Deep economic crises encourage a radical rethinking of the socioeconomic model that generated them. The combination of shrinking economies, political stalemate, and growing social resentment is inducing people, especially the younger, to question a model of society that is prone to generate huge inequalities as well as great instability but is incapable of providing a long-term direction in difficult times. With general elections approaching in most European countries over the next 12 months, there are all the ingredients for populism to emerge. If so, Europe, not just the common currency, will be under serious threat.
To avoid this scenario, it is imperative for aspiring, reliable candidates to speak hard truth to their voters by explaining that sacrifices are not over yet and that more are necessary to tackle the challenges posed by the global market forces that are undermining Europe's prosperity. To persuade their fellow citizens to accept new cutbacks, politicians have to inspire their voters with a shared long-term goal – one that is capable of strengthening social cohesion, motivating common efforts, and justifying reciprocal concessions.
In the past, political ideals or religious precepts projected a country into the future by treading the path towards a common goal of justice, equality, or fairness. The end of ideologies, following the fall of the Berlin Wall, along with a growing tendency toward secularisation, multiculturalism, and individualism, has left our society with no driving values. Therefore, what begs asking is whether today's leaders can find a new driving force to revive common interest in their societies.
Family and political consensus
Nowadays, politicians should look at family, meant as a socioeconomic institution, to replace ideologies or religion in creating political consensus. Across time and space, it has always been the cornerstone in building a sense of community and creating the commitment to the common good. As acknowledged by the European Parliament in 2010, family produces assets and factors for development by promoting peace, stability, and cohesion as well as freedom, responsibility, and solidarity. And in time of crisis, like the current one, it acts as ‘shock-absorber’.
In greying Western societies, where old people rig political and economic life for their benefit, family is the only institution able to build a bridge between young and old, merging opposite individual interests into a common general one. By creating strong and natural intergenerational links, family projects society into the future by charting a path towards an ideal of fairness between generations that benefits everyone regardless of economic status, religious view, or political affiliation.1
Yet the countless spiritual virtues, material benefits, and political implications accruing from kinships have long been unnoticed by politics, if not in appearance, surely in practice. In recent decades, myopic leaders, not realising the importance of these intergenerational links, have created consensus and maximised their chance of election just focusing on the most numerous group, the elderly. In several advanced economies, the accumulation of explosive public debts, soaring youth unemployment rates, and dual labour markets are side effects of this political approach.2
An enlightened leader should realise that people, at least with their close relatives, are altruistic, not selfish. Parents care about the opportunities of their offspring, and the youngsters wish their old relatives to live an untroubled retirement with the assistance of the state. This intra-family altruism spreads out to society as a whole, making policymaking more far-sighted.
Focusing a political campaign on the democratic minority, the youth, will capture the votes of many old fathers. And the elderly will be happy twice over.
- First, their children will realise their dreams.
- Second, the young people, being again the engine of the economy, will increase the size of the cake for the oldsters as well.
Thus, by playing on family ties, politicians could persuade older voters that an increase in the retirement age or other fiscal austerity measures are not a dolorous renunciation, but a way to relieve their offspring from unfair obligations. And today's young people, once old, will follow suit in honouring the social contract. This is the political approach adopted by Mario Monti’s government to persuade Italians to accept today’s sacrifices in exchange for tomorrow’s benefits.
The role of family-friendly policies
But passively appreciating the social, economic, and political benefits accruing from intra-family altruism is not enough to strengthen social cohesion. European leaders should actively promote family as a fundamental principle of our society by adopting a wide set of policies:
- They should guarantee job and economic security to younger generations to favour the creation of new family units.
- They should implement family-friendly policies to help people striking a better work-life balance, thus increasing the fertility rate (OECD 2007), beefing up the workforce with young workers and preserving the stability of the pension systems without relying on massive and costly immigration.
- Politics should adopt measures able to shape the family-model in a growth-friendly way. As shown by Alesina and Ardagna (2010), strong and oppressive kinships, while indeed associated with higher fertility rates and higher levels of happiness, tend to crowd out the market, reduce labour mobility, and increase rigidities in the labour market. Therefore, a well-designed family-model will avert the ‘amoral familism’ trap described by sociologist Edward Bunfield (1958).
- Reforming the pension systems and eradicating dual labour markets will make intra-family altruism flow in the right direction. In the past, adult children were obliged to care for old and sick parents. After the creation of the welfare state, government-funded pensions and medical assistance replaced this obligation, even if younger workers’ taxes financed such schemes. But nowadays in Europe the role of family in the transmission of economic resources is reviving, with huge flows of wealth from old to young. On an individual basis, old people’s transfer of resources to their adult children may well be motivated purely by parental love. But, from the perspective of their group interests, these transfers represent a concession aimed at preserving from collapse a system that is skewed in their favour. Therefore, European countries should alter their social contract by redirecting more resources to the young (Campanella 2011).
The next round of voting in Europe presents a great opportunity to rebalance the current socioeconomic model, providing people with a direction in their daily life and avoiding the enormous costs associated with a transition to a yet unspecified alternative model. A family-based approach to politics could sweep away the bleak shadow of populism.
Alesina, Alberto and Paola Giuliano (2010), "The power of the Family", Journal of Economic Growth.
Bentolila, Samuel, Juan Dolado, Juan Francisco Jimeno (2012), “The Spanish labour market: A very costly insider-outsider divide”, VoxEU.org, 20 January.
Bunfield, Edward (1958), The moral basis of a backward society, New York: Free Press
Campanella, Edoardo (2011), "The new-old generation gap", Project-Syndicate.
European Commission (2011), "Employment and social developments in Europe 2011", Brussels.
European Parliament (2010), "Investing in family cohesion as a development factor in times of crisis", Resolution 1720 (2010).
Michel, Philippe, Thibault Emmanuel, and Vidal Jean-Pierre (2004), "Intergenerational Altruism and neoclassical models”, Working paper NO. 386/2004, European Central Bank
OECD (2007), "Can policies boost birth rates?", OECD Policy Brief.
1 After all, intergenerational altruism is a realistic hypothesis incorporated in several macroeconomic models that reconciles finite lifetime and infinite horizon (for a review see, for instance, Michel et al 2004).
2 According to a report recently released by the European Commission (2011), one in five young people is at risk of falling into poverty or social exclusion, only one third of young people are employed, and one in three has been out of work for over one year. Moreover, 40% of the unemployed are under 30, to the amount of 9 million people. On the other extreme of the age scale, the trend is reversed. The employment rate for people aged 60-64 increased from 23% in 2000 to 34% in 2010. See also Bentolila et al 2012 on dual labour markets.