Voters and debt

Excellent texte, le problème généralisé dans les démocraties, c’est que la gouvernance de l’État est sous forte influence des groupes d’intérêts.

C’est un cancer généralisé, de toutes les démocraties, à part de quelques exceptions (Scandinave + Suisse)

Les politiciens ne travaillent plus pour le bien-être de leur peuple, mais pour satisfaire les besoins des oligarchies, ou pour satisfaire leur carrière politique à court terme sans voir les conséquences à moyens – longs termes.

La réalité économique doit tenir compte de la qualité d'une gouvernance (Une saine démocratie est une démocratie encadrée),  car elle a une incidence majeure sur la prospérité du pays.

Souvenez-vous de mon paradigme à droite sur mon blogue :

Tous les pays démocratiques avec un fort déficit ont un symptôme commun.

Des politiciens qui ont géré pour gagner la faveur populaire et satisfaire les groupes d’intérêts sans voir les conséquences économiques à moyen et long terme.

Extrait de: Voters and debt, By George Bragues, Financial Post, Aug 31, 2011

Winston Churchill

Winston Churchill noted that “democracy is the worst form of government, except all the others.”

In trying to comprehend the meaning of the sovereign debt crisis now enveloping the United States and Europe, we must confront the fact that the fault ultimately lies with democracy.

Among the many lessons the current crisis is enjoining us to learn, definitely the most important is how the political incentives embedded in the architecture of democracy conduce to the inordinate buildup of public debt.

Disconcerting as this claim may be, the idea that democracy bears critical flaws has long been generally acknowledged in the macroeconomic arena with respect to monetary policy. Throughout the Western industrialized world, after all, decisions about the money supply and interest rates are not left to elected representatives of the people. Instead, the responsibility is placed upon an appointed elite whose conditions of tenure grant it a measure of distance from the exigencies of the democratic political process. Central bank independence, as this qualification of the democratic principle is called, is based on the concern that politicians empowered to make monetary policy would sacrifice economic stability to their short-term electoral goals.

Yet the willingness to appreciate democracy’s vulnerabilities has been far less pronounced with fiscal policy than it has with its monetary cousin. This is notwithstanding that chronic deficits have usually been at the root of monetary-policy failures in the past when central bankers came under heavy pressure to print money as a politically convenient way to repay the huge public debt. The deeply held belief that democracy is the best regime keeps us from noticing all its imperfections.

Let’s start with the basics. Whatever the form of government in place, if the state is to perform its functions, it must have resources at its disposal, such as land, buildings, equipment, and labour. Its principal way of financing these, of course, is taxes. The imposition of these, however, effectively takes money from one part of the community and transfers it to another, namely those who work for the government, supply it with goods and services, or otherwise receive benefits from it. True enough, many in this latter group will usually have to file taxes. But if they pay less than what they get from the government, then all that really happens is that the amount of their transfer from the community incurs a deduction.

Consequently, the state’s fiscal operations necessarily divide society into two classes — that is, between those who, on balance, receive more from the government than they are required to give it, as opposed to those who must pay more to it than they are entitled to receive from it. Following John ­Calhoun, the 19th-century American politician and writer who developed this analysis, we can refer to the first class as tax consumers and the second as tax payers.

Amid the struggle that occurs between these two,
democracy favours the tax consumers.

In every society that has developed beyond the hunter-gatherer stage, wealth has been distributed unequally, that is, concentrated in a group making up less than 50% of the population, indeed often a good deal less than that. At the same time, democracy in principle empowers whoever can garner 50% plus one of the votes.

Tout à fait exacte, juste au Québec, la proportion est de 1/3, 1/3 de la population travaillent dans le privé et payent des impôts, malheureusement, ils ne sont pas majoritaires.

To an ambitious democratic politician, the optimal strategy to win elections is obvious: Promise the not-so-wealthy majority a wide assortment of government-

supplied benefits in the hopes of passing on the costs to the wealthier minority.

In other words, forge a coalition of tax consumers
that outnumbers the tax payers.

Thus, the democracies of ancient Greece and Rome continually harassed the rich to provide handouts and spectacles to the populace. This is nicely evidenced by a conversation recorded in Xenophon’s Banquet, where a man named Charmides expresses joy in no longer being wealthy: “Then I paid a revenue to the body politic; now I live on the tribute that the state pays to me.” In contemporary democracies, the well-to-do fare better, in large part due to the existence of a bigger middle class, who have fewer incentives to soak the rich than do the poor. Even so, it cannot be stressed enough that democratic states only began to grow toward their current bloated size in the early part of the 20th century, just after the full extension of the franchise had been mostly realized. Today, the rich pay a disproportionate share of tax revenues throughout the Western democracies, with most of the government’s spending benefiting the middle class, despite the moral pretensions of the welfare state to take special concern in the plight of the less fortunate.

Mine field

Over time, as politicians outbid each other in adding government programs, expenditures eventually reach a point at which a good number of the tax consumers are apt to shift into the category of tax payers in order to finance the entire enterprise. To manage this political minefield, the focus then turns to the issuance of public debt. While one might think voters would sniff this out by recognizing that the accumulation of debt only means that they’ll just have to pay later for government programs through higher taxes or inflation, the psychological reality is that scenarios about the future impact the human mind much less vividly than more present realities.

Voters’ judgments can also be confused by politicians telling them that the rich are not paying their fair share of the government’s costs or by blaming inflation on profiteering businesses.

Then, too, there is the fact that the young and unborn, on whom the burden of the debt falls, cannot vote to protect themselves.

Ce qui est tout à fait immoral et ILLÉGITIME

Cheap but not the Reality

Put all these together, publicly provided goods appear cheaper than they actually are, helping to maintain the demand for them above people’s demonstrated willingness to pay for them.

None of this should be taken to mean that a lasting resolution to the debt problem requires that democracy be transcended. As Winston Churchill put it, “democracy is the worst form of government, except all the others that have been tried.” Still, we can justly conclude that checks restricting what politicians can fiscally do must be implemented if tax payers are ever going to be adequately defended against tax consumers in our democracies.

C’est pour cette raison que je reviens, toujours à la même logique :

Ne jamais donner le plein pouvoir aux politiciens lors de leur mandat, les anciens sages du peuple suisse l’ont très bien compris, quand ça dérape, le peuple doit intervenir.

George Bragues is assistant vice-provost and program head of business at the University of Guelph-Humber in Toronto.

Un cahier spécial fort intéressant :

L'État, la dette et les libertés : l'importance de la bataille pour les idées