Monday, April 21, 2014
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Aclaremos la austeridad

MILÁN.- Recientemente he tenido el privilegio de ser orador en la principal conferencia anual del Consejo Económico Alemán, la sección económica y de negocios de la Unión Demócrata Cristiana, el partido gobernante. La canciller Angela Merkel y el Ministro de Finanzas Wolfgang Schäuble también estaban entre los oradores. Fue un evento interesante –y, algo más importante aún, esperanzador.

Pareció claro que Alemania (o al menos este gran conjunto formado por gobernantes, empresas y líderes sindicales) sigue comprometida con el euro y una mayor integración europea, y reconoce que para superar la actual crisis en la región, los costos deberán distribuirse al nivel europeo. Las reformas en Italia y España se perciben correctamente como fundamentales, y parece haber una profunda comprensión (basada en la propia experiencia alemana en la década y media posterior a la reunificación) del largo tiempo necesario para restaurar la competitividad, el empleo y el crecimiento.

Las opciones de Grecia no son buenas, pero se debe controlar el grave riesgo de contagio para evitar el descarrilamiento de las reformas fiscales y orientadas al crecimiento en Italia y España. Ante el elevado riesgo sistémico, el capital privado está abandonando los bancos y los mercados de deuda soberana, elevando los costos de endeudamiento de los gobiernos y reduciendo la capitalización de los bancos. Esto, a su vez, amenaza el funcionamiento del sistema financiero y la eficacia de los programas de reforma.

Por lo tanto, las instituciones centrales de la Unión Europea, junto con el Fondo Monetario Internacional, tienen un papel importante que desempeñar en la estabilización y la transición al crecimiento sostenible. Sus esfuerzos son necesarios para eliminar la brecha generada por el éxodo de capital privado, permitiendo así que se completen los programas de reforma y comiencen a surtir efecto. El rol del FMI refleja la enormidad de lo que está en juego para el resto del mundo –tanto los países desarrollados como aquellos en desarrollo– con la recuperación europea: es una inversión de alto rendimiento.

Me parece que los políticos y líderes empresariales alemanes entienden bien todo esto. Por otra parte, este tipo de apoyo es, y debe ser, condicional al grado de implementación de las reformas en Italia y España, la tercera y cuarta mayores economías de la zona del euro, respectivamente. La liberalización de los mercados de trabajo para aumentar la competitividad y el crecimiento es fundamental –y aún debe ser implementada.

Ganar tiempo para que la reforma funcione exige la socialización del riesgo de corto plazo. No hay otra forma de mantener el rendimiento de los bonos bajo control y los bancos en funcionamiento, y no hay garantías absolutas sobre la aprobación de los programas de reforma necesarios para lograr los objetivos.

Los eurobonos, viables en un plazo mayor, resultan entonces prematuros, porque implican un relajamiento de la condicionalidad, debilitando así los incentivos a la implementación de las reformas. Pero si todo funciona, compartir el riesgo ahora no resultará caro en el largo plazo. Incluso puede generar rendimientos positivos.

¿Qué hay entonces del tan discutido conflicto entre austeridad y crecimiento? Creo que se basa en un problema de comprensión bastante importante. Para los alemanes, la austeridad, que toma la forma restricciones sostenidas sobre los salarios e ingresos, fue una parte importante de las reformas orientadas al crecimiento que completó su país en 2006. Se dedicó mucho tiempo y esfuerzo a garantizar que el considerable costo de recuperar la flexibilidad, productividad y competitividad fuese equitativamente distribuido entre la población.

Pero, cuando se recibe el mensaje en el sur de Europa (y del otro lado del Atlántico), la «austeridad» se entiende en gran medida en términos fiscales –como un ataque a los déficits excesivamente rápido y potencialmente nocivo para el crecimiento, en términos de la velocidad de la economía para lograr ajustes estructurales y eliminar la brecha en la demanda agregada. En otras palabras, la austeridad severa se ve en gran medida a través de una lente keynesiana.

Encontrar el equilibrio correcto entre una reducción del déficit excesivamente rápida y una peligrosamente lenta es importante, y no tan fácil. Pero ese es solo uno de los componentes necesarios para reequilibrar. El crecimiento es fundamental para reducir los indicadores de deuda pública respecto del PBI, y por lo tanto una parte clave de la estabilización fiscal. Y es cierto que los beneficios de la reducción del déficit, si llegan demasiado rápidamente, serán sobrecompensados por el efecto negativo sobre el crecimiento.

Al mismo tiempo, para reiniciar el crecimiento de una economía y del empleo, son necesarias otras medidas, que varían en cierto grado entre países, debido a las diferencias en las condiciones iniciales. Pero generalmente incluyen la remoción de rigideces y otras barreras a la competencia en los mercados de trabajo, bienes y servicios; la inversión en habilidades, capital humano, y la base tecnológica de la economía; y la reconstrucción de redes de seguridad en formas que fomenten y apoyen, en vez de impedir, los ajustes estructurales.

Esas reformas requieren el sacrificio de ciertos tipos de protección, así como del crecimiento del ingreso y el consumo. Los beneficios toman la forma de patrones de crecimiento y empleo sostenibles en el futuro. La disciplina y la austeridad implican entonces elecciones intertemporales e intergeneracionales sobre el precio que se debe pagar ahora –y sobre cuán equitativamente se debe distribuir ese costo– para lograr más oportunidades económicas y estabilidad social en el futuro.

Después de todo, restaurar la estabilidad y el crecimiento solo tiene que ver en parte con revivir la demanda agregada en el corto plazo. También está relacionado con las reformas estructurales y el reequilibrio, que implican costos. Lograr un patrón de crecimiento sostenible requiere decisiones que no solo afectan al nivel de demanda agregada, sino también su composición –por ejemplo, inversión versus consumo.

Llamar a esto austeridad, u otra cosa, es una cuestión semántica. Pero la confusión existente no tiene nada de inofensiva. Por el contrario, se ha convertido en un gran impedimento para alcanzar una comprensión común de los desafíos actuales y, por lo tanto, para lograr un amplio consenso sobre el camino correcto a seguir para enfrentarlos –uno con responsabilidades bien definidas y diferenciadas.

Traducido al español por Leopoldo Gurman

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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?

    1. 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

    1. 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

    2. 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.

    3. 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

    4. 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. 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.

  8. 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.

  9. 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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