Appalled

The group 'apalled economists' has an interesting article
in today's Libération. Translation to come...

https://www.liberation.fr/debats/2018/12/21/la-devise-liberte-concurrence-finance-a-remplace-celle-de-liberte-egalite-fraternite_1699001


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source: Libération Opinion December 21, 2018

translation: doxa-louise

The slogan ‘liberty, competition, finance’ has replacedthat of ‘liberty, equality, fraternity’

The neoclassical regime, in the grips of Finance Capital, focuses on public 
spending, thus making inequalities worse and stoking anger,

according to these ‘appalled economists’.

Opinion. Giving emphasis to trailblazing leadership, the slogan ‘liberty, equality, 

fraternity’ has given way to ‘liberty, competition, finance’. Growing anger became 

inevitable. Response by the powers that be are not up to expectation. Seems the taxpayer 

must from now own assume the costs of higher salaries, a higher supplementation for 

low income earners has been chosen rather than direct action on the minimum wage. 

Same story for overtime, thus acting against creating more jobs. This crisis runs deep. 

One will not be able to get through this without a true re-orientation and thus an altered 

economic doctrine.

Before the French Revolution, those forced to pay taxes were considered ‘vile’,

the nobility being exempt from this. The feeling of fiscal injustice being expressed 

today is a legitimate one. In order to re-establish consent to taxation and thus the public 

sphere (res publica), it is important to get beyond exemption for the rich. Fighting fraud

and tax evasion, re-establishing the ISF (taxation on wealth), going back to a source

taking of 30% on financial revenues and upping taxes on large inheritances: all that is 

possible.

Discourse of untruths

At a more fundamental level, one needs to escape the discourse of untruths on

public spending, social security contributions and the public debt. The size of the

public debt is not catastrophic: the State letting its debt run on, which is in no way 

shocking, more money goes into public coffers (372 billion borrowed in 2017) than 

goes out (308 billion of that capital to be reimbursed and 40 billion in interests), which 

permits financing investments for future generations. The rise in public indebtedness

(close to 100% of GDP as opposed to 25% in 1982) is not explicable by out-of-control

spending, but rather by policies that have choked off activity through austerity measures, 

multiplied by gifts to the richest and then provoking the finncil crisis of 2008.

The strategy used by leadership consists of ‘starving the beast’: they argue for deficits 

and debts - which they sometimes worsen - to reduce the Social state and transfer to 

private interests (pension funds, insurance companies, building and civil engineering 

companies...) retirement, health, public services.

«Public spending accounts for 56% of GDP». Constantly waved around, this number 

hints that there is only 44% left to the private sector, which is false. Public spending 

(1 330 billion) clocks in at 56% of GDP ( 2 300 billion). But this is not a part. Public 

spending has two major components. Public services: civil servants contribute to GDP 

(375 billion) and their productions (police, hospital, teaching...), freely available, are 

paid for through taxation. This represents 17% of GDP, a number which has been stable 

for the last 35 years which thus can increase to meet pressing needs. The second component, 

benefits (retirement, family allowances, unemployment...) and social transfers (medical 

visits and drugs reimbursed...), is much more weighty (590 billion).

Far from being an ‘expense’ for households, it augments their incomes and sustain their 

consumption with respect to the private sphere.

The social State does much to reduce inequality: from 1 to 8 between the most poor 

20% and the 20% richest for primary revenues ( salaries, revenue from assets...), it

goes to with direct taxation, then to 3 thanks to public services and allowances. In certain 

countries, education, retirement or health are more privatized. Public spending and 

hard deductions are weaker, but private deductions (insurances, retirement funds...) 

are higher. An the private is non-egalitarian and often more expensive. America spends 

on health 18% of GDP as opposed to 12% in France, toward a life expectancy 3 years less.

Diminishing the Social State

One can see the wisdom of diminishing on certain public expenses, of which the blind 

help to enterprises which have not permitted the uptake of investment, and whose impact on employment is negligeable if not negative when one also considers (which is rarely done) the recessionary effect entailed, to finance them, by cuts in order jobs.

It also makes sense to help certain independent workers and certain ailing enterprises 

or to reduce certain taxes (the value added tax on collective transport as a prime example). 

But care must be taken not to use the crisis to further diminish the Social State. 

We need more resources for the ecological transition, the EHPAD (homes for the elderly), 

hospitals and schools. France is one of the countries where the rate of poverty among 

the elderly is at its lowest. We should be proud of tis. But to keep this lovely system in 

place, we will need tomorrow to keep paying in with goof humor, accept that the revenues 

of the active population progress less slowly than global wealth, because the part of the 

retired in the population will go up. Government is planning the contrary. It wishes to 

cap pensions at 14% of GDP, which will imply a substantial lessening (over 20% looking 

to 2035) relative to the revenues of the actives.

One needs to stop opposing public and private. A good part of private activity is made 

possible by public spending (consumption by the retired, etc). The economy is not a 

zero sum game. During the Thirty Glorious (...post-war years), public spending and 

salaries both went up regularly, this created more activity, in such a way in fact that 

public spending as a percentage of GDP went up very little. It is this virtuous circle we 

must create anew.

Societies of wage-earners

We live in wage-earner societies. For the most part, the outputs of enterprises, and 

hence their activities, depend on salaries direct and indirect (retirement incomes and 

allowances payed by deductions). Salaries are not the enemy, but the friend of employment.

Neoliberalism accentuates the grip of financial capital on enterprises. Holding down 

salaries permits pumping up dividends, stock buy-backs and fusion-acquisitions (for 

the most part in foreign countries), to the detriment of investment and employment. 

Large companies are held hostage by this short-term-leaning finance and often autocratic 

upper management bathing in excess (Carlos Ghos unfortunately is no exemption).

It is high time to leave behind the archaic liberal view of the corporation which only 

recognizes the shareholder, and denies that the workers are part and parcel of the whole.

Flipping perspectives

In imposing their views,  liberal proponents have methodically strengthened the power 

of finance and organized social and environmental dumping through free trade:

compressions in salaries and allowances, reduced taxes for the richest and enterprises 

all in the name of ‘attractiveness’. The rules we find for Europe and the Euro amplify 

those of liberal globalization. European countries compete among themselves socially 

and fiscally. The Euro is under-valued for Germany, over-valued for the countries of 

Southern Europe and France. The trade surplus for the Euro Zone is greater than 3% 

of GDP (larger than for China!) which bears witness to a too-weak internal demand.

It is up to France to put forward a reversal of perspective: stop using Europe as a tool to 

dismantle national Social States, propose a growth plan ( more important for countries 

in a surplus position such as Germany) with higher salaries and public spending 

investments (especially on ecology). If this doesn’t sit well with Germany, it must 

propose to countries that might agree( Spain, Italy, Portugal taken together with France, 

represent more than 50% of GDP of the Euro Zone), to break with current european 

rules, and go forward with this reconstruction pact. the demand for equality has doubled 

again in our country. It is a chance worth going for. Neoliberalism runs on inequality. 

It is time to turn the page.