4 - 2003

Reforming the welfare state

"An economy for life” in the ecumenical witness

Churches, banks and world financial system

by Wolfgang Gern

At the Ecumenical Kirchentag in Berlin, in June 2003, a panel discussion was held on the complex of issues around the churches, the banks and the world financial system. The focus was on financial instruments for an economy which could be considered friendly to life and to human beings. This brought up, among other things, the social welfare problems in Germany which have to do with a weakening economy and demographic trends. W. Gern takes a look at the Federal Government’s reform programme, the "Agenda 2010”, which aims to push the economy back towards growth through reform of the labour market and restructuring of the social welfare system. He doubts that these reforms will really help the poor.

More and more people in Germany are turning to church social service advice centres. They are unemployed or homeless, in debt, suffering from addictions or psychic illness, or have just given up from nervous exhaustion. At the same time, welfare associations are having to limit or reduce their services because the public and communal coffers, and those of the church as well, are practically empty.

The churches’ declaration on the economy and social welfare in 1997 ("For a Future of Solidarity and Justice”) called the bond of solidarity between the powerful and the powerless obligatory (Par. 25 and 220). For years we have upheld this word of the churches, but suspected that solidarity is subject to control by the market, that it even disturbs the market. The "Agenda 2010” does not mention the wealth tax, corporation tax, tax evasion or tax havens; instead, once again, it is the least powerful in the society who must bear the burden.

The structural adjustment policies which the North of this world has been imposing on the South are now being used by northern governments on their own peoples. This means that recognised insights of development policy and economic development ethics (autonomy and participation of affected persons, social justice, qualitative economic growth) are being tossed overboard. With structural adjustment, globalisation has finally come home to Germany.

The social market economy as a guiding concept, as the "third way” between the command economy and laissez-faire capitalism, is becoming more and more a "theoretical accompanying theme” and an appendage to the market economy, as predicted by Oswald von Nell-Breuning. Is it still true that "The economy must serve people – not the other way around” (US Catholic Bishops’ Conference, 1986)?

The globalisation of markets caused a paradigm shift in social welfare policy: welfare expenses reduced to a minimum, privatisation of pensions and health insurance. The Agenda 2010 will push about 3.1 million people – the unemployed and their families – directly into poverty. It also lacks sensible tax policy measures: top-level tax rates will be cut, tax evasion and tax havens become trivial matters, the wealth tax dismissed as ineffective.

But people’s sense of justice will be badly disturbed if no concessions are asked of those who can well afford them. Economic globalisation today is like historical Christianity in colonial times – an ideal of universal mission is slipping into a tradition of hegemony by force and injustice. Casino capitalism, coming in freedom’s clothing, should have the fate of many peoples and cultures around the globe on its conscience.

Our faith does not testify to a snug God who declares me and everything else to be handsome, young and strong, who colours circumstances brighter than we know they are; instead, we witness to a God who does justice and loves mercy. Justice is inseparable from faith and compassion. The churches’ statement of 1997 on the economy and social welfare said it like this: "Compassion is no fleeting emotion; it presses for justice”. Instead of sitting on this, churches have to stand up for it, for the sake of humanity.

That means that church and diaconia have to take the offensive in calling for change and helping to shape it, for the better (Luke 7.22f). They have to be concerned for the sake of humankind both here and around the world. Subsidiarity, that big social market economy word, means in practice helping people become autonomous, so they can keep standing up again and go on living. Furthermore, the Christian churches, with their social and ethical guiding concepts, have made a crucial contribution to building the social welfare state. Planning to dismantle it also leads to loss of significance for our social-ethical models of compassion and justice, of subsidiarity and solidarity.

The "view from below” is the view of church and diaconia. That is why we support the cause of those who have no voice, or no confidence: the unemployed, the homeless, youth without prospects, older persons who need care, persons with disabilities. In our time, empathy means resisting the marginalisation of the powerless in economic and social life. It also means a political commitment to a just tax system, to a tax against speculation, to raising the limit on calculating contributions for health and long-term care insurance, to poverty-proof welfare safety nets. And it means creating occupations in new fields such as personal services, helping people. We need a new sort of globalisation which benefits not only those in the light but also those in the shadows.

Church and diaconia are directly affected by reductions in the welfare state and cuts in public benefits, since in Germany they too are dependent on taxes. They are powerful players in social services to the whole society. They are big employers. If income is reduced, church and diaconia will have to look for money from the private sector, from sponsorships, fundraising and foundations. Then their work will no longer be driven by needs, but by the good will and the donation inclinations of wealthy citizens.

Although our society’s readiness to give generously is appreciable, it cannot replace the social welfare state. The welfare state is expected to preserve the social equilibrium of the whole community, making the economy a function of the culture. And it is supposed to be part of our culture that everyone has a right to participate in the economic life of our society, even to the point of an "economy of sufficiency” for the well-off, when the society is in danger of losing its equilibrium. A society is only as good as the way it treats its weakest members.

Three themes and issues must be directly on the agenda of the churches and their social services:
Does our economic system improve our ability to live as neighbours, or does it threaten or break down our neighbourliness? Are justice and human dignity still the measure of our economic life?
Article 14 of our constitution embodies the principle that owning property obligates one to contribute to social welfare. In their 1997 statement on the economy and social welfare, the German Catholic and Protestant churches said: "If the wealthy are not appropriately associated in financing the overall tasks of the state, their social obligation to an important relationship will be limited or even abolished” (Par. 220). The wealthy must contribute to making social safety nets poverty-proof. So if burdens are to be distributed anew, our society cannot avoid contending more seriously with tax evasion and the flight of capital and taxes from the country. A conflict of powerful interests is already programmed here.
International resistance to the erosion of the welfare state has been spreading widely for some time, as the various networks seeking control of international financial markets show. A Tobin tax, even at a very low rate, could lead the way out of the unstable international financial situation. According to James Tobin’s proposal, the United Nations calculates that a tax on global foreign exchange transactions would raise hundreds of billions of dollars US – for the benefit of social welfare programmes and development aid. The tax would also make speculation less attractive and invite the world to a more just distribution of wealth.

Since 1948 the World Council of Churches has opposed the power of Christian witness to any who violate or destroy human rights. It seeks to be the ally of people, wherever they are, who are struggling for justice and peace. The WCC’s message from its first assembly, in 1948 in Amsterdam, put it this way: "We have to ask God to teach us together to say ‘No’ and to say ‘Yes’ in truth.

‘No’ to all that flouts the love of Christ, to every system, every programme and every person that treats any[one] as though he [or she] were an irresponsible thing or a means of profit ... ‘Yes’ to all that conforms to the love of Christ, to all who seek for justice ... to all who – even without knowing it – look for new heavens and a new earth wherein dwelleth righteousness.”

Dr. W. Gern is Director of the Social Service Agency of the Evangelical Church in Hesse and Nassau, Germany. This article has been slightly abridged.