by Jerome a Paris
Mon Nov 6th, 2006 at 09:21:18 AM EST
Eric Le Boucher, the resident neoliberal at Le Monde, has an article which summarises quite neatly the common wisdom of the times (that common wisdon that France has apparently so much trouble swallowing). Here's his list of the 5 things we should stop fighting, and the 3 things we should actually debate.
|Ces cinq faux débats, dont il est temps de se débarrasser, sont :||The 5 false debates we must get rid of are:|
|1 - La mondialisation : "Aucun pays européen pris individuellement ne peut rien changer à l'ouverture des échanges". Dès lors, les restrictions à l'importation, le freinage réglementaire des délocalisations, et les mesures qui relèvent d'une "approche défensive" sont "impraticables". Tout accroissement de la protection de l'emploi est " irresponsable" ;||Globalisation: No country on its own can do anythign about trade. Limits to imports, regulations to prevent offshoring and any other "defensive" tools are useless. Any increase in job protection is irresponsible.|
|2 - L'exigence de rentabilité du capital des entreprises : "On voit difficilement l'Europe ignorer les règles "anglo-saxonnes" du capitalisme, de la comptabilité, de la gouvernance" ;||Return on equity. It is impossible for Europe to ignore Anglo-Saxon rules for the economy, including accounting, governance and minimum returns on equity.|
|3 - Le budget : la "redoutable combinaison" de la concurrence fiscale engagée dans l'Union européenne et de la dette nationale va interdire toute facilité budgétaire. "Les riches paieront", "les entreprises paieront" ou "les enfants paieront" (par la dette) sont des mensonges ;||Budget. The implacable combination of tax competition within the EU and existing national debt will prevent any new budgetary spending. Neither the rich, the corporations nor the children (via debt) will pay. Pretending otherwise is a lie|
|4 - Le vieillissement : "Tout programme qui ne mentionnerait pas les moyens d'accroître la durée du travail sur la vie (...) ne pourrait pas être pris au sérieux" ;||Older populations. Any program which does not include ways to increase time worked over life cannot be taken seriously.|
|5 - Jean-Claude Trichet : "Le mandat de la Banque centrale européenne ne sera pas modifié, pas plus que le traité de Maastricht ou la sociologie de son conseil." A tort ou à raison, il est temps d'arrêter d'agiter une illusoire relance monétaire.||Monetary policy. As Trichet said, the mandate of the ECB will not be changed, and neither will the Maastricht Treaty not the sociology of the members of its council. There will thus be no monetary splurge.|
This is actually a pretty good summary of the neolib consensus. and thus the 3 'real' debates are:
|1 - Le revenu ou le temps libre ? La France est au 27e rang sur trente dans l'OCDE pour la quantité de travail par personne active. Voilà autour de quoi devraient tourner les colloques sur le pouvoir d'achat ! La gauche préfère le temps libre ? Qu'elle le dise. La droite le revenu ? Qu'elle abroge les 35 heures.
||Income or free time?. France is 27th amongst OECD countries in temrs of work done per person. That's what debates on income should talk about. The left favors free time? It should state it. The right prefers income? Let the 35 hours be cancelled!|
|2 - La mondialisation creuse les inégalités. Pour éviter que les bas salaires ne décrochent de plus en plus, la France a instauré des défiscalisations et la prime à l'emploi. Le coût est très lourd. Gauche et droite devraient dire le degré d'inégalités qu'elles souhaitent et qu'elles demandent de payer aux contribuables.||Inequality. Globalisation increases inequality. To prevent people with low salaries from dropping out altogether, France has put in place numerous mechanisms to lower social contributions and taxes for such workers. It's very expensive. Left and right should state what level of inequality they target and what contribution they thus ask from taxpayers.|
|3 - Le risque de perte d'emploi. Que "la sécurisation du parcours professionnel" fasse unanimité de la CGT à l'UMP est suspect. Gauche et droite "devraient expliciter leur projet et dire comment répartir la charge du risque entre l'individu et la collectivité", bref indiquer où elles mettent le curseur entre le modèle danois et le modèle libéral.||Job protection. That the "securisation of professional life" theme brings in agreement the CGT [the formerly communist trade union] and the UMP [Sarkozy's party] is suspicious. Left and right should explain their project and state how the burden of risdk is sharedbetween individuals and the collectivity, i.e. indicate where they want to be between the Danish model and the laisser-faire one.|
This is all meant as a summary of a book recently published by the Cercle des économistes, a grouping of French economists led by Jean-Hervé Lorenzi, professeur à Paris-Dauphine (Politique économique de droite, politique économique de gauche
, Editions Perrin, 15,80 €), but as Eric Le Boucher makes his the above two lists, we can assume that he is in agreement with these, and they actually make a decent description of the what the neoliberals want for continental Europe.
So let's have a go at it.
The 5 hard truths are presented as things that are still debated in France, but vainly, as these things are there and cannot be discussed any longer, being the reality we live in.
Globalisation is certainly a reality, but there is nothing that would prevent a country from staying out of it. It may have a huge economic cost, but it's not impossible. We thus bump up immediately on the first hidden assumption behind this "reality": only the economy matters. Other non-monetary criteria do not even exist to determine policy. Quite a big assumption to make, really. Ask the Iraqis. Or the Ukrainians. I will note as well that the writers of this 'reality bite' are careful enough to say that "individual" countries cannot weigh in - which suggests that the EU has sufficient weight to do so, and impose other rules to trade. what these rules are naturally open to debate, and trying to say otherwise is just a cheap way to try to preempt this debate. In particular, should environmental protection or worker rights be taken into account to determine if dumping (selling below cost) has taken place?
Return on equity. Trying to make the fact that corporations and capital are currently taking advantage of the sudden abundance of labor (thanks to Chinese and Indian labor forces rapidly joining the global markets), and the corresponding relative scarcity of capital into a permanent reality is, one could say, a nice try. Nothing in the current balance imposes that it remain so forever. Those holding capital today are in effect saying: eliminate all taxes, regulations and rules that bother me, and I may come to your country (but may leave at any time, so don't even think of changing the rules after I'm in). And yet, all statistics show that investments take place even in countries that do not follow these 'rules', in significant volumes. So capital can be pragmatic and will go to places that provide good opportunities. These do not come only from low taxes. Good infrastructure, educated workforces, predictable (rather than light) regulation - all paid by taxes - also do wonders. There is thus no reason to listen exclusively to this self-interested discourse. As to the requirement that Anglo-Saxon rules for accounting and governance (hint to Germany: get rid of these pesky supervisory boards where workers - gasp - are overrepresented. Hint to France: get rid of all these worker consultation mechanisms. Hint to all: please hire more London-based lawyers and accountants), it appears to be little moren than an advertisement for services.
Budget rules. While I am generally sympathetic to fiscal rectitude, I'll just point to the example of the USA in the past 6 years to say that this is complete and utter bullshit. If a country decides that it has overriding strategic imperatives to spend a lot of money, it will do so with abandon, and the sanction of the markets will take a while to hurt. With the euro, I expect that the same would apply, should we ever get a government as irresponsible as George Bush's.
Ageing. While ageing populations are real, I don't see why this cannot be dealt with by tinkering with the system occasionally, and taking advantage of regular productivity growth. There is nothing intrinsically wrong with spending a larger portion of national wealth on older people if there are a lot more of them, and countries will find various ways to organize intra-generational transfers on a collective or individual basis. Saying that more work is the only solution goes again with the mindset the perpetual growth of the economy is an absolute requirement, something deeply ingrained in our systems, but by no means compulsory. (more on this below)
Monetary policy. Again, I'm personally sympathetic to a hawkish monetary policy, but I don't see why it's not a legitimate topic of discussion. I'll agree that the current institutional framework deeply embeds the hawkish p.o.v. and changing it would require currently unlikely new treaties at the EU level, but, that said, that does not make it an illegitimate long term goal.
Another, unstated, assumption is , of course: abundant energy will be available at all times. That a column summarising the core economic debates of the day does not have a single word for energy and energy policy (nor for climate change and its consequences) is quite typical of the "common wisdom" and its general cluelessness.
Government for, and by, the corporations does not seem to have much of an ability to look at the long term (the theme of ageing populations is just a gambit by the insurance industry to put its hands now on pensions/social security money). Demand will continue to come from workers (even if they are paid less); infrastructure will continue to be built by the government (even if they should not spend any money to do so), and energy will come from all these pesky foreign countries when they finally get the light and let our good corporations invest there and extract their poorly exploited resources.
The 3 debates flagged by the above article make a little bit more sense. The topic of work vs free time is a very real one (and part of the larger debate on economics vs other priorities) and it's good to see it mentioned as explicitly. The discussion on inequality is also legitimate, even as it mostly avoids two underlying fundamental truths:
- it is possible to fight inequality, as France does and shows, despite all that's said in "truths" 1 to 3 above. It requires heavy government intervention, something that again does not fit well in the above model.
- And it requires funds, another subject best avoided, as it brings the vexing issue of the rich whether to tax them (impossible!) or simply to note that they are capturing most of the wealth created by the economy nowadays. Because if this is acknowledged, the question of "why growth?" comes up again: if it all goes to a very small minority, why do we need it? And the debate comes back to "share with us or do without growth - we don't have any anyway"...
Basically, the current wisdom assumes that we are in a situation where there is an endless supply of cheap labor in China (allowing to blackmail European workers with and get them to give up all their "privileges", and to blackmail Western governments with and get them to give up their scandalous attempts to tax and regulate corporations), and an endless supply of energy to make the underlying requirement for permanent geometric growth possible. Energy is the most visible, but that model also assumes an endless supply of other 'commons' that can silently, freely and endlessly provide all our resource needs and absorb all our externalities - raw materials, water, food, and pollution, carbon emissions, etc...
Without even mentioning the geopolitical risks created by the past 5 years of Bush trashing the rest of the world to frighten its domestic population and loot its treasury, I am also surprised by the lack of mention of the global asset bubble we are in. Experience shows that banking crises are the single most damaging cause of recessions (or depressions) historically, and the splurge of the past years puts earlier bubbles to shame. Consumer price inflation, and wage inflation are currently non-existent thanks to the global deflationary impact of Chinese manufacturing, but asset inflation, despite being ignored by (most) central banks, is very real and absolutely unsustainable, and has led banks and financial markets to make increasingly ludicrous bets, many of which will fail in the not so distant future.
So, will it be energy shortages or price peaks? A financial crisis? Or a major environmental breakdown in China? but I bet that in 10 years' time, the 5 truths above will look faintly ridiculous, like the gospel of a new (and then past) gilded age.