Philippe Lamberts: “Revitalise the Government Debt, They Argue, Because It Depresses the Spending Power of Businesses and of Families
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debt and a lack of competitiveness. We have to lower Philippe Lamberts: “Revitalise the government debt, they argue, because it depresses the spending power of businesses and of families. But if it is economy with green investments so, how come we never hear that viewpoint expressed by a businessman. Their second obstacle is a poor competitive position. Our businesses are not competitive enough, the orthodox claim. We need to sell more On May 22, 2014 the citizens of because it boosts economic growth. the Netherlands, like the citizens of all the other To restore growth, they wield a surprising tool: a blunt member states, will go to the axe. On the pretext of “sustainable, inclusive, smart polls to choose their growth”, the troika has left a trail of destruction through representatives for the southern Europe. They have imposed draconic European Parliament. But what restrictions on government expenditures in order to curb do we really know about the a national debt which is judged to be similarly draconic. European Union? They aim to revive competitiveness by cutting labour costs. That implies lower wages and hollowed- out social The Green European Foundation, with the Dutch services. The choices are political ones, and are not Foundation Bureau de Helling, is organising a series neutral in social respects: if you decide to sanitise the of lectures in Utrecht featuring well-known speakers budget by cutting expenditures, it has a greater impact to discuss how the EU works, what its role is and why on those who are low on the income scale than on those we should care about the up- coming elections. in higher brackets. The better off are able to compensate the inadequacy of public services by paying more, for Philippe Lamberts, a Member of the European example for private schools or clinics. The pressure on Parliament from the Belgian Ecolo party, presents labour costs also has most impact on those who live on a his vision on a socially committed green economy. wage and do not have some other source of income. It’s time to resolve the crisis with a Green New Deal. But what does that imply in concrete terms? He The challenges of the 21st century extends terms like “debt” and “competition” to the What are the real challenges that face us in the 21st economy, mankind and the environment, and he century? Lamberts points to two time bombs threatening argues for widespread investment in a greener human welfare: one of social inequality and one of the Europe environment. Economic inequality has risen in most Western countries in the period between World War II and the present economic crisis: the rich have become richer and the poor (relatively) poorer. The crisis has aggravated this In a series of six lectures, Bureau de Helling, the Green disparity. By the end of 2012, no less than one in four European Foundation and the GroenLinks working group Europeans were living below the poverty line. Even in on Europe delve “deeper into Europe”. The Green New Germany, the most prosperous EU member country, Deal – a green and socially responsible strategy for there is an extremely high number of poor people despite tackling the economic crisis – was Philippe Lambert’s the relatively low unemployment figures. This indicates main theme in the third lecture. Lamberts has earned his that our society is unhealthy. Wealth too is unevenly reputation in the European Parliament by framing strict distributed. A mere one percent of the population of Europe owns 25 percent of the total capital (60,000 billion legislation for banks. euros). A mere 5 percent of the capital is left over for the less well- off 50 percent. This inequality is growing year The aspirations of the orthodox by year. Let’s start by looking at the answer favoured by orthodox economics. That means the mainstream parties: not only How long will it take before violence erupts? Equality is the Christian Democrats and the Liberals, but also those not just a goal for its own sake. Wilkinson and Picket’s who call themselves socialists like François Hollande. book The Spirit Level shows that numerous indicators of They build their houses on the quicksands of the health and security correlate with economic equality. A orthodox economic discipline. They have all been trained greater equality of incomes leads to a higher life in the same theories, and are all incapable of adapting expectancy – even among the richer members of more their models to the limitations of our planet. egalitarian populations. An equal society is a society with less tension. The orthodox contingent strives for economic growth. They perceive two main obstacles to growth: government Then there are the problems of the environment. Global Philippe Lamberts: „Revitalise the economy with green investments 2 climate change is not the only environmental threat to questions about the price of capital. Our own financial our planet. The scarcity of certain mineral resources is markets expect a 15 percent yield. That quickly becomes becoming increasingly acute. Many people point to infeasible once employees insist on a wage rise. Besides, recycling as the solution but that too has its limitations. high yields on capital are in any case unsustainable in a Consider titanium. Titanium dioxide is widely used as a competitive market economy. Acting to reduce the wage white pigment in paint. How can you recycle it? Scrape it bill is taking the easy way out: cutting wages by 10 off the wall? It’s not recoverable. We face not only a percent gives immediate results. The alternatives call for dearth of oil in the course of this century, but also investment, and the results will not come instantly. We shortages of titanium ore, coal, natural gas, iron, live in a short- term society. aluminium and copper. The orthodox believers respond that we can always discover new mineral resources; but As for the “debt” factor, the consensus, particularly in the they do not allow for the fact that our planet is limited. Netherlands and Germany, is that debt is bad. It is certainly unfair when we shift the burden of debt onto a The area of agricultural land per head of the population is future generation. That is an intergenerational injustice. also shrinking. We now have only half of what was Lamberts has no objection to using the term debt, “but if available fifty years ago. The world population has surged we do let’s talk about the whole concept.” Debt has and the deserts are spreading. The orthodox claim that several components. Firstly, there is government debt, we can increase yields by modern agricultural about which people make far too much fuss. Then there techniques. But industrial agriculture depletes the are private debts. These are supposedly innocuous, but quality of the soil. that is pure ideology. Market participants, in the orthodox view, know what they are doing with their cash, whereas These are the two major challenges. The accelerating politicians act irresponsibly. Is there any truth to this? degradation of our planet and of humanity is the fault of Before the economic crisis hit Spain, there was a huge an ideology which sees short term profits as the only rise in debts held by companies, families and financial important indicator for society. Everything must be done enterprises, while the government debt shrank. Why is for sake of the market. Everything is turned into a private debt harmless but a rising public debt commodity and is open to speculation. This applies even dangerous? Why do we place severe constraints on to our lifespan, upon which the life assurance companies governments but only mild ones on private debt? If debt speculate. We are moreover blackmailed by the financial is dangerous, we ought to impose strict rules for giants: they threaten us with social dislocation if the companies, families and banks. Financial debt may be government fails to shore up the old financial structures risky but as long as you can use it to create sufficient from taxation. added value it may be good. If you only use it for consumption or speculation, it’s not good. Growth, the only answer in orthodox quarters, cannot solve these problems. Besides there is a relation But there are other kinds of debt: social debt and between the growth of an economy and emissions of environmental debt. Inequality can impose a heavy carbon dioxide. Some argue that it is possible to decouple burden on future generations. If the level of education economic growth from CO2 emissions, but the declines, in orthodox terms, the productive potential of correlation can only be weakened and not broken. In society is diminished. You can gradually reduce a social recent decades, economic growth in Western society has debt but it calls for a huge effort. Environmental debt failed to reduce the environmental burden and has done refers to the exhaustion of non- renewable mineral nothing to counter inequality. resources and to the global climate. It is practically impossible to recover from an environmental debt, Debt and competitiveness as green concepts particularly in the short term. The time scale is a The two main concepts of orthodox economics are debt geological one. It’s not hard to redeem or restructure a and competitiveness. The Greens must not sidestep the financial debt, but the obsession with public debt will not discourse on competitiveness. Competitiveness depends help us reduce private debt, social debt or environmental on the value you create in relation to the cost of creating debt. it. The costs include not only labour but also energy, raw materials and financial capital. When it comes to The Green New Deal improving competitiveness, orthodox economists This is the challenge facing the political fraternity: how consider only labour costs.