Corona crisis turns into social crisis
Queuing for food because there's not even enough for the bare necessities: tens of thousands of food parcels were handed out in Geneva.
By Hans Baumann and Robert Fluder
The Corona crisis is exacerbating social inequality in Switzerland. Corrections are necessary and feasible.
[This article published on 2/3/2021 is translated from the German on the Internet, Corona-Krise wird zur sozialen Krise - infosperber.]
Within the socially critical think tank "Denknetz", the authors Hans Baumann and Robert Fluder deal primarily with questions of income and wealth distribution. To this end, the Denknetz publishes an annual distribution report and an "Equality Monitor."
The Corona crisis is exacerbating inequality. Many employees were and are affected by short-time work or became unemployed and suffered considerable losses in income.
The pandemic exacerbates existing inequalities.
In the first quarter of 2020, short-time work increased at an unprecedented rate. At the end of April, 1.3 million workers were on short-time work, representing nearly one-third of all workers. While this number has declined significantly as the economy has recovered, it was still nearly 220,000 in October, and 645,000 workers pre-registered for short-time work in November as a result of the second wave (SECO 2021).
Unemployment also increased by 46,000 in December 2020 compared to the same month last year. For 2021, the range of forecasts for the unemployment rate is between 3.3 and 3.9 percent. Given the tightened Corona measures of January 2021, the more pessimistic forecast figure is probably more accurate: compared with 2019, this would mean an increase of almost 70 percent.
Short-time work, unemployment and loss of employment are driving many families and single people into poverty and into dependence on social benefits. Hardest hit are cultural workers, smaller catering businesses and their employees, the travel industry, people in temporary and precarious employment, and especially women employed in the care sector, retail and personal services.
A large number of them were already facing low wages and poor working conditions before the crisis. Their situation has been further exacerbated by the Corona crisis. If a household has to get by on an income that is just above the poverty line, and there are quite a few of them (cf. Fluder et al. 2020), then a drop in income due to unemployment, short-time work or a drop in sales means that the people concerned slide into poverty.
In Switzerland, wage losses between the first and second quarters of 2020 due to unemployment and a reduction in working hours have so far been relatively low by European standards, averaging 3.7 percent (EU average -6.5 percent). Most of this was the result of a reduction in the number of hours worked (ILO 2020: Wage Report). It can be assumed, however, that employees with high incomes as well as a large part of the core workforce with secure employment and pensioners were hardly affected by crisis-related income losses, while in Switzerland, too, mainly low-wage earners and people with insecure employment relationships had to accept higher losses.
The Crisis Winners
There are also clear winners of the Corona crisis. These are mostly well-heeled people who were able to significantly increase their wealth even before the crisis. Companies in the IT platform industry, online stores, the pharmaceutical industry and related sectors were able to massively increase their sales and profits. In the U.S., seven of the richest billionaires (owners of IT and platform companies) alone gained 9 billion during the pandemic, while millions of employees became unemployed. According to the "Bilanz" survey, the wealth of the 300 richest Swiss increased by another 5 billion in the Corona year (Luzerner Zeitung, 26.11.2020). As a result of the crisis, existing inequalities have thus worsened significantly.
Three years of wage freeze
Inequality had already increased in Switzerland in the years before the pandemic crisis. Unions were able to negotiate only small wage increases after the appreciation of the Swiss franc in 2015. On average, wages increased by 2.5 percent since 2016. However, purchasing power increased by just one percent in four years due to inflation. During the same time, gross domestic product increased by 7.3 percent and labor productivity by 5.5 percent. Net corporate profits have increased by almost 9 percent. As a result, the winners in recent years have been corporations and the wealthy. The distribution of wealth has shifted significantly from wage earners to capital (Denknetz Gleichheitsmonitor 2020).
Sources: BfS wage index, labor productivity by actual hours worked, BfS. A negative value means that real wages are lagging behind labor productivity, i.e. to this extent the distribution has shifted from labor to capital. If the growth of real wages exceeds that of labor productivity, the distribution has shifted in favor of workers.
The Corona crisis will result in even greater shifts here, because many people in the lower part of the income pyramid in particular are threatened by unemployment, short-time work and wage cuts.
Distribution of wealth: the gap is widening
Compared with other countries, wealth in Switzerland is distributed decidedly unevenly: One percent of the population now owns 42.5 percent of all assets. Almost a quarter of households have no assets or debts. More than 55 percent of households have little or no wealth (i.e. they have less than CHF 50,000). The richest have also grown again in the last ten years (Baumann, Fluder 2020).
Looking further back, this redistribution from the bottom to the top becomes even clearer:
Sources: FTA, All Switzerland. Wealth statistics, various years.
World Inequality Database WID
Thus, the wealthiest one percent of taxpayers in Switzerland already held a very high share of all wealth in the 1980s and 1990s, at around one-third, and was able to increase this share considerably: From 30 percent in 1990, this has risen to over 42 percent (2016), and during the pandemic, the wealthiest were able to increase their assets even further.
At the same time, wealth inequality in Switzerland is very pronounced, even by international standards. But even in terms of income, the high and very high incomes have been able to grow at an above-average rate over the past ten years.
Source: World Inequality Database WID.
*France and Austria: Based on taxable income of adults; other countries: Based on taxable income of taxpayers: Base taxable income of taxpayers.
The Swiss tax system is by no means the redistributive machine it is sometimes suggested to be. OECD statistics show that the redistributive effect of taxes in this country is much smaller than in many other countries. High earners and the wealthy have also been relieved by various tax reforms in recent decades. Corporate taxes in particular have been greatly reduced. Taking into account the last corporate tax reform STAV, "properly taxed" companies pay only half as much tax as 40 years ago.
Poverty on the rise
While wealth is increasingly concentrated at the top of society, the number of people affected by exclusion and poverty has increased. For example, social assistance and poverty rates have shown an upward trend since 2013, and despite economic growth, the unemployment rate has decreased only slightly through 2019. Thanks to government support and social insurance measures, the number of people on social assistance has remained stable so far during the pandemic, according to SKOS case monitoring.
However, due to the increase in the number of people leaving the labor market, the rising number of needy self-employed persons, and the lower rate of abolition due to more difficult access to the labor market, SKOS estimates that the number of persons on social assistance will increase by 58,000 persons or 28 percent by 2022 (SKOS 2021). In addition, there will be an increasing number of households with incomes below the subsistence level who do not want to claim their right to social assistance or are unable to do so (see Fluder et al. 2020).
Sources: BfS SLFS, social assistance statistics, Statistics on Poverty and Material Deprivation (SILC). Poverty rate of employed persons: Proportion of people living in a household with income below 50 percent of median income.
Rising inequality, exacerbated by the Corona crisis, calls for a counterstrategy to prevent further polarization of society and, as a result, destabilization. What is needed are higher wages, especially for low-wage earners, redistribution via taxes and a new social policy. Additional public funds are needed to stabilize employment after the Corona crisis and for urgent measures to turn the climate around.
As was the case after the crises resulting from the First and Second World Wars (e.g. war profits tax, crisis levy or the federal military levy), a special levy on high wealth and top incomes would be necessary. In addition, corporate taxes should be raised again to a higher level and harmonized. Another financing option would be the accumulated profits of the SNB (Canetg 2021). In recent years, the SNB's distribution reserves have risen to a current 98 billion because of the high profits. These reserves belong to the Confederation and the cantons. To overcome the crisis, it would be appropriate to make one-time distributions from these reserves to the federal government and the cantons in multiples of the current four billion - or as recently promised - up to six billion.
These measures could slow down the increase in public debt, skim off part of the gains from the crisis and support those population groups that have been hit hardest by the crisis.
Hans Baumann is a freelance economist and publicist. He was an economist and member of the executive board of the Unia trade union for many years.
Robert Fluder, Dr. phil., sociologist, works as a project manager in research at the Bern University of Applied Sciences BFH in the area of social security, thematic area inequality and poverty. He was responsible for setting up research in the Department of Social Work at BFH and is a member of the Denknetz.
Chuquiacamata copper mine in Chile. Copper is consumed and wasted mainly in rich countries. © CC-BY-NC-SA 2.0
The Taboo in Glasgow: The Growth and Wear Economy
Niklaus Ramseyer / 14.11.2021 The greatest danger to our planet is more and more people who want to live like we do in Switzerland or Germany.
The studio guest smiled slightly surprised. Then he said: "Every six-year-old child understands that you can't grow forever." That was in the Sternstunde Philosophie on SRF television in mid-October. The moderator had asked the guest (in minute 29) what he had against economic growth. With the reference to the six-year-old child, of course, she did not give up. There is also "qualitative instead of quantitative growth," she said. She played an "expert" who cheeky claimed that modern "houses that produce energy" were an example of such "qualitative growth". After all, "innovation" is also growth – "qualitative growth".
Then the studio guest smiled almost pityingly. He did not point out that moving from a large villa with oil heating to a small house with solar cells on the roof was probably also "innovation" – but probably the opposite of growth. He stated only briefly and concisely that growth is synonymous with progress, as it is "myth-making" and "nonsense". He recalled that important inventions such as the steam engine or great cultural achievements such as classical art paintings and musical works were created centuries ago "in societies that had almost zero growth". In any case, permanent growth is a rather new phenomenon that is not even a hundred years old.
"A culture that consumes its own prerequisites"
Harald Welzer: "Stop!"
The studio guest is Harald Welzer. He is 63, and was originally a social psychologist. Today he heads the "Stiftung Zukunftsfähigkeit Futurzwei". In his latest book "Obituary for myself" (288 p. by S.Fischer) he calls for a "new culture of quitting". And he means not least the cessation of permanent growth in the capitalist, one-sided profit-oriented wear economy.
Welzer provides both impressive and frightening facts about this "relatively new" economy and culture: Since 1900, the mass of man-made goods (with corresponding consumption of resources and production of waste) has doubled about every 20 years. (Which corresponds to an increase of a good 60 times!) At that time, these products would have made up 3 percent of the biomass, the living nature. Last year, "the dead mass – i.e. houses, asphalt, machines, cars, plastics, computers, etc. – exceeded biomass for the first time".
Our cultural model "systematically ignores the question of where the resources come from." But: "At some time it just doesn't go any further". Because: "A culture that, like ours, consumes its own prerequisites must be a mistake." A mistake that leads to the fact that humanity on "their" planet now lives every year from August on its finite reserves – and with its growth economy destroys and eats its own foundations faster and faster.
But – and Welzer also emphasizes this – every person in the north-west of the world now lives more comfortably and luxuriously than France's "Sun King" Louis XIV in his magnificent Palace of Versailles.
Global warming is a fatal consequence of the basic error of eternal growth
Global warming, which is now being intensively discussed everywhere (and temporarily at the political summit level in Glasgow), is just one of the many fatal consequences of this fundamentally wrong way of doing business, Welzer notes. Their defenders are "standard economists who, like priests, pay homage to God growth." These people could not deal with the fact of finiteness. Threatening finite phenomena such as climate change or species extinction and the destruction of biodiversity would be ignored or even denied by the growth apologists.
And when very dangerous consequences of growth, such as the warming of the earth, "simply could no longer be ignored", these economic theorists and politicians tried to react with "magic formulas". With the term "decarbonisation", for example. This means a world economy without carbon, which would of course be illusory and not feasible at all. And even if "everything had been decarbonized and electrified", the basic problem of unrestrained growth – the constantly increasing consumption of finite resources – would still remain unsolved.
Welzer calls it "increased world consumption". This is not only misunderstood as a problem and ignored, but quite the opposite: "Increased world consumption is still considered desirable in the media as well as in advertising as well as in the economy and is subsidized and advertised accordingly." However, the fact that numerous products "would only be sustainable if they did not exist" is overlooked. In short, the unchecked increase in world consumption is the real reason "that we have a survival problem in the 21st century".
Humanity is decimating its livelihood thoroughly
Only one species in the entire universe of fauna and flora acts as a "world consumer": man. Welzer states: "There is no other species in the history of the whole zoology that has decimated its own livelihoods as thoroughly as Homo sapiens, which is rather unwise in terms of sustainability." This had "destroyed or displaced other life forms to a degree that no other animal species has ever managed".
And there are more and more specimens of this animal species of ruinous "world consumers": While only 1.6 billion people lived worldwide around 1900, today there are almost five times as many with almost 8 billion. And every year, almost 80 million net new additions are added. This corresponds to the entire population of Germany. The UN has been warning about this dangerous problem every year since 1989 on 11 July on "World Population Day" – without much success.
Population growth is taboo
Because where the powerful in politics, business and science hardly address and problematize the unsustainable growth economy (and argue about individual follow-up problems such as CO2 pollution or global warming), they taboo the associated population increase even more. This even happens at the "Centre for Development and Environment, CDE" at the University of Bern (Centre for Development and the Environment), which is actually responsible for this.
At the beginning of this year, this institute was asked whether it would not be possible to launch a research project that would investigate the following three questions:
1. How many people could live well and sustainably on Earth at the same time? "Sustainable" means to use up the finite reserves of the planet faster and faster, as is the case now. And "living well" would have to meet the six criteria of the British philosopher Ted Hondrich:
– physical well-being;
– Freedom and strength enough to determine one's own life in different situations;
– respect and self-respect;
– good social relations;
– good access to culture.
2. What would the maximum population look like for Switzerland in this sense?
3. What humane and mindfully acceptable ways would there be to achieve these sustainable conditions in the long term, both nationally and worldwide?
"No scientific answer"
CDE Director Sabin Bieri replied in detail to further inquiries – but evasively and dismissively: "As far as your proposals for research topics are concerned, there is a fundamental problem in the understanding of science," she writes. Because: "There is no scientific answer to your questions, at least no clear ones." The basic problem is that humanity has long had the necessary "system knowledge", but that "little is changing". And: At her institute, one prefers to deal with "transformation knowledge". And for example, with the question of "what a 10 million Switzerland could look like".
Well understood: Not whether such a mass Switzerland is sustainable or makes sense for everyone in terms of a good quality of life. Or what this would look like in comparison to a 4 million Switzerland. Growth and population growth appear to be assumed and accepted. Bieri had previously publicly warned urgently: "We are about to drive the world to the wall at full speed."
Glasgow creates only lukewarm symptom therapy
The example shows that hardly anyone dares to seriously name and research the basic problems of economic growth and population growth. In Glasgow, meanwhile, the "Masters of the World" are capitulating with the CO2 problem and global warming to an important and threatening aspect, but only to a partial aspect of the acute danger – to a consequence, a symptom of the growth and wear economy.
And they don't even achieve something substantial: they just set themselves new "goals" – which they then never achieve. Serious researchers are already expecting that not even the "goal" of a maximum of two degrees of warming can be realized. Loud and often repeated commitments to the protection of the rainforest are even less credible: The ruinous destruction of forests in Latin America and Southeast Asia continues more brutally than ever. But not only there: "Protected" primeval forests are also being deforested and irrevocably deforested in Romania (in the EU).
Finally learn to stop!
Welzer sees a fundamental problem here: "We have no methodology for quitting." And: "Because we don't have a methodology for quitting, we don't stop." Specifically for the threatening global warming, this means: "In order to cope with this, one would have to stop with many, the exploitation of more and more raw materials to produce more and more products and services, for example." On the contrary, one would have to "stop increasing the size of our economic metabolism and start reducing it – and that means nothing else than learning to stop".
Conferences like the one in Glasgow are not expected in this regard. The elders and the youngest assess the summit in Scotland the most soberly: There will probably be "just a lot of talk and nothing done," said the 95-year-old Queen. And the young climate activist Greta Thunberg demanded squeely: "No more blabla!" In Glasgow, a lot of hot air is produced in advance. And worse: Conference participants flew with hundreds of private jets from all over the world over thousands of kilometers to the Scottish industrial city – to then talk long and loud and polished about the urgently needed CO2 reduction and "decarbonization".