The policy of the ECB is part of this framework

Some forty years ago, the Economist Walter Heller, then at the head of the team of advisers to John Kennedy, said in a Conference become famous that economics had reached such a level of development and understanding mechanisms of growth that it was possible for any Government to achieve full employment. This enthusiasm and this belief seem today much excessive while Europe is unable to get rid of unemployment and its growth rate seems to oscillate around 2. Economic policy, i.e. the intervention of the State of the Central Bank responsible for monetary policy and fiscal policy, is often seen as powerless. François Mitterrand fairly well summarized this sentiment by proclaiming, resigned: "Unemployment, we tried everything."

That translated the formula of the former President of the Republic, it is less the finding of a failure of economic policy that the despite linked to unforeseen result of the relaunch of 1981. What has failed, is not economic thinking, this is a schematic view of Keynesian theories, as early as the mid-1950s, some economists had been used to characterize as "hydraulic Keynesianism." The basis of the hydraulic Keynesianism is the opposite of conventional ideas about the efficiency of the market economy. Since the liberal theory was able to respond to the dramatic flow of deflation and unemployment of the 1930s that the inertia and the fatalistic statement that the market would eventually solve the problem, it became clear to some that this theory was disrepute. They convinced quickly that to rebuild the political economy, should be systematically reverse the Liberal conventional assumptions. The most notable result of their approach was the inversion of the Act, Say. A statement that supply creates its own demand, they substituted that demand creates its own offer. By putting the application in the centre of economic practice, the hydraulic Keynesianism has legitimized policies of stimulus by the budget deficit, but also gave certainty to a generation of economists who, like Heller, believed found silver bullets. Intellectual success of the hydraulic Keynesianism is, Furthermore, fortified facilities that he gave to political leaders. How they could refuse a theory doing the consumer non-not the consequence of the work and effort, but the origin of this work How to refuse a vision of the world where the increase in wages may be as beneficial and never no problem Employees who see their power purchase grow, and therefore their consumption increase, are delighted, the unemployed who find work through the resulting revival of consumption allowance are equally, companies which are new opportunities can not complain. However, by the end of the 1950s, some shouted daredevil. Engine consumption growth, the reduction in average working time of jobs, the growth of the money supply source of production: all approximate or downright false ideas which, ultimately, lead to inflation. This is what Paul Samuelson wrote to Kennedy at the time where Walter Heller militated for a decrease in the income tax.

Between Heller and today, the hydraulic Keynesianism was apparently away, and because, in fact, inflation. In the 1970s, the stimulus policies are unable to stem the underemployment and fail to undermine the financial system. Unemployment is rising, disparaged the international monetary system, and inflation is packaged. Is stagflation, formidable cumulation of inflation and unemployment which appears to give reason to the warnings of Samuelson. However, it has also been interpreted as a denial of another aspect of the thought of Samuelson. Indeed, he had in the 1960s, bounced on the work of the New Zealander Phillips. Statistician at the London School of Economics, Phillips found an inverse relationship between unemployment and the evolution of wages. Samuelson relies on its work to define the arbitration said Phillips between inflation and unemployment. For him, inflation was introduced that when unemployment has disappeared or when economic policy is fundamentally in opposition to one that effectively reduce the unemployment. Samuelson takes a position decided on arbitration of Phillips, if that other economists of his time did not associate inflation and strong growth. Jan Tinbergen the first Nobel Prize in economics in history sees inflation a very specific mechanism under the management by the Central Bank of credit activity. Therefore, it should not be analysed in connection with the action of the State to reduce unemployment. For Tinbergen, the State use of fiscal policy to increase demand and organize growth, while the Central Bank controls, in turn, inflation. Central State Bank has the opportunity to drive a non-inflationary growth.

A look at the recent economic history of the United States, one might think that Tinbergen was correct and that inflation is not threatening well conduct policy to fight unemployment. However, a widespread laxity would lead to a situation combining drift prices and unemployment. The second situation is would be embodied in the stagflation of the 1970s, the first in the growth of the economy of the past ten years, framed with talent and brilliance by Alan Greenspan.

News of the inflation-unemployment

However the analysis of the American reality has not convinced Samuelson to the theses of Tinbergen. In 2004, in a manifesto of support for the candidacy of Democrat John Kerry, he denounced the multiplication of Monetary liquidity policy conducted by Greenspan, accusing him of causing runaway inflation. Its policy decision has surprised many who, brandishing the evolution of prices for consumption in the United States, asked where the old Nobel saw inflation.

In fact, Samuelson, in his economic insight always also live, has understood for a long time that the end of the system of fixed exchange moved the nature and the manifestation of inflation. Increase wages without any link with productivity, promote consumption, inject through the budget deficit of additional means of payment regardless of their content, measures which lead to inflation in the sense that they give rise to a gap between the supply and demand. Arbitration of Phillips still relevant: in times of high unemployment, businesses are stocks of producing additional demand can mobilize. But in current situation, they respond to any change in their economic environment by the rise in their prices. If therefore the arbitration of Phillips is still relevant, the question remains: where is inflation by Samuelson It is simply in the fact that the supply-demand imbalance reflected more in the case of the United States by a rise in the price, but by the massive importation of foreign offers. The hydraulic Keynesianism has survived in the United States in a version not assumed. Brought into disrepute by stagflation, it continued through the strange openly hostile to public action policies. Tax cuts decided by Republicans led to huge budget deficits and a stimulus by the application clearly enough inflationary. To avoid the higher prices induced, the United States agreed to abyssal swelling of the external deficit.

Efficiency both touted us economic policy is based on a tour of legerdemain to hide inflation. In the Middle praise but also cries of alarm lucid economists like Samuelson, Greenspan and Bush paradoxically gave a second wind to hydraulic Keynesianism while mine to berate the. Unhealthy practice, in fact, because it is to use as a vector of growth, economic policy but as a way to postpone time

Keynes himself was not unaware that his ideas could be summarized to a skilful management of inflation. Behind assertions disposed of his disciples, such as Walter Heller and behind the more or less elaborate models who supported there especially the belief that liberal economics had to respond to problems by underemployment while Keynesian economics there would meet the worst inflation. And it is a politically much less dangerous than unemployment. Painless as long as it remains limited, it also offers this benefit, according to Keynes, to ensure the "euthanasia of the annuitants. The Keynesian State of previously endettait to increase demand and in return received a more or less happy combination of growth and inflation which, in any case, the freed from debt. The postkeynésien State of Greenspan and Bush continues to go into debt to maintain idle and useless "Mac jobs." But the Annuitant to euthanize is Chinese or Japanese. And he will leave probably less national annuitant do.

The hydraulic Keynesianism. The growth is there, but at the cost of considerable inflation that measures an external deficit of 6 of GDP. American economic policy has responded to the challenge of growth in robbing Asian labour. Unquestionable ability, but which feed two sources of future conflict: the challenge of monetary privilege that is are usurped the United States by their currency the world currency. the rise of tensions with the Asian countries, which have no reason to accept long-term work and productivity efforts allow Americans to hold the highest standard of living of the world while multiplying sous-productifs, or even almost Soviet jobs.

Investment and Lisbon strategy

To the American model, Europe is often presented as an example of what not to do. In the ten years prior to the changeover to the euro, the average annual growth of countries involved in the process of construction of the single currency was of 2.1, compared to 3.7 in the United States. This gap is used to instruct the trial of European economic policy, and the action of the European Central Bank singularly. Monetary policy has become a ritual subject of denigration. This ritual has the characteristic of all the rituals, it is reckless to the point of become grotesque. Indeed, Europe has chosen, in contrast to the United States, the path of growth without inflation, i.e. without bequeath to future generations of the heap of debts. Phillips arbitration there lead ipso facto to the risk of unemployment. This risk is not lifted, that can be read sometimes amending the statutes of the ECB strange and naïve vision which is a phrase a determinant of economic reality... It will be lifted by an action of economic policy favourable to investment, to the reconstruction of productive capacities, to the establishment of a process of capitalist accumulation restaurant growth potential. Jean Fourastié, which came in the legend by launching the expression of the "30 Glorieuses", constantly reminded: sustainable growth based on productivity gains, i.e. on the capital investment and the training of employees. This policy in Europe has a name: it is the Lisbon strategy.

The policy of the ECB is part of this framework. Having the choice of a single currency, and therefore economic policy co-ordinated, who translated this choice in a desire to avoid inflation, the countries of the European Union, members or not members of the eurozone, have adapted their tools of economic policy to this choice. The ECB maintains a rigorous monetary policy is tending to avoid inflation imported by a favourable evolution of the terms of Exchange, i.e. entering parity. Similarly, fiscal policy has waived illusory facilities of the hydraulic Keynesianism in organizing around the stability and Growth Pact.

We must now extend economic policy towards the two high requirements of the Lisbon strategy: promoting investment; improve the productivity of labour.

France productive investment has fallen by 8 points of GDP over the period of the thirty Glorieuses. Large companies have certainly reconstituted their margins, but SMEs system remains fragile. Economic policy should seek to give them the means of their consolidation. Specifically, more than to more or less electoral reductions in VAT, French fiscal policy should be oriented towards investment. The spectacular growth of the small European countries in recent years, the Baltic countries or the Slovakia is made with a disappearance of the tax. Europe in pursuit of fiscal harmony must engage in relief, including the large countries, the taxation of enterprises. Remove the tax on corporations in France is the type of measurement in shock therapy which is likely to boost growth.

Similarly the labour force of the Lisbon strategy component emphasizes the quality of the work that must provide Europe, and therefore the training. Think this policy in pure terms of public expenditure to education grant to research labs without the practical possibility of evaluation of the results would be counterproductive. On the other hand, ensuring a systematic reconciliation between training systems and enterprises, between researchers and producers, between intelligence and spirit of risk is the most effective way to make an operational element of the Lisbon strategy.

The circular on the duration of the working time in Europe prepared by the Finnish Presidency is going in the direction of flexibility on the labour market, flexibility does not mean precarious, but adaptability. In practice, there again, thinking about the organizational modalities of work and the right of termination in a country like the France should not be conducted independently of the future of the Unedic and the definition of the rights and obligations of the employees of private employment, than on the future of vocational training and its links with the business world.

At the beginning of modern capitalism, the Economist David Ricardo emphasized the danger of appearances, supported patterns common sense but which, in practice, lead to erroneous interpretations of the economic reality. The major error was, according to him, to believe that increasing the amount of currency in circulation, leaving to go to develop public employment, seeking to avoid harsh law which is the source of all wealth, labour ended by wake up growth. To avoid unnecessary enthusiasms, he proposed monetary discipline. He saw the establishment by Britain through the adoption of the gold standard. Jacques Rueff to, rightly deplored the disappearance in the diving of the British economy in the 1970s. Today, Britain reinvents the logic of Ricardo by the main defender of the Lisbon strategy. It becomes the symbol of an economic policy which is based on the investment, and not on inflation. Growth in Europe is granted provided that it adopts without a State of soul the logic of the Lisbon strategy. Such an approach faces two threats: the fascination of the restored hydraulic Keynesianism in the United States, despite the fragility of this model and its decline started. the maintenance of England out of the euro, one of the more mature components of the European project.