The Oxymoron of Social Democracy

It has been only a few days since I moved to Germany and I quickly had my first cultural disorientation. Even though I should have known it from living in Belgium, I forgot to stock up food before Sunday and literally spent the day walking over 8 kilometers in and around my upscale Hamburger suburb of Othmarschen, looking for an open supermarket, kiosk, café, or just about anything that sells food… Even the only vending machine I finally found didn’t work, leaving me hungry. Finally, I sought refuge at an open sushi bar run by an Asian immigrant and had sushi for all three meals.

Turning into a ghost town on Sundays is not unique to Hamburg. I have repeatedly been in that situation in Brussels, Luxembourg, and Northern Denmark. Somehow, these countries would rather have you starve than let you shop on the only day of the week reserved for taking care of errands such as grocery shopping! To be fair, not every city in Europe has this BS. I got by fine in London, Paris, Warsaw, and Istanbul where I have lived for much longer.

So, I did my research. In Germany, this started in 1956 when the legislators passed the Store Closing Law (Ladenschlussgesetz), which, at the time, mandated every store to close at 6.30 PM during the week, 2 PM on Saturday, and not be open at all between 2 PM on Saturday and 8 AM on Monday. The hours were liberalized a bit over the years but the law still stands.

The justification came from the unions: That storekeepers shouldn’t work long hours and if the government didn’t force everyone to close, they would have to work around the clock to keep up with the competition. As if competition (i.e., lower prices and higher quality products) is not what we as a society want!

Some politicians argued that repealing the law would pave the way for Walmartization of Europe, as big stores can remain open for much longer due to having a cost advantage and access to larger labor supply. So clearly, we as a society don’t want more jobs for the people as a result of increased consumer (hence labor) demand!

In sum, the government is telling me, the average consumer, that they will willingly create an inefficient market that would force us to pay more for the same products and have us compensate for the hours that the local storeowners don’t want to work. I wonder if they have similar plans to support pharmaceutical executives?! Then I might shut up.

– o –

So, am I writing this just to complain about the store hours? Obviously not. It is the whole mentality behind such bad governance that has plagued this continent increasingly more since the late 50s. The mentality, which some call social democracy, that has condemned the wealthy European nations from great significance and productivity to political irrelevance, humongous public debt, and unsustainable social security schemes.

To close the deficits in their social security spending, Europeans would have to impose such high taxes on their residents that essentially no one would be earning anything considerable, hence forced to leave their countries. There was a time when one could steal from the rich and give to the poor, à la Robin Hood, but in the age of second-wave globalization and increased mobility, it is less and less feasible. The news about the wealthy in France leaving for less-oppressive tax regimes, such as Switzerland or the U.S., even before any tax hikes are passed by Hollande should be proof enough (see this, this, this, and many more…).

Robin Hood Tax

At least these protesters are honest!
Source: Friends of the Earth Europe

Solution? As with any problem created by socialism, the only solution is to use force to make people stay or at least leave their capital behind. Like the Soviets and many others did. Would it work? Maybe in the short term, or even a couple of decades.

But is it democratic? Of course not. By definition, socialism requires impositions on people and taking away some of their civil rights. Think about it: If something was in the best interest of the individual, s/he would do it anyway, and the society would not have invented socialism in the first place. It would be like inventing a political movement that tells people to breathe.

Then, why do governments infringe on people’s right to choose what to do with their resources? At the end of the day, these are democracies and not some communist dictatorships, right?

I think if they asked their people if they want lower prices with more variety available for longer hours at their stores, they would all say yes. It is not even an assumption, just straightforward logic. But the same people would probably also say they want to work less for higher wages. Also straightforward logic. Are they contradicting themselves? Probably. Are they stupid? Not necessarily; they are just like anybody else. European conundrum reminds me of the Californians, who, using the direct representation legislature, keep proposing and approving measures that would reduce taxes and increase public benefits at the same time. The result: Never-ending multi-billion dollar bail-outs by the federal government!

Source: The Right Spin for Americans – The Social Disease in Greece

Lesson? Populism corrupts the economy and slowly impairs democracy.

Is there a way out? Only if we get strong leaders who are willing to serve the longer term benefit of the people, and not their immediate popularity. Margaret Thatcher once famously said: “If you set out to be liked, you will accomplish nothing.” Believe it not, she was the longest serving Prime Minister of Britain in the 20th century. So, she clearly was liked –but only after the people saw the proof in the pudding (not based on populist rhetoric).

Will Europe ever get a strong leader as such? To her credit, Merkel (coincidentally or not, another woman) has stood out among her peers as a leader trying to reform Europe’s ailing condition. But Nicolas Sarkozy and David Cameron had both promised to reform social security and trade legislations but failed to accomplish much, as they, too, caved in to populism. If anything, Cameron has focused more on passing anti-immigration laws than reducing the government deficit, which, I foresee, will damage Britain’s diversity which has made London such a uniquely cosmopolitan center of productivity and creativity in Europe.

– o –

However, we see a change in European attitudes against social democracy in light  of the Great Recession and the ongoing debt crisis. Both for the right reasons (people realize the detrimental effects on the economy) and, in my opinion, the wrong reasons (people don’t want to support the less wealthy, if they are not sharing kinship). Europe has become more united than ever before and each country in itself has become more ethnically heterogeneous. Now suddenly, there are visible differences between who gets to subsizide and who gets subsidized. It is not very long until racism and cultural stereotypes will erode the system.

For years, Europeans argued for social safety nets and supporting their fellow citizens in times of hardship. But now we read about the German taxpayers complaining about their 50%+ income tax subsidizing some “tax-evading, early retiring, lazy Greeks, ” or the ethnically French refusing to let the poverty-stricken African-French to benefit from the social security system, and of course the Scandinavians who were in love with social democracy until some Muslim immigrants with no “strong Lutheran work ethics” (according to this article) showed up at the door! “The Swedish Social Democrats are currently in disarray,” the article explains, “[a] party that alone held power virtually uninterrupted for most of the 20th century currently only has support of about 25-28% of voters.”

Incidentally, that is why I argue that social democracy could never take hold in the U.S., because it has always been a multi-cultural, diverse country with existing socio-economic differences along ethnic lines.

– o –

So, I don’t hesitate in saying European social democracy will fail. One day, we will be free to shop at any store we please on any day we please. We will be able to work as long as we want, and we will get compensated for it, as we create more value for the society. And a day will come when the European governments will compete to lower taxes because they wouldn’t be able to support their increasingly poorer populations while all the productive and the creative move to other hubs of productivity such as Singapore, Hong Kong, or the USA.

Then, Europe can move back to its hard-working and democratic ethos that marked the post-WWII reconstruction era. And when that happens, I will be watching gleefully from a café on Champs-Élysées, sipping on my aromatic café au lait.

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