employer’s and employee’s contributions“ would fall away in the former case and the whole obligation to register every employer-employee relation in the latter.

This would mean not only a radical reduction in the costs incurred by an employer in offering someone a contract of employment but also the drawing of many former „black-economy“ jobs back into a sphere in which the state and the community would also, through taxes, profit from them. The growing gap between high- and low-earners would be, at least as regards the low-wage sector, somewhat closed and the job market made at the same time more flexible, while the work available would be more fairly distributed.

This would in turn lead to an increase in domestic demand.

The highly costly administration of mass unemployment would thus become as obsolete as the equally costly administration of income tax in today’s Tax Offices. Existing Social Security Offices could also be more or less entirely shut down; likewise Housing Benefit Offices. Nor would the existing administrations for Child Benefit or student grants be any longer required, and the offices administering old-age pension matters could, once outstanding claims and obligations had been dealt with, also be shut down.



Privatisation

The sole and exclusive function of the state is to be a provider of services to its citizens. The specific „services“ here in question consist in seeing to it that the shared life of said citizens is one that is reasonable, safe, free of violence and characterized by a sensible social balance.

It is a fundamental mistake to conceive of the state as an end in itself, as a commercial enterprise, or as a self-service emporium.

From these definitions alone we can clearly and confidently conclude which economic and administrative spheres ought to remain in the hands of the state and which ought rather to be given over into private hands.

A basic truth that must always be borne in mind here is that privatised enterprises will always be aiming to work in a manner oriented to maximum profit. This applies both to their decisions in terms of costs and to their decisions bearing on actual returns.

In all spheres in which one important concern is the maintenance of a degree of social solidarity and cohesion, it can be a very rational and reasonable policy for the state itself to administer and operate some economic presence with a view to intensifying competition and regulating prices (as much applies in the spheres of banking, drugs and medicines, telecommunication, energy-provision, leisure, public transport, roads and highways, and education).

But it must in the end also be clearly borne in mind that every area administered by the state is one in which economic activity is being conducted with money held only „in trust“ (that is, with tax money) and that there is a solemn obligation to use this money effectively and economically.



National Debt

Present levels of public debt must be reduced at all costs. We have no right to demand of our children and grandchildren that they take over from us such a heavy negative inheritance simply in order that a minority of people can live, today, the high life.

One measure that should be considered here is, for example, a special tax levied on the profits of banks and other speculators.



Wasteful Use of Tax Revenues

Monies raised through taxes remain the property of the tax-payers, having only been given into the care of the governmental administration in order that this latter may fulfil its task of serving and promoting a society based on ideals of social solidarity.

It is to the tax-payers that those civil servants entrusted with this administration owe explanation and account in respect of what they do with said monies.

Such explanation and account must involve impeccable procedures in respect of all goods and services ordered or provided, foresight in planning, a general administrative strategy which takes into account the whole picture across all the various departments, and - last but not least - accounting records kept in a manner meeting the very highest standards applying in normal business dealings.

There must in every case ensue, from any doubts or criticisms raised by the Federal Audit Office in respect of non-probity or incorrectness in the administration of public funds, an investigation of the matter in question by the Public Prosecutor’s Office; it should also, in each such case, be examined whether there may be grounds for legal action under civil law. Steps should immediately be taken to change existing law so as to make this possible.



Taxation and National Insurance Contributions

One of the most serious and fundamental errors in our present tax system consists in the very idea of making human labour an object of taxation.

To be capable of work, and to be in a position to do so, constitute human rights as fundamental and essential as the right to air that one can breathe. To impose taxes on such fundamental and essential human rights is expressive of a contempt for humanity itself.

Particularly as work in itself makes no contribution to the structures of the state! Rather, it is only productivity which makes this socially necessary contribution.

This can be shown by an example from agriculture. Imagine a farmer who has worked a whole half-year long very hard on his fields, only to see his ripening harvest destroyed at the last moment by a storm.

He has worked a great deal - but achieves in the end, through no fault of his own, nothing that can be called „productivity“. But ought the farmer, in this position, still pay taxes and employer’s contributions for those who have helped him in his farm work?

Take the opposite case, however, of the same farmer’s happening to discover an oil-well in one of his fields. In this case, he would suddenly, without having expended much labour, have acquired a huge degree of productivity and a huge income, and would not be obliged to pay, in any significant degree, income tax or social contributions for it.

These two examples show how senseless it is to impose taxes on the factor „work“.

Given, however, that it would be impossible simply to eliminate income tax and national insurance contributions without putting anything at all in their place, the solution presents itself of shifting the burden presently borne by them over onto VAT. The intention behind the progressively rising structure of income tax contributions is that of creating, at least in a very limited degree, something like an equalization of income in society. But the same equalization might easily be achieved by imposing increased VAT taxation on luxury goods and by drawing also revenues from capital investments into the VAT system.

Certain special taxes - such as those on tobacco, spirits and beer - should be re-examined and, where necessary, revised or scrapped altogether.

Taxes imposed with the intention of protecting the environment tend - particularly given the many complex exceptions foreseen in their provisions - to distort the framework of competition.

If it is really our intention to create a politics compatible with the protection of the environment, our emphasis should rather be on creating the appropriate general conditions liable to promote such a protection. Simply to decree that petrol used in aeroplanes is to be taxed at a different rate from the electricity used in rail transport or the fuels used in cars and busses cannot be the right way forward. One approach to a solution might be found in the flat-rate taxation of primary energy on such non-renewable energy sources as oil.

Moreover, taxes, fees, and contributions should be established and levied according to the principle of the „person ultimately responsible“.

Absolutely necessary as well is a simplification of tax administration, a measure which will also cut costs.



Subsidies

Speaking generally, the tool of subsidization is not an appropriate tool with which to correct erroneous or pernicious developments in the economy and society.

Where such developments arise, it is generally rather the wider determining legal or economic framework that is faulty or inadequate. Only in cases where such a framework proves totally insusceptible of being adjusted is there an argument for the short-term application of subsidies.

We must bear in mind particularly here that subsidies can have indirect effects on several levels. Thus, the housing benefit system represents a subsidization not only of tenants but of the housing and renting industry itself, since, did this subsidy not exist, the high rents demanded could not be paid (or demanded).

If there were no housing benefit, this would result - given a basically healthy social and economic framework - in certain very expensive flats and houses standing empty. And this in turn would lead to rents dropping.

Ideally, it would only be in the case where the basic economic and legal framework were somehow out of kilter - where, for example, the potential profits to be gained on the capital investment market lie at such a high level that the renting of property is not so lucrative as the drawing of interest - that there would even be any question of the paying out of housing benefit. But this would indeed apply only for so long, and no longer, as the general framework in question - in this example, the level of interest rates - had not been brought back into kilter.

A particularly indefensible measure is long-term subsidization intended to „save jobs“, as for example in the coal-mining industry.

It would be much cheaper simply to pay the miners their full wages without them actually turning up for work than to have them further endanger their health by digging out coal that is only going to be stockpiled.

A more complex question is that of subsidies in the form of the making available of venture capital. The issue that needs above all to be considered here is whether the enterprise being subsidized would have been able to carry through the development in question, at a reasonable level of economic risk, without subsidy from the side of the state. The object of consideration and examination here would need, of course, to be the enterprise as a whole, and not merely the subsidiary making the application for subsidy.

What is completely incomprehensible is that „a bank with a small electronics firm attached to it“ should receive, year after year, state subsidies even for very minor developments and innovations that do not even ever need to be paid back.

In the area of agricultural subsidies, there exists, in the form of the surplus capacities involved alone, likewise good reason for dismantling.

Given, however, that the adaptation of the general economic and legal framework of our society has been neglected for many years now in favour precisely of the short-term remedy of subsidization, this process of dismantling of subsidies will have to be one conducted step by step and in co-ordination with said neglected adaptation.



Customs and Excise Duties

Barriers and obstacles to trade are counter-productive - and customs and excise duties are indeed one form of barrier to trade. The administrative costs and efforts they impose are immense, especially for smaller companies.

Therefore, customs barriers must be reduced as far as possible, and the amount of administrative effort involved correspondingly minimized.