The Great Disarray of Western Politicians in Front of the Multiple Challenges of the Next World.
One positive note, however, is that humanity has been through much worse, and has always come through.
More and more people agree that we have entered a “post-liberal” world. States are back, they have to plan the ecological transition, invest billions, monetary policy has to switch to austerity, trade has to ensure the security of supply and not just price, consumers have to learn frugality, and even children's video games have to be limited.
But what are the new lines of post-liberal thinking? A mystery. None can be found in the literature of economics, except for empiricism. The next world will be made by moving forward.
Hence the dismay of leaders to define public policies in advance and concrete terms, and, by the way, the enormous advantage of populists who do not bother with the details of their “other world” and are satisfied with the magic "there is only to". The whole of the Western world is a perfect example of this, in Europe and even in America.
Competition and marginal price have created chaos
Take energy. Prices that have increased by a factor of 10 or 15 are the verdict: the market does not work. The discovery of shale oil has caused the United States to abandon its imperial duty to monitor and anticipate the global market. In Europe, the liberal system of competition and “marginal price” has caused chaos since Putin distorted the game by using gas as a weapon.
Germany, which is at fault, never imagined that geostrategy could be imposed on the economy.
But all the other countries are guilty of the naivety of thinking that market mechanisms can guarantee the cheapest energy. This winter, countries including Germany will experience the unimaginable medieval shortage and cold. What should we do? First, reinvest in energy, both oil and nuclear - who would have thought it? But will finance have the right and the desire to do so? Not sure.
In Europe, a large mutualization and solidarity mechanism is being imagined, for the anti-Covid vaccine. Spain, for example, would give up its Algerian gas to Italy, which is being strangled by the Russians. But which countries are going to accept to deprive themselves this winter to help Germany, Austria, and Poland? Then, public monopolies will be reconstituted, as in France, but what place should be given to competition? If the system has to be completely redefined, the first line of the blank page has not been written.
Diving into pragmatism
The same is true for monetary policy. The record of the “magician” Alan Greenspan (Fed chairman from 1987 to 2006) of opening the coffers wide is unflattering: the long-term support for growth is uncertain, but the inflation of real estate and stock market bubbles is proven.
Money must have a cost, and we must return to orthodoxy, but to what extent?
The central banks, beset by inflation, have completely turned around and are going to raise rates very sharply, with the FED and then the ECB obliged to follow suit. But if the recession starts to bite, how will public opinion react? Is the independence of central banks over? As in energy, there is no known doctrine.
The same could be said of fiscal policy. Chancellor Olaf Scholz has admitted that the Stability Pact should be rewritten “without prejudice”, but this is to say explicitly that the eurozone is immersed in pragmatism. The last example is ecology. The transition must be “planned” so that everyone knows where we are going and how fast. Certainly, but we are still waiting for a plan that gives us the evolution of the price of a liter of gasoline: 2 euros today, then 5 euros in 2027, and 10 euros in 2030. One can imagine the reactions ...
As a decarbonized economy will be less efficient and more expensive (unless there is a technological breakthrough), the fight for the climate is a social problem. We will finally have to say it clearly and add that to help the most fragile, we will have to take the money elsewhere and where.
On the end of abundance, an abundance ... of criticism
In this example of climate change, the strategic line is clearer, but it is the way of making it accepted by the unprepared opinions heated by the populists that are not clear at all. For having spoken of the “end of abundance, of carelessness and the obvious”, Emmanuel Macron has taken a lot of criticism.
However, it will be necessary to teach the new world and also a new approach: we do not know if we are going to California, we only know that we will have to go through the mud. It is time to find some humor, mud is good for traffic, and a song of hope: humanity has known much worse, it has always managed.
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