Vienne Chan

Author: vienne

  • Another lens on the German retirement debate

    (The English version of the German text published in Makronom.)

    In the German pension reform conflict, the Junge CDU claims that stabilising pension payments at 48% is unfair to the younger generation that must bear the cost of supporting a bloated generation of dependents. They claim this is a question of generational justice.

    If we are to talk about justice, then we should examine the retirement system ethically. Given the CDU’s ‘Wirtschaft first’ (Economy first)agenda, this is not a superfluous exercise. Ultimately the CDU forces the question, ‘Do people serve the economy, or does the economy serve people?’ 

    Framing the retirement debate as a matter of generational justice, the inverse of the Generational Contract, which is what the German PAYGO system is also known by, is bound to lead to murky ethical waters. Based on a transactional logic, it inevitably antagonises different age groups by justifying the allocation of resources based on accomplishments and potential. Given the climate crisis, colonialism, and historical wrongs that continue to be committed, it is difficult to talk about any meaningful form of generational justice. The argument can quickly become nihilistic. 

    The existing PAYGO system, where the labour force makes regular contributions to support retirees, is imperfect. Women and anyone excluded from good, formal working conditions have long been most impacted by elderly poverty. The current retirement system perpetuates many systemic injustices, partly because wellbeing in old age is conceived as a right to be earned.

    Rights, however, are not earned. It would be more fruitful to situate the topic within the broader welfare debate, as pensions are ultimately concerned with how those who cannot work live in our society, and what support we make available to them. 

    The Demographic Transition is about People

    Ageing demographics, whether in Germany, China, or other advanced economies, threatens classical economic assumptions of welfare provision, where a larger labour force supports a smaller group of dependents, whether through financial contributions or through the production of goods and services. But at its core, the demographic transition is about people. Productivity per capita is not fixed, and a smaller workforce can achieve more, but only if the country invests in its workers rather than relying on cheap supply chains and the continued exploitation of often gendered and migrant labour.

    The CDU’s proposed cuts to social spending directly undermine the labor force. Shifting costs to individuals—such as the reduction of Care Level 1 benefits—would directly weaken the structures that enable labor participation. Women, facing a gender pay gap of 17.6% and correspondingly lower pensions, already absorb the bulk of unpaid care work. They often outlive partners, leaving them not only with smaller pensions but also no caregiver. This exacerbates gender inequality across the entire life course and the bill would undo decades of work toward greater gender equity.

    Industrial policy that hopes for innovation requires people and their capacity to innovate and to adapt. Economists have already raised concerns that innovation policies are slipping into a middle technology trap. This suggests not only a lag in technological ambition but also investment in education and social infrastructure will be necessary.

    Ostensibly to compensate for the shrinking labor force, other proposals include a mandatory year of volunteer work for elderly citizens and tax-free earnings from Aktivrente to encourage older people to continue working, Yet productivity and longevity are not synonymous. Late-life conditions such as dementia and reduced mobility are highly unpredictable, though preventive care may delay onset or reduce severity. Without accessible healthcare, longevity becomes a fiscal burden rather than an asset.

    Purchasing Power – the Missing Lens

    Lobby groups such as the INSM argue that economic growth is key to securing higher pensions; however housing, energy and care coss have risen significantly faster than wages and pension adjustments. Increases are irrelevant if the essential basket of old age outpaces them. If we are concerned about how to pay for welfare, then it is equally important to consider factors affecting purchasing power, sovereignty over the supply of essential goods and services, and their prices.

    Consider that no pension architecture can be socially successful if retirees do not have secure housing. Germany’s homeownership rate of 47.2%, is the second lowest in the OECD, leaving millions exposed to rental volatility. 12% of the German population spends over 40% of their income on housing costs, above the 8.2% EU average. For younger generations, the housing expenses delay wealth accumulation and reduce their own retirement resilience.

    A move towards a system where pensions are funded through investments in the capital market, risks reinforcing this dynamic. Pension funds invest in housing companies such as Vonovia, whose business models profit from rising rents. Meanwhile, public spending on housing allowances has soared: housing subsidies rose from €1.4 billion in 2021 to €4.3 billion in 2023, after the reform to include heating subsidies. While households urgently need support, it is worth asking whether redirecting billions into rental income – without expanding affordable housing or renewable energy for energy sovereignty – is an efficient use of public funds.

    By 2030, approximately 29% of the German population will be over 65. A funded system offers no escape because it fails to address the ownership and prices of key expenses; as demonstrated in the housing crisis, profits come at the expense of higher costs of living. Germany has been in a stagnation since 2018 and PAYGO can be a robust solution as it requires no savings –  it was established when Germans had no savings after the second World war. But investments in people are needed. And of course, in climate action.

    Strong social investment, affordable housing, and climate resilience benefit both current retirees and younger workers. Rather than hoping to continue as usual, the demographic transition is an opportunity to examine underlying assumptions about savings, and to re-embrace welfare as a right.

  • Europe’s social welfare crisis

    “When Friedrich Merz recently declared that Germany can no longer afford its welfare state, he was diagnosing a crisis that extends far beyond German borders. Across Europe and in many advanced economies, ageing populations and rising welfare costs have governments scrambling for solutions. But this crisis is a product of the very ‘solutions’ we’ve been pursuing for decades. (….)”

    An Op-Ed in EU Observer

  • Pensions and the Capture of Social Reproduction

    Abstract

    Pensions are the conceptual basis of social welfare. Through contributions from the entire labour force towards the end of each individual’s labour life, the pension system has an underlying effect that binds together the means of social reproduction. Banking on our need for security in future old age, pension funds have captured and supported financialisation of multiple areas for social reproduction. Despite their scale, pensions are failing to secure wellbeing in old age, and elderly poverty has become a political issue exploited by right wing populism in Germany. Looking at the notion of saving for old age as essentially misguided, I argue that a contractual framework of welfare will be fundamentally challenged by the ageing population. Examining the current failings of the PAYGO system, I consider how public provision of care and a capabilities based pension discourse can have much to contribute to economic organisation, the re-design of the pension system and to securing the means of social reproduction.

    Vienne Chan

    Paper published in the Forum for Social Economics, Sept. 2024

  • The pitfalls of pricing  

    Carbon credits, Emissions Trading Schemes, CO2 pricing — market-based solutions and pricing mechanisms have been the primary tools used to combat the effects of climate change. By pricing fossil fuel use to include all the externalities — that is all the social costs it comes with — then it would be clear that fossil fuels’ real price tag is too high, become non-competitive on the market, and eventually disappear.

    But there is often the worry that raising energy prices would be politically challenging. Fossil subsidies can help soften the blow. This however leaves us on a self-defeating path with no way out. If the logic is that by raising fossil fuels’ price they would become expensive and unattractive, the effect is immediately negated with subsidies. But in a climate strategy where the key to ending fossil fuel use is by phasing it out with its “true” price, the price of fossil fuel cannot be lowered because the systemic damage caused by its use incurs a high cost. 

    Pricing externalities, especially when they involve assigning value to human lives, can involve highly political dimensions. For example, the IMF prices mortality risk according to a country’s income, with an assumed elasticity that declines as income rises. Put in lay terms, people in poor countries are willing to die for less money than those in rich countries. But these communities do not value their lives any less than those in Europe, and valuations based on their current poverty perpetuate the long history of inequality imposed upon them.This approach overlooks the historic and ongoing injustices faced by many countries in the Global South, particularly those trapped in cycles of debt and disadvantage. Prices aren’t neutral. They come with long histories of negotiations and power.

    How much is our future worth?

    Tax revenues from higher fossil fuel prices can theoretically offset some of the damage; we should however be sensitive to the limitations. One should not confuse compensation with loss. If we treat the two as synonymous, with price increases to pay for damage, including loss of life, are we not, in effect, accepting economic complicity in this harm?

    How much money a human life is worth can never be adequately addressed by pricing mechanisms. What matters is preventing the damage and loss of life in the first place. And we are currently caught in an ideology of price that freezes action while the consequences of inaction grow rapidly. Homes, livelihoods, and lives are increasingly at risk. Governments are not businesses—they are policymakers with a responsibility to use tools beyond pricing mechanisms to shape the future of society.

    Relying solely on price mechanisms overlooks the fact that governments have other tools. For instance, consider the global ban on DDT for agricultural use in 2001—a harmful pesticide once widely used but prohibited through decisive regulation. Similarly, public schools ensure that everyone can access their right to education, regardless of economic background. In the same way, fossil fuel use can be restricted through regulations, such as the fossil fuel non-proliferation treaty, while public investments in clean energy can make it widely available to households, ensuring affordability and equitable access across all income levels.

    Taking collective ownership of the green transition

    Over-reliance on pricing renders the market as the main area for action. The market is the arena of the private sector. Given the scale of the climate and environmental challenges, and the existing wealth inequalities, ownership of the green transition in the market can only belong to a few large financial actors; most people simply do not have the financial means to buy any meaningful stake in these projects. Even in a purely hypothetical scenario, where every person owns a share in a green project, ownership is fractured into an individual basis, where some will sell their shares. If we can learn from historical example, the division of commonly held lands into private ownership in Indian Country in the US reduced indigenous tribes’ sovereignty; the fractionation led to sales of native land and even when stubbornly held onto, the fractionation entailed significant administrative burdens that hindered communal economic development.

    While the private sector’s cooperation in the implementation of climate resilient technologies and processes is necessary towards a green transition, it is known that private finance will be insufficient to tackle the scale of climate and environmental challenges. A recent report from Finance Watch found that even with an extremely optimistic hypothesis, capital markets can only meet a third of the EU’s essential financing needs. 

    Rather than stepping up to bat, in the recent conclusions concerning EU commitments for COP29, the plan is however to shift the responsibility to the private sector: [The] private sector will have to undertake the largest share of the required investment in net-zero, resource-efficient and climate-resilient development” (my italics).

    Insufficient private financing as the primary investor for climate-resilient development creates a scenario where essential needs are forced to compete for limited funding. Not only does this climate of austerity further risk missing the limited timeframe we have to avert climate catastrophe, but mobilisation of private financing requires sufficient profit as return on investment, and ultimately, these returns are extracted from citizens. 

    Purchasing power has decreased sharply in the past few years, and 48% of Europeans fear they will soon be in a precarious situation. A private financing led approach not only strains resources but also deepens social inequality—a situation that far-right movements have been quick to exploit. Such a policy poses a long-term threat to the democracy we value.

    Public investment is the most effective tool for ensuring a green and just transition. The counter-cyclical impact in government spending is not insignificant as Europe’s economy remains fragile, with deepening economic woes in Germany. While concerns are often raised about the sustainability of public debt, the greater risk lies in not acting boldly enough. Trust in public institutions—vital for both democracy and economic stability—has eroded due to a series of crises, including the ongoing cost of living crisis. People’s sense of both physical and economic security has been shaken, and austerity measures have only deepened this distrust. 

    The green transition is about how each and every one of us will survive in the future. Without public ownership, there is little protection against corporations extracting profit from our most basic needs for survival. 

    Our collective future is at stake, and it is much more than the sum of individual existences. Our future demands more than market tweaks, and we desperately need a plan to end fossil fuel use. Now more than ever.

    Vienne Chan, 2024

  • The village

    Lecture notes for talk at Weird Economies Portfolio event


    Reflecting on my participatory art project in the village of Janoshida, Hungary, and its aims. With rather few financial resources at its disposal and suffering from brain drain like most rural areas, the village hoped that art could introduce new possibilities to its economic development.

    (..) 

    There are a lot of socially engaged art projects, where artists design interventions to help participants reflect upon conditions so we can move towards a better world.  And that is how artists can contribute to society. But I didn’t want to over promise because art can do some good stuff but we are not magic. And in thinking about this, I realised that despite the many claims the professional sector may make, our claims to impact are actually very hard to prove.

    Not only are these claims to impact difficult to prove, but because it’s about what artists can do for others, these arguments tend to provide poor defence for other forms of artistic practices such as drawing, as well as for amateur art.

    And then, what if, in the example of Rick Lowe’s Project Row Houses, the project “works” not because of the artist’s intervention, but because the work created conditions of artistic practice for everyone? What if art making benefits the artist more than the audience?

    Art is imaginative, sensitive and creative. But we can’t claim exclusivity to these qualities. But what if making art is what makes you desire change in general, which is a precondition for change itself? Many socially and politically active people I’ve met over the years have an amateur artistic practice after all. And if art has all these great qualities – and I think it does – and the art maker benefits more than the audience, then perhaps what we need to consider is actually broadening the amateur practice of art. 

    From a professional perspective, this might sound like suicide. The professional arts sector has been trying to demonstrate its impact on society as we try to secure funding to continue working. If we say that the art maker benefits more than anyone else, then why should the art maker even be paid?

    Yet the professional arts sector has been engaged in the impact discourse for 20-30 years, depending on which country you are in, and we haven’t secured better working conditions for ourselves. Not only is funding for the arts continuing to dry up, and we have to move towards self-sustainability, but our society seems to be going downhill as well, with eroding social welfare and the rise of the extreme right wing. And how exactly is art supposed to solve these kinds of problems?

    In growing conservative climates, funding for arts education at the secondary school level is often the first to go. Because art is seen to have no use-value. Because even being a more sensitive or emphatic citizen has no use-value. And since we know appreciation for the arts tends to be directly correlated to exposure to the arts, society’s appreciation for the arts, and therefore its value, will also decrease. Even from a purely pragmatic perspective, fostering amateur practice also ensures our supporter base – which is important if we want to go down the road of funding things that people value.

    Because we are not the ones who determine use-value. And even though analogies are limited, it would clearly be strategically false to support anti-racist movements by providing evidence that racial equality is valuable, as it can be better demonstrated that racism generates significant value since much of the world economy was built on slavery and colonialism.

    At first glance, one might ask, why put in all this time with kids when most of them leave the village when they grow up? How will they contribute to the economy of the village? 

    Because if we look at why the village is in trouble, it is also because of the larger political environment. It is not just about building a lovely “self” sustainable village. Chronic poverty comes from adverse incorporation. In this sense, we must always consider the relationship between our community and the “outside”.

    I don’t know if it will pay off, but very little else is paying off the way we want.  And if we want to see the change we want, then I think cultivating such sensitivities is essential.

    Vienne Chan, 2023

  • No Higher Order

    It was the last night of my hospital stay and I got moved into a room with an 80 year old lady who kept ringing the buzzer for the nurse every few minutes. Where’s the TV remote? Why haven’t you got me the TV remote yet? I need to sit up and no you can’t help me – get me the other caregiver. Can you get me into the chair so I can go to the toilet? I need you to clean me.

    The TV was far too loud and she ignored my requests to turn it down. Hearing aid wasn’t working. Around 5am, perhaps sensing I wasn’t deep asleep, she loudly asked me to ring the buzzer because she couldn’t reach hers. I don’t remember what it was for, only that I was very annoyed and tired. She’s probably a nice woman, just under stress. So am I.

    But I know she should still have a right to receive care. Thank goodness there are professional caregivers. Maybe that’s why people call them heroes and angels because this is not what a human being would want to do on a regular basis. Unless you are Mother Teresa, who is literally a saint today. But do we really need heroes, angels and saints?

    *** 

    In medieval society, the Church was a powerful institution. Sometimes, families would offer their daughter to the convent to secure social alliances and their spiritual well-being. Widows and otherwise inconvenient women joined because it offered safety in a misogynist world. There were few educational opportunities for women, and despite vows of obedience the Church still offered more opportunities. Although girls who didn’t have a dowry often ended up as mere labourers. The Church ran hospitals and charities; it was an established institution for care, and those who dedicated their lives to it could interact with society on different terms.  Even today, some become nuns in search of freedom. 

    With religious morality, nuns became the models for giving without expecting any returns. But even in their vows of poverty, nuns receive ascetic accommodations and sustenance, which can’t be assumed with care or even in other forms of work today.  The Church didn’t really do things for free. Donations to the Church were big business. All this talk of angels and heroes put people into other-worldly spheres. As if there were really any other world.

    ***

    Artists also get put into saintly spheres sometimes. The genius. The autonomy of art. That the performance of our calling is beyond rewarding and money contaminates our genius. Why can’t we learn from caregivers that there is no other world but this present from which we cannot escape? What if art and care are not callings but ways to relate to the world? Should art and care not be practiced by everyone and everywhere? What if all callings are simply things we enjoy and are good at? What if art and care are not professions?

    But there is a need for professional care. Because there are different kinds of care. Some require dedication to learn and practice at the cost of other callings. And sometimes it’s simply a job to take care of annoying people. It is clear that recognition of care as work secures rights for those who spend time giving care. It’s a good thing. 

    But when I look at art and its professionalization, I feel violently allergic. I am unsure why. Perhaps I despise the exclusivity of professionalization, the difficulty of being recognized without formal education, which is becoming increasingly unaffordable depending on where you are. Perhaps I am afraid that art will only be left in the hands of the designated. Perhaps it is the self-doubt as to how my art-making does anything for anyone that deserves it being called a profession. Some theorists say that doubt is part of the artistic process, but it doesn’t make it any easier.

    ***

    Over interpretation. Artists are struggling to interpret what they do in terms of their social value because at the end of the day we need money to live. In our desperation, we interpret what we do in economic terms and put ourselves into various positions of innovation and creativity because that’s economically valuable. What if our innovation is simply that we do things that we believe should be done, like care? 

    Care work does not need to define itself. It has been a mistake to do so. The managerial efforts in the 90s onwards to codify, standardise and streamline the delivery of care has actually ended up in delivering less care because caregivers could not respond to the care receivers as individuals with needs that can vary wildly.

    Perhaps we should resist the definition and the need for finding use value in art, and simply insist that this is good and worthwhile. Because that is in the end what rights are about. Like health care, education, and fair trial should be rights. And a society based on rights is valuable. Just like that. I could say it is valuable because it contributes to social stability, without which no development can take place and economies may even collapse. But when it comes to the heart of the matter, it is because it allows us in our infinite non-codifiability to roam the world, and that is simply the right thing to do. Like art and care.

    Vienne Chan, 2023

    “In the Mirror of Care Work”, an art publication on art and care, eds. Inga Gerner Nielsen and Klara Utke Acs