Good sense… forbidden?

” We have been through adversity before and always come out a lot stronger”.

Alexis Tsipras could have spoken these words at the height of his action to mobilise the Greek population. In reality they were spoken by Richard Fuld on 10 September 2008, five days after declaring the bankruptcy of Lehman Brothers, the bank he was still in charge of… 

The parallel between the demise of Lehman Brothers and the current situation in Greece is so simple that it sparks fears for the worst for our economic and financial environment. In clear terms: the fundamental situation is totally different and while Lehman upset the global economy on a lasting basis, the financial planet fears no more a debt default by Greece than it does that announced very recently by Porto Rico. Interaction in the global economy is limited and the financial markets remain calm in view of a situation that they know is managed by central banks.

What strikes us the most during these moments of agitation is to note to what extent good sense and the vision of collective interest are virtues that are shared so little! In a world that is informed, educated and has experience of past failures, reason should preside and lead to decisions that are acceptable to the large majority.

This is not the case: how many decisions remain purely influenced by doctrine, posture and the weakness of those designated to make them?

The example of the French pensions system is a marvellous illustration of this tendency to forget the common objective. The foundations of the systems born throughout Europe after the Second World War were intergenerational solidarity and a distribution ensured by the public powers. This system was excellent in its design but has clashed with the way our societies have changed, with a decline in birth rates, longer life expectancy and the emergence of mass unemployment rapidly undermining the economy of our pensions.

These disadvantageous developments have obliged a number of states to change their pension systems. As of the 1970s for the most far-sighted (the UK and Chile), then during the 1990s for Sweden, Germany and New Zealand. Even Italy planned to radically overhaul its pension system as of the 1990s by planning to spread these changes over a 40-year period!

In France, where the retirement age was reduced to 60 in 1982, fundamental reforms have still not been implemented. However, the overall amount of pension-related spending currently stands at €294bn, the equivalent of the entire gross tax revenues collected by the state in 2014. The successive reports and various commissions mandated on the subject have only served to note, warn and fill the holes in a system that has been generating permanent deficits since 2005, with more than €9bn in 2014.

For the past 20 years, reflection in France has focused solely on increasing the number of years and amount of contributions made before handing over to the next “decision-makers”, without ever considering an fundamental overhaul of the system.

The irony of the story is that the whole of Europe is currently demanding that Greece reform its pension system that consumes 14% of GDP, a level that is considered way too high, but which is equivalent to that of France!

If the decision-makers still needed to be convinced of the urgency, two figures should suffice to replace good sense on the negotiating table: 92% of the French population is worried about the future of its pension system and two-thirds considers that they do not live decently.

And so what if Alexis Tsipras was not entirely wrong to request the opinions of those primarily concerned before making fundamental decisions about the future?

Didier Le Menestrel