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2004-09-01

SPÖ and the economy 

Apparently the SPÖ has a lot of guts (though its leader Alfred Gusenbauer may have a bit less: 'Gusenbauer fürchtet sich' [DE], Der Standard). As the former SP-finance minister (turned industrialist) Hannes Androsch rightly remarks [DE], the ideology underlying the proposed new economic program of the party is reminiscent of Oskar Lafontaine, the German scourge of the SPD: this new brand of a socialdemocrat credo advocates net salary increases financed by substantially higher taxation of capitals and high incomes to get the economy going again. The most explicit Austrian defense of this new ideology I've found so far is a piece by SP-regional governor (and federal vice-party chairman) Erich Haider in DerStandard. His title: 'The antidote to neoliberal poison' [DE].

Since the early 1990s, Haider writes, net salaries in Austria have fallen, because neoliberal ideology dictated budget austerity and increasing cutbacks of social welfare. In this climate of economic anxiety, consumers have stopped spending, and this is the reason why economic growth has stalled. The solution: Cut labor taxation for small salaries so that consumer confidence will rise. Finance this by various new taxes on capitals and higher incomes - 'tax increases across the board!' the right-wing parties are screaming, exuberant about having found such an easy target for the next election campaign.

Unfortunately, the SPÖ/Lafontaine narrative about the reasons of the economic malaise in continental Europe is not very plausible, because it blissfully ignores the external reasons for the economic changes of the last fifteen years, in one word: globalisation. Economies like Austria have become even more open than they were earlier, due to the increasing ease of physical and immaterial transactions on the global scale, where new competition to the traditional European production models is springing up everywhere, from Bratislava through Shanghai to Silicon Valley. Why does the SPÖ not consider it a danger that increasing capital taxation will drive capital and jobs out of the country? The SPÖ has a track record of simplifications and denial in this respect, that ranges from its xenophobic immigration policies of the nineties to its recent campaigning against 'tax dumping' by Eastern European countries. As long as the party does not convincingly address this blind spot in its world view, it will find few voters who are willing to accept new taxation for the sake of an ideology that is not willing to even admit the really tough challenges.


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