4 - 2003

Reforming the welfare state

Citizens as "kept” men and women?

The unfortunate logic of the welfare state: independence and personal responsibility wither away

by Helmut Maier-Mannhart

This article sheds light on some of the causes leading to the wretched state of Germany’s finances: the welfare state, its citizens’ thinking in terms of entitlements, and the trade unions’ policy of seeking ever higher wages.

How does it happen that, in a country which spends a third of its gross domestic product on various forms of social welfare, there is so much talk about social justice? How does it happen that the least change brings forth a debate, as if the state were condemning its citizens to an abyss of poverty? – Answers to these questions could show us how to bring about the needed acceptance of reform. First of all, the state must tell its citizens much more clearly than it has so far that the horn of plenty is not inexhaustible, and that the problems of a satiated, low-growth national economy and demographic changes call for us to change course. If the state’s representatives could then go on to demonstrate convincingly that there are many possible ways to cut social services without anyone’s having to fear an existence unfit for a human being, much would be gained.

This would not call for sorcery. We are faced with the paradox that, despite increasing prosperity, social welfare benefits have not been decreased, as one would expect if people are individually better off, but have rather been successively extended. This is what social scientist Meinhard Miegel calls the reign of the social welfare state. Politicians, he says, have perceived that unscrupulously increasing social services is a means to power and have shamelessly exploited it. One has only to look back through the election campaign promises of the last forty years to be convinced of this.

The use of social welfare beneficence to assure one’s grip on power seldom fails, and this marks the transition from a socially-minded nation to the welfare state about which Ludwig Erhard warned us, but in vain. At all levels of the social welfare system, almost all our citizens have been changed by collectivism into "kept” persons, living off the state. Independence and responsibility for self have withered away.

This did not stop those in power in the mid-1990s from taking pension and health insurance which they already did not know how to finance and saddling it further with collective long-term care insurance. All notions of the subsidiarity principle had been lost, here as well. This long-term care insurance, as it is now put together, often merely assures that the assets of elderly persons can be inherited instead of being used to meet their personal needs. No one should be astonished if the care insurance itself soon becomes a basket case.

As politicians have always known how to make themselves useful in the cause of citizens’ welfare, the case was no different in the second big collective arena, that of sector-wide collective bargaining. Here too, the trade unions started early down the wrong road, which still today consists essentially of seeking ever higher wages and lower working hours. It’s no longer any good asking what our country could have looked like, if the workers’ representatives had decided in time to lead the union members towards joint ownership of the economy’s productivity.

The workers would have come of age. Through sharing in the profits, they would have benefitted from the productivity of the enterprise and come closer to the decision-making structures. Wage levels would have remained an important component, but would have lost their overwhelming importance for individual income. Whatever an employee lost in wage percentage points, he or she could help to make up through higher profits.

But that wouldn’t have fit the trade unions’ plans. A society composed of so many capitalists, great and small, which would have done away with much labour-capital antagonism, would have represented a nightmare for the officials. Here too, the striving for power of those supposedly acting in the interests of wage earners, a role safeguarded by the Constitution, prevented the development of more personal independence and responsibility.

Now that collectivism has eaten its way into our everyday political and economic life, what shall we do? To turn the wheel backward, to cut services which are now considered part of our standard of living, to replace our long-established collective bargaining rituals, is difficult. But there is no other way. The problems which have arisen from depriving our citizens of adult decision-making, and from our transformation from socially-minded nation to welfare state, are too heavy to be simply fine-tuned. Much has been said lately about more personal responsibility, for pensions, for health care. But it is still anyone’s guess how to get politicians or collective bargaining partners to give individuals the space in which to exercise it.

This article appeared on 23-24 August 2003 in the daily newspaper Süddeutsche Zeitung. The author is editor of the daily newspaper.