Prise de vue 2- Les inepties en finance du Québecois de souche : Raymond Bachand

par

André Gouslisty

Avril 2010

Après la dilapidation en 2008, de 40 milliards de $, par Henri-Paul Rousseau, un Québécois de souche, ancien président de la Caisse des Dépôts et Placements du Québec, au casino des produits dérivés, un autre Québecois de souche, Raymond Bachand, Ministre des Finances du Québec, s’apprête à mettre le chaos, dans l’économie du Québec, avec son budget pour 2010-2011, sous prétexte qu’il doit réduire dans un premier temps le déficit budgétaire, pour l’éliminer complétement par la suite dans quelques années.

Face à un déficit budgétaire, le ministre des finances du Québec, Raymond Bachand, aurait demandé conseil sur ce qu’il conviendrait de faire, à un comptable, de la pauvre Faculté d’Administration de l’Université de Sherbrooke, ainsi qu’à un économiste de l’Université du Québec à Montréal. Ils lui auraient répondu, qu’il ( le ministre Bachand ), devrait augmenter les revenus et réduire les dépenses. Sur la base de ces conseils, le ministre des finances du Québec s’est empressé, dans son budget pour 2010 – 2011, d’augmenter ses revenus en taxant à droite et à gauche et en promettant de réduire les dépenses.

Si le ministre de finances du Québec ne sait pas, de lui-même, que pour résober un déficit il faut augmenter les revenus et réduire les dépenses, ce que le dernier des épiciers sait, et qu’il a besoin que de prétendus experts le lui apprennnent, on peut se demander si le Premier Ministre du Québec, M. Charest, a eu la main heureuse en choisissant comme ministre des finances Raymond Bachand.

Avant de décider s’il faut réduire le déficit, un ministre des Finances responsable et non un vulgaire épicier, chercherait à savoir quelle est la nature profonde du déficit budgétaire de l’État, parce que l’État n’est ni une entreprise privée ni une entreprise commerciale ni une entreprise industrielle ni une entreprise financière et que l’on ne mène pas l’État comme une friperie.

D’authentiques experts, et non les prétendus experts consultés par le ministre Bachand, se sont penchés sur cette question du déficit budgétaire de l’État, tout particulièrement William Vickrey, Prix Nobel d’Économie, dont nous reproduisons ci-dessous les reflexions et que le ministre des finances du Québec a le plus grand intérêt à faire rentrer dans sa petite cervelle.

WE NEED A BIGGER "DEFICIT"

William Vickrey

Professor of Economics, emeritus, Columbia University;
President of the American Economic Association for 1992
1996 Nobel Memorial Award in Economics.

August 6, 1993

We are not going to get out of the economic doldrums as long as we continue to be obsessed with the unreasoned ideological goal of reducing the so-called deficit.

The "deficit" is not an economic sin but an economic necessity.

Its most important function is to be the means whereby purchasing power not spent on consumption, nor recycled into income by the private creation of net capital, is recycled into purchasing power by government borrowing and spending. Purchasing power not so recycled becomes non-purchase, non-sales, non-production, and unemployment.

We have not had a satisfactory approach to full employment, except in wartime, since 1926. Over much of this century trends in the ratio of profitable private capital to national product have been downward, as a result of capital-saving innovation such as optic fibers, the trend to light industry away from steel mills and other heavy industry, and the increasing importance of services. Prospects are that for the foreseeable future the capacity of private industry to find profitable use for private capital will be not much greater than two years of gross domestic product.

On the other hand aspirations of individuals to acquire assets to provide for retirement and other purposes have been growing, due to longer life expectancy, higher retirement aspiration levels, the loosening of family ties, the development of expensive medical technologies, and other factors. Current aspirations appear to be moving towards three years or more of gross domestic product. This leaves a gap to be filled by government debt of about one year of gross domestic product.

If we aspire to a satisfactory level of full employment by 1998, whereby anyone not too finicky about the type of work could find a job at a living wage within 48 hours, this will, if we assume inflation to average about 3%, call for a gross domestic product of about 10 trillion dollars. To fill the gap between the asset aspirations of individuals at this level of income and the ability of the private sector to provide assets, the supply of government securities would have to rise to 10 trillion dollars, implying a level of income recycling by governments of about one trillion a year on the average over the next five years.
Once this level is reached, to continue in equilibrium the supply of government securities will need to grow pari passu with the gross domestic product, to correspond to the gap between the demand of the population for assets and the provision of assets by the private sector. Whatever interest charges on the debt are not financed out of this growth in the debt can more than be met out of savings in unemployment insurance payments, and the increased tax revenues derived from the larger national product at rates no greater than at present. A 10 trillion debt with a full employment economy will be far easier to deal with than a 5 trillion debt with an economy in the doldrums.

If governments fail to fill the gap and meet the demand for assets by issuing an adequate volume of securities, the attempt by individuals to acquire assets by non-spending will cause a reduction in sales, temporary investment in excess inventories, cutbacks in orders, unemployment, and reduced national income and product. This may be partially offset by the bidding up of asset values, leading to a certain amount of additional spending out of capital gains, but the "saving" imbedded in these capital gains does not involve the creation of new capital or the employment of individuals in construction. The reduction in interest rates could in principle increase "deepening" types of investment in labour saving technology, but after the initial stimulus the effect on employment tends to be negative. Little "widening" investment is likely to take place regardless of reduced interest rates if the market for the product is not there. There is a serious danger that the bidding up of asset prices could create a bubble of unsustainable values that is likely to collapse disastrously, as occurred in 1929 after the budget surpluses of the preceding years. Sooner or later a reduction in production and national income will set in until the reduction in income reduces the demand for assets to conform to the supply.
Reducing the "deficit" may reduce the debt of the government, but it also reduces the supply of assets people want to acquire to take care of their security needs. Reducing the "deficit" does not improve the real heritage left for the future, rather it impairs that heritage by leaving a legacy of inexperienced workers, impaired infrastructure, and reduced investment in plants because of reduced demand for the products, to say nothing of the impact of unemployment on health, delinquency, crime, and broken homes.

The "deficit" is not even calculated on a businesslike basis. It makes no distinction between current account and capital account items. If GM, AT&T, and the nation's households had been compelled to "balance their budget" calculated in the way the federal budget is calculated, we would now have many fewer automobiles, telephones, and houses.

Urging individuals to save more is counterproductive. Individual saving does not mean that funds are created out of thin air to put into savings accounts or the capital market; for most individuals savings is non-spending which becomes the non-income and reduced savings of the vendor. Funds are transferred from the bank account of the vendor to the account of the saver, there is no increase in total money in the bank, and no facilitation of investment while reduced market demand will actually discourage investment. Savings are neither a prerequisite nor an inducement for investment. Rather, non-spending by reducing market demand lowers incentives to invest.

On the other hand if a businessman can show good prospects for profitable investment he can nearly always get credit and proceed with the investment, which will constitute an increase in someone's wealth which is ipso facto savings. Supply does not create its own demand as soon as some of the income generated is saved, but investment does create its own savings, and more.

Eventually, in all likelihood, we will have to find some way of dealing with the threat of an unacceptably high rate of inflation that does not involve the maintenance of what Marxists used to call "the reserve army of the unemployed." For the moment, however, that threat seems sufficiently remote that we could proceed with the first steps towards full employment and deal with that bridge when we come to it. There has been no dearth of plans for controlling inflation in ways that preserve the essence of free markets.
The administration is trying to bring the Titanic into harbour with a canoe paddle, while Congress is arguing over whether to use an oar or a paddle, and the Perot's and budget balancers seem eager to lash the helm hard-a-starboard towards the iceberg. Some of the argument seems to be over which foot is the better one to shoot ourselves in. We have the resources in terms of idle manpower and idle plants to do so much, while the preachers of austerity, most of whom are in little danger of themselves suffering any serious consequences, keep telling us to tighten our belts and refrain from using the resources that lie idle all around us.

Alexander Hamilton once wrote "A national debt, if it be not excessive, would be for us a national treasure." William Jennings Bryan used to declaim, "You shall not crucify mankind upon a cross of gold." Today's cross is not made of gold, but is concocted of a web of obfuscatory financial rectitude from which human values have been expunged.

***

Dans l’élaboration du budget du Québec de 2010, le ministre des finances du Québec, Raymond Bachand, un Québcois de souche du même type que Paul-Henri Rousseau, le joueur, a commis deux graves erreurs, prouvant son incompétence crasse :

- d’abord en consultant un comptable de la pauvre Faculté d’Adminidtration de l’Université de Sherbrooke;

- ensuite, en optant pour la vision comptable des choses au lieu de choisir la vision économique des choses.

La première erreur du Ministre des finances du Québec, Raymond Bachand, a été de consulter un comptable, de la misérable Faculté d’Administration de l’Universitée de Sherbrooke, dont la plupart des Doyens, depuis son origine, ont été des comptables, le plus minable, le plus miteux, d’entre eux ayant été Jean Comtois, futur vice-recteur de l’Université de Sherbrooke. Or pour gérer les finances publiques du Québec il n’y a rien à tirer du comptable, le comptable n’est d’aucun secours.

La seconde erreur du Ministre des finances du Québec, Raymond Bachand, a été d’avoir opter pour la vision compable des choses au lieu de la vision économique des choses. En effet, la fonction ultime du compatable est de dresser à une certaine date un bilan. Pour cela il commence par dresser l’actif, en le constatant, sans chercher à savoir d’où il vient. Puis il dresse le passif, la dette. Puis enfin il calcle l’actif net en déduisant de l’actif le passif. Comme il constate que le passif vient réduire l’actif, le comptable en conclut que le passif, la dette est une calamité, une malédiction à éviter coûte que coûte.

L’économiste a, des choses, une autre vision que le comptable. L’économiste, le vrai pas le faux, raisonne en termes de ressources et d’emplois. Les ressources financières sont composées, pour l’économiste, des fonds propres et des fonds empruntés. Ce sont ces fonds qui vont déterminer le volume et l’importance des emplois c’est à dire le volume des actifs. Et alors, les fonds empruntés ne sont plus des calamités, mais, au contraire, une bénédiction qu’il faut multiplier autant que l’on peut. Pour l’économiste, le vrai non le faux, non seulement il n’y a aucune urgence à réduire la dette, au contraire il y a necessité à l’augmenter, par ce que c’est une ressource.

Mais la dette coûte. Il y a des intérêts à payer. A vouloir augmenter la dette le plus possible n’y-a-t’il pas danger à ce que le service de la dette n’absorbe tous les revenus de l’État et ne laisse plus rien pour les autres services?

William Vickrey, Prix Nobel d’Éconmie en 1996, pas le petit comptable de la Faculté d’Administration de l’Université de Sherbrooke ou le petit économiste de l’Université du Québec à Montréal, nous disons bien le Prix Nobel d’Économie, repond à cette qustion de la façon suivante :

FALLACY 8 OF FINANCIAL FUNDAMENTALISM
William Vickrey, 1996 Memorial Nobel Awards in Economics
October 5, 1996

If deficits continue, the debt service would eventually swamp the fisc.

Real prospect: While viewers with alarm are fond of horror-story projections in which per capita debt would become intolerably burdensome, debt service would absorb the entire income tax revenue, or confidence is lost in the ability or willingness of the government to levy the required taxes so that bonds cannot be marketed on reasonable terms, reasonable scenarios project a negligible or even favorable effect on the fisc. If full employment is maintained so that the nominal GDP continues to grow at say 6%, consisting of about 3% inflation and 3% real growth, the equilibrating debt would have to grow at 6% or perhaps at a slightly higher rate; if the nominal interest rate were 8%, 6% of this would be financed out of the needed growth in the debt, leaving only 2% to be met out of the current budget. Income tax on the increased interest payments would offset much of this, and savings from reduced unemployment, insurance benefits and welfare costs would more than cover the remainder, even aside from substantial increases in tax revenues from the more prosperous economy. Though much of these gains would accrue to state and local governments rather than to the Federal government, this could be adjusted to through changes in intergovernmental grants. A fifteen trillion debt will be far easier to deal with out of a full employment economy with greatly reduced needs for unemployment benefits and welfare payments than a five trillion debt from an economy in the doldrums with its equipment in disrepair. There is simply no problem.

FALLACY 9 OF FINANCIAL FUNDAMENTALISM
William Vickrey, 1996 Nobel Awards in Economics
October 5, 1996

The negative effect of considering the overhanging burden of the increased debt would, it is claimed, cancel the stimulative effect of the deficit. This sweeping claim depends on a failure to analyze the situation in detail.
Analytical reality: This "Ricardian equivalence" thesis, while referred to by Ricardo, may not in the end have been subscribed to by him. In any case its validity depends crucially on the system of taxation expected to be used to finance the debt service.

At one extreme, in a Georgist economy making exclusive use of a "single tax" on land values, and where land values are expected to evolve proportionally over time, any debt becomes in effect a collective mortgage on the land parcels. Any increase in government debt to offset current tax reduction depresses the market value of land by an equal amount, aggregate wealth of individuals is unaffected, Ricardian equivalence is complete, and pure fiscal policy is impotent. A larger debt may still be desirable in terms of taking advantage of possibly lower interest rates available on government debt than on individual mortgages, and in effectively endowing property with a built-in assumable mortgage that facilitates the financing of transfers. And there may still be a possibility for stimulating the economy by tax-financed expenditures that redistribute income towards those with a higher propensity to spend.

In another scenario, if the main tax is one on all real estate, such as is common in American local finance, the effect is drastically different. In this case any investor erecting a building thereby assumes, for the time being at least, a share in the government debt, subject to some of this burden possibly being eventually taken over by further construction. Not only does this discourage construction, but if the debt overhang gets too great, this expectation of others taking up part of the burden may vanish rather suddenly, and all construction come to a grinding halt. Debt becomes a strong inhibitor of growth. While this result may resemble that claimed by the "crowding out" theory, the mechanism is not one of displacement but of disincentive.

With a sales or value-added tax as the mainstay, a deficit involving a reduction in tax rates today will have no depressing effect on capital values and will have a fully stimulating effect, through the increase in the aggregate supply of assets, possibly reinforced by anticipatory spending motivated by expectations that taxes may have to be higher at a later date to finance the debt service. There will be no Ricardian equivalence effect; if anything, anticipation of higher future taxes will encourage current spending, adding to the stimulus of the increased supply of securities.

The U.S. federal tax system is dominated by the income tax, for which the effect will be somewhat intermediate between taxes on savings and taxes on expenditure. In practice few individuals will have any clear idea of the taxes likely to be imposed in the future as a result of the existence of a larger debt, and it can be safely said that no reasoned Ricardian equivalence phenomenon will occur, though there may be some generalized malaise among the viewers with alarm, involving a kind of partially self-fulfilling prophecy.

***

Mais, à force de s’endetter, est-ce qu’il n’y a pas risque de nuire aux Jeunes Générations comme le prétendent les Jeunes du parti libéral du Québec ?

William Vickrey, Prix Nobel d’Économie en 1996, répond à l’objection dans les termes suivants.

FALLACY 1 OF FINANCIAL FUNDAMENTALISM
William Vickrey, 1996 Nobel Award in Economics

October 5, 1996

Deficits are considered to represent sinful profligate spending at the expense of future generations, who will be left with a smaller endowment of invested capital. This fallacy seems to stem from a false analogy to borrowing by individuals.

Current reality is almost the exact opposite. Deficits add to the net disposable income of individuals, to the extent that government disbursements that constitute income to recipients exceed that abstracted from disposable income in taxes, fees, and other charges. This added purchasing power, when spent, provides markets for private production, inducing producers to invest in additional plant capacity, which will form part of the real heritage left to the future. This is in addition to whatever public investment takes place in infrastructure, education, research, and the like. Larger deficits, sufficient to recycle savings out of a growing gross domestic product (GDP) in excess of what can be recycled by profit-seeking private investment, are not an economic sin but an economic necessity. Deficits in excess of a gap growing as a result of the maximum feasible growth in real output might indeed cause problems, but we are nowhere near that level.

Even the analogy itself is faulty. If General Motors, AT&T, and individual households had been required to balance their budgets in the manner being applied to the federal government, there would be no corporate bonds, no mortgages, no bank loans, and many fewer automobiles, telephones, and houses.

***

Pauvre Québec. Composé à l’origine de vilains de l’Ancien Régime Français dont le sang, vicié et vicieux ne s’est guère amélioré en se mélageant par la suite au sang indien, au sang irlandais et récemment au sang maghrébin ; façonné par le Prêtre et l’Anglais, qui avaient intérêt à le laisser patauger dans sa crasse et son analphabétisme; il a acquis des gènes qui le pousse aujourd’hui à mal faire.

Entre une chose bonne et une chose mauvaise il choisira par instinct la mauvaise.

Entre une chose noble et une chose basse il choisira la basse.

Entre une immigration française, européenne, blanche, chrétienne,vigoureuse et non frileuse, et une immigration maghrébine, polygame, vigoureuse, il choisira la maghrébine et la polygame, croyant pouvoir construire une Nouvelle France avec des anti-français.

Entre une vision économiques des choses pour qui la dette est une ressource et une vision comptable des choses pour qui la dette est une malédiction , Québec choisira la vision comptable et bornée des choses.

Entre une politique financière basée sur les analyses et les avis d’un Prix Nobel d’Économie, William Vickrey, et les avis d’un petit comptable de la Faculté d’Administration de l’Université de Sherbrooke, il choisira les avis du petit comptable.

Entre une gestion de ses avoirs, à la Caisse de Dépôts, en bon père de famille et une gestion crapuleuse à la Wall Street, il choisira la gestion crapuleuse laquelle lui occasionnera en 2007 une perte de 40 millards de $.

Entre chanter un Requiem pour le repos de l’âme des marins français morts à la bataille navale d’Aboukir en 1798 et un Te Deum en l’honneur de Horatio Nelson, l’amiral anglais vainqueur de cette bataille; entre chanter un Requiem pour le repos de l’âme de l’amiral français Villeneuve et un Te Deum en l’honneur de Horatio Nelson, l’amiral anglais, Québec choisira de chanter un double Te Deum en l’honneur de Horatio Nelson, sur les recommandations de son clergé catholique et francophobe.

Entre l’honneur de l’indépendance et le désohonneur de la dépendance le Québec a choisi par deux fois majoritairement les bassesses de la dépendance.

Et c’est ainsi que le Québec, de bêtises en bêtises, de stupidités en stupidités, de francophobie en xénophobie, verra son poids dans la Confédération Canadienne chûter de 35,9 % en 1837, à 24,4 % en 2003, pour atteindre 22,1 % après l’adoption du projet de loi C-12 de 2010, qui augmentera le représentation de l’Ontario au Parlement Fédéral de 18 députés, la représentaion de l’Alberta de 5 députés et la représentation de la Colombie-Britannique de 7 députés, le nombre des députés québécois restant le même.

Quel beau chemin parcourru par le Québec depuis 1837.