A promise is due. I attack this week in a famous rhetorical: the devastating impact of financial globalization on our model office. The bet is risky as unanimity is great about it. On the left, they condemn the ruthless competitive welfare states in a race to the bottom where the winners will be the lowest bidder in terms of social protection, redistribution, culture etc.. Right, & c # 39, is the revenue side that we perceive a dangerous place: to continue to attract foreign investment, governments postpone any tax burden on wages. Rising labor costs then causes unemployment and deficits. That we take the problem on the expenditure side or revenues, the conclusion is identical: globalization jeopardizes the funding of our social systems and once they arrive ruling parties of both right and left have no choice but to reduce the social ambitions of the state and pursue policies of austerity: c ' ; is the end of politics and the triumph of the market. Gulp! The internationalization of finance: a recent phenomenon? Not at all!
Before addressing these arguments well oiled, we can relativize the debate already taking a bit of height (to please Tom Roud : our dice ; independence vis-à-vis foreign capital is not a historical record. Looking back on the economic history over a century ; century we find that markets international financiers were more before 1929 than they are today. Net capital flows amounted to about 5% of the GDP of Great Britain at the end of the last century against less than 2% today. Same trend in France and Germany:
(graphic from presentation on financial globalization Philip Martin, University of all Knowledge, 2000)
If financial globalization seems news is mostly because we are leaving behind a half-century of restrictions on capital movements. Of course, internationalization is very different from that of the nineteenth century, more volatile and oriented to short-term. But quantitatively, we are less dependent on foreign than we were at the time.
Less social spending? Are you kidding! Having
said, looking somewhat the extent of damage it has caused on our welfare system. To the left, our violent social conflicts about the deficit, pension or hole in the safety are compelling evidence of toxicity. Since the 1980s, when markets were deregulated, our governments show themselves more in social chick? Just rummage on the OECD website to find out and voila what happens:
not only social expenditure of the States have not decreased, but on the contrary, most countries have seen them grow faster than GDP. The share of social spending in France rose by 20% of GDP in 1980 to 28% in 2005. Ditto for the management of health spending by the state, which is globally stable for 20 years, according to statistics from the OECD
In these two areas , one looks in vain for the famous "spiral down "in which welfare states would be sucked under market pressure. We saw no more convergence between indicators of different countries, who each retain their own model of development policy.
Less public employment? Absolutely not!
same goes for the number of jobs in the public service, we count the number of staff (left chart below) or that of public service jobs as the administration missions, health, education and social action, sometimes delegated to private sector (right graph):
Neither the number of officials, or the disparity between the country really does diminish . In France and despite the effects of ads, many officials increased sharply since 1995 . Elsewhere the effect is masked because the private sector took over: what are the functions of "public utility" which occupy an increasing share of total employment. In total, the public gains more ground.
Financial markets reluctant to social spending? On the contrary!
It is probably no coincidence that globalization and growth of public spending are well combined. In France, the opening financial markets has coincided with the austerity policy of the mid-1980s , where he had to replenish the coffers. And our case is not isolated! As some economists point out, " with increased debt, national treasuries could no longer rely exclusively on domestic investors . We had to appeal to international investors, especially institutional investors to buy shares in domestic public. It and the departure public authorities have liberalized and modernized financial systems to meet their financing needs ( source)
In these two areas , one looks in vain for the famous "spiral down "in which welfare states would be sucked under market pressure. We saw no more convergence between indicators of different countries, who each retain their own model of development policy.
Less public employment? Absolutely not!
same goes for the number of jobs in the public service, we count the number of staff (left chart below) or that of public service jobs as the administration missions, health, education and social action, sometimes delegated to private sector (right graph):
Source: Audi and Baccache -Beauvallet, Employment in the public service functions and "public interest" (2006, pdf)
Neither the number of officials, or the disparity between the country really does diminish . In France and despite the effects of ads, many officials increased sharply since 1995 . Elsewhere the effect is masked because the private sector took over: what are the functions of "public utility" which occupy an increasing share of total employment. In total, the public gains more ground.
Financial markets reluctant to social spending? On the contrary!
It is probably no coincidence that globalization and growth of public spending are well combined. In France, the opening financial markets has coincided with the austerity policy of the mid-1980s , where he had to replenish the coffers. And our case is not isolated! As some economists point out, " with increased debt, national treasuries could no longer rely exclusively on domestic investors . We had to appeal to international investors, especially institutional investors to buy shares in domestic public. It and the departure public authorities have liberalized and modernized financial systems to meet their financing needs ( source)
revenue side: too much tax? Not at all!
Now the threats posed by financial globalization on government revenues. The parties of all stripes are the same conclusion even if they draw different conclusions. To maintain the attractiveness of the country's financial, taxation is become far too light on profits (which denounces the left) and far too heavy on personal income (which denounces the right). Yet the OECD statistics again seem to hurt everyone:
Too contributions? Are you kidding!
The problem would there contributions? It is the favorite argument of the right. I heard Herve Morin said on France Inter radio on Friday: "What is needed is to have the tax burden that can cope with globalization in which we live. I think we need a tax system that is appropriate for our economy to be competitive and I think it will go through a thorough reform of contributions social can not be sitting alone on the job. "Social contributions they really penalize our competitiveness? If this is the case, points out there at Center for Strategic Analysis, the total cost of labor and social-employer contributions included-should weigh more heavily in the country's total value added (which is divided between wages, profits and corporate taxes). Now we see just the opposite:
While the e chosen scale accentuates the decline, since 5 points lower in Europe in 35 years is not plummeting. But again, the trend is the opposite of what might be think: wages weigh (slightly) less in the economy of developed countries there are 30 or 40 years. Where is the bug? How the state can fund more social services without increasing the total labor cost? The answer is intuitive-cons, according to these economists: there is no correlation between cost of labor and social security contributions. Social welfare does not increase the cost of labor necessarily because of net wages may moderate offset employer costs and significant wage. That is how countries with high rates of employer contributions may have very different labor costs similar (France and Switzerland for example, or Italy and Ireland):
They conclude that "social contributions behave as a total share of socialized compensation of employees and not as a tax on wages. [These results] accordingly invited to reconsider the model economic welfare, to see it not as an issue in the struggle for the distribution of value added between wages and profits, but as a way of redistributing income wage (...) There therefore see no paradox in that a high level of collective social protection is not a handicap in the global competition. "Incredibly, no?
And if we did we take to ourselves?
So if this is not because of neo-liberal that our social system is in crisis, where is the culprit? Maybe should we blame but ourselves: with all public spending in France, it is difficult to explain the persistence of ; much poverty. We are the champions of the public deficit and yet according Canadian economist Timothy Smith "the majority of expenditures authorized by the deficits in the years 1980 and 1990 is went to non-redistributive social programs already existing, instead of financial programs for poverty reduction, education or long-term investments in infrastructure. " His conclusion is brutal: "States still have the freedom and resources necessary to correct the decline, and some states (Sweden, Denmark, Netherlands) have also chosen to do . The other, paralyzed by corporatism (France, Italy) and unable to reallocate resources to those who need it most are precisely those states where anti-globalization rhetoric manifests itself in the most extreme. " Ç has casssssssse" as I would say NumberTwo ...
Sources:
Melchior's site on the origin of financial globalization
The study by the Centre for Strategic Analysis: "The model European Social Is soluble in globalization " (2008, pdf)
Navarro, Schmitt & Astudillo: Is Globalization Undermining the Welfare State? (Cambridge Journal of Economics, 2004, pdf)
Andreas Bergh, Explaining Welfare State Survival: The Role of Economic Freedom and Globalization (2006, pdf)
The site OECD statistics
France is unfair Timothy Smith.
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