Great sacrifices by employees, Eurozone management
Labor incomes are a key adjustment variable in the face of economic shocks and ECB policy within the eurozone.
” The duty of the government is to ensure social protection of the people », Disraeli
I don’t know if people will lose their temper, but after years of service, they are caught in the grip of a “social” policy that is actually anti-social:
1/ the perverse and anachronistic rise of interest rates
Presented as social (“to slay the inflationary hydra”); we shouldn’t run out of air: inflation would already be down (gas prices won’t x10 every year, freight and semiconductor prices are falling) how will rising credit prices improve the situation for the troubled middle class? months of salary struggling to earn 3% in the best possible configuration, etc.)? Let’s take a look at where this strange claim comes from:
commercial bankers : If you ask the department manager at Darty what he thinks about the prospect of a price increase for washing machines, he’ll be enthusiastic. Bankers still want interest rates to rise and don’t see the anti-social consequences. As they say, “It’s hard to understand something if a person’s salary depends on what they don’t understand“. Because for simplicity, let’s assume that individual bank deposits in the euro zone reach 10,000 billion euros. If commercial banks pay depositors 1% and buy government bonds at 3%, banks’ margin is 200 basis points, or 200 billion euros per year in subsidies for banks (let’s not be afraid of the word)… in fact, for the benefit of bank shareholders!
Emmanuel Macron sees a general macroeconomic consistency in his policy. Yes… except for one (big) detail
central bankers : In 2013, Mario Draghi answered a question about falling prices: “…allowing people to buy more “. In 2022, Lagarde suggests that inflation will no longer allow us to buy so much (logic problem: if we buy less, inflation goes down…). With such software bent in a pro-German direction, any money restriction does God’s work somewhat. To paraphrase and redirect Bourdieu, the ECB “gives the privileged the privilege of not appearing privileged in the eyes of the non-privileged”. His practice is entirely related to the banking sector, especially since 2012, which he has overseen. Milton Friedman warned: “…an independent central bank will tend to overemphasize the bankers’ point of view. It is extremely important to distinguish between two problems that are often confused: the credit policy problem and the monetary policy problem. Its text dates from 1962 and has not aged a bit; it’s almost unstudied these days and has been costing us a lot of money since 2007 (at least).
We know what the players in the financial world want: interest rates around 3% (and the highest possible discount rates), which allows us to pay off the entire ecosystem, play with the nominal illusion and not anger anyone; they want this scenario so badly that they always plan for it (just as they want growth so badly that they never plan for a recession next year, even if it conflicts with them raising interest rates to kill it) (in) short) ( in the same spirit, managers will always say that their departments are understaffed corporations they never talk bad about carbon neutrality, even if they know it makes no sense, the insurer will always push more units of account than the common fund, etc.). Believing that this is in the “public interest” is simply foolish.
French stable alert: These are the structural reforms France needs. And those who are just sado-liberalism…
2/ The euro is very expensive, the silent ones pay for it
For 15 years, all economic, technological and financial developments have been unfavorable for the euro zone. But will the euro retain the same fundamental value? Do you believe this joke?
Capital can flee overvalued currency regions, not ordinary citizens. 1.06 today is economically the same as 1.36 12 years ago. It is very expensive.
And will you tell me our policies? As with interest rates, they placed the “responsibility” on independent technocrats in Frankfurt (against the letter of the Treaty), meaning they ignored them. Our elected officials are not exactly located in the suffering sections of society carpet bombing money; they are neither industrialists nor poor nor over-indebted nor mid-range exporters in world markets. Obviously, the expensive euro means for them a more comfortable rest in the dollar zone, in addition to patent in (pseudo) orthodoxy. Because they are older than the rest of the population, they are more likely to avoid inflation than deflation; and rarely would entrepreneurs or economists arbitrate in favor of devaluation or debt cancellation, even if necessary (Poincaré and de Gaulle imposed monetary reforms rather than reluctant elected officials). The differential rejection of the disadvantages of an exposed France and the superiority of a protected France, the fact that the country is no longer a political class but an administrative class: everything contributes to a form of monetary imprudence of an antisocial nature.
The energy transition, free trade and globalisation: what would Europe be like if naïveté was not where we see it?
3/ Employment, yes, but which one?
The government prides itself on its relatively low unemployment rate. Also, the problem may no longer exist: The problem—at least in the United States—isn’t that people can’t find jobs. The problem is that they can no longer find jobs that provide them with dignity and a decent social status » (Kenneth Rogoff). The usual statistics of macroeconomics refute the “Great Resignation”, which does not mean that there is no concern (there are also “a lot of interesting things”. Idle jobs e.g. by Graeber), a loss of meaning, especially in many companies run by accountants.
This is a dimension that Macron cannot integrate. This is often the case with him, running down the entire list of must-do tech moves in the 90s. A job may exist around the corner, but it’s often a job without meaning, meaning, or direction. Working to fill such a job may not always be antisocial, but it is like a bridge over the River Kwai. A form of the religion of numbers.
4/ Minimum wage: not very social!
One last example. Tweet from Aymeric Pontier: “OECD reveals France is one of 7 rich countries where smicards haven’t lost money in two years due to automatic revaluation of minimum wage (still slightly above inflation): +2% from January 2021” real “minimum wage”.
It’s not a lie. But given that apparent labor productivity has been falling in absolute terms in the eurozone for 4 years, what do you think the economic significance of this growth is? A further narrowing of the gap between the minimum wage and the average wage, and a rise in the equilibrium unemployment rate, is precisely what these “reforms” purport to reduce. Yes, I know economic analysis isn’t very “fun”…
5/ We refuse basic public services, services that serve people above all
Note that Piketty & co almost never talk about government spending: they focus on income. It is very practical. However, one only has to go to a few schools, a few police stations, a few RER platforms or a few hospitals to see a good deal of abandonment and thus massive antisocial practices. Non-social social transfers (a big pump that gets sucked in with lots of losses online and expires) cover public services.
For example, look at energy, especially controllable, uninterruptible electricity. We had an instrument unique in the world, at the service of all, massive, cross-class, rational, “à la Marcel Boiteux”, we broke it and let the Germans take more of it; tomorrow’s layoffs, load shedding, and rationing won’t hit the rich first, and their jobs can rarely be shifted to industry and elsewhere. We want to have fun here, in the context of the hypocritical little hexagon debate about gas prices and purchasing power? Imagine what it would be like in a world ruled by Parisian elites where shale oil, gas and other LNGs would not fit our fancy for 12 years…Macron will be saved by Texas this winter. often found in the press.
6/ Housing, the nest of the stupidest regressive policies
Construction is blocked in 100 ways to the grotesque (zero-artificial, etc.). In your opinion, it is suitable for young couples who want to climb the social ladder insiders ?
We’re doing everything to subsidize the demand for social housing, don’t you think that’s low-level patronage? We’re trying to block rents, do you know of a place in the world that hasn’t caused the market to hurt the poorest the most?
Note that there is a big difference between rising house prices and rising stock prices: the latter takes nothing away from anyone. We can imagine that the increase in stocks continues continuously without violating the Pareto optimum. A more expensive square meter, on the other hand, is a curse for the non-owner; It is not only about the inequality and distribution of wealth, but also inhibits the mobility of the factors of production and is an economic tragedy from a certain stage, including now the geographical mobility of the labor factor in the United States. in free fall for several years.
7/ Immigration: a chance for those who want more ethnic restaurants in their neighborhood, often not a chance for the popular, competitive and insecure classes.
Milton Friedman: You can ask for a full welfare state if you want, and you can ask for free immigration from less well-off countries, but … you can’t have both at the same time for very long. For the successor of our president at the same time, it’s a very hard lesson to admit. In its defense, the Swedes and a few others also struggle. So this leads us to a slow dismantling of traditional protections, a slow approach to an American-style system where the average voter doesn’t really want to develop safety nets because he knows all too well who it benefits. At the end of the process, money is used only to buy social distance, ie. de facto ethnic distance. A beautiful society is born; for the sake of social justice, of course.
” We are getting closer and closer to a situation where no one is responsible for what they do, but we are all responsible for what someone else does.”Thomas Sowell
It seems that you need to do social: chick. But let’s make sure in advance that our social approaches are indeed social. “In life, it is important to be beautiful, but it is more important to be right.” (Churchill).
The first step is to correctly define the responsibilities and evaluate the public policy. That’s probably why we don’t do it. It just so happens that most so-called social policies miss their targets (if they have any) and are destroyed every 5 or 6 years anyway by rent-seeking monetary policies. Now there’s only one way: Re-read the dozens of articles in The Atlantic since 2011 that have addressed these questions from various pens…