Thursday, January 30, 2014

Piketty on the Responsibility Pact

Thomas Piketty is fairly close to what I've been arguing these past few weeks, although his criticism of Hollande's dithering is more blunt:
Soyons clairs. Le poids des cotisations patronales pesant sur les salaires est excessif en France, et il est urgent de les alléger. Non pas pour faire un cadeau aux patrons, mais parce qu’il n’est ni juste ni efficace de faire reposer à l’excès le financement de notre modèle social sur la masse salariale du secteur privé.
Le problème de la politique menée par Hollande est double. Tout d’abord, après toutes ces hésitations, on ne sait toujours pas comment vont évoluer les taux de cotisations dans les années qui viennent. Comment vont s’articuler les allègements de charges sur les bas salaires, la fin évoquée - mais loin d’être confirmée - du CICE, la suppression envisagée des cotisations de la branche famille ? Personne n’en sait rien.

1 comment:

Mitch Guthman said...


I have finally worked my way through Thomas Piketty’s essay in Liberation. Like your commentary, it is unquestionably incisive and an excellent discussion of both the merits and the politics of the “responsibility pact”. As you say, Piketty is considerably more critical of Hollande and I thought his final paragraph was particularly good.

I think we beaten the politics of the “responsibility pact” to death on this blog. I don’t think there’s as much distance between us on the merits as you might think. I do not disagree that new thinking is needed to address the problems of globalization. Obviously, I believe that a major rethinking about free riding and the unrestricted movement of capital will be necessary. Similarly, I believe that the west generally needs to move away from neoliberalism and towards greater, more uniform regulation of markets to promote important social values. But I agree with you and Prof. Piketty its very likely that France ultimately will also need to implement something along the lines of the Hartz reforms.

But, in thinking about these two commentaries, I have come to believe that neither one should ever have been written. Europe is in the midst of the worst economic climate since the Great Depression and, if we don’t change course or else hit bottom very soon, my guess is that ultimately our "lesser depression" will soon overtake it. The “responsibility pact” does almost nothing to address the present economic emergency, at best some aspects may have a very mildly stimulative effect but only if businesses act irrationally and hire workers, reduce prices of export goods, etc instead of simply pocking Hollande’s gift to them. And, really, God only knows how much of French (or even European) society will remain intact by the time this “responsibility pact” is eventually adopted.

The French economy is like a ship being buffeted by a terrible storm and in imminent danger of sinking. At such a critical time, the captain shouldn’t be planning future voyages or worrying about how to retrofit the ship when it is eventually in dry dock. In the middle of such a storm, his only responsibility is to save the ship. Nothing else matters.

I believe that any discussion of the substance of the pact is counterproductive because it distracts from the only question that really matters, namely, ending this depression now. The only thing worth mentioning is that the ship is still sinking. Talking about the substance and even the politics of the responsibility pack is like arguing about the stolen strawberries with Captain Queeg in the middle of a typhoon instead of worrying about how to save the ship.