Berlin Budapester Straße Gedächtniskirche (Church of the Memory) European Commission Audiovisual Library

Berlin Budapester Straße Gedächtniskirche (Church of the Memory) European Commission Audiovisual Library

A New Progressive Agenda Gerhard Schröder Agenda 2010 Gerhard Schröder Sticking to our goals, reforming our means vol 2.2 progressive politics 15

A New Progressive Agenda Gerhard Schröder While we are preparing for the Progressive Governance Conference and Summit social democrats must set their sights almost simultaneously on both the past and the future. We are the proud heirs of a movement with a noble history: a history of fighting for freedom, justice, peace and solidarity. In May this year we celebrated the 140th anniversary of the German SPD. The oldest party on our continent, the SPD has survived not only more than a century of change in the German political system, but also the hardships and, at times, horrors of repression to become the leading political force of our country. Throughout it all, the SPD defended the rights of working men If we fail to modernise ourselves and our societies, then uncontrolled market forces will modernise us. and women, and was a stronghold of hope for a freer, more equal society. The SPD has grown from being an association for the liberation of the working class to become a modern, popular party addressing the ambitions of all those who rally behind our goals of equal opportunity, solidarity and comprehensive participation. In 2003, we celebrate our achievements and accomplishments: the creation of a more liberal, open, peaceful, and compassionate society of good neighbours, in which economic and technological progress benefit the many not the few. But our story must not end here. We must never stop looking to the future. We have never been satisfied with the way things are, but rather have always striven to make this world a better place for our children and future generations. A social democracy that spent its time reminiscing about the past would, at best, be a glorious memory. At worst it would become a conservative, even reactionary force. If we fail to develop a comprehensive agenda that meets today s realities and opens up tomorrow s opportunities we will prove right all those who have already proclaimed the end of the social democratic century. Fortunately, nothing could be further from the truth. Our past provides us with many answers as far as our principles and our methods of pursuing them are concerned. Our experience is one of solidarity, self-organisation and mutual care. Together, our core values and good practices form a solid ground on which to face new responsibilities. But, our past does not necessarily provide us with all the means and instruments we need for shaping the future. Some instruments that had once served progressive ends may now be counterproductive or even harmful. Today, we are confronted with a whole set of radically new challenges: How can we cope with demographic change? How can our policies keep pace with the dramatic changes in our working lives? How can we best exploit the opportunities offered by a knowledged based society and new technologies? How can we avoid exclusion and mobilise everyone s potential to allow for maximum participation? How can we create wealth, justice and equality in a society that is culturally and socially diverse? How do we foster new economic dynamism whilst meeting budget 16 progressive politics vol 2.2

constraints? What is our response to new threats, the dangers of unilateralism and the widening gap in the world s incomes, living conditions and opportunities? Globalization is not an option. Globalization is a reality. It holds risks and creates anxieties, but it also opens up enormous opportunities. This is We must not get trapped in defending our past achievements, but instead must work to secure our future. why we need to be the instigators of change, not its victims. If we fail to modernise ourselves, if we fail to build modern social market economies, then uncontrolled market forces will modernise us, and freedom will be reduced to a luxury enjoyed by the few, not the many. None of our respective countries and governments has discovered the one true path that the progressive left should follow in order to solve its problems. We are united in our values and our aspirations, but our starting points may be quite different. A number of aspects and structural issues apply in one way or another to almost all of our European societies, which is why it may be helpful to compare and combine. After all, it is the genuinely European model of social inclusion and participation that we all wish to preserve and strengthen. In Germany, as in some other European countries, our systems of social security were built on an industrial society and full employment. Pension funds, health care and unemployment insurance are all based on the contributions of a large and strong workforce, income from those transfers was seen as getting your money back through a circle of contracts between the young and the elderly, the working and the temporarily unemployed, the healthy and those in need of medical care. An ageing society, new forms of employment, and a slowdown in economic growth have all pushed the cost of labour to unprecedented heights. Add to this the specific case of Germany, where the previous conservative government decided to cover the social costs of German unification by loading that burden onto the already overcharged contributing workforce rather than asking the tax-paying community to pick up the cost and you begin to get an idea of why the share of labour related costs has risen to a staggering 43 per cent of salaries. Budget constraints urgently require a limitation of consumption expenditure in favour of investment in infrastructure, education and innovation. The conclusion is obvious: if we want to generate growth and new jobs, we must lower those costs that eat into take-home pay. If we are serious about stopping exclusion, namely exclusion through unemployment, then we will have to limit our expenses. Financial constraints are not the only driving force behind the reform programme we have dubbed Agenda 2010. What matters most is our commitment and responsibility to shape the future, to hand over to vol 2.2 progressive politics 17

A New Progressive Agenda Gerhard Schröder our children and grandchildren the freedom to shape their own lives. On the progressive left, all our political action must be focused on the human being, and in particular, on the way people want to live, not the way we want them to live. That is why the reform of the welfare state is Exhausting all our means through welfare transfers would amount to ruthless egotism visà-vis our children. We must invest in their future. so essential. It is a necessary pre-condition for the success of future generations. Only with a modern welfare state will we be able to develop and fulfil the social and cultural potential necessary for a diverse society and a knowledgebased economy. Tomorrow, each individual will need to contribute to her or his full capacity, for there is no other way to create a good society. Everyone left behind or excluded from full participation is an irreparable loss. Only through the provision of security, empowering and nurturing citizens will we be able to live up to our potential and face the challenges of globalization. In past times, the main topic of welfare politics was the re-distribution of income and wealth. Firstly, we must remember that wealth can only be re-distributed once it has been generated. Secondly, we should note that re-distribution has limits, beyond which mere monetary transfers encourage dependence rather than work and responsibility. Thirdly, elaborate systems of re-distribution tend to produce side effects in opposition to the desired results. For instance, very long-term unemployment allowances for the elderly, invite employers to lay-off elderly employees, disguising this as early retirement, forcing the unemployment agency, at least partially, to pick up the tab. We cannot lose the valuable productivity of skilled and experienced employees, nor can we justify brushing people aside once they are 50. Agenda 2010 aims to halt this trend. Defend the achievements of the past or secure our future? We have always been proud of our history, and we are eager to learn from our mistakes as well as our successes. As social democrats we are constantly obliged to renew our policies, to adjust our instruments to new realities, and to propel political and social innovation. We are can rightly say that Renewal is one of our traditions. Our s must be a politics of enabling, empowering, and encouraging and demanding responsibility. Ferdinand Lassale, one of the most important early Social Democrats coined the phrase: All political action begins with speaking the truth. He added that all small mindedness and pusillanimity begins with camouflaging and suppressing 18 progressive politics vol 2.2

the truth. Today, one of the core challenges before us is to fully accept the reality of globalization, the digitalisation of our economy, and demographic change in an ageing society. Unless we accept these realities and assess their impact on our welfare systems, we are gambling with our future. There can be no doubt about the importance of a welfare state that effectively covers those risks the individual cannot protect themselves against. A functioning welfare state is quintessential for a society based on equity, solidarity and justice. Contingent on this are the particular instruments and regulations we apply in order to secure the functioning of Creating security must begin with fighting insecurity politically, economically and culturally. this welfare state. In an ageing society pension funds cannot be based solely on the contributions of the workforce and their employers. The same is true of health care when a perfectly praiseworthy increase in life expectancy could produce sky rocketing health costs if based on a dwindling number of contributions. Our pensions reform introduced a publicly subsidised element of capital insurance that was the right answer even though it implies a modification of a rather pay-as-you-go scheme. Health reforms must enhance quality and individual responsibility for prevention, replacing the passive attitude to exploding costs. Pension funds compelling the young generations to contribute without any hope of ever being paid back an equivalent do not promote social justice. The same is true of a system of health care financed only through Europe is the framework we must use to make our calls for greater justice, freedom and co-operation ever more compelling. ever increasing labour costs and, thus, lower purchasing power and unemployment. In Sweden, which conventional wisdom judges as a sound welfare state governed by social democrats, there is a discussion as to whether employers should, in the case of employee illness, continue paying them a full salary for 2 or 3 weeks. In Germany, this right is guaranteed for up to 6 weeks, This great achievement makes it possible that employees can be asked to take care of longer illness through privately funded insurance. Under these conditions, reducing state expenditure by encouraging private contributions is certainly no deviation from the principles of the welfare state. On the contrary: it indicates the path of a modern welfare system that social democrats should endorse if we want to live up to our responsibilities for the whole of society. There is something else our selfproclaimed but in fact rather conservative leftist critics should vol 2.2 progressive politics 19

A New Progressive Agenda Gerhard Schröder bear in mind: we must not only create and preserve social justice for those living and working today but also consider future generations. We have no right to consume and exhaust the resources they will need. We must weigh current welfare consumption against the need to build a good The core challenges before us are accepting the reality of globalization, the digitalisation of our economy and an ageing society. future. We cannot spend all our means on welfare transfers without leaving a cent for enabling and education, for modern infrastructure, for R&D and the pursuit of new opportunities. Faced with changing our means to social justice not, I repeat, our principles we know the future has more rights than the past. We must resist all those who hold that the welfare state, workers and trade union rights are the source of all evil. But our resistance to these neo-liberals will be all the more successful if we tackle the task of re-structuring the welfare state in order to modernise it and put it on new, more solid foundations. We must never forget that our proud movement is about freedom: the freedom of the many to develop their abilities and live according to their own expectations and imagination. This will always remain our core value. Our politics of freedom must therefore be a politics of enabling, empowering, encouraging and demanding responsibility. Just as there is no justice without full participation there is no freedom without solidarity and inclusion. As we fight exclusion and empower people to take on new rights and new responsibilities, we shall find that these very people are increasingly prepared to exercise solidarity and responsibility. Shape not accommodate globalization We have to adapt the pace of our policies for innovation and change to the runaway speed of globalization, as Tony Giddens terms it. But adapting our pace does not mean simply accommodating to the demands of globalized markets and those who benefit most from them. What has made social democracy not merely survive but sustain the perpetual change of almost one and a half centuries is our conviction that the way things are does not make for the best of all worlds. What has determined the degree of our political appeal is our conviction to take on political responsibility and shape the political reality according to our own values and goals. Globalization opens up enormous opportunities, but its benefits are unequally distributed, while its costs are borne by all mankind. But we also firmly believe that globalization and the changes it engenders in modern society do not wash over us in the way natural phenomena do. It is up to us to address the risks of insecurity, inequality and unfair access to opportunities, and to promote social democratic answers to those challenges. We must avoid all narrow approaches. We must work not just to promote free trade, but also to enable ever-greater numbers of people to 20 progressive politics vol 2.2

participate fairly. The same is true for global security risks, be they terrorism or global warming. Social democrats have never considered war as the continuation of politics by other means. Far from being fundamentalist pacifists, we follow the idea of crisis and conflict prevention, as well as patterns of multilateral, global and regional integration. Creating security must begin with fighting insecurity politically, economically and culturally. A European Union content as merely a large free trade area would be a missed opportunity. We must, to re-frame Tony Blair s famous maxim, be tough on international insecurity, and tough on the causes too. All politics begins with the truth. And it begins at home. Internationally, our main goal must be to build and further integrate Europe. After the people of Europe have so wonderfully overcome the division of our continent a European Union that contented itself with being no more than a large free trade area would be a missed opportunity. Here, as well as in regard to our domestic agendas, the simple truth is: if we want to send a clear signal for a brighter future, we need to demonstrate that we are ready to put all our political tools to one decisive test: do our means accomplish our goals and create more, and better opportunities? If not, are we ready to give them up in order to uphold our values? If we can do this, the best is still yet to come for social democracy. Europe is a fine example of what we set out to defend, to promote and offer to others. Europe was built on the ashes of war. We have overcome the rivalries of the past. Today, Europe stands for integration, social justice, and greater economic momentum. For us, Europe is a way to make our calls for social justice, freedom and co-operation ever more compelling. Many are pinning their hopes for a bright future on our European experience and performance. Our own appeal as an old social democratic movement, to the young of our own countries and the world at large, will largely depend on our ability to address the challenges of globalization and insecurity, and on the enthusiasm that we can spark for more justice and greater opportunities in a truly fair and multilateral world order. Gerhard Schröder is Chancellor of the Federal Republic of Germany. vol 2.2 progressive politics 21