Wednesday, October 22, 2014
17

Eclaircissement sur l'austérité

MILAN - Je viens d'avoir le privilège de parler à la principale conférence annuelle du Conseil économique de l'Allemagne, le bras économique et d'affaires de la CDU, le parti actuellement au pouvoir. La chancelière Angela Merkel et le ministre des finances Wolfgang Schäuble étaient présents parmi d'autres orateurs. Cet événement a été intéressant - et surtout encourageant.

Il a semblé clair que l'Allemagne (ou au moins ce regroupement assez important de gouvernement, d'entreprises et de dirigeants syndicaux) reste engagé dans l'euro et dans une intégration européenne plus profonde, et reconnaît que le succès exigera de partager le fardeau au niveau européen pour surmonter la crise continue de la zone euro. Les réformes en l'Italie et Espagne sont bien reconnues comme cruciales, et il semble qu'il existe une compréhension profonde (fondée sur la propre expérience de l'Allemagne dans la décennie et demi qui a suivi sa réunification) selon laquelle la relance de la compétitivité, de l'emploi et de la croissance prend du temps.

La Grèce n'a aucune bonne option, mais un risque sérieux de contagion reste à contenir afin d'empêcher le déraillement des réformes financières et des réformes orientées par la croissance en l'Italie et en Espagne. Face au risque systémique élevé, le capital privé quitte les banques et les marchés de la dette souveraine, en faisant augmenter les coûts du crédit des gouvernements et en faisant chuter les capitaux bancaires. Ceci menace à tour de rôle le fonctionnement du système financier et l'efficacité des programmes de réforme.

Ainsi, les établissements centraux de l'Union Européenne, ainsi que le Fonds Monétaire International, ont un rôle important à jouer dans la stabilisation et la transition vers la croissance durable. Leurs efforts sont nécessaires pour établir le lien créé par l'exode du capital privé, permettant de ce fait aux programmes de réforme d'être accomplis et de commencer à entrer en vigueur. Le rôle du FMI reflète l'enjeu énorme que le reste du monde - les pays avancés tout comme les pays en voie de développement - a dans le relance de l'Europe : il s'agit d'un investissement très rentable.

Tout ceci m'a semblé bien compris parmi les politiciens et les chefs de file des entreprises allemandes. D'ailleurs, ce genre de soutien est et devrait être une condition de l'ampleur des réformes effectuées en Italie et en Espagne, respectivement les troisième et quatrième plus grandes économies de la zone euro. La libéralisation du marché du travail à la recherche de la compétitivité et de la croissance est cruciale - et reste à mettre en oeuvre.

Gagner du temps pour que la réforme fonctionne, nécessite la mutualisation du risque à court terme. Il n'y a aucune autre manière de contrôler les rendements des obligations et de faire fonctionner les banques, et il n'y a aucune garantie certaine que les programmes de réforme nécessaires pour cette tâche seront approuvés.

Les euro-obligations, viables à plus long terme, sont ainsi prématurées, parce qu'elles impliquent un assouplissement de conditionnalité, et qu'elles affaiblissent de ce fait les incitations à appliquer les réformes. Mais si tout cela fonctionne, partager le risque maintenant ne coûtera pas cher à la fin. Cela pourrait même générer un rendement positif.

Qu'en serait-il alors du conflit tant controversé entre l'austérité et la croissance ? Je crois qu'il se fonde sur un assez sérieux malentendu. Pour les Allemands, l'austérité, sous forme de gel des salaires et de diminution des revenus, était une partie importante des réformes orientées vers la croissance que leur pays a accomplies en 2006. Beaucoup de temps et d'efforts ont été consacrés à s'assurer que le fardeau considérable de relance de la flexibilité, de la productivité et de la compétitivité, soit partagé équitablement à travers la population.

Mais, à l'autre extrémité de la chaîne en Europe méridionale (et à travers l'Océan atlantique), le mot « austérité » est interprété en grande partie en termes financiers - comme un ordre excessivement rapide et potentiellement destructeur de croissance, de réduire les déficits plus rapidement que l'économie ne peut structurellement les réguler, et de combler l'écart de la demande globale. En d'autres termes, la dure austérité est envisagée en grande partie dans une perspective keynésienne.

Trouver le bon équilibre entre une réduction du déficit excessivement rapide et dangereusement lente est important, et loin d'être facile. Mais c'est seulement un composant du rééquilibrage. La croissance est essentielle pour réduire le taux de dette publique/PIB, et est ainsi un élément essentiel de stabilisation financière. Et il est vrai que les avantages de la réduction du déficit, s'ils sont réalisés trop vite, seront plus que compensés par l'effet négatif sur la croissance.

En même temps, pour remettre en marche les moteurs de la croissance et de l'emploi d'une économie, d'autres mesures sont nécessaires, et changent légèrement d'un pays à l'autre, à cause de conditions initiales différentes. Mais ils comprennent en général le fait de supprimer des rigidités et d'autres barrières sur la concurrence dans la main d'oeuvre, la production et les marchés de services ; l'investissement dans les qualifications, le capital humain et la base technologique de l'économie ; et la reconstruction des filets de sécurité pour favoriser et soutenir plutôt qu'entraver un ajustement structural.

Ces réformes exigent le sacrifice de certaines sortes de protections, comme de la croissance des revenus et de la consommation. Les avantages prennent la forme de modèles durables de croissance et d'emploi pour l'avenir. La discipline et l'austérité nécessitent ainsi des choix inter-temporels et inter-générationnels au sujet du prix à payer maintenant - et sur la manière dont ce fardeau doit être pris en charge - pour une meilleure ouverture économique et une meilleure stabilité sociale à l'avenir.

Après tout, la reconstitution de la stabilité et de la croissance n'est concernée qu'en partie par la relance d'une demande globale à court terme. Elle l'est également par la réforme structurale et le  rééquilibrage, qui a un coût. La réalisation d'un modèle durable de croissance exige des choix qui n'affectent pas seulement le niveau de la demande globale, mais également sa composition - par exemple, l'investissement contre la consommation.

Appeler cela « austérité » ou autrement est une question de sémantique. Mais la confusion qui en résulte est tout sauf inoffensive. Au contraire, elle est devenue un obstacle important à un arrangement commun des défis courants, et ainsi à réaliser un large consensus sur la bonne voie à suivre - une voie aux responsabilités bien définies et bien différenciées - dans la confrontation de ces responsabilités.

Traduit de l’anglais par Stéphan Garnier.

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  1. Commentedpeter fairley

    Reply to Gary Marshall. The flaw is: the govt needs to get revenue somewhere to make payments on the pure govt debt system you propose. You have not stated what 'for profit' enterprises the govt would use the borrowed money for."Worthy public expenditures" do not imply revenue production unless they are something like toll roads, which most people consider 'a tax'. Where is my $50,000?

      CommentedGary Marshall

      Hello Peter,

      And where does the government currently get the revenue from to make payments on the government debt that exists now?

      They would get it from the same collective, though participation in that collective will vary.

      Now, the government need not actually collect the money to repay the debts. In my example, you will note that if the government were to tax the community to erase the acquired debts, the government would take the money from the community and hand it right back to the community. So in the aggregate taxing to pay off the debts in no way alters the wealth of the community. Erasing debts just erases assets.

      So, in effect, the government need never make the theoretical transfer. The money is there, however the costs in making the transfer are far greater than just letting the national assets and their equivalent liabilities rise indefinitely.

      Its sort of like a bank. Its assets in loans rise along with its liabilities in depositor's money indefinitely. The individual depositor shall see his money returned to him if desired, but the assets and liabilities will accrue forever with the bank living on the margins between interest paid and interest earned.

      To pay off every depositor would mean collapsing the bank. Why go through such trouble. One would just estimate the value of the bank and have it reflected in the share price.

      Money will be borrowed with a cost. So each public expenditure will have to be justified financially wherein benefits exceed costs. Otherwise, the expenditure is never made.

      For example, access to clean water could be accounted a worthy project with good returns. Dirty or disease laden water can cause a community grievous harm. The local hospital may be overrun with patients suffering all sorts of water borne maladies. The medical costs, lost work days, etc could be erased with a modest investment in purifying the water.

      Simple cost and benefit analysis. If the cost to the community of water borne diseases are $5 million, and construction costs of a water filtration plant $1 million with $1 million in annual expenditures, is this not a valued return to the community?

      Is it inflationary? No because the community now has $3 million per year to go and spend on other items, perhaps better healthcare, better education, a larger home.

      An idle person will cost the community or nation in welfare costs. An annuity of $10,000 would require an initial investment of $200,000 with an interest rate of 5%. If a person collects $10,000 per year, the community or nation would be better off lending funds of say $50,000 for training or education up to amend the burden.

      I hope that answers your questions.

      GM


  2. Commentedmmm bbb

    Yes, there is a misunderstanding in Europe regarding the definition of austerity and it is almost funny that nobody treated until now. (or at least I did not notice - sorry for my ignorance)

    On the other hand, growth may appear even if the austerity measures are going on, or better to say the austerity is consolidated.

    Indeed it is a fine mechanism to adjust the speed of implementing the austerity measures and the ones related with growth.

    Who should act for finding the right compromises?
    A researcher, an artist, an economist, a mathematician, a philosopher, a sociologist, a politician?

    Why is needed such a long period of time to harmonise the differences among the partners in EU?

    Greece could had a better chance, and implicit EMU, if the actions of partners were more quickly established...

  3. CommentedAl Hick

    Like other proponents of the German model of structural reform, Mr. Spence fails to recognize that Germany's success in in building a
    "competitive" economy during the 2000s was based on having counter parties who would provide the needed demand for the excess supply caused by wage suppression in Germany. If southern Europe, the U.S. and other "irresponsible" countries had not experienced credit fueled bubbles over the past decade, Germany would still be in a deep and long 10 year recession. It is essential that changes in the Euro periphery are matched by expansionary fiscal policy in Germany or expansionary monetary policy from the ECB. To suggest that southern Europe follow the German model, without addressing were the demand is going to come from is simply to wish unnecessary misery on the populations of Southern Europe.

  4. Commentedsrinivasan gopalan

    Mr Spence plea for return to simplicity by shouldering burden now so that posterity does not blame you for recklessness reeks of asking too much from a generation that is inured to comforts and free lunch. Welfare programmes as practised in some European countries without ensuring concomitant responsibility on the present of beneficiaries is unfortunately the patent reason for the current mess in some of the Southern European countries. When ailments afflict the system bitter medicine is but inevitable but people in real life do not countenance this diagnosis and the attendant treatment. The best course open to the countries mired in crises of all sorts is to make a few adjustments in life so that this phase will be a passing one before days of comfort and delight break out. What the crisis-laden countries of Europe need is a moral leadership and not economic policies that divide the people between austerity and persistence with the same level of living they had been accustomed to. Probably faith in themselves and in the ability of things to shape out to their benefit by degrees need to be nurtured so that undue expectations of a disaster can be averted.
    G.Srinivasan. New Delhi

  5. CommentedGary Marshall

    Hello Mr. Spence,

    In conventional economics you are right -- Greece has no good options. But in progressive economics, they have a very good option: the abolition of Taxation.

    Below is the very simple proof for this measure.

    If you or anyone can find the flaw, I shall be more than happy to give the reward of $50,000. None have yet been successful.

    Its not the end of the world, but a new beginning.

    Enjoy!

    ####

    The costs of borrowing for a nation to fund public expenditures, if it borrows solely from its resident citizens and in the nation's currency, is nil.

    Why? Because if, in adding a financial debt to a community, one adds an equivalent financial asset, the aggregate finances of the community will not in any way be altered. This is simple reasoning confirmed by
    simple arithmetic.

    The community is the source of the government's funds. The government taxes the community to pay for public services provided by the government.

    Cost of public services is $10 million.

    Scenario 1: The government taxes $10 million.

    Community finances: minus $10 million from community bank accounts for government expenditures.
    No community government debt, no community
    government IOU.

    Scenario 2: The government borrows $10 million from solely community lenders at a certain interest rate.

    Community finances: minus $10 million from community bank accounts for government expenditures.
    Community government debt: $10 million;
    Community government bond: $10 million.

    At x years in the future: the asset held by the community (lenders) will be $10 million + y interest. The deferred liability claimed against the community (taxpayers) will be $10 million + y interest.

    The value of all community government debts when combined with all community government IOUs or bonds is zero for the community. It is the same $0 combined worth whether the community pays its taxes immediately or never pays them at all.

    So if a community borrows from its own citizens to fund worthy public expenditures rather than taxes those citizens, it will not alter the aggregate finances of the community or the wealth of the community any
    more than taxation would have. Adding a financial debt and an equivalent financial asset to a community will cause the elimination of both when summed.

    Whatever financial benefit taxation possesses is nullified by the fact that borrowing instead of taxation places no greater financial burden on the community.

    However, the costs of Taxation are immense. By ridding the nation of Taxation and instituting borrowing to fund public expenditures, the nation will shed all those costs of Taxation for the negligible fee of borrowing in the financial markets and the administration of public
    debt.

    Regards,
    Gary Marshall

      CommentedGary Marshall

      Hello Daniel,

      What I advocate is the abolition of all Taxation. If the state retain any of it, then it is still able to control its finances and the people whom it is appointed to serve. Without Taxation, the state is forever dependent upon its citizens for its existence.

      Singapore does have a range of taxes and fees, though quite moderate compared with NA. It is also a very small country.

      Regards, GM

      CommentedDaniel Gomes

      Gary, your proposal was implemented in Singapore a few decades ago.

      The taxation base is extremely low and almost all of the credit is forcefully obtained from the tax payers via a forced savings scheme called Central Providence Fund.

      Interestingly, on paper, Singapore has one of the highest sovereign debts in the world but seems not to worry a single bit about it.

      CommentedGary Marshall

      Hello Mr. Ravazzolo,

      A pension is indeed a financial asset, a financial asset for a member of a nation, and in the aggregate for the nation itself.

      A water holding and treatment facility is indeed an asset for a community and its members. Water borne ailments can have a devastating impact on a community's productivity and health care costs. For a small investment, all that will disappear.

      Similarly with education, police and fire, and garbage collection. These are all useful services that create wealth in a community. Without police and fire, whole communities can disappear in a conflagration or riot. Insurance costs would be prohibitive without such a wise investment.

      Welfare recipients could be given loans to enhance education and training in order to make those unproductive souls productive. When employed they can pay back the loan. The annuity now comes with a great cost to the community and no solution.

      With the unemployed, a loan could be given if there are no other means available to maintain them, repayable when conditions improve.

      Government expenditure with a capital charge will change drastically. The erstwhile taxpayers now become the nation's bankers will ensure that the government now justifies every expenditure. There will be no corporate welfare. There will be no subsidies to favoured producers. Mineral rights will be handed back to those that own the land. There will be no customs and excise, or tax collection. There will be no deterrent effect from an abolished taxation. Pensions will no longer be needed as the population will now have government bonds. Publicly funded healthcare could be limited to difficult cases or for those without means because everyone should possess bonds with which to pay for them.

      What a better world it will be!

      Regards,
      Gary Marshall

      CommentedMiriano Ravazzolo

      Mr. Marshall

      Your idea is quite interesting, but I am afraid it would only work if all public expenditures could be configured as assets. In the modern world unfortunately (or fortunately) there are way too many expenses that can be categorized as "services", which get consumed at the moment of fruition and therefore do not add to the financial assets. Think healthcare, or pensions, which while contributing to the general economy do not create any bookable asset...

  6. CommentedPaul A. Myers

    A lot of metrics are thrown around in the European debate, but it seems to me the core metric is economic productivity over time. Germany successfully accomplished a decade-long productivity improvement program that put it into its enviable position today.

    Other countries have to implement productivity-converging policies or otherwise fail in some fashion.

    So I would think that changes in future productivity should be the criterion by which policy proposals are evaluated.

  7. CommentedThomas Lesinski

    ...as evidenced by the increase in poverty rate in Germany from 11% in 2001 to 15% today, despite the increase in employment.

  8. CommentedThomas Lesinski

    Is there a single point of hard evidence towards the idea that labor-market flexibility is favorable to growth ? Or is it just a talking point taken for granted by the high priests ?

  9. CommentedRussell Pittman

    A related point is that made by an earlier Nobel laureate, James Meade, in the "burden of the debt" debate: A policy with a given level of fiscal stimulus has a much different long-term impact depending on what the stimulus money is used for. In that light, spending borrowed money on improving infrastructure or strengthening tax enforcement has a lot to recommend it as compared with, say, funding military adventures or propping up unsupportable pension schemes.

  10. CommentedMatthew Cowan

    I'm glad to see that someone has broken the austerity vs. growth argument down into its component parts. This is where we can make a real difference in improving economic outcomes.

    The larger debate of stimulus vs. fiscal austerity too often overshadows the component parts and execution of a particular stimulus or austerity plan. Done correctly, either can be an flying success or a dismal failure.

    The debate needs to move beyond stimulus vs austerity to how to stimulate and/or cut back spending effectively and how to effectively time austerity and/or stimulus measures to optimize the outcome.

  11. CommentedRobert Winter

    The writer states "But, on the receiving end of the message in southern Europe (and across the Atlantic), “austerity” is interpreted largely in fiscal terms – as an excessively rapid and potentially growth-destroying drive to cut deficits faster than the economy can structurally adjust and fill the gap in aggregate demand." It would have been of interest had he address whether in his view the terms that have been imposed to date on Greece and other countries reflected the balanced burden sharing he suggests or excessively rapid and growth destroying policies. As best I can tell, the better argument is that at least to date it has been the latter.

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