Christian Fuchs

General elections will take place on September 28, 2008 in Austria. The coalition government between the Social Democrats (SPÖ) and the conservative People’s Party (ÖVP) has broken up because of conflicting political interests and logjamming.

The topics that the competing parties have thus far presented are superficial and neglect the actual problems that people are facing in their everyday lives (such as the sharp rice in prices). This can also be observed by taking a look at the topics that are represented on election posters:

The ÖVP placards racist, right-wing, conservative values: “Enough is enough! Somebody who wants to live here, must speak our language. No immigration without taking German courses. No rights without duties”. “Families need help against the rise in prices! A double amount of family allowance each Sepember. Promised-Kept!”

The SPÖ relies on the unpolitical topic of trust in politicians: “Werner Faymann. The new option”. “Enough quarreling. Werner Faymann. SPÖ”

The same strategy is pursued by the Green Party that has election posters, which present their front-runner saying: “Permanent quarrels? Not with me”. “Dropping principles? Not with me”.

The Freedom Party (FPÖ) also attempts a racist-populist strategy: “Social security for our people. They are against HIM. Because HE supports YOU. HC Strache 08″. “Asylum fraud means flying back home”

The Liberals (LIF): “Sincerity. Openness. Fairness. This would be a three-way coalition for the next government!”

Promising abstract trust by persons and parties is almost cynical in a time when many people distrust politicians because they benefit less and less from overall material wealth.

The true issue for the people is income distribution. But this is neglected by the parties because they do not seem to have solutions and finding solutions would be uncomfortable for some.

Statistics show that corporations and the rich become ever more wealthy in Austria because the mass of people becomes relatively poorer.

Profits, wage share and productivity in Austria (Source: EU AMECO Database)

The image shows that in the past 40 years the productivity in Austria has doubled (blue graph, left scale). This resulted in an overall growth of wealth. But the wages have been relatively declining. The wage share, which is the pshare of the total economic wage sum in the gross national product (GNP), has decreased from more than 70 percent in 1980 to approximately 55 percent in 2008 (yellow graph, right scale). At the same time corporate profits have grown almost exponentially (red graph, right scale. They amount to approximately 80 billion Euro in 2008. This shows that the reason that many Austrians think that financial survival becomes ever more difficult and that the recent price increases have hit them hard, is that corporations increase their profits by keeping wages relatively low.

The next image shows that the profit share (blue graph), which is the share of the economic profit sum in the GNP, has continuously increased in the past decades in Austria.

Profit share in Austria

It is also interesting to see which Austrian corporations are the largest ones. They are ordered by capital assets (in billion Euros) in the next table.

Austria’s largest corporations 2008 (Source: Forbes 2000)

1 315 872 Austrians (21.4% of all incomes) earned annually less than 8 000 € in 2005 (Source: Statistisches Jahrbuch 2008, table 34.19). Their income amounts approximately to the profits of the 13 largest Austrian corporations listed above. (Total income of these 1 315 872 Austrians (Statistisches Jahrbuch 2008 ) 4.829 billion Euro, total profits of the 13 largest Austrian corporations: 9.26 billion US$=approximately 6.26 billion Euro).

The next image shows that the profit rates, i.e. the relation of profits to investment costs, of listed Austrian corporations have had high magnitudes during all of the past ten years. In the past couple of years, the average profit rate of listed corporations has always exceeded 10%.

Profit rates of listed Austrian corporations. Source: Shareholder Performance Test 1998-2007, Contrast Management-Consulting

The average tax rate on capital was 23.4 percent in Austria in the year 2006. The average tax rate on capital in the European Union is 33 percent. In Ireland, France and Denmark, it is above 40 percent. Austria is one of the taillights in the ranking of tax rates on capital in Europe (Source: Tax Rates on Capital 2006, Eurostat).

Tax Rates on Capital 2006 (Eurostat), in percent
Ireland 42,5
France 41,5
Denmark 40,9
United Kingdom 39,7
Spain 38,7
Cyprus 36,6
Italy 34,4
EU27 33,3
EU25 33,3
Belgium 32,3
EU15 31,9
Czech Republic 24,9
Finland 24,6
Germany 23,4
Austria 23,4
Netherlands 20
Slovakia 18,1
Lithuania 14,1
Estonia 8,4

Why do many Austrians feel so affected by the recent prince increases? Because profits stand over human interests in Austria. Because capital taxation is so low. Because wages increase at a much lower rate than profits. The only solution is a trend reversal – to admit that corporate profits and one-sidedly distributed wealth are immoral and perverse and that a redistribution from corporations and the upper class to lower classes is needed desperately. How can this be achieved? By a heavy increase of tax rates on capital and wealth. And this also means that it has to be clearly communicated in the public that there are groups (corporations, stockholders, the rich), from which a certain wealth needs to be taken, in order to give it to poorer groups. This shows that established Austrian parties are not willing to put an end to income inequality. They represent dominant economic interests. As a result, the issue is neglected and people are told that the causes of the increase in prices are immigrants or that the solution is increasing the family allowance. One should not expect change after these elections. Election campaigns, in which there is a personalizing, superficial focus on trust in politicians and that are silent on the issue of capitalism, are expressions of a politcal circus show that ridicules the suffering mass of the people.

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