The LSAP’s plan to reduce “social envy” will create more of it

For Luxembourg’s upcoming parliamentary election, there will be firsts for nearly every party. The centre-left CSV will bring out some fresh logos as well as Claude Wiseler, a lead candidate who battled through a leadership contest where, in the past, candidates seemed self-evidently put in place. The liberal democrat DP will be running with the slogan Zukunft op Lëtzebuergesch (Future in Luxembourgish) – an unusual focus on the Luxembourgish language for a party that, for decades, has always put fiscal responsibility first. And hearing Luxembourg’s socialist party, the LSAP, vowing to combat “social envy” definitely falls in the category of new events, especially considering it has accused other parties of fostering it for years.

In a PlusPunkt newsletter from 2016, LSAP MP Taina Bofferding writes about the government’s social policy: “Accusations that the governing parties’ family policy forces families to live according to a given model are … wrong. In this debate, the opposition deliberately ignores the benefits and plays the ‘old’ family models against the ‘new’ ones. For purely political reasons, social envy is fuelled here, and the mood in society is poisoned.”

Now, social envy is back on the agenda, but this time the LSAP is addressing the envy of Luxembourgers unhappy with social housing benefits received by refugees. The party’s chairman, Claude Hagen, an MP and the mayor of Diekirch, is calling for a distribution system that would alternate between residents and refugees, effectively making all social housing equally distributed between the two (fun fact: Hagen didn’t actually use the word “residents” but said “Luxembourgers”, apparently targeting that part of the voting population that had a negative reaction to the influx of refugees into the country, which begin with the refugee crisis in 2015).

The socialist proposal fails to convince for three reasons: it doesn’t make practical sense, it’s an example of political flip-flopping, and it doesn’t address the actual problem.

Unless the number of refugees mirrors the number of residents in need of social housing one by one, the suggested system in neither fair nor efficient. Even though Hagen suggests “we take turns between taking a refugee and a resident because of waiting lists”, the actual statement would have to be that the social housing distribution is supposed to be 50/50 under the system he suggests. However, if either group exceeds the other in quantity – if there are more residents eligible for social housing in a municipality than there are refugees, for example – then refugees would still be advantaged, since a higher percentage of refugees would benefit from social housing compared with residents. Under that scenario, the policy would appear to be fair on the surface, but it wouldn’t actually be fair at all. In fact, those situations could create social envy of a far worse nature because now those affected would have reason to feel betrayed by the authorities.

On the political side, those who know Luxembourgish politics can easily imagine the reaction coming from the LSAP had any other party called for a similar system. The socialist worker’s party most probably would have decried the campaign of slander and social division, and the word “populist” would certainly have been among those to describe whoever had suggested it. But now, with less than two months to go before the election, the votes of those aggrieved by the government’s handling of refugees are looking very tempting, indeed.

And because the socialist party has been so vocal about the housing problem in Luxembourg, we should also address the underlying problem of why people need it in the first place, instead of tinkering with its redistribution or arguing for more construction. Luxembourg’s problem is a question of supply and demand. The Grand Duchy’s population is growing, and housing construction is not keeping up with the demand. This is due to strict requirements on where a house can be built, which might keep the country very green but not very affordable.

As a general market principle, an investor will only choose to invest into a business if he or she believes it be profitable. Instead of attracting capital for a lot of land and a lot of housing construction, the government’s policy is pushing investors to acquire more expensive land in lower quantities. The more homes the government takes off the market by creating so-called social housing, the worse it will make the problem.

The idea that rent subsidies, which the LSAP proudly advocates, would make life easier for low-income households is equally fictitious. Rent subsidies only incentivise landlords to increase rent by the average level of the subsidy. Instead of the funds ending up in the pockets of low-income households, it will feed those who own real estate. If Luxembourg’s Left actually cared about reducing housing prices, it would open the market for more construction and oppose a system of subsidies and social housing. As a general principle, which can be applied both to refugees and residents who are on benefits, the best social programme is a job.

This is specifically true for refugees, who are still barred from the Luxembourgish labour market on arrival. If newcomers were allowed to work freely, become entrepreneurs or find employers who needed their skills, they wouldn’t need government handouts and would find themselves accepted much more readily by the local community, through their work.

So yes, the LSAP might win a certain voter with its new policy, but it still fails to address the actual issue. Unless, of course, that wasn’t the party’s intention in the first place.

This article was first published by the Luxembourg Times.

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About Bill Wirtz

My name is Bill, I'm from Luxembourg and I write about the virtues of a free society. I favour individual and economic freedom and I believe in the capabilities people can develop when they have to take their own responsibilities.

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