Tuesday, November 6, 2012

Piketty on the Gallois Report and Government Reaction

Here. I see here, clearly articulated, one line of emerging critique of the government's plan: it is intellectually incoherent, Piketty argues, "illegible," unclear, etc. Bernard Girard echoes the thought here. Given the total irrationality of fiscal debates in the US, I think "illegibility" is a rather mild criticism, though one can understand the disappointment of intellectuals who had hoped for a complete overhaul of the tax system. A fine idea in principle, but such ambition requires a more resounding mandate than Hollande received (for a program quite different from the one he has enacted, moreover) and a party more united than the PS about where it wants to take the country. Given the political constraints, I'm rather pleased that Hollande has moved, with some dispatch, toward a policy that holds out some promise of mild improvement. Of course the cost-shifting is merely a short-term response to a deteriorating competitive situation; the long-term response will be the real test, and it may be that a government forced to pinch its pennies ever tighter will be tempted to skimp on the investments in R&D, infrastructure, and education that are ultimately more important than the "legibility" of social-security financing.

1 comment:

FrédéricLN said...

Read, thank you for the link. Piketty is right, for sure. But he forgets that "un bon impôt est un vieil impôt". You cannot make a large fiscal reform at balance 0 (with as many losses as gains for taxpayers): the number of loosers would block either the decision process or the economy. You can only increase well chosen taxes when you (State) need money (as Hollande has done in Summer), and cut well chosen taxes when you have money. In between, you will always be suspected of fiscal conjuring.