The Dutch government’s recent
announcement that the welfare state will be substituted by an undefined
“participative society” may be the news story of the year — or at least
deserves to be. No doubt the headlines oversimplify as usual. But the
alarm is sounding: if the Dutch, who are a paradigm of wealth,
efficiency, and democracy and are at home in the globalised world,
declare the European social model defunct, what can we expect in
politically hobbled, closed societies like ours? How not to be depressed
if we are told that the havoc wrought by austerity policies will mean
the unsustainability of the chief hallmarks of the EU social model,
which we see as a natural aspiration for any individual or nation? Does
this mean that Europe will no longer progress, that it has hit a
ceiling and can now only recede?
Society
is based on three contracts. The first is between generations: those
of working age sustain the rest, both elder and younger. Though this is
sometimes forgotten, pensions are not really paid out of the savings
of pensioners, but out of taxes on those who are working. This massive
inter-generational income transfer (€121 billion in Spain in 2013, 12
percent of GDP) is accepted without question. The old, as the
politicians put it, are “our” elders. A pension system based entirely
on the recovery of the private savings made by each individual
throughout their working life would amount to a radical change in our
political, economic, and social model.
The
second contract is between classes. Also underlying our coexistence is
the acceptance of income transfers from the wealthier classes to the
poorer. Progressive taxation, which we also accept, is the proof of
this. Why should those who have more pay more? Shouldn’t we all pay the
same percentage? These are questions frequently asked by the American
libertarians, partisans of a minimal state limited to guaranteeing
private property and the fulfilment of contracts. But in “welfare”
Europe no party would go into elections with a programme proposing to
suppress progressive taxation, and with it the equal-opportunity
(education, healthcare) policies that (at least in theory) ensure that
one’s position in society will be determined, not entirely by birth and
social origin but, at least to some extent, by merit.
The
third contract is between territories. Every state has richer and
poorer regions, and cannot accept this divide and its perpetuation
merely as a symbol of the natural order of things. Independently of the
debate on the causes of these disparities and the ways to moderate
them, the consensus is that they have to be corrected by means of
income transfers, and that without such “territorial cohesion” it is
impossible to maintain the stability and unity of a country.
These
three contracts express, as the Americans like to say, the European
way of life. In Europe, democracy is the result of a broad pact between
capital and labour, substantiated precisely in the general acceptance
of an economy based on private initiative in exchange for a social
state that is redistributive in each of these three dimensions.
The
Dutch government now thinks that some aspects of welfare should again
be the business of the individual, while others should devolve upon
local rather than national authorities.
Read more: Did The Dutch Start The End Of Social Europe?
