And who is still having their knuckles rapped? France, which is our future “exemplary president”! Of course France hasn’t reached its objectives. Of course its deficit is larger than foreseen. Of course the objective is now to achieve balance and growth in 2012. I’m saying to you, next July it’s going to be really classy when we have to explain to other states that they must follow EU rules etc etc…
But, you’ll say to me, I don’t understand! I thought that France had managed to come out of its famous 3% deficit. The deficit for 2007, is 2.7%. There shouldn’t be any more problems then! But of course there are!
Because that’s not all. Under the Stability and Growth Pact, the states have committed themselves to reducing their deficits with the objective of having a complete balance by 2010. Yes, you’ve read correctly, 0 deficit! But it’s in the treaty, this thing! The treaty says it should be less than 3%, full stop. What’s Europe getting itself into now?
Europe is saying that 2.7% deficit in a positive economic period is frankly not great. That the budgetary deficit can be used to compensate the effects of a crisis, but a deficit when there is no crisis is a structural deficit, and that, whether you’re a leftist or rightist, Keynesian or monetarist, is truly terrible! And we’ve had these structural deficits for twenty years…
And actually, what exactly is public spending for? Aside from roads, railway tracks and schools, it also works as a sort of stopper in the face of economic crisis. When things are going badly, we help the unemployed, we reduce charges for businesses etc. In summary we revive the machine. And that deficit is made up in the years when things are going better.
But when we have a 3% deficit in the years when things are going well, we spoil all hope of being able to soften economic shocks. In keeping these structural deficits, we voluntarily cut ourselves off from weapons for the future. And at the least economic shock it’s a downward spiral: spending increases automatically, but the economy doesn’t re-launch. You all recognise the absolute terror of economists: stagflation! The economic equivalent to a black hole. Total destruction, the Nothing (for those who remember the Never Ending Story, our geek reference of the day…)
The conclusion to be drawn from all of this is that those who swear faith in our social system and at the same time promise more spending, or less taxes, are lying to you. Actually no, it’s worse, it’s pure and simple betrayal! It’s as though the Pope came to speak to you about love, or multinational companies about social responsibility: we ask ourselves how it’s possible that anyone can still believe it.
And lastly, this liberal and capitalist Europe, which puts states in a straightjacket of technocratic criteria, which imposes an orthodox budget, isn’t it the best assurance for our social policy?
Why is there such a refusal to reduce deficits on the part of the European Commission? Because the urgency is now! The surge in prices of primary materials, the beginnings of a global food crisis, an American economy skimming a recession, all of this is going to mean that our economic policies will need more room to manoeuvre.
When the European Union tells states to clean up their finances, it’s not a question of a Trojan Horse. On the contrary, it ensures that our systems of public spending stay effective, and therefore viable, for the future.
The true question in this story is therefore not whether or not we should balance our budget, but more why, after all these years, we still have structural deficits. Maybe this reflects the perceptions of the population? Maybe there are certain people who feel like they’ve been in a crisis for twenty years? But here the solution will not be found in budgetary policies.
Translation: Christina Connolly