Poverty Returns with Misguided Policy
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POVERTY RETURNS WITH MISGUIDED POLICY
By Franz Segbers
[This article published on May 12, 2011, is translated abridged from the German on the Internet. Up to 2014, Dr. Segbers was a professor at the University of Marburg.]
When you hear the word poverty, what picture do you have? Is it the beggar, the unemployed Hartz IV recipient or the woman, the single parent taking care of her children? Who comes to your mind?
Poverty in Germany strikes the long-term unemployed engineer, the academically trained single parent, the factory- and service person slaving away, the deregulated subcontracted worker, the creative and precarious small- or Internet entrepreneur and parts of the core personnel in businesses. Very normal pensioners stand in line at the soup kitchens. Poverty extends to the middle classes and our communities that for a long while were not stricken by poverty.
"I was not really described as poor." Elisabeth is a single parent. She lives with her two children in a small apartment on the outskirts of Frankfurt. She has a part-time job that she supplements with Hartz IV (radical German welfare reform that combined unemployment assistance and income support, drastically reduced the duration of benefits and was ruled in violation of civil rights by the German Constitutional Court). She has slightly more than 900 euros. Is she poor? No, she says. "We have a tight budget but we aren't starving. When the children need new things, I get money from my parents... " She has no prospect of a full-time job...
There are many Elisabeths in Germany. Every eighth person has to manage with an income below the subsistence level. European statistics set the mark at 60% of the median income of the country. Whoever has less is defined as poor. Three groups are particularly afflicted by poverty: unemployed at 54%, single parents at 40% and migrants at 27%. Those are nationwide numbers; the Berlin numbers are always higher. But poverty is different than income poverty or lack of money. There is no objective definition of poverty. Poverty means fellow persons have to live in miserable housing, have low-paying work, can hardly feed themselves and suffer with poorer access to education. This undersupply is largely a consequence of income poverty. The more or the less a rich society is ready to hand over part of its wealth to combat the plight of fellow citizens, the more or the less poverty exists in a society. Poverty is the exclusion of people from the possibilities and resources of a society. Why are they excluded? Who excludes them?
Poverty is returning. That must be our first discovery when we speak about poverty in Germany. Once it was fought and became a marginal problem. Why is it returning? For a long while, there was the firm belief that life goes forward and we live in an elevator society. Our children will be better off. That was the motto when I was growing up. This picture of the elevator society where everyone would be prosperous is not reality any more. Everyone is not on an upward course any more. The picture has turned upside down. While some are going upward, others are going downward. A Lord's Prayer society has replaced the elevator society. The formerly secure middle class at its outskirts has long been eroding. Children with good education can not find good jobs and work their way from one traineeship to the next and one temporary job to the next.
In the 1980s, unemployment was the main reason for poverty. In the 1990s, child poverty moved into the center of attention. Since the turn of the millennium, work is the main reason for poverty. Now poverty gnaws in the situations of many families who are counted in the middle class. Why is that? Why is poverty returning and why is the number of the poor increasing - and also the number of the rich? Why is the middle class shriveling?
The poor are the first ones who suffer from a false or misguided economic and political policy. Economic and financial crisis on one hand the crises of the social state are two sides of one and the same coin of a flawed economic and social policy. A policy according to the motto "Less state and more market" has failed. That was the EKD's (Evangelical church in Germany) theme in its word on the global economic- and financial crisis of June 2010. In its Foreword to the memorandum, Wolfgang Huber, chairperson of the EKD, said: "A new era or chronology has begun. We speak of the time after the crisis as twenty years ago in Germany after the turn... The call for a strong state can suddenly be heard where privatization and deregulation were heralded as bringers of economic prosperity."
The financial market crisis has not ended by any means - it has only shifted. It has become a crisis of the public budget. The crisis costs should now be shifted to the weaker and the poor and not be assumed by the profiteers of the crisis, the banks, the speculators and the wealthy. The German government has made it unmistakably clear from whom it will get the money to finance the financial crisis. The "austerity package" of over 80 billion euros altogether will result in more poverty. There can be no talk of social justice as long as Germany represents a tax haven for heirs, speculators and the super-rich.
The tax revenues are rising again. The question is: who pays for the state and its tasks? Consumers and dependent employees finance the state. However, owners of capital are spared. The extent of their exemption is amazing... This discrepancy has a system. Like the Black-Red coalition, the Red-Green coalition ensures that consumers above all pay for the expenditures of the state by paying the sales tax, the energy tax, the lotto tax, the tobacco tax or the insurance tax. On the other hand, the taxes on profits and incomes are constantly falling - and recently only amounted to 39.2% of state revenue. This shift is dramatic since everyone pays the consumer taxes - whether poor or rich. Officially taxation in Germany should be according to output. The technical term is "progression." However progressive income taxes are actually becoming increasingly insignificant. The tax reforms of Red-Green and Black-Red were not without consequences. Public poverty rose when the top tax rate fell from 53% to 42% and owners of capital only had to pay a 25% compensation tax on their interests and dividends.
The empty public treasuries are politically caused and are not natural phenomena. For years, the financial- and budgetary policy relied on tax reduction...
The consolidation of the budget in view of massive state indebtedness is strategically instrumentalized for "the absolutely necessary" reorganization of the social state. The revenue side is not a theme since budget revitalization is declared the pressing goal. Social-political reforms for the whole society are made plausible by pointing to the empty treasuries. The practical restraint - saving or economizing - is imperative and prevails at the end. So a policy of empty treasuries is staged through rigorous revenue cuts.
The existence of millions of people was threatened and their jobs and social security destroyed. Many generations will have to bear the costs and the interest burdens. But the financial crisis also led to an incredible enrichment of the actors of finance capitalism. In 2010, the hedge-fund manager John Paulson earned $5 billion. Paulson earned $2.4 million an hour... A society with only one John Paulson is degenerate and feudalist. In 2010, the top 25 hedge-fund managers "earned" more than $22 billion. More dividends were poured out in 2011 than in 2010. Nearly all DAX-companies paid their investors very generously... Keeping a tighter rein on hedge-funds was ended by the lobbyists of the finance industry. The financial market transactions tax is still a utopia - like a stronger regulation of the finance system or even the crisis causal agents sharing in the crisis costs.
What we experience is not only an economic crisis that can be ended like a disturbance. We face an economic-, social-political and ethical orientation crisis. When we first identify this crisis and its causes, we can also properly see the problem of poverty.
The previous political-economic concepts "More market - less state," deregulation, privatization and liberalization have failed.
The head of Deutsche Bank Ackermann confesses to having changed from Saul to Paul: "I do not believe in the self-healing powers of the market any more." Thus Ackermann has broken away from the faith he preached for years - as if the pope could fall from the catholic faith! Reversing direction is vital. Admitting a mistake is not enough. Such social inequality has long been regarded as economically dynamicizing. Distribution-justice was taboo. What is the result? Since 1998, the number of millionaires doubled to 800,000 and rose again in the time of the financial crisis. Millionaires do not know any crisis. But there are simultaneously more and more poor in a rich society.
The state that first said it was poor and weak and then was made weak should now help out and step into the breach. The weakening of the social state, the social insecurity, the impoverishment of people, and the financial crisis are results of a false misguided policy that has failed.
POVERTY IS POLITICALLY INTENDED AND ECONOMICALLY CAUSED AND IS NOT A NATURAL PHENOMENON
Poverty in a rich country is the result of political decisions and is not a natural phenomenon. Poverty is produced. It is not made by the poor even if responsibility is shifted to them. Income poverty is the end on a scale of income conditions whose other end is formed by wealth. Therefore we cannot speak of poverty and be silent about wealth.
The Federal Republic of Germany finds itself at a critical stage of wealth development. Germany's wealth has never been distributed more unjustly. The wealth distribution from the bottom and the middle to the top accelerated in the last years according to a study published in January 2009 by the DIW. According to this study, the richest 1% of the population possessed 23% of the wealth in Germany while the lower half of the population had no assets and 10% only held debts.
This inverted distribution has structural and political causes and is not a natural phenomenon. What causes could be named?
The first cause is the deregulation policy of the last three decades accompanied by the promise that the self-healing powers of the market were the best control instrument for social development. The consequences were the "achievers" earned more, wages fell and social benefits had to be slashed. The governments were not strong enough or willing to resist the pressure of the international finance markets. The deregulation of the social state and the deregulation of the finance markets are two sides of the same coin.
Politics has favored the rich:
the property tax was rescinded,
the profits of the "grasshoppers" were made tax-free,
And the top tax rates and business taxes were lowered.
The second cause is the social reforms. Agenda 2010 and the Harts laws intensified the inequality in the lower income sector. Unemployment benefits II forces the majority of recipients of unemployment assistance below the subsistence level. The reforms deformed the social solidarity and individualized the social risks. The social state was dismantled and the system broken. In the economic crisis, the dismantled social state severely impacts people. The damaged social state no longer fulfills its function of protecting citizens from the uncertainty of the market. The social state that was slandered so irresponsibly and permanently dismantled is needed more urgently than ever. Cutting or eliminating the social state benefits and services and deregulation of the economy are two sides of one and the same coin.
The third cause is the weakening of the unions and collective bargaining. There will be a fair distribution when the unions first gain a fair share of the social domestic product...
These three main causes were provoked by financial market capitalism. This special form of the development of capitalism consists in weakening and reducing market-limiting institutions. Stock markets with the trading of fictional capital are the real control center of finance market capitalism. Businesses are capital investments n the hands of shareholders. Consequently, managers only serve the interests of shareholders. The interests of the workforce, dependent employees, customers, the public authority and the interest in preserving the natural environment do not play any role or only a microscopic role. The financial markets put pressure on the businesses so the fewest possible taxes, the lowest possible wages and the least possible social- and environmental fees are paid. Flexible employees become a maneuverable mass serving the profit goal while the capital profit rate is fixed at 16, 18 or even 25% despite the crisis. Mammoth financial assets acted like a fuel for the financial markets. This money seeks ever new investment possibilities in the casino and puts the social state under pressure.
Stagnating mass incomes were the backside of the rising income- and wealth concentration... The partial privatization of the social security system and vital necessities, the public health system and nursing care expanded the investment spectrum on the financial markets. Everything becomes a means to profitably invest money and earn a living.
MONEY HAS BECOME A RELIGION TO WHICH WE SACRIFICE EVERYTHING
Bishop Wolfgang Huber rightly criticized the profit goal of 25% and pilloried Mr. Ackermann, a worshiper in the great dance around the Golden Calf. Ackermann is not the only culprit. A whole system that dances around the Golden Calf is involved and not only individuals...
Bishop Huber rightly criticized high-profit goals as a dance around the Golden Calf. Money has become a god demanding sacrifice. We can no longer afford the social state, it is said. Benefits according to Harts IV are so low they violate the human dignity command of the German Basic Law - according to the judgment of the regional labor court in Darmstadt along with precarious jobs and low wage sectors. The promise of a boundless increase of wealth that is hidden behind greed is a religious theme and not only a moral problem. Jesus spoke of an opposition between two powers God and mammon (Mt 6, 24/ Lk 16, 13) and did not condemn riches.
Mammon means "what one trusts." Money becomes a power that the Bible calls mammon whenever the purpose of money goes beyond exchange. In his interpretation of the First Commandment, Luther moved an antithesis - God or mammon money - into the center of the speech for God. "That on which your heart cleaves and you rely is your God... "
The enrichment of one results in the impoverishment of others. Excessive profits and dismantling the social state occurred at the expense of the social state and fair wages. In Latin America, theologians of liberation speak of a "sacrificial capitalism." Poverty is politically intended and economically created and isn't collateral social damage. Poverty is part of unbridled deregulated capitalism as water is part of a shower. Therefore poverty and exclusion must be seen as consequences of a neoliberal economic policy and the costs calculated just as CO2 emissions are counted as an environmental consequence of a flawed eco-policy.
HOW CAN WE BE A DIAKONICAL CHURCH IN THE CRISIS?
Which church does God need for our country? Does it serve the healing and salvation of this society that was wounded twice by social uncertainty and the financial crisis? Is it enough to be a Samaritan church that binds the wounds of victims fallen among robbers and organizes tables?
Money is a central theme for Christians. We could learn this in the example of the Good Samaritan. The one fallen among thieves gets back on his feet... Repairing the structures of thievery is crucial. That is a political task. The engagement of a Samaritan church that only counters social state deficits through works of mercy is celebrated as an innovative element of an active civil society but makes possible dismantling the social state and social rights. It wants to help in a distress but falls into a mercy trap and accompanies the backward social-political step from fighting poverty to caring for poverty.
A church that limits itself to the help-ethos of mercy and organizes tables or social department stores as help against poverty reduces the biblical message. It is in danger of falling into a trap of mercy. Mercy is from the Latin misericordia "having a heart for the poor." Biblical spirituality is a spirituality of mercy that presses for justice. Biblically mercy is by no means a mere feeling. Mercy is expressed in a concrete act of justice and presses for just structures and a just politics.
The concrete reality of poverty in a rich country is the great question to us. That we raise this question and see it from the perspective of the poor is a fruit of mercy. Biblically based spirituality is practice in the right way of seeing. The catholic theologian Johann Baptist Metz says Jesus' first concern is the suffering of others, not the sin of persons or theological questions. He calls the biblical dowry "compassio," an elementary sensitivity to suffering that opens eyes, feels sympathy and sides with those gravely burdened and in distress with all power and passion. This passion becomes a compassio, a "world responsibility sensitive to suffering." Compassio is not sympathy or an apolitical empathy. Compassion sees suffering and therefore seeks justice. Compassio has a categorical imperative: eyes open (Hans Jonas). There is no experience of that God proclaimed by the Bible without looking.
Dietrich Bonhoeffer's vision of a "church for others" was the motto for a church that sought the best for the city. "Only the one who cries for the Jews may sing Gregorian." He said to the apolitical pious of his day. He wanted the singing of hymns allied with the works of the just - and vice versa. Translated for our time, Bonhoeffer's saying means: Only the one who openly does his utmost for welfare recipients made poor may sing Gregorian.
The Good Samaritan has become the model of helping and love and affection to persons "who fall among robbers." Whoever helps the poor fallen among robbers does not only take the Good Samaritan as a model. What should be done to help the poor is clear according to Luke 16 in the parable of poor Lazarus with "Moses and the prophets."
Jesus explains this in the parable and cites Abraham as the highest authority. What do we hear when we listen to Moses and the prophets?
The key to understanding the total biblical picture in the judgment of poverty and riches can be read in Moses and the prophets. Moses means the social laws. Prophets are the men and women who interpret these social laws for their time so they are God's word for their time. With social laws, God's will can be converted in binding rules of justice. The poor have rights and should be validated. The poor should not only be thankful for mercy. Whoever is poor is someone whose right to participate should be validated according to the Bible. This legal claim characterizes the biblical response to poverty. "But there will be no poor among you" (Dtn 15, 4).
However social conditions were and are contradictory. A deep gulf existed between the claim of the Torah and social reality. Jesus cites the verse "For you always have the poor with you" (Mt 26, 11 and Dtn 5, 19) in apparent contradiction to the ideal of a society without the poor. While poverty persists, poverty should not exist. The land is richly blessed and there is enough for everyone. No one needs to live in poverty and distress. The Bible breaks through the seemingly unshakable reality and sets the programmatic obligation against it: "But there will be no poor among you... for the Lord will bless you" (Dtn 5, 4).
People have always dreamt of a society and a world without poverty. They have postponed this dream in utopias or the world to come. The biblical draft of a just world shares this hope. However, this ideal of a just world without poverty can become reality when the wealth with which the land is blessed becomes the blessing of everyone. Therefore the rich are obligated to share the riches of the land so it can become the blessing of everyone. Blessing lies on wealth when shared but disaster occurs when wealth is not shared.
The basic conviction of the Bible is outfitting the poor with rights and not asking the rich and powerful for mercy with open hands. For the Bible, fighting poverty always means curtailing the power of the powerful and helping the poor with the aid of the law. Only the strength of the law ensuring the blessed circulation of wealth from the rich to the poor helps against the power of the stronger. Whoever interprets poverty as a deficiency in material goods will appeal to mercy so there can be sharing. But whoever sees poverty as a lack of rights will ask about justice. The Bible answers poverty by holding together mercy, law, and justice. The poor should not be dependent on the open hands of the rich or on their charity. One must hope and be thankful for mercy; people have a claim to the law.
What distinguishes a Samaritan community from a diakonical community? We are living once again in a Lazarus society. But what do we hear when we listen to Moses and the prophets today? Hearing Moses and the prophets means naming injustice by name, intervening legally for the interests of the poor and being concerned for rights and justice. Inequality cannot be combated through works of mercy since the poverty of the many and the riches of the few are politically caused and did not arise through a lack of mercy. Hearing Moses and the prophets means seeing the poor compassionately and doing your utmost for their rights and justice.
A Samaritan church helps in distress but does not deliver from distress. But a diakonical church does both: helps in distress and is concerned that people have rights. The key for rights and justice today is strengthening and developing the social state. What holds together a diakonical church, mercy, rights and justice?
A spirituality of open eyes: In the EKD memorandum (Evangelical church in Germany), we read: "A new conversion to the Diakonia is vital in which the joy and hope, the sorrow, fear and distress of people needing help become the joy and hope, sorrow and anxiety of Christians." A culture of solidarity and high esteem of the foundations of the social state are crucial. If this culture of solidarity disappears, the foundations of the social state also disappear. Christians cannot resign to living in a Lazarus society where the unnoticed poor live on the street. They ask about the reasons and the persons responsible. A spirituality of open eyes does not only see the distress of people but asks: who makes them needy? Why is there poverty in the midst of wealth? When we adopt the plight of people as our own, we first see and regard them with compassionate eyes.
Praxis of the hands: From time immemorial, the Samaritan service has been one of the basic tasks. We see the tasks with the eyes of mercy.
Designing social policy: For the Bible, mercy, justice and rights are always connected. Christian engagement can not be limited to the immediate service. We cannot erect enough tables to compensate for a misguided and deficient social policy. Therefore mercy must press for rights and justice. The road between Jerusalem and Jericho must become safer so no one falls among robbers any more.
Fighting poverty is first of all demanding politics to combat poverty through just policies. We need a policy that helps the wealth of a society become the blessing of everyone again. New approaches include a wage from which one can live in dignity; a need-oriented minimum security and reintroduction of the property- and inheritance taxes.
Organizing a poverty policy with the following themes could deliver people out of the crisis in a socially just and economically efficient way:
The social state must protect from poverty and contain elements of minimum security. Raising the benefits for adults, children, and youths of the Hartz IV laws, children's basic security and minimum pensions are long overdue.
The educational system must guarantee social ascent irrespective of social origin;
A progressive tax rate and high tax share;
Family-wage jobs and diminution of the low-wage sector: a minimum wage that protects from poverty... ;
Increasing the female share in the working life and compatibility of work and family for parents;
Retraining groups that are disadvantaged on the labor market;
The countries that realize the best results in these seven points have the lowest poverty rates in Europe: Denmark, Finland, Sweden and the Netherlands. Whoever wants to fight poverty must test the respective social system by these indicators.
Investment in the social state means creating additional employment fields in health care, nursing, therapy and education and building environmentally-friendly transportation systems. Both would strengthen the human quality of life and the public welfare, for example, an innovative development of the social state and also elude play money for casino capitalism. Beyond that, a guaranteed basic income would be an innovative development of the social state that would be economically sensible and socio-politically necessary since the existence of poor persons would be safeguarded. A basic income would make unnecessary more tables organized by charitable churches!
The church is urged to raise its voice for those made poor and unemployed and demand a policy for them and with them that is oriented in the ethical guideline proclaimed in the Bible: "But there will be no poor among you."
The poor need rights and justice, not alms or handouts. A diakonical church needs a double-strategy as long as politics fails in its task of averting poverty and social state undersupply in a rich country: help in the distress and politically do everything to help people out of the plight. It can only do this when it becomes a justice-movement.
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