Annuler la dette : une ineptie nuisible au débat démocratique
Pour l'éco, Septembre 2020
Pour limiter l’impact de la crise sanitaire, les États s’endettent comme jamais. Il le fallait. L’Union européenne a décidé de faire de même. Excellente décision. Et la Banque centrale européenne a lancé un programme massif d’achat d’obligations publiques, financé par émission de monnaie. C’est dans sa mission.
Tout cela va devoir continuer aussi longtemps que nécessaire. Instruits par l’erreur de 2011, lorsque la zone euro s’est prématurément tournée vers la réduction des déficits, les gouvernements ont compris qu’il n’est pas l’heure de virer vers l’austérité. C’est heureux.
À l’issue de cette crise, on comptera 20 ou 30 points de PIB de dette publique en plus. Avec des taux d’intérêt nuls ou négatifs, cela restera soutenable. Sinon, il faudra en venir aux solutions hétérodoxes : une dévalorisation des dettes par l’inflation (une monétisation), un abandon partiel de créances par les prêteurs (une restructuration), un impôt exceptionnel sur la richesse. Il ne doit pas y avoir de tabou. Mais agiter aujourd’hui ces perspectives improbables ne servirait qu’à faire peur aux acheteurs de titres publics.
Un débat franco-français s’est ouvert sur une solution prétendument indolore, l’annulation partielle de la dette détenue par la BCE, éventuellement conditionnée à des investissements climatiques. Si elle était disponible, il faudrait s’en réjouir : il n’y a aucune raison morale de faire payer la dette COVID à qui que ce soit. Mais elle est juridiquement inaccessible et économiquement inepte.
Les traités européens sont sans appel : une annulation volontaire par la BCE, voire même une détention explicitement perpétuelle de la dette, seraient assimilés à un financement monétaire et sont donc proscrits. Bien sûr, on peut envisager de changer les traités. Mais même si un improbable accord unanime se trouvait réuni, ce serait sans effet économique.
Chacun comprend en effet qu’une entreprise endettée auprès d’une banque dont elle est le seul actionnaire n’améliore en rien sa situation en obtenant l’annulation de son dû. Il en irait de même ici : la BCE est une entité publique dont les actionnaires ultimes (via les banques centrales nationales) sont les États ; une annulation ne changerait rien au bilan du secteur public agrégé (BCE + États).
Pour acheter des obligations d’État, la BCE a émis de la monnaie, aujourd’hui détenue par les banques auxquels celle-ci sert de réserve de trésorerie. Pour le secteur public agrégé, cette monnaie est une dette, actuellement rémunérée à un taux négatif. Si, lorsque la situation économique se sera normalisée, la BCE augmente son taux d’intérêt, cette dette lui coûtera. Elle devra alors réduire ses versements de dividendes aux États. Et si elle n’augmente pas les taux alors même que son mandat le voudrait, elle s’engagera dans la dévalorisation par l’inflation et pénalisera (entre autres) les prêteurs.
C’est aussi simple que cela. Prétendre qu’on peut annuler la dette sans que cela coûte rien à personne n’est qu’une mystification nuisible au débat démocratique.
Philippe Frémeaux : plusieurs vies, un seul homme
(Hommage à mon ami Philippe Frémeaux, ancien directeur d'Alternatives économiques, 6 août 2020)
Tour à tour enseignant, journaliste, consultant, chef d’entreprise, Philippe a eu plusieurs vies. Jamais prisonnier d'aucune de ces incarnations, il a fortifié ses convictions à l’épreuve de toutes ses expériences, et de chacune il a su tirer le meilleur.
De l’enseignant, il avait conservé le goût et l’art de faire comprendre, et c’est sans doute l’une des raisons qui l’avaient conduit, très tôt, à se rapprocher d’Alteréco (c’est là que nous nous sommes connus, il y a quelque quarante ans, autour d’inévitables et bourratifs jambon-beurres). Mais aussi, parce qu’il avait été professeur de sciences économiques et sociales, il était animé de la conviction que les questions réputées économiques ne peuvent se lire à travers le prisme d’une seule discipline, sans prendre en compte à même hauteur leurs dimensions sociologiques, anthropologiques ou politiques. Il n’avait pas attendu l’économie expérimentale pour se méfier de l’homo economicus et lui préférer l’homo socialis. Des inégalités, notamment, il ne voulait pas qu’on donne une lecture étroite fondée sur la nature du progrès technique, la concurrence, le rendement du capital ou même, de manière plus englobante, la mondialisation. Il ne pensait pas qu’on puisse les comprendre sans prendre en compte compromis sociaux et normes collectives. Et tant pis pour ceux qui lui opposaient qu’à force de convoquer toutes les disciplines, on ne se soumet à aucun régime de preuve.
Du consultant spécialisé, il avait retenu une approche concrète, industrielle des phénomènes économiques. Ce n’était pas seulement, pas d’abord sur la base de théories, de modèles ou des grandeurs agrégées de la comptabilité nationale qu’il en appréhendait les mécanismes, mais à partir des produits et de celles et ceux qui produisent ou consomment. Il savait bien sûr la valeur analytique des concepts (tout autant, d’ailleurs, que leur valeur politique) mais il s’en méfiait aussi, et aimait les tester à l’épreuve des réalités matérielles. Pour parler avec lui de transition écologique, mieux valait savoir comment fonctionne une turbine.
Du chef d’entreprise – du patron, treize ans durant, d’Alternatives économiques – Philippe avait gardé un réalisme assumé et tranquille. Ce n’était pas la posture morose de ceux qui ont renoncé à leurs utopies, mais l’exigence lucide de ceux qui veulent construire sur la terre ferme. Il tenait pour une évidence que la prospérité collective s’ancre dans la productivité du travail et la santé économique des producteurs. Et il savait mieux que personne qu’une entreprise à finalité alternative est, comme toute autre et parfois plus que toute autre, soumise à l’impératif de rentabilité. Là n’était pas l’essentiel, certes, mais il était indispensable que la maison tourne et dégage les moyens de son propre développement. Gare à qui voulait se lancer dans une nouvelle aventure au mépris du compte d’exploitation : il était vite prié de revoir ses projets.
Le journaliste s’était nourri de ces expériences multiples. Il avait fait siennes les ambitions fondatrices d’Alternatives économiques – simplifier sans dénaturer, critiquer sans travestir, imaginer sans s’illusionner – parce qu’il se retrouvait pleinement dans ces alliances de contraires. Autant l’homme de convictions était stable, autant le dialecticien était mobile. Mais c’est d’une manière très personnelle qu’il portait ses idées, avec un mélange tout particulier de sérieux et d’humour qui brouillait les pistes et déroutait ses contradicteurs.
Au fil des années le journaliste engagé en était venu, sinon à se muer en une institution, au moins à tenir un rôle social, avec ce que cela comportait de responsabilité, de contraintes, parfois de contradictions. Il remplissait le rôle du docteur ès-alternatives avec précision bien sûr, avec conviction surtout, et puisqu’il le fallait ne manquait pas, avant de se risquer à surprendre, de s’employer à conforter. Mais non sans que le coin de sa paupière rappelle discrètement, mais avec insistance, qu’il ne se résumait pas à son personnage.
Depuis plusieurs années, Philippe se savait menacé. Aussi longtemps que possible, il a poursuivi son chemin, et traité de sa propre mort avec la même ironie qu’il employait pour parler des sujets difficiles. Ce n’était pas le détachement des blasés mais plutôt celui des empathiques, dont la générosité est si essentielle qu’il faut sans cesse la protéger d’une armure. Il y a quelques semaines, il m’a appelé pour m’inviter à un colloque qu’il organisait en novembre et, comme en incidente, pour m’annoncer qu’il était condamné. Si je suis encore là, me dit-il, cela me fera plaisir que tu viennes. Si je n’y suis plus, ajouta-t-il avec un sourire dans la voix, tu pourras parler de moi et, compléta-t-il avec un sourire redoublé, tu pourras faire mon éloge. C’était Philippe.
Facts, not words: The EU role in the deconfinement phase
Bruegel Post, 22 April 2020
Each year, 500 million passengers fly across the European Union. Each day, 1.3 million employees commute to work in another EU country. Ten million European citizens reside in an EU country other than that of their birth. International road haulage amounts to one-third of total EU traffic. Imports from within the EU amount to one-fourth of GDP. These numbers tell us how integrated the EU is – or rather was, before the coronavirus prompted a de-facto closure of national borders. And the numbers show how much is at stake in what amounts to a fragmentation of the EU along national borders.
Read the post on Bruegel's website
Questions to the High Rep / VP designate of the European Commission
Bruegel Post, 30 September 2019
[Note: This post is part of a series prepared by Bruegel scholars ahead of the hearings of Commissioners-designates in the European Parliament. It focuses on the dimensions of the High Rep/VP mission that bear some relation to economic policy discussions. It does not address the pure foreign affairs dimensions of his mission]
In her mission letter, President-elect von der Leyen emphasises that she wants the next Commission to be a geopolitical Commission. She envisages a more strategic, more assertive and more united Union in its approach to international relations, and she would like the High Representative / Vice-President to contribute to creating a stronger link between the internal and the external aspects of EU policies, so that the external action becomes a systematic part of decision-making processes. More specifically, she would like the action to all external-facing Commissioners to be better coordinated, in particular through letting them participate in a dedicated group chaired by the VP for a Stronger Europe in the World.
These aims largely coincide with the requirements put forward in our memo to the High Representative, in which we called for a refocus from the internal to the external aspects of EU policies, emphasised the new linkages between the economic and foreign relations / security dimensions of its interaction with the rest of the world, and advocated a “change of mindset” to address the threats to the EU’s economic sovereignty. We therefore welcome this new emphasis as it is indicating awareness of the magnitude of the challenges the EU is facing on the world stage, and of the need for a reset in its approach to international relations.
A number of questions nevertheless arise.
1. Do you consider that the new global context calls for ending the traditional separation between external economic relations and foreign relations?
This separation, which resulted from the primacy of the United States both as the ultimate provider of security to European states and the guarantor of the international economic system, is one of the key premises upon which the EU system was built. It has made it possible for the EU to keep foreign and security policy and foreign economic policy essentially unconnected. Beyond the stance of the current US administration, international relations are likely to be dominated by the US-China rivalry and its across-the-board implications for security, diplomacy, trade, finance, the internet and a series of other fields. Neither the US nor China separates the foreign affairs / security field from the economic field. This is a context the EU should adapt to.
2. Do you regard economic sovereignty as an appropriate concept and if so, how would you define it in the present context?
Economic sovereignty means different things to different people. It is crucial for the EU to be as clear as possible about its aims. In the US, there is a growing debate about the benefits of trade openness as well as about the potential gains from decoupling from China. But a decoupling strategy cannot be in the EU’s interest. EU prosperity critically depends on global economic exchange and China is set to become an increasingly relevant trading partner for the EU. It is therefore in the EU’s interest to retain its trade openness tradition and specifically to engage with China. While the US is in direct geopolitical confrontation with China, the EU is not. The central challenge for the EU is therefore to uphold its economic sovereignty while staying highly intertwined with both the US and China.
3. Do you regard both the Chinese and the US attitudes as potentially threatening for Europe’s economic sovereignty?
Europe is a collection of countries whose cooperation is largely governed by rules, whereas China is governed by a one-party system. China’s growing influence over individual EU countries, its blurring of economic interests and security/military goals, and its divergence from multilateral standards are all source of concern for the EU.
The relationship with the United States is different. The US has been Europe’s most important ally since the second world war and our ongoing alliance with it reflects Europe’s democratic values and history. But the use of the centrality of the US financial system and the US currency to enforce US preferences unilaterally is a blow to Europe’s sovereignty.
Europe’s response to this new situation has been piecemeal. It has shown a readiness to address the new challenges in various fields. But what it needs is a more encompassing strategy for a context in which partners and competitors are prepared to let economic relationships serve broader geostrategic goals.
4. How will you proceed to trigger the necessary change of mindset?
A long-established EU tradition is that policies are run in silos and to a large extent depoliticised. This fragmented approach had its logic as long as the overall framework for international economic relations was stable. It has shaped attitudes, but also procedures and legislation. There are considerable obstacles on the way to a more coherent approach and there are even good reasons to retain a separation across fields. Within the Commission, policy in certain domains will and probably should remain independent from the overall foreign relations priorities.
5. What are the organisational and procedural steps needed to ensure a better coordination within the Commission?
How do you conceive your coordination role within the Commission? Which among your colleagues are those you should work with in priority? Do you envisage creating an economic sovereignty committee with your colleagues for enlargement and neighbourhood, trade, development, humanitarian aid and migration? The External Action Service is currently separate from the Commission services. Does it need to be brought under the same umbrella?
Thomas Piketty’s New Book: Impressive Research, Problematic Solutions
Peterson Institute Real Time Economic Issues Watch, 19 September 2019
Thomas Piketty’s Capital in the Twenty-First Century blended history, statistics, and theory. Capital and Ideology, his new magnum opus, is long enough (1,200 pages) to lump together several books: a quantitative history of inequality through time and space, from medieval Europe and ancient India to present-day societies; a largely noneconomic theory of social stratification; an investigation into the social roots of current populism; and a political manifesto for the European left. From the extraordinary wealth of its empirical material to the breadth of its cultural scope, and from the rare alliance of statistical precision and literary references to the level of its intellectual and political ambition, there is much to commend in this remarkable book.
From a policy standpoint, however, its last part, where the author offers an agenda to promote social fairness, deserves the most thorough discussion. It is much shorter but at least as ambitious as the analytical chapters.
Piketty’s goal there is to offer a new paradigm to substitute the largely obsolescent social-democratic project. This ambition may seem excessive. It is rather fundamentally right. In the current context of social anger, catalogues of down to earth policy proposals neither convince voters nor provide policymakers with a guide for real-time decision making in an unpredictable environment. Democracies nowadays need directions as ambitious as the welfare Keynesianism of the 1960s or the small government, free market project of the 1980s.
Purportedly realistic agendas, furthermore, often fail to tackle pressing challenges. Wealth inequality, income inequality, and inequality of access to essential goods such as education and healthcare have reached levels where they cannot be addressed by tweaks on the margin of the sort usually discussed in the policy debates.
Piketty’s bold agenda relies on three main pillars. The first is the empowerment of employees through a radical reform of corporate governance; the second is a massive redistribution of wealth and income through an overhaul of the tax system; the third, which essentially applies to Europe, is a move to transnational federalism. There are good reasons to contemplate each, but each is also highly problematic.
Empowering Employees through Reform of Corporate Governance
First, corporate governance. A recurring theme of the book is a critique of the absolutism of property rights (what it calls proprietarisme). Piketty despises communism, but he considers the gradual extension of the sphere of private property (from land to manufactures, intangible capital, and data) and the parallel increase of shareholder power as capitalism’s main curse and a fundamental cause of the rise in inequality. Drawing on the German and Swedish experiences, he aims to restore a balance between capital owners and employees.
His proposals, however, go beyond the German codetermination, where employee representatives get half of the seats on the supervisory board while shareholders generally appoint the executive board, which in practice ensures that the latter retain control of decisions but provides employee representatives with good access to information and a say on the overall strategy. Piketty envisions more on two fronts: He advocates giving employees half of the seats on the board of large companies and capping the voting rights of shareholders holding more than 10 percent of a firm’s capital.
There is no reason not to contemplate pro-labor corporate governance reforms, especially in an economy where human capital matters more and more. What is striking in Piketty’s proposals, however, is that he envisages the issue from an almost exclusively distributional point of view. Whether or not his reforms would be conducive to social efficiency, spur innovation, or help to curb corporate short-termism seems largely outside his scope. Capitalism is looked at primarily as a wealth accumulation machinery, not as a driver of economic transformation.
Redistributing Wealth and Income through Overhaul of the Tax System
Taxation is the second instrument through which Piketty intends to contain the concentration of wealth and property. His proposals on this front are both precise and radical. Numerical benchmarks are presented as indicative, but the goal is unambiguous: to transform the nature of property to make it temporary rather than permanent. Piketty’s social utopia is explicitly akin to a land ownership regime where property is regularly redistributed from the landlords to the peasantry.
Three different progressive taxes are to be mobilized to this end: a wealth tax, an inheritance tax, and an income tax. The proceeds of the first two, about 5 percent of GDP, would finance a universal capital allocation whereby on her or his 25th birthday, every citizen would be endowed with 60 percent of the average wealth (or about $130,000 in advanced countries). The third one would yield about 40 percent of GDP and finance public goods, social insurance, and a basic income for the poor.
These numbers may not look that radical. Public spending amounts to 45 percent of GDP on average in the European Union, so the overall tax burden could remain roughly constant. However, the suggested parameters point to a fundamental overhaul of the property regime. Based on table 17.1 on page 1130 of the book, the annual tax rate on wealth could reach 5 percent for a person with net assets worth ten times the average wealth. Knowing that Piketty would (rightly) tax all forms of wealth equally and that average French household wealth amounts to €250,000, the tax on a €2.5 million wealth would be €125,000 annually. By comparison, for the United States, Senator Elizabeth Warren envisages only a 2 percent marginal tax rate on wealth above $50 million (instead of Piketty’s effective rate of 10 percent), reaching 3 percent above $1 billion (instead of more than 60 percent).
On top of that, the same assets would be liable to a 60 percent estate tax, and the effective tax rate on income would reach 60 percent for a person earning ten times the average income. Such levels would most likely eradicate property above a relatively low threshold, except for entrepreneurs able to achieve stellar returns on capital. Simulations by Emmanuel Saez and Gabriel Zucman (2019) on the 400 richest US individuals actually indicate that a 10 percent marginal wealth tax on assets above $1 billion would have prevented the trend deformation in the distribution of wealth observed since the 1980s. Piketty’s combination of a confiscatory wealth tax, a highly progressive estate tax, and a highly progressive income tax would go much farther. It would imply the end of capital ownership as we know it.
Again, there is nothing wrong about breaking taboos and considering fundamental capital ownership reform. But on the condition that repercussions are addressed. Piketty’s apparent disdain for the implications of his proposals is mind-boggling. He does not even bother discussing consequences for saving rates, investment behavior, or innovation. As for corporate governance, distribution seems to be his only lens. Whereas the repeated use of capital in the title of his books is an unmistakable reference to Karl Marx, Piketty shows almost no interest in the production side. Capital, for him, means little more than wealth.
Moving to Transnational Federalism in Europe
The third pillar, European federalism, is conceived as a way to overcome the policy constraints stemming from the distortions created by tax competition and the European Union’s unanimity rule on taxation matters (and, obliquely, from the eurozone’s fiscal discipline framework). To solve the stalemate resulting from the addition of veto powers within the EU Council (where each country is represented by its minister), he advocates democratizing the European Union and transferring taxation powers to a new assembly combining national and European parliamentarians.
The diagnosis is correct, but the solution is unlikely to see the light. The problem in Europe is not, as Piketty pretends to believe, the composition of the parliament. It arises from the much more fundamental fact that nations that have agreed to pool economic sovereignty in a range of fields are not ready to endow the European Union with competences for either taxes or wealth distribution. This has been their position since the origins, and the current political climate makes them even less sympathetic to such ideas than ever before.
Apart from the fact that an assembly combining national and European parliamentarians would probably not behave according to Piketty’s wishes, why would states suddenly agree to a fundamental change in the distribution of competences? In Germany, the question has become a constitutional matter. In a series of rulings, the Federal Constitutional Court has erected barriers to the transfer of new powers to the European Union. Ironically its argument is of the same nature as Piketty’s, but its conclusions are the opposite: For the Karlsruhe court, the European Union is not sufficiently democratic to be endowed with significant new competences, because the citizens of the country whose demographic weight is the strongest—Germany—are underrepresented in its institutional system.
On all three accounts—corporate governance, taxation, and European governance—Piketty’s proposals, therefore, raise many questions that he fails, or does not even attempt, to answer. Absent a systematic discussion of the implications of, and possible objections to, his ideas, they can hardly be regarded as serious policy proposals. In the end, what is deeply disturbing in his book is not the radicalism of his plans. It is the contrast between the thoroughness of his empirical analysis and his casual approach to policy issues.
 The book is available only in French.
 EU legislation results from “codecision” (joint approval) of the European Parliament and the Council of the European Union.
Can the primacy of economics survive great-power politics?
Contribution to the Aix-en-Provence Economic Forum, July 2019
Europe for a while believed that a rules-based order was gradually taking hold of the world. The Cold War was over, rogue states were just a few and international law was gaining credence. In the economic sphere, trade, exchange rate and increasingly financial relations were governed by common principles. Global regulation was making progress. Competition law was being enforced regardless of the nationality of the corporate giants involved. States could be taken to courts.
Because it is itself a community of law, the EU felt at home in this emerging system. True, the institutional and regulatory architecture of globalisation was still far from complete. True, the US remained reluctant to be bound by international law. True, emerging countries felt that the rules were biased in favour of the incumbent powers’ interests. But the trend seemed clear.
This belief is being shaken by the return of great-power politics, first and foremost by the China-US rivalry that is set to dominate the 21st century. The US under president Trump has become a much more transactional power. China under president Xi does regards the rules-based order as a Western construct of which it has no ownership – a perception shared by Russia and many emerging countries. At a time when global interdependence has reached unprecedented levels and when the management of global common has become an overriding priority for the future of mankind, power rivalry threatens to take the world back to the type of adversarial international relations that prevailed in the 19th century.
It is tempting to regard the current climate in international relations as a temporary aberration. But it would be illusory to rely on such a belief. First, the world has learned from the behaviour of the very guardian of the international order that once-imperative rules are here to be breached. The lesson will not be forgotten. Second, the rivalry between China and the US and the emergence of a multipolar world dominated by three of four blocs are deep trends, not momentary accidents. Third, the Trump administration’s peculiar stance on international trade may go, but the China stance of the US policy community has definitely shifted towards a much more confrontational approach.
Beyond national attitudes, what has been irreversibly shaken by recent developments is also the widely held assumption that the economic sphere was governed by its own rules and could to a large extent evolve independently from the geopolitical sphere.
Globalisation was not meant to imply the end of wars and power rivalries, but it was assumed that it could remain largely immune from them. Trust in the primacy of economics was such that it was assumed that the evolution of the global economic and financial system was driven by its own logic.
Recent events have shown that this was an illusion. The unilateral enforcement by the US administration of secondary sanction on Iran irreversibly signalled that infrastructures that were routinely regarded as common goods – a global currency and a US-centric global financial system – could by the stroke of a pen be turned into instruments of sheer power. By the same token, the US ban on Huawei and Google’s subsequent decision to stop supplying the Android system to its phone subsidiary signalled that there is no such thing as a common technology platform that is, and will remain, accessible to all participants in the global economy.
China does not separate economics from geopolitics either. It simultaneously seeks economic growth, technological development and geopolitical influence. For example, the acquisition by a Chinese firm of a European or US company may be motivated by national priorities rather than private profit-making objectives. Similarly, Chinese investment within the framework of the Belt and Road Initiative is motivated by a search for influence – including within the EU - rather than by the (often dubious) intrinsic economic value of the projects that are being financed.
Europe is slowly waking up to a new reality in which power trumps economics and where control of the nodes of economic integration – from the hubs of the monetary and financial networks to those of global data networks – can be turned into instruments of power. To use the cogent expression of political scientists Henry Farrell and Abraham Newman, it gradually realises that interdependence can be “weaponised”. In this context old concepts, such as economic sovereignty, are acquiring a new relevance.
The other big question is whether the global economy will avoid fragmenting into separate blocs. For decades the world has been moving towards a single set of technical standards, economic rules and behavioural norms under the oversight of unified global institutions. It may have entered a process of fragmentation. Even before the Trump administration’s initiatives, cracks were already noticeable in the fields of trade (with the weakening of the multilateral system), development finance (with the BRI and other Chinese initiatives), financial safety nets (with the substitution of bilateral swap lines to the IMF-centred financial support regime), money (with early Chinese initiatives to internationalise the renminbi) and internet regulation (with the emergence of a separate Chinese internet).
Recent events are bound to amplify what is not yet a general tendency. The question is, how far are we from the tipping point where the momentum towards integration would be lost and the global economy inexorably reshaped by geopolitics?