Professor Michel Rocard's masterful lesson in economics on the situation in France

"Make 2013 a year of growth", Michel Rocard does not believe. The former prime minister, however, accepted the invitation of the real estate platform Cerenicimo, which organized a congress on this theme on Thursday January 10. In front of an audience of 500 real estate professionals, Michel Rocard showered the enthusiasm of the most optimistic. "I don't believe in any growth in 2013," he soberly explained in the introduction, after somewhat mocking the theme of the conference.

Invited to give a macroeconomic analysis and present the challenges of pension reform, Mr. Rocard preferred to address the first subject at length, no longer considering himself competent enough to discuss the second at length. He thus delivered an analysis of the dark economy with very marked Keynesian overtones. This, in front of a disillusioned-looking room, but religiously attentive.

A generation facing complex challenges

The man who has accompanied economic developments for more than 60 years first painted an edifying picture of the current period: "I do not believe that, since we know history, a generation has not had to solve so many challenges and complications," said the former Prime Minister. He recalls that during the not so distant period of the Trente Glorieuses (1945-1973), full employment was the order of the day in France (only frictional unemployment of 2% remained) and average growth was 5% in western economies. From now on, "the sum of unemployment plus precariousness plus poverty reaches 30% of the population of developed countries", bringing with it "democratic disaffection, the reduction in the electoral rate and the rise in power of protest parties". The room is attentive, without reaction.

A yawning gap has now been created between rich and poor, risking creating many other complications, particularly in France. “A society that is only interested in money cannot function properly,” insists Michel Rocard to wealth management advisers who wonder where they are.

Keynes and the art of living together

The former Prime Minister disapproves of the current state of society which "unlearns the art of living together". A reference to the famous British economist John Maynard Keynes - quoted regularly by Michel Rocard - who predicted in 1930 in his Economic prospects for our grandchildren: "It will be the peoples capable of preserving the art of living and cultivating it more intensely , capable also of not selling themselves for their subsistence, who will be able to enjoy abundance the day it comes." This "lap of economic abundance", Keynes saw it happening in 2030 favored by "energetic and resolute money men".

The British economist planned that 100 years after writing his book, without a major increase in population and without a major war, the economic problem would be solved. The man would then no longer have to fight for his subsistence and would "ensure that the work which still remains to be done, is shared among as many as possible. Shifts of three hours a day or 15 hours a week will postpone the problem for a good while”, wrote Keynes, quoted by Michel Rocard under the golds of the Hoche salon.

Keynes, however, brought an important downside to his reasoning. According to him, the danger lay in the inability of man to adapt to this world of abundance, forgetting the adequate distribution of resources and the forces of productivity. He feared that "the love of money as an object of possession" would come to stop his predictions and cause a "generalized depression" where every man for himself prevails over concern for the common good. “It seems to me more clearly every day that the moral problem of our time is that posed by the love of money: nine-tenths of our activities are oriented by the lure of gain (...); money is socially recognized as the measure of success," he wrote.

The international financial mess

Michel Rocard considers that Keynes was not far from the truth. Especially from the beginning of the 1970s, which marked the transition from a fixed exchange system established with the Bretton Woods agreements in 1944, and of which Keynes was one of the main protagonists, to a floating exchange system. "August 1971 is the date that brought our world into international financial disorder", slices Michel Rocard in front of his audience. According to him, the establishment of such a system of exchange has led to the development of financial engineering; in the first place by the creation of derivative products supposed to insure unwelcome changes in prices on the financial markets. There followed a multitude of innovations that dictated the evolution of finance until the disaster that we experienced in 2008.

Hence Michel Rocard's urgent appeal to the savings professionals present in the room to "protect savers". He who, in the light of economic history, pleads for a real separation between deposit banking and investment banking so as not to overburden establishments that have already shown limitless ingenuity with capital. In addition, he does not forget to alert on the "750 trillion dollars of speculative liquidities still present on the market which are without valid counterpart".

Hard to get out

In short, the former Prime Minister fears that it will be difficult to get out of this negative spiral. Especially since he considers the level of knowledge of society about his situation too low. "We can't get out of this without understanding what's going on," he said. In this regard, he castigates a political and media world dominated by the audiovisual sector, in search of shock and sensationalism, with the sole aim of immediately occupying all the space. Michel Rocard thus deplores the slow death of the written press, the "disappearance" of long-term visions and the "refusal of the complex" of our society which leads to "general ignorance about the economy in France, and sometimes even company management personnel". "The virtual non-existence of teaching economics in our school system hardly helps," he laments.

He illustrates this point with a concrete example on the use of the word crisis: coming from medical vocabulary, the crisis defines the high point of the disease and supposes "that we will regain the health that we have lost", explains Michael Rocard. But in the real economy, the diagnosis of the disease has not yet been found, therefore impossible to cure. It is therefore necessary to get down to "inventing new forms of response to completely new challenges", thinks the socialist. The singular use of the word crisis also saddens the former prime minister who sees several crises befall society, whether it is the crisis of employment, finance, ecology...

As Keynes did before him, Michel Rocard believes that absolute priority must be given to reducing unemployment. If only for the good health of public finances, since a worker does not receive public allowances and pays taxes. "Saving pensions requires a drop in unemployment," he also told his audience, who then felt concerned. But he does not forget finance and advocates a collective exercise in long-term reflection, including politicians, journalists, bosses and unions. This, by the need to rediscover together "financial balances from private savings not swallowed up by the speculative markets".

The TEPA law is an "insult" to some French people

The floor of real estate professionals remained rather unmoved by the macroeconomic reasoning developed by the former Prime Minister then relaxed when Michel Rocard teased his comrades from the Socialist Party, when commenting on the recent tax reforms of the government. According to him, for some time now, the battles inside the party and the media machine "which no longer demands that we think but that we argue" have "discouraged the function of thinking inside the party ". This triggered a general burst of laughter in the audience, quickly tempered when the former minister retorted: "Opposite it is not better".

The room will remain all the more silent when, almost apologizing for making his remarks, Michel Rocard described the TEPA law of the Sarkozy government "as an insult to this part of the French people who earn a bad living", arguing that "giving priority to the richest is unacceptable". However, he regrets that the 2012 electoral confrontation suddenly took place on the theme of tax revenge.

Michel Rocard nonetheless welcomed the Ayrault government's 20 billion euro competitiveness pact, which he considers to be a good start; and above all revealing of the finding on the part of the political class that certain cogs of the French economy do not work. As evidenced by the growing share of bankruptcies of its SMEs, the decline in hourly labor productivity, the poor state of foreign trade or the loss of power vis-à-vis Asia.

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