Economic proposals (5/6)

COMPENSATORY ALLOWANCE OF SOCIAL VAT IN FAVOR OF LOW- INCOME EARNERS
VAT (value added tax) is but a fiscal tool based on a mathematical algorithm that is necessarily fallible in terms of the real economic situations encountered (by consumers, companies, the State). It can be adjusted via a compensatory allowance of social VAT in favor of low- income earners; this allowance would be calculated by INSEE (the French National Institute for Statistics and Economic Studies).
Should the principle be accepted, the triggering threshold needs to be defined, for instance an income tax return showing less than 0.8 – 1.3 SMIG (guaranteed minimum wage for full-time employees), whether the income is earned per adult or per family in the INSEE sense (offhand, 1 part for the first adult, 0.8 for the second adult, 0.5 for the first child, and 0.2 for the others). All decisions regarding thresholds, parts, and amounts should involve the trade unions, even the non-governmental organizations, and the associations working to fight poverty so as to prevent electoral challenges and street actions.

THE AUTHORITIES RESPONSIBLE FOR NEGOTIATIONS MUST PUNCTUATE THOSE WITH WELL DEFINED MILESTONES AND LIMIT THEIR LENGTH
One achievement acquired in May 1968 is the refusal of stupid and nasty authority that subordinates were expected to give blind obedience to, with no knowledge of the whys and wherefores and with no regard for the effort required. There ensued a period of interminable discussions, where no-one obeyed anyone as a matter of principle. The truth is that any organization needs someone (or group) who bears the ultimate responsibility for decisions, someone who will receive the information, listen to the arguments, and then who will cut the Gordian knot. It is essential to ensure that the consultation phases do not get bogged down in terms of either complexity or time, whether the stalemate is deliberate or not.
Consequently, the authorities responsible for negotiations must punctuate those with well defined milestones and limit the length of each phase. If negotiations get bogged down, the authority in charge needs to settle the argument unilaterally, since this is the final option.

This negotiation principle must be clearly explained to all stakeholders so as to gain acceptance and legitimacy. Any time-wasting behavior will be openly denounced. This is essentially what Nicolas Sarkozy, as presidential candidate, proposed in his Villepinte speech, and this approach is the right one, regardless of what one may think of the substance of his proposals. This approach is equally valid for discussions between unions and the company manager, between pupils and their teacher, children and their parents, plaintiffs and judge, government and the parliament, a President and street protesters.
No human (or even animal) grouping can function without an authority figure. Should difficulties arise in a society, it is that authority figure, if competent, who will ensure survival for all. It remains necessary, however, to assess its proper intensity, legitimacy, mode of enforcement, and the possible and necessary level of compliance to its commands.

FLEXIBLE LAW ENFORCEMENT, ACCURATELY IDENTIFYING WHAT IS ESSENTIAL FROM WHAT IS LESS IMPORTANT
I have recently experienced an administrative dispute on some trifle, and I understood to what extent the administration could harass people and make a fuss for the sheer sake of it! Civil servants believe they act within their rights when they enforce the law, which is the same for everybody, even where only special cases abound. They behave as the guardians of some semi-divine Law, because secularity and the Republic have replaced the sacred in my country, while their behavior is in fact inhuman and obtuse. Do not get me wrong, I am not advocating any laxity; I am a Republican through and through, straight out of the most impartial and demanding competitive examinations. I am also aware that the decision-making mathematical algorithms underlying our laws are hard to set up, that the threshold effects are cruel for those who are subjected to them, and that even the law-makers are fully aware of that. What I really want is to promote the notion of mediation in all areas of French society: in law enforcement, trade, education, social services. Sometimes, we might even realize that we need to be far stricter than the laws of the Republic, such as they are.
In this case, as I explained in a previous article, it is necessary to rely on the relevant legal power and human potential of mediation, of municipal police officers and gendarmes, long before knocking on the judges’ doors – they are overwhelmed by cases of no fundamental importance. Local and national news stories are full of these cases: tickets issued for exceeding the speed limit by a few kilometers without threatening one’s or anyone else’s life; families experiencing payment difficulties whose electricity and gas are cut off, often for, really, very little; companies filing for bankruptcy because of temporary difficulties, even though they are viable in the medium term; strained relationships between local authorities and citizens resulting from a too strict application of the town planning Code, etc. Flexibility and customization, even if difficult to implement (that’s why one can call in the mediators) - surely this is one of the keys to a better life for all in this beautiful and rich country, France.

Economic proposals (4/6)

INTERMEDIATE VAT RATES
The possibility is being considered of introducing intermediate VAT rates to increase tax revenue from products/services that are not really basic. In this case, convergence with German VAT rates is being sought, which is not a bad idea.
It would be advisable, however, for both countries, to determine representative rates amenable to quick mental calculations. In management control, people are taught to think in terms of large masses, so that they can concentrate on what’s essential rather than silly decimal points pulled out of thin air or from maximizing tax revenue over one or two years, hence pretty sterile and futureless. I suggest the following:
1%: for the press, starch food (pasta, bread, potatoes, rice), another basic essential food; cabbage? (German)
5%: the rest of foodstuffs
10%: catering (sitting, fast, take out, delivered, etc.)
20%: normal rate 1/5
A 25% (1/4) extension could be considered if there is a 5% social VAT to reduce the companies’ social burden, or a 5% anti-relocation VAT to tax products issued from social, tax, carbon, or ecological dumping, etc.
33%: (1/3) luxury or comfort products, perfume, cosmetics, fashion brands, cars, flights, planes, etc.

I repeat that rates that can be calculated easily are not some gadget or other; rather, they constitute a necessary readability of taxation, the beginning of understanding, of proper budget management for households, companies (often made up of heterogeneous groupings not necessarily accounting-savvy – autoentrepreneurs, VSEs, SMEs, large companies). The project of a company, the State, or local authorities is more likely to succeed if it has been clearly conceived and executed, rather than another plan which is fuzzier and more brilliant!
Public accounts need to be readable by both taxpayers and the administrations – this should become all governments’ leitmotiv, mantra, obsession!

Today, tax flows between individuals, companies, territorial authorities, social benefit schemes, and the Nation-State look like a plate of spaghetti: no-one knows by which end to start the process of obtaining a clear and coherent idea of those flows. Sold by weight, the Fiscal Code 2011 weighs several kilograms: it’s an ineffective cathedral made up of articles added over time, with no coherence, no guiding principles; no-one, I repeat no-one, not even individual tax inspectors, understands all those articles. Only a few clever inspectors, gone into private practice and paid handsomely for their services, help the wealthy because they know the loopholes, the weaknesses of the tax system.
NB. What I said concerning the mumbo-jumbo and mixed salad effect of tax law is just as accurate regarding all other current French law Codes. It would thus appear that neither the French nor their representatives who make laws are endowed with clear, limpid reasoning abilities. To be sure, keeping things simple, neat, clear and effective is truly hard and requires work, time, and talent.

KEEP NUCLEAR TECHNOLOGIES AS LONG AS ENERGY ALTERNATIVES ARE NOT MATURE!
In this domain, I speak as a scientist, engineer, and researcher. I am highly aware of the drawbacks of our civil nuclear energy generation (radioactivity levels of nuclear waste, possible radioactive leaks following technical failure, attacks, natural disaster, and additional costs linked to the dismantling of nuclear power plants at the end of their lifecycle). It is essential to launch and prolong research on cleaner energy sources (production + storage): solar panels (photoelectric or other fundamental physics?), improving wind energy yields, capturing the energy potential of the sea and oceans in continual motion, etc. None of these technologies is currently mature. We’re still at the level of research, sometimes prototypes, demonstrators, not at the industrialization phase, let alone that of equipping our territory in terms of sufficient dissemination and overall energy capacity (issue of time and capital).
For centuries, or even longer, breakaway inventions have occurred at random, often as a result of research focused on something else. With their rather dubious training and relatively limited IQ as compared to that of Planck, Bohr, and others, politicians are not the ones who will change anything to that fact. Hence, claiming that we can change our energy model within a few decades is sheer utopia, or worse, an electoral lie. Within the presidential promises ambit, namely 1 or even 2 five-year electoral mandates, I bet there won’t be more than one change in the margin of the energy mix. Every man to his own trade: politicians and manufacturers should finance energy research and hope; researchers should work hard on several avenues leading to success, one day; but the timing cannot be predicted.

BANKING REFORMS
Banking has been weakened by its own greed and threatens the real economy, the one companies and consumers belong to, because it no longer does its core job, namely to collect savers’ extra cash then lend to investors.
The range of required reform measures can be found in L’échéance (The cutoff point) by François de Closets, pp. 263-272:
- The Tobin Tax regarding financial transactions to curb speculation by making it expensive.
- Reinforcing the banks’ own funds so they won’t go bankrupt in case of massive demand for redemptions.
- Limiting by law the leverage ratio to, for example, 1 Euro of own funds for 20 Euros on loan so as to limit the risks in case of an economic turnaround.
- Preventing banks from lending to hedge funds: this is where the gap is biggest between own funds (guarantee) and loaned funds in fine.
- In the stock exchanges, once-a-day quotation should replace continuous trading so as to curb speculation, in particular that made in one millisecond by automated algorithmic financial software (software for automatic speculation).
- Separating the banks’ market speculation activities from those of receiving deposits and supporting the real economy, in 2 different types of banks, as used to be the case in the US (the Glass-Steagall Act). The point is that in France, in 2011, these activities each generate half of the benefits of the mixed banks. Such a separation of activities would protect savers from the investment banking activities (speculation), particularly in case of bankruptcy. This would be a long-term measure to prevent a rerun of the 2008 banking crisis.
In 2011, the country that is ahead on the issue of banking regulation is Canada.

HOW TO CUT BACK ON SOCIAL BENEFITS
Today, politicians are caught between, on the one hand, the absolute need to cut back on social benefits and, on the other hand, their conscience that demands they should not negatively affect the living standards of citizens who are forever complaining, regardless of the situation and people’s social categories. Efforts must be prioritized. It is essential to retain the humanistic goal of avoiding worsening great poverty, which could even be reduced in this crisis phase through specific benefits such as the RSA (Active Solidarity Income) and getting all other social categories to contribute proportionally (right-wing policies) or progressively (left-wing policies).
Regardless of the taxation instrument (additional tax or cuts in benefits), a statistical indicator should be set up, then monitored by INSEE, to ensure that absolute poverty does not increase but instead is reduced through specific benefits reviewed every 3 or 6 months.

After taking this basic precaution, in the name of humanism and social cohesion, any and all tax instruments can be selected: pension reduction beyond a minimum level to be negotiated with the social partners (i.e. employer organizations and trade unions), perhaps between 0.8 and 1.3 of the monthly SMIC; contribution to light medical care according to people’s financial resources (e.g. 5 Euros per visit and/or 5 Euros for medicine for those who pay income tax, etc.); 20% VAT plus 5% for anti-relocation VAT allocated to the reduction of companies’ social charges; family allowances granted only to parents who do not pay income tax, etc. These reforms would protect the working and lower-middle classes while affecting the higher-middle and wealthy classes, i.e. those who can thus contribute to the national solidarity effort. People who belong to those well-off groups would be delighted to benefit from the same level of solidarity if they had been less lucky and experienced more knocks.

PROMOTING TEMPORARY WORK AMONG YOUNG GRADUATES
Youth just out of school are not necessarily immediately operational; hence, hiring them is less cost-effective for companies that balk at offering them long-term contracts (they’re not sure about the candidates’ performance) and a sufficient salary (lack of profitability). Besides, it’s in young people’s interest to keep learning in the various companies they could be hired in: the versatility acquired during temporary work (“temp”) contracts will prove to be a considerable professional asset. When there is a real match between the young individual, the job, and the entrepreneur, that is when the youngster will obtain his/her long-term job.
It would thus appear that a prerequisite to long-term employment is extensive experience, particularly through temp work. This type of work contract thus ought to be promoted among young people, particularly as it is being belittled by “insiders”, those who already hold a long-term contract and who wrongly give temping a bad name. Additionally, 20-year-olds should not be too greedy, and temp work is a good deal more formative and lucrative than the drifting brought about by unemployment!

SENDING ALL CITIZENS AN ANNUAL INDIVIDUAL ECONOMIC ASSESSMENT
I fully agree with Laurent Wauquiez when, in La lutte des classes moyennes (The struggle of the middle classes) pp. 136-137, he asks that a statement of what each individual has given the State and received from the State should be drawn up and sent to the citizen concerned. This would increase awareness that everybody benefits from State transfers – though at different levels - and it would promote personal accountability regarding social transfers: the culture of money is nonexistent in France, a catholic country in which money is still either taboo or secret, hidden, shameful. This is also a country where people increasingly demand State help without trying hard enough to manage on their own.

This is what Laurent Wauquiez writes:
“It would make sense to me to ask each French citizen to pay a minimal tax, at a nominal amount, even if that means reducing the CSG [contribution sociale généralisée or general social contribution, a supplementary Social Security contribution] by as much. What really matters is that individuals should be aware that their behavior generates expenses and that is to be found on their income tax sheet. We have got to the point where some people are forever demanding additional help from society; they moan about the slightest restriction, and no longer realize the extent to which French society is, in fact, supporting them most generously. As far as healthcare is concerned, this sense of irresponsibility is particularly acute. Medication and treatments lose their value when they are totally free and no information about them is given. I do believe that it would be a good idea to send the French people an annual summary of the national solidarity sums they have benefited from over the past 12 months. The purpose of such an act would not be to make people feel guilty but to make them aware of the huge sums that national solidarity devotes to their expenses. This type of approach would help promote a sense of accountability. Ultimately, it would be worth thinking of a kind of Republican balance sheet showing on one side what you have contributed to society (the amount of social security contributions, CSG, income tax, etc.) and on the other what society has done for you both in cash (various services, both universal and resource-dependent) and in kind (for education, public infrastructure, etc.). This highly symbolic step would enable all citizens to become aware of their role within a balanced social contract and of their responsibility regarding public expenditure”.

As always, it is a matter of considering the foundations of the Republic, our rights and obligations. It is necessary to remind people of the “obligation” side of things, which French citizens conveniently forget all the more readily as they get used to comfort, with its negative corollary, mental vulnerability.

FINANCING HIGHER EDUCATION
I fully support a significant increase in university fees to an annual registration fee of 1,000 Euros, namely 1 month of net SMIC. We need to find a realistic compromise between the real cost of one year at university and what households can afford. Why? Because France is bankrupt. Because those who benefit most from higher education have a privileged background – they hail from well educated and well-off socioprofessional families. Therefore, because financial transfers must be limited for these categories, already privileged, else other categories would be disadvantaged (working classes, employees); those need classrooms and apprenticeship positions and opportunities in the professional and technical secondary sector. Even if this type of distribution is not inevitable in our republican education system, the statistics are overwhelming.
Laurent Wauquiez does not agree with me on this notion of a significant increase in university fees. Having said that, in order to keep to the spirit of his book, La lutte des classes moyennes (The struggle of the middle classes) pp. 173-178, Wauquiez does put forward a number of good ideas regarding the financing of university studies. Here is what he says:
• “Strengthening the steps designed to support large families by considering the possibility of aligning the registration fees with the “family-quotient system” (family-based taxation)”
• “The first step was taken in 2009 when a State-guaranteed bank loan was created. I suggest we should go further. To help students finance their studies, the State would offer them an interest-free loan. Students would start paying the loan back only when they had obtained their first stable job. There would be a salary-based upper limit on annual repayments so as not to overburden our youth. The higher their salary, the faster they would be able to reimburse their debt.”
• “However, we should also fight the practices of some private owners who take advantage of students by charging exorbitant rents for tiny surface areas, particularly in the large cities. I have joined forces with Benoist Apparu in suggesting taxation on mini-surface areas as a deterrent to such practices.”
• “Students will be able to obtain from partner banks an advance of the bond guarantee, corresponding to one month rent; they will reimburse this interest-free when leaving their lodgings. The CROUS will stand as collateral security, as this often constitutes ground for refusal on the part of agencies and owners towards low-income families.”
The section concludes thus:
“Sometimes, with a little common sense, one can set up useful tools at little cost”. I fully agree!

PROMOTING CIVIC-MINDED SOCIAL EXPERIMENTS
In the section “Humanism against administrativism” included in his book, La lutte des classes moyennes (The struggle of the middle classes) pp. 203-206, Minister Laurent Wauquiez puts forward a number of good practical ideas (and that is precisely what we need, within both Right- or Left-wing politics!) regarding social contract experimenting to revitalize our Rule of Law: “In the post-crisis civic society, we need a facilitating rather than simply regulating State.”
Here is what he says:
• "Mentoring within companies. We waste skills in companies because we don’t know how to organize the transfer of know-how. The different generations ignore one another, seniors are asked to leave overnight, and the youngsters are not helped. To correct this situation, the idea would be to get one youngster and one older worker to team up. The older one takes the young one under his wing, helps him to get his bearings, and passes on his experience. Everybody wins. The company does not lose the human capital that feeds its competitiveness, a lifetime of work is given full meaning through the transfer process, and the youngster can take his first steps in the company safely.
• “A young student who struggles to find lodgings ought to be able to secure a reasonable rent for a room from an older person whose apartment has become too large. In return, the student would commit to regular meals with the older person and small services, such as doing some shopping. This type of intergenerational mutual assistance is not merely a financial arrangement; it is also a means to fight solitude and re-establishing social ties. This type of meaningful give-and-take between a young student and an elderly person used to be seen frequently in our parents’ generation, but it has gradually died off. We need to reactivate the process through, for instance, offering a rental agreement that gives security to both parties.”
• “A young student is offered, for 100 -150 Euros per month, a room in a furnished apartment in a disadvantaged neighborhood; in return, he will spend a few hours each week in a local association tutoring young children, running cultural or sport events, etc. Again, this is the type of initiative that ought to be extended because it strengthens neighborhood ties and promotes social diversity.”

These are not anecdotal examples. Widespread civic social actions linked to a loosening of the overly centralized judicial Jacobin spirit would avoid many concrete problems the French have to face throughout their lives, from the cradle to the old age home.

ENHANCING THE REPUBLICAN SOCIAL CONTRACT
There are books one does not regret having spent time reading. La lutte des classes moyennes (The struggle of the middle classes) by Laurent Wauquiez is one of those for me. Granted, I do not share his defense of the middle classes as a priority; I strongly believe that it is the working classes that experience real hardship and are excluded from the social game. However, Wauquiez makes a number of useful, concrete suggestions (see previous articles) and he has a good approach to what welfare can be in a Republican State. I ask that you read at least chapter 6, “Rights and obligations: the new social contract” and its conclusion, pp. 181-216.
Summary of Chapter 6:
Everyone for himself and no-one for us all
The risk of infantilization: The State can do everything, must do everything – A society of distrust – “I am entitled to” – Lack of public spirit and impunity – Not in my garden – Solitude in the networked society
The middle classes, the backbone of the Republican Pact
Renewing the social contract
A solid foundation, refusing antisocial behavior – Rights and obligations – Responsibility of the elites: we need a few French Bill Gates – Humanism vs. administrativism – Rediscovering making a commitment to others: somewhere between voluntary service and civic service
Conclusion

Economic proposals (3/6)

SERVICE IN ADMINISTRATIONS
How do the French see administrative services?
The system is complex;
It’s time consuming;
It brings nothing but trouble;
And to top it all, it’s expensive!
This is the exact opposite of what they think of the Internet world that works so well these days, hence bringing real added value to that world:
It’s simple;
It’s fast;
It’s useful;
I am more than willing to pay because I’m happy with it.
In order to bring citizens and companies closer to administrations, not only in terms of positive evaluations but also for a very real economic benefit, each administrative task needs to bring a service-added value rather than simply entail a threat of legal and/or financial retaliation for careless work.

For instance, when answering a questionnaire “in good faith”, assumed by default since administrations are responsible for proving “bad faith”, the guarantee of insurance or legal aid is offered to the citizens.
Another example: a tax or social audit financed by the entrepreneur or state officials to verify the legal or accounting compliance of the firm. Conformity would be paid by the entrepreneur, without any administrative penalty costs, within a period to be negotiated depending on the type of breach (12 months or more). This counseling role of administrations already functions in other European states.
Yet another example: in the event of a move, registration and deregistration with the municipal services, voters’ roll, CNAM, CNAF, post office, EDF, gas, telecommunications services, etc. would be automatically processed for free or a token sum. And then: Online processing of a maximum number of administrative services, forms, administrative documents, pedagogic PowerPoint slides on legal and procedural matters, promotion of the interfacing of administrative and private sector software.
Finally: Interfacing administrative databases with the aim of simplifying all the various declarations/registrations and, doubtless, checking them …

OPERATING VIA PROHIBITING/EXCEPTIONS OR COST INCENTIVES?
French reasoning is fond of the notion of equality, hence persists in creating legislation and economic regulations that apply without distinction to all, regardless of the reality; inevitably, then, there are very many exceptions. Indeed, so as to avoid the Procrustean effect (Procrustes mutilated those who were either too tall or too short to fit into his bed), the legislature allows for inevitable and numerous exceptions. This reminds me of Basic, the archaic programming language that was used in the absence of a holistic and structuring view. Educated through this logic of egalitarian processing, young French people are well prepared for science and information technology, but not for business and economy issues. To follow the IT terminology, command of the France system appears to be an all or nothing yes/no.

There is, however, another mode of reasoning, one that is based on Anglo-Saxon predilection for individual freedom and freedom of choice. This type of economic reasoning is based on the notion of maximizing goals and accepting to be guided by cost functions that are not necessarily linear.

- In the Juppé/Rocard book, one suggestion involves regulating the weekly working time through entrepreneurial arbitration, with the employees’ agreement, leading to the cost of social charges being inferior to the one currently used for the first 32 hours of work, and then a cost-plus method for the following hours. I believe that this should result in establishing two teams working in shifts: the week team working from Monday to Thursday, and the team working over the weekend from Friday to Sunday (the latter would be ideal for those who do not, or no longer, have dependent children).
- Sweden has established a pension system whereby the pensionable age is not fixed, and allocations are calculated on the basis of the contributions paid (period of time, level) and the remaining life expectancy (not the same for manual workers and senior management). This system has been analyzed by Picketty.
- In his book Et si la France s’éveillait (What if France woke up), Gérard Colomb suggests a flexible system of territorial management, one with different levels: Paris, the city – world; regional centers, including Lyon and Marseille, Toulouse, Montpellier, Strasbourg, etc., which structure their territory; medium-sized towns, networking the country; and rural “départements”. In this anti-Jacobian system, départements exist in rural territories only; this de facto introduces a dissymmetry between large cities and the countryside in terms of territorial management. This constitutes an example of the system whereby the regulation is adapted to fit the reality, rather than the reality being adapted to fit the regulation! However, it is then necessary to follow this logic to the end and introduce a different break-down of public policies for healthcare centers, justice facilities, the SMIC, public service institutions and facilities such as postal services, EDF, GDF – all depending on the 4 types of territories. In short, it is essential to do away with the current system that treats all issues in the same way, regardless of whether people live in Paris, or a medium-sized town, or a rural area that is being depopulated.
NB: Prescribing a SMIC that is higher in Paris and lower in a small town would encourage manufacturers to relocate their plants in the provincial préfectures and sous-préfectures, to the great satisfaction of workers who would gain in the quality of life stakes (living standards, much lower rentals, weekends enjoying sports and nature, emptying the ghettos in high-density housing developments).
- To end the debate on cost functions, Gérard Marseille suggested, as in other European countries, a flat tax, a single tax with a single rate of tax = proportional tax. Thomas Picketty suggested to the Socialist Party a single tax that would be progressive (piecewise linear) to take into account considerations of social justice/redistribution. So, we see that the cost function that is chosen in order to maximize optimization will in fact direct us towards the optimum that we wish to privilege depending on its prior ideology. In other words, the cost function encodes ideology, guides towards the optimum statistically reached through the law of large numbers, all without imposing an a priori choice on people who can choose of their own free will.

BONUSES FOR EMPLOYEES IN A COMPANY DISTRIBUTING DIVIDENDS
The bonuses the government has decided on appear to be appropriate:
- On a practical level, performance bonuses amount to a variable cost in terms of management control. They disappear when performance is poor; hence they do not endanger the company at a time when it is already in a vulnerable situation (i.e. one does not add poor performance to bonuses to be paid). In contrast, a general salary rise can be seen as fixed cost, something that has to be paid even if business is bad.
- Implementation complies with the principle of negotiation between union partners, employers and employees. This involves stakeholders’ accountability, and the specific situation of each company is taken into consideration in the calculations of the bonuses level. However, all the employees in the same company ought to receive the same bonuses; this would signal cohesion in the company and help the lower wage earners, as the high wage earners do not need the bonus (they already have a high salary + a privileged position from which to negotiate an annual increase).
- Activating the bonuses when the shareholders’ dividends increase acknowledges that the company is doing well (there are dividends) and penalizes shareholders’ predatory behaviors (if they want to see the company’s capital and jobs grow, they will tend to reinvest the benefits through self-financing and distribute fewer dividends).
- The system does involve the small and very small companies, which are the most vulnerable.
- At a theoretical level, in today’s business world, the adjustment variable, those who bear the risk of poor results are more the employees (who risk losing their job) than the shareholders (who get artificially high dividends through share buy-back), not to mention the managers (who enjoy arbitrary golden handshakes, self-attributed stock-options, a salary committee filled with friends). In such conditions, if the employees share the risks, then they must share more fully in the performance too.

As for the Socialist representatives’ reaction, it is sheer electioneering dishonesty. They should have had a job for the 10 years they sat on the Opposition benches; then, they would have had this idea before M. Sarkozy did! Let’s hope we are now going to see healthy competition …

A CENTRALIZED CREDIT DATABASE
People are more and more tempted by too easily obtained consumer credit. Bankers no longer do their job, which is to check repayment ability. Reasons involve competition among banks, bonuses given to bank employees per signed credit agreement, and near-loanshark rates that enable banks to be reimbursed anyway.
A sensible step, easy to implement, is to set up a centralized database for ongoing credit agreements; bankers would systematically check it up before granting a credit request, and they would be legally responsible if they granted credit improperly – that is, outside trade standards, that would be determined through negotiation between the State and banks. Thus, default on an excessive debt repayment would be borne by the bank involved. Banking behaviors would soon be self-regulated.

EDUCATING PEOPLE ON THE ISSUE OF BUDGETING
Left wingers should not abandon the issue of individual accountability, of educating people on how to monitor their family budget, instead of yielding to acute “benefititis”, driven by the current national sport, namely whining. Things have to be said out loud: there is money in this country, as is shown by the revenue figures generated in the tourism or automotive sectors, air transport, telecommunications, or the level of savings invested in housing and life insurance! The money is shared among a considerable number of citizens, but too many people are still left behind, and that is why I support the Left. The point is, though, that saying that the majority of citizens require increased benefits is an insult to my grandparents’ poverty, to my parents’ efforts when they started off after the war; at that time, the poor garnered self-respect by gritting their teeth and paying their month-end bills.

Today, wasteful consumption patterns are the norm, a 20% revolving consumer credit has become a virtue, and then people are surprised when families go bankrupt, which brings politicians to cry, then grant even more benefits.
What the Left wing needs to do, and that’s anything but corny, is to get back to the job of educating people on the issue of a well planned family budget and show the illusion of the consumer society and easy credit. Believe me, this won’t kill off our economy – instead, it will stabilize it! Consumers in good condition are the prerequisite for the proper functioning of our market economy. So what to do? Plug into the economy classes from grade 10 (the first year of high school in France), instead of making pupils speculate on the State mechanism. There should also be television broadcasts dealing with excessive debt and its consequences, consumer wastage, and, in particular, explaining in concrete terms how these situations could have been avoided.
Finally, politicians ought to speak publicly on the civic (collective) virtue of family budgeting, well assimilated by the stakeholders, namely the families, for their own, well understood, selfish benefit.

REVITALIZING THE TRADITIONAL NETWORKS OF VSEs/SMEs
It is clear that over the last 30-odd years, the French economy has modernized through giving priority to the large export industries (bringing much-needed currency); a majority of the population has not been able to keep up with the changes required on the job market and has consequently found itself excluded. Unemployment has ensued, the meeting point between the reduced demand for low-skilled work in the traditional VSEs/SMEs and the increased qualifications required in the large groups.
But why should we persist in reducing anything that is not innovative (start-ups) or designed for export (large companies)? I suggest we should revitalize the traditional economy sector characterized by geographical proximity (good for ecology) and human networks (good for the population’s morale- hence that of consumers).
Taxation for auto-entrepreneurs, VSEs, and SEs ought to encourage growth and job creation. Contacts with administrations should be kept to the minimum (see the various propositions I’ve already made). In contrast, the idea is also to make sure that the large groups are fully involved in the national effort, in particular via taxation; they have not delivered on the promise, made to all the politicians over the last 30 years, that they would push the economy forward.

ALLOWING FOR A SALARY REDUCTION FOR OLDER PEOPLE
I agree 100% with the following points made by Jean Arthuis in SOS finances publiques, Osons les vraies réformes (Public finance SOS –Let’s have the courage of real reforms):
“Unlike current practices, a salary reduction for older people needs to be examined. As people get older, children are no longer dependent upon them and most of the loans have been reimbursed, their income needs are reduced […] Our practices are in contradiction with people’s real needs. There is no reason why salaries should automatically rise based simply on seniority. A day comes when the older people are too expensive. Regulations, once more, damage those they were meant to protect!” (pp. 116-117). Older people are less productive (reduced motivation, outdated training), and there’s the extra cost brought by the absurd rule of salary progression based on seniority – hence the plans for massive layoffs of older people who ought to be able to stay in the company. Jean Arthuis is right: we need to revise the counterproductive rule that stops salary reduction in terms of services effectively rendered.

Economic Proposals (2/6)

PENSIONS
Balancing the books is an adequate goal, but the population thresholds that have been fixed (legal pensionable age of 62, a minimum of 41.5 years of contributions) are not rigorous enough to be effective.
Nevertheless, one should set up safeguards taking into account long careers and arduous working conditions to ensure the acceptability of the reform by all:
1. To take long careers into account, one could put a ceiling of a 45-year contribution requirement, for example: just as 67 years would be the maximum legal retirement age, 45 years would be the maximum contribution requirement for a full pension.
2. To take arduous working conditions into account, one could use a life expectancy of 67 years (the maximum legal age) as a starting point. For example, if a 67-year-old executive can hope for another 15 years’ life expectancy, the maximum legal retirement age must be reduced for the category of threatened workers in such a way that they will have statistically the same amount of pensionable time left (i.e., 15 years in this example). The maximum thus defined will be evaluated according to category/type of worker/employee and reviewed regularly (for instance, every year or every 3 years).

NO TAX/ FIXED CHARGE ON SALARIES
In this country, we need to ease conditions for companies to help them create jobs without giving up their contribution to the country’s burden.
I suggest a drastic simplification of company tax, namely replacing all taxes/fixed charges on salaries (pension, health, unemployment contributions, etc.) by a single corporation tax contribution = variable charge for the companies. Hence, the contribution asked of one company will be considerable when business is good and much reduced when there are serious problems; the salaries paid to those members of staff still in place will advantageously replace the unemployment insurance, since the company will be less likely to go bankrupt.
The idea would be to calculate the new company tax rate in such a way as to garner the same resources as brought by the old company tax + the fixed charge on salaries. Then, one should round off to a meaningful figure for entrepreneurs and shareholders: 1/3 (33%) or ½ (50%).

LEAVING THE EURO?
The main flaw of the Euro is well known: the currency-unified economic zones are not aligned in their economic operations (industry, services). This has led to regular imbalance over time, of the type that monetary devaluations or revaluations used to compensate for, in particular in the monetary snake. Past efforts to achieve monetary unification without economic governance (the industrial and budget policy of the states) have all failed (c.f. the franc zone of the Latin Union 1865-1927 – it lasted 60 years with 32 signatory countries).
The instigators were well aware of this flaw. The policy of monetary union constituted a bold attempt to force member states to adopt budget moderation policies, thus reaching harmonious rigor without (federal) coordination efforts. The question is: Can one survive on an illusion? Should one be loyal to Germany, a country that has shared so little of the economy cake (in terms of both economic development and the power brought by directing the currency)? It could well be that the sole solution to bring down our country’s debt easily and quickly involves leaving the Euro and creating inflation by printing money.
As in all revolutions, some will win and others lose. In this case, pensioners whose capital is already constituted and whose resources barely grow will lose. Winners will be the workforce, the young people in particular, and export businesses and tourism. Raw materials will be more expensive, and so will Chinese junk, which will lead to some relocating.
The fall of the Euro will bring that of the Dollar, affected by the excessive American debt, of the Yen, and of the Yuan since Chinese financial assets are involved in the Dollar. Countries will have to offer the Chinese government political or even economic support to prevent the economic shock wave from degenerating into riots, then civil war, in a country possessing nuclear weapons. In other words, one should do nothing to bolster the desire for freedom in the faltering country; abandoning the communist dictatorship can take place only within the sense of equanimity brought by a flourishing economy.
Let’s not kid ourselves, however: leaving the Euro will signal the country’s prolonged inability to achieve the necessary administrative and political reforms and a whining people, forever expecting increased state allocations but with fewer obligations towards the state and enterprises. Leaving the Euro will also represent the failure of the policies of austerity that were initiated in 1983, the failure of 30 years of public policies, including the fight in favor of the Maastricht referendum. What the French people urgently need is a rousing vision of the 21st century future perils, just as in other places and other times, Americans rallied in the face of the “Red peril”, the Russians in the face of American imperialism, and the Chinese in the face of foreign interference. What are the perils coming to us? We can cite climate crises (global warming due to the release of carbon dioxide), ecology crises (rising sea levels), unbalanced global demography (falling for us, but showing exponential growth in Africa and India, thus leading to famines and migrations more or less well tolerated), a third World War that would start in the nuclear powder keg of China/India/Pakistan or a regional war against Iran. All these events will require solid public finances so that one can address them with a winning spirit.

NO, PROGRESS IS NOT LINEAR!
We’re still living under what is left of the late 19th century positivist philosophy which, in essence, posits that progress increases from generation to generation and will soon reach the sky.
For instance, Westerners increasingly receive better medical care, live in greater comfort, in particular energy-driven comfort (abundant and cheap oil, electricity), travel increasingly faster and further and further, eat better; in addition, there are fewer wars (though they are more lethal and devastating), etc.
Yet, this ascending straight line of progress was the result of huge efforts from each generation, sacrifices, and massive breakdowns (two world wars). The concept of steady progress is a dangerous delusion that blinds us and makes us doze in the comfort of our declining social democracy, in opposition to the nations that consent to considerable efforts, the pioneers or those who wish to catch up with them (United States, China, India). I cannot envision any other path for our leaders than to re-mobilize us in a realistic project for the 21st century, something that would highlight the future hardships our generation needs to face and overcome.

MAKING LABOR LAW A BACK-UP SOLUTION ONLY
Our current labor law is implicitly based on the assumption that employees are “weak” and must be protected in their relationship with the “strong”, i.e., employers. This means leaving out the notion that employers do not hire in order to lay off automatically and quickly. Recruiting employees costs time and money (unfulfilled contracts, financing the time human resources directors and managers spend interviewing, provisioning the anticipated costs of breaching work contracts). Then, there are also the costs of training / further training and of accepting the inefficiency of the first months of work.
In addition, the work contract, as it is currently planned, protects those individuals who have succeeded in getting hired, but also keeps unemployed those who would bring a lesser benefit to companies, precisely because of the hiring and potential firing costs that keep entrepreneurs from hiring.
Finally, our society is based on the principle of individual accountability. It would be advisable to re-establish it at the level of the work contract. Companies are the only ones to know their business opportunities and what is needed to address them. Then, it would be up to the employees to accept the constraints or not!
Thus, I suggest giving labor law a back-up role, that is, it would be applicable only if contractual terms have not been entered into.
Perhaps one could consider giving this back-up role to other fields of law. It is time we called a stop to the glorified nursery that replaces individual initiative with never quenched thirst for state benefits!

FISCAL RESOURCES
Here are a few leads to obtain extra fiscal resources:
• Why should we treat as taboo the figure of a 10% reduction of the tax havens deductions? Perhaps one should consider the more significant figure of ½ (50%) or even 90% if one considers tax havens as unproductive, almost useless but, nevertheless, highly symbolic. These flat rates would, of course, not exclude and in fact add to the study of the current usefulness of each tax haven.
• Modify VAT rates to 5% and 20% (1/5) to simplify the mental calculations of business people and consumers.
• Keep the same VAT rate in the fast food and traditional domains, either 5% or 20%, so as not to skew the competition.
• Eliminate all the aids to companies regarding the limits of a 35-hour workweek. Surely, a properly managed company will have carried out the organizational change from 39 to 35 hours several years ago!

FISCAL PRESSURE LIMITS
In our open environment, we compete with countries in the same category as ours: Great Britain, Germany, Italy, or even Japan and the United States. Our taxation limits must be in the same range as they are in these countries, namely between 40% and 45% of the GDP (unless I am mistaken). This proportion will change over time; there are “fashionable” practices in the management of both public and private affairs. Why should we not use part of our influence to help change those practices towards modes that suit us?
We should not think that France will be right in the face of opposition from the rest of the world. We boast like self-satisfied, arrogant roosters – the old image is still prevalent… We need to note that not only does the rest of the world not adopt our social model, it is also secretly happy to see us stray outside the flock: we are disqualifying ourselves in a field where being right only works from inside the group. In this domain, solo racing brings nothing except rejection.

SIMPLIFYING INCOME TAX
We need to make taxation more readable, understood and accepted, and defended by governments. Hence, the mode of taxation determining must be easy to understand and the rates easy to calculate. We should not aim to optimize the rates for the revenue of one particular year, which would only increase confusion and bring the rejection of this instability.

Hence, as far as income tax is concerned, one would end up with the following:
Tax bracket Rate
€0-10,000 0%
€10,000-20,000 10%
€20,000-30,000 20%
€30,000-40,000 30%
€40,000-50,000 40%
€50,000+ 50%
And for VAT:
Reduced rate 5%
Full rate 20% or 25% (1/5 or ¼)

ALLOWING LOCAL AND TERRITORIAL AUTHORITIES TO RAISE THEIR OWN TAXES
We need to speed up decentralization and deconcentration to promote efficiency through proximity, as local stakeholders are best placed to negotiate among themselves what they believe will be best for them. Paris is too far away, online information channels lose something, answers are late; in other words, from a regional perspective, nobody is happy with the State.
As a corollary, the resources of local/territorial/regional authorities need to grow, but these entities must be responsible for raising their own taxes (mode and rates of taxation). The mode should be coordinated by the associations of mayors, elected representatives, region presidents. Rates should be determined by local representatives. Easy mobility on the national territory and voter patronage ensure relatively moderate rates.

Finally, if determining a particular type of tax for a specific level of local authority is not considered possible, one should not forget to send households an annual summary of the taxes paid for each level of authority. The computer specialists in the Ministry of Budget have all the data, the process is easily done by computers but tedious for private individuals who do not do it systematically. This summary would represent a guarantee of proper local management since everyone would know who receives the monies from the local taxes and who the local person determining the rates is, and would be in a position to see excesses from year to year.

Equalization mechanisms between regions and departments are necessary but must remain limited so as to avoid skewed arguments of the type “I raise taxes for others”. As a baseline for discussions, I suggest that a rate of 10% of the raised taxes be allocated to the equalization processes between local authorities at the same level. This rate is quite low (1/10°). In addition, the figure is significant and allows taxpayers to carry out mental calculations easily; this is essential as taxation readability is a necessary condition to acceptance by the population at large. We’ve had enough of these silly figures (19.6 or 5.5 and why not 12.02?) that result from a compromise, power struggle, optimization, barstool psychology (designed to hide the required financial effort) – all those arguments which are at best valid the year the tax is being created and downright crippling afterwards. As for the redistribution criteria used by the equalization fund, they need to be negotiated (to reach consensus on the part of the region presidents/representatives regarding their respective level) and subject to change with electoral changes (agreement would need to be reached within 6 months, otherwise the government would have the final say).

BREAKDOWN OF THE BENEFITS MADE BY COMPANIES
What we need:
• To finance our public debt
• Equal footing with our European and global competitors in the context of mobility of capital, companies, entrepreneurs
• GDP growth arising out of investments and companies’ economic good health
• Promoting entrepreneurial capitalism rather than financial capitalism
• National social cohesion (equitable benefit sharing) at a time when fashionable management theories promote hard squeezing / squeezing to death / draining the last drop / milking dry which only makes employees lose their motivation or even their health
• Readable taxation that brings acceptability.

What I suggest regarding corporate taxation:
• ¼ (25%) of the companies’ benefits go to the State (this is in line with European practice)
• ¼ (25%) go to the shareholders (return on capital risk)
• ¼ (25%) go to self-financing (to promote companies’ growth)
• ¼ (25%) go to the employees (with a distribution key equal for all employees rather than proportional to the salaries earned)

Mme Parisot has objected that certain companies would like to grow faster; fair enough – in which case, shareholders give up their share (thus brought to 0%), which goes to self-financing (which becomes 50% of the benefits, more than enough to achieve self-funded growth).
Another distribution system, much more innovating and worthwhile, I believe, is desirable if my previous suggestion (see relevant article) concerning a single corporate tax is accepted. This tax on benefits (with variable charge) would substitute for the fixed charges on salaries (URSSAF, pensions, unemployment, health funds, etc.) + the former variable charge (IS). As a reminder, this shift from fixed to variable charges was suggested because fixed charges constitute the major cause of bankruptcy when the revenue drops; similarly, the level of fixed charges on the salaries is the main brake on employment.

The distribution now becomes:
• ½ (50%) of the companies’ benefits go to the State
• 1/6 go to the shareholders (maximum figure)
• 1/6 go to self-financing (minimum figure)
• 1/6 go to the employees.

Should the shareholders want faster growth, their share could drop to 0% and self-financing rise to 1/3 (33%); variations are all possible between the minimum level of self-financing (1/6) and the maximum level for shareholders (1/6). At first, this type of taxation benefits employees and management; then, it also benefits shareholders (healthy companies + dynamic companies and fully motivated employees).

SIMPLIFYING THE RED TAPE
Filling in administrative forms constitutes endless bureaucratic red tape, time wasted in needless repetition of information already collected by the various administrations!
I suggest setting up a centrally managed administrative Web site where users willingly enter oft requested basic information: surname, name, birth date, birth place, marriage place and date, name of spouse, civil status, INSEE number, vehicle registration number, driver’s license number, number of children and their names, birth dates, etc. Users authorize the requesting service access to the information by email. The information is then used to “pre-populate” administrative forms, so that users can concentrate on the really useful areas.
In any event, it is unacceptable to find the same administration requesting the same information in different forms, once the information has been collected. This only serves to demonstrate the chronic inability of their IT specialists to set up simple databases.

WORKING ON THE TAXATION SYSTEM
Contrary to what the head of State explained during his televised performance, as it was understood by commentators, it is not only asset taxation that has to be reviewed in France.
What needs to be worked on:
- Assets (fiscal shield, ISF, high incomes, stock options, severance agreements - the so-called golden handshakes)
- Local authorities (dedicated tax according to the level of local authority with 10% equalization mechanism)
- The corporate business tax, replaced by VAT on each company’s production (variable charge)
- Rates and share of taxes on companies’ benefits: benefits to be shared equally between the State, self-financing, shareholders, employee profit-sharing measures
- Simplification of the individuals’ income tax brackets to promote acceptance of this tax through greater readability. Rates should not be optimized in line with the year’s specific needs!
- Increasing VAT from 20% to 25% but maintaining the low rate at 5%
- Modifying labor taxation (fixed charge in terms of the revenue) into a variable charge through integration into benefit taxation.

THE RIGHT TO HOTEL ACCOMMODATION FOR HOLIDAYS???
Yet another alarmist report from the INSEE signals that 1 out of 4 French people has been in a situation of “poverty” in the last 5 years. One of the comfort criteria that came into use is the right to spend one’s holidays out of one’s home, not in a family member’s home, but rather in a hotel in weekly or monthly rentals.
We are now sinking into INSEE-managed feelings of misery, whereas the only real poverty indicator is the absolute poverty rate (basket of essential goods, housing). Continuing on the road of relative poverty indicators would lead a cash-strapped country into a dead end, create artificial frustration in a country full of depressed people (who hold the record of psychotropic drug use).
PS_1. I cannot afford to go into a hotel, but I live well and do not complain because of this … This does not make me poor, or unhappy, or unhappy and poor!
PS_2. I’ve heard of a poverty threshold of less than €1,000 a month; but is this per individual, adult, or household? It does make a difference.

AN INDUSTRIAL POLICY FOR FRANCE
Through an incentive plan, the State needs to coordinate 3 types of industrial and commercial companies that overlap partly:
- VSEs and SMEs destined to do business on the national territory. They create jobs and generate fiscal revenue.
- Innovative start-ups designed to shelter France from international competition by being several steps ahead, as chess players say. These days, those lean-structured companies like start-ups are more innovative than the big companies (because they focus on innovation rather than on a financial casino, the monopoly of corporate takeovers, or gaining the upper hand via advertising and overwhelming and expensive marketing).
- Export businesses, the mature and performing ones, such as the large groups and the large medium enterprises that bring in currency, prestige, and some influence abroad.
Clearly defined companies pursuing different goals are now emerging. All have a role to play; all deserve public support in the country’s own best interest through a clear incentive plan both administrations and the companies understand and through well-adapted taxation (most notably by limiting the fixed charges that cripple companies during an economic downturn and so terrify entrepreneurs that they do not hire in good times in a country where it is so difficult to lay people off in bad times).

JOB RELOCATION FROM PARIS TO THE PROVINCES
At issue here is relocation to the large regional centers, the prefectures and sub-prefectures.
- Under normal conditions, we have reached saturation point in road transport, so now, what will happen in snowy conditions …
- Local air pollution is already a major concern (allergies, asthma)
- The cost of housing for individuals is much too high 1. in terms of salaries and 2. in terms of provincial standards
- The salary levels are 1. high in terms of provincial standards (hence a cost increase for the companies) and 2. low for employees in terms of the housing costs.
It is high time entrepreneurs realized that a skilled or unskilled labor force exists in the provinces, that the cost of living is much lower, that all employees, including the executives, live well, that there is no shortage of information networks (the Internet, newspapers, books + DVDs through Amazon.fr and local bookshops, teleconferencing, the TGV train, airplanes), that open-air leisure activities are pleasant, etc.
So now, where is the initial State support? Could we have an update on the government’s vision regarding land use planning?

THE TARGET: ZERO ACCUMULATED DEBT
The time always comes when individuals, companies, and states have to settle their debt because the latter has become counter-productive. This is the situation in France today. Which target can we fix for our debt settlement? Surely, the zero level is the one that will give us maximum leeway in a century filled with numerous and definite threats, though one cannot set a date for them: a climate crisis (rising sea levels, rainfall floods brought by local climate changes), pollution ->depollution, the end of cheap oil, pressure upon raw materials (agriculture, energy), more or less serious wars, etc.
Stop and Go Keynesian policies cannot be used, given the current state of indebtedness: in order to stimulate the economy, one needs money! So we need to forget the myth of revenue-producing growth, as this myth has not worked for the last 30 years. In other words, we need to make do with a 0% growth, as long as we repay our debt. An annual 3% growth based on an annual 3% extra debt is nothing but a misleading delusion destined to an economically immature electorate.
Clearing our debt requires using at least 3 tools:
• Increasing taxation (which signals the capacity of a state to make citizens understand the seriousness of a situation)
• Reducing costs: operational costs (salaries, status, pension calculations for the civil servants of the 3 public services + costs of transactions, flow and storage of information, infrastructures, and procurement policies), social policy costs (lowering the retirement pensions beyond a certain minimum, increasing people’s financial participation to remaining in good health). Nevertheless, the objective should also be to reduce by half the number of people living in absolute poverty.
• Selling the family jewels that are not essential to the sovereign functions of the State: selling buildings and land (SNCF, the army, town halls, etc.), privatizing state-owned companies and public enterprises (EDF, GDF-Suez, SNCF, etc.) whenever possible, reducing and eliminating the non-strategic participations of the Caisse des Dépôts et Consignations [a French financial organization designed to safeguard public funds], stopping investments in expensive economic development projects (freeways, expensive military weapons programs).

JOINT REGULATION OF WORKING TIME AND LABOR COSTS
I’ve read an interesting proposition in the Juppé/Rocard interview book: a four-fold reduction of the hourly rates below 32 hours/week, and a four-fold increase beyond. It seems to me that the figure of “4” is debatable; why not “2”?
Note 1: in the fields of mathematical optimization, automatic control, and economy, when it is not easy to regulate through bans/authorizations (in other words, all or nothing) according to a rigid threshold to be defined, it is worth defining an incentive cost function while letting those in charge (in this case, the company managers, the payers) make the decisions.
Note 2: the link thus established between the working time and the labor costs enables a double regulation: that of working time and that of the costs of salaried labor.

A SAVINGS BOOK TO BENEFIT VSE/SME FINANCING
M. President Sarkozy, how far have got with the idea from the CGT, which you accepted in 2 broadcasted speeches, and that deals with the launch of savings books designed to help finance French VSEs and SMEs? This is both urgent and essential:
1. Commercial banks no longer finance the “real economy,” as they choose, instead, to speculate on financial securities and to finance large companies, which are less risky in the long term. However, when considered collectively, VSEs and SMEs are worth investing in and solid.
2. VSEs and SMEs have the highest hiring rate in proportion to the invested capital. Their leaders have not fallen prey to the by now well-known management style of “hiring less for a higher rate of return.” VSEs and SMEs believe in the future, they invest, they hire.
3. Neither start-ups nor export companies should be supported or financed via these funds. I could be mistaken, of course, but I believe that there are other financing channels for these 2 categories (e.g., business angels, banks, Coface) that are attractive to commercial banks (? To be confirmed)

MULTI-CRITERIA SELECTION OF PUBLIC PROCUREMENT
At the moment, public contracts are awarded mainly to the lower bidder, which involves bias towards lower quality and products from low-cost countries.
However, mathematical rational choice/multi-criteria selection theories have been around for at least a couple of decades. These theories combine, for instance, the following issues:
• Costs
• Quality
• Esthetics (if needed)
• Ecological footprints (type of materials, energy savings, carbon value, etc.)
• The nationality of companies (French, European, countries favored by a treaty, WTO, others)
• The strength of companies (balance sheet analysis over several years, type of shareholding, management options +/- in sync with the payer)
• The way employers treat employees (salary policy, human rights, occupational injury rates)
• Etc.
The mathematical technique involves 1) evaluating each criterion numerically (a cutoff threshold can be established), and 2) comparing all the scores for one criterion in pairs, so as to establish a classification for each criterion separately. Finally, 3) in order to determine the overall classification for all criteria, one can establish a score = the sum of all the scores for each criterion, and the winner is the one that has the lowest score.
For instance, the one who is 1st on Criterion 1, 5th on Criterion 2, 2nd on Criterion 3 receives the overall score of 1+5+2=8; the one who is 2nd on Criterion 1, 2nd on Criterion 2, and 3rd on Criterion 3 will have an overall score of 2+2+3=7. So, the second project is chosen over the first; if the second project is also better than the third project, it will be termed “dominant” and will be selected in the end.
Another type of multi-criteria algorithm to be tested involves giving a score between 0 and 10, then multiplying all the scores related to one project. The highest overall score will indicate the best project.
To select one of two multi-criteria algorithms, testing is necessary so as to select the one closest to human cognitive intuition.

STRUCTURAL REFORMS TO BE CARRIED OUT IN THE PUBLIC SERVICES
The February 2011 issue of Capital magazine deserves top priority reading by those interested in reducing public expenditure through the more effective organizational functioning of administrations. And no, it is not yet another ordinary pamphlet against civil servants! The idea is to demonstrate, via examples, that a more effective organization of those (miserable!) basic civil servants would result in a wealth of productivity and … well-being in the workplace. But it is essential that government officials take full ownership of the analyses presented in the magazine, this particular approach, and types of resolutions. So what on earth is the ministry tasked with the modernization of administrations and the General Public Policy Review (RGPP) doing?
PS. I already knew about the multiplicity of statuses that is an important brake on mobility. What I really enjoyed reading about is at the end of the Capital feature: In Canada, civil servants are offered a financial incentive to suggest effective reforms (10% of the savings realized at the end of the first year of the suggested reform).

TEACHING THE FRENCH PEOPLE THE REAL COST OF GOODS AND SERVICES
The French have a deep-rooted aversion to and contempt for money. But I can’t think of a better economic system than capitalism to determine guide the complex transactions that determine behaviors. As we know, Marxism, this community-based utopia, ended dismally in the real world. Bartering is inadequate to manage decentralized transactions. Christian giving/ counter-giving simply does not work to enable progress in a society with diverse individual behaviors. Hence, it is high time the French acquired a positive way of considering the business world.
More specifically: politicians mollycoddled the French society after the reconstruction (around 1960). The real cost of medical care is carefully hidden (100% reimbursement rate, third-party insurance), which the care community (which I know well) cashes in on; most of its members are more interested in making money than in actually helping the sick…

Up till now, petrol costs have been cleverly overtaxed in order to deter wastage of this precious resource, hence reducing costly imports. They’re now talking about setting up a social rebate on pump prices; surely, this goes against the notion of waste reduction. If we are legitimately concerned about the poor, it would be better to reinforce the RSA, which tallies quite accurately with people living in a situation of absolute poverty. Similarly, freezing the price of gas is currently in the news. Problem is, the price of gas results from contracts on the world market. The only thing that can be done is to check that the gas, petrol, electricity, postal, etc. companies do not abuse their oligopolistic situation to gorge themselves. All that’s needed is to carry out a cost analysis and evaluate the cost increases within international competition; this must be done by a management controller paid by the State. Freezing increases in the sectors previously mentioned is done purely for electoral purposes and delays the adaptation of the French people to the reality of costing in the market world where they are going to have to live for a long time.

TAXATION FOR THE AUTOENTREPRENEURS
The autoentrepreneur status was created in order to
- facilitate testing the self-employment route
- supplement paid employment
- fight moonlighting
To succeed, what autoentrepreneurs need is administrative simplicity:
- The accounting system required by the banks and the tax authorities must be extremely simple to set up and to verify. I’m thinking of a mandatory professional bank account, which, a posteriori, the tax authorities can verify and the banks are authorized by the account holder to access. This system differs from the accounting records which are required a priori from all other companies. I would also suggest developing business accounting software that would be interfaced with the various administrations (tax authorities, URSSAF, etc.).
- The tax charge must be based on the turnover or the benefits; it must be either proportional or progressive. It should not include any fixed charge (that is, independent of the activity) precisely because autoentrepreneurs’ activity is highly variable, and fixed income and social taxes would doom many activities to failure and, worse, would inhibit the emergence of new autoentrepreneurs, particularly as the start-up phase is crucial for these low volume activities.
After testing, should this system without fixed charges work, it should be extended to include the VSEs (1-10 persons). I repeat that the issue is not that the absolute level of taxation on business activities that matters, as entrepreneurs are happy to pay taxes, like everyone else, provided taxation does not kill their activities, hence their assets and salary. This is the MANTRA: fixed charges linked to administration (income and social taxes) must be brought to zero level. The only fixed charges must be those linked to employee salaries, which will consequently be more manageable, which is turn is better for employment, activities, hence for the State (fewer unemployment benefits, more activity-based revenue, and increased spending resulting from increased purchasing power, hence increases of indirect salaries).

FINDING ECONOMIC GROWTH
Economic growth cannot be imposed by decree. It does not result from some vague and substance-free political will, nor from trust in the capacities of key political leaders; it is no longer derived from adjustments to macroeconomic equilibrium; it comes from attention to microeconomic detail.

Macroeconomic domain:
The European Central Bank (ECB) deliberately maintains high interest rates and low inflation rates to force governments to be virtuous (the debt burden), to sustain the medium-term visibility of prices for consumers, manufacturers, financiers, and to prevent inflation from wiping out the income from annuities in an ageing Europe where the well-off elderly/pensioners hold power. Given the current power dynamics between the ECB + Germany and southern Europe, it is unrealistic to expect any protest-driven shift; all one could hope for is a loosening of the inflation rates from 2% to 4%, as the figure is not cast in stone for the institutions.
As far as the notion of budget deficit-driven Keynesian stimulus is concerned, I have already shown that Go policies are feasible only if budget surplus has been accumulated during the Stop phases, which is evidently not the case. Transferring the stimulus burden to a European budget level would serve only to extend the deadline for massive reimbursement, given the leaking expenses basket. Above Europe, there’s only the IMF, which knows how to get reimbursed the hard way if need be. We would then lose our economic sovereignty, and voters would overwhelmingly choose the extreme parties.

Microeconomic domain:
The prototype (and tool) of the kind of much-needed microeconomic future is the Internet world: everything is dead simple (90% of the time, all that is needed is to click on OK in successive windows, except for special cases), servers are competing to offer something extra (information, services, goods), the consumers are more than willing to use their bank card to pay online (a turnover of billions, and steadily increasing).
As far as administration is concerned, the Internet micro-economy involves legal simplification, the cult of administrative simplicity, interfacing with private industry software, and promoting dedicated social networks of the Facebook type reaching civil servants in a group of administrations who are potentially interacting, senior government officials in all administrations and sectors: law, healthcare, agriculture - water and forestry, sanitation, agribusiness, etc.
As far as the private sector is concerned, it is essential to fight for the maximum innovation at all levels: technical, organizational, service-based, etc. This is necessary to keep ahead of the products from countries with low labor and production costs, in the same way that good chess players will be several moves ahead in a game they want to win. It’s no use whining about French decline: it is not inevitable; let’s rather fight to find solutions!