Watson Institute for International and Public Affairs

Former Heads of State Discuss 'the Next Left' in the Global Economy

April 14, 2011

Three former leaders of Italy, Austria, and Chile, who have all led progressive parties and movements in their long public careers, discussed the future of the “Next Left” at the Watson Institute this week.

Former Italian Prime Minister Romano Prodi was joined on Tuesday’s public panel by former president of Chile, Ricardo Lagos, and ex-chancellor of Austria, Alfred Gusenbauer. All three hold professorships at Brown.

The policymakers shared their views on the economic and political challenges faced by the next generation of the left – focusing on the global conceptions of inequality, income re-distribution, and taxation, as well as on the shifting axes of world power and the implications of the most recent global financial crisis.

In his remarks to open the panel, Prodi highlighted, among other things, the political challenges of using taxation as an instrument for income distribution, a sentiment that was later echoed by Gusenbauer.

“I paid the price when I became severe with taxes,” said Prodi, describing events that led to a Senate vote of no confidence against him and, consequently, his resignation in January 2008.

Lagos emphasized the need to place more importance on equality, noting that in the United States, for instance, the wealthiest one percent of the population earns about 25 percent of total income.

Furthermore, inequality is a fundamental determinant of social outcomes and health, according to Lagos, who cited findings from the recent book Spirit Level: Why Equality is Better for Everyone by Richard Wilkinson and Kate Pickett.

According to the Lagos, the book’s findings show that that there is no rise in life expectancy and level of happiness above a threshold level of income per capita (roughly $20,000); furthermore, the book also established a strong correlation between high levels of inequality and social/health challenges of societal mobility, life expectancy, education, crime, and imprisonment.

In Latin America, according to Lagos, levels of per-capita income are rising though the region has yet to reach the “mythical” $20,000 threshold. “We’ve done it through mere fiscal expenditures,” he said, “but we’re still unable to touch taxes.”

Lagos also emphasized the importance of regulation and the critical role that international organizations like the World Bank have to play in restoring global financial health; for Latin America, the former Chilean president said it is important for countries to “speak with one voice.

“For the first time, we had a global financial crisis which Latin America had nothing to do with,” he said.

Gusenbauer criticized the “populist extreme right,” among other influences, for causing a global political crisis; such a crisis, Gusenbauer said, has undermined the “notion of nation” in different ways — including the transfer of power away from the nation-state because of European Union integration, and in Europe, the dilution caused by immigration.

Gusenbauer also suggested that taxpayers are bearing the cost of bailing out banks and other financial institutions during the crisis, while at the same time facing government austerity policies that reduce their public services.

 “There is enormous expropriation of ordinary people,” he said, “because the banks were able to convince governments to bail them out.” He also added that allowing self-regulation in the financial sector was pointless and ineffective.

“Self-regulation is just a sophisticated way of saying ‘no regulation.’ It’s like asking a dog to be a guard over sausage,” Gusenbauer said.

Gusenbauer concluded by emphasizing that in an era of rising financial capitalism, the “Next Left” has to clearly decide which agenda it should pursue: “Either an agenda that serves Wall Street or one that serves Main Street.”

This week’s panel was the most recent in a series of Next Left events focusing on the future of progressive policy at the Watson Institute. Last October, Lagos and Gusenbauer spoke about “The Next Left: Globalized Social Democracy in the North and South.” In 2009, the series looked at the implications of Barrack Obama’s presidency for progressive policy.

By Watson Institute Student Rapporteur Dominic Mhiripiri ‘12