“Debt denial paralyzes politics”

By writing your book, you say you have discovered the “family secret” of today’s France. What is it?

In a previous essay, published in 2022, I tried to understand why France had deindustrialized. Once this was written, another question arose: what if there was a link between this deindustrialization and the evolution of our public finances?

To answer it, I questioned political leaders and senior civil servants who are still alive: how could we have forgotten the golden rule which dictated, even thirty years ago, that social benefits should never be financed by debt?

At the time, all the leaders were attached to it. How did this principle disappear? By investigating, I discovered what I call a “family secret”: our debt is first and foremost a social debt (pensions, illness, minimum wages, etc.) And as is often the case with family secrets, everyone believes that everyone knows it, and ultimately no one tells the French.

Is the situation really worse today than yesterday?

Yes, more worrying. Not just because of the level of debt, but because it is now galloping out of control. Over the last nine months, it has grown by 130 billion euros. We set off at full steam towards 4,000 billion. Forecasts show that, even with courageous measures in an optimistic scenario, it would rise to 130% of GDP by 2029.

All other European countries have suffered the same crises (Gulf War, September 11, 2001, Internet bubble, financial crisis of 2007, Covid-19, etc.) but their debt is decreasing, because they have dealt with the problem. Because we have devoted our margins of maneuver to social benefits and the interest on the debt which is used to finance them, we can no longer, today, double the police budget in Marseille to fight against the mafias, nor properly pay our researchers who are leaving for the United States and now for China.

How could this “family secret” last so long?

Initially, the drift is small and seems controllable: 1% of social spending was financed by debt; today it’s 10%. Why such progress? A step back is necessary.

With the transition to the euro and the entry into globalization, France has turned a historical page but, unlike other European countries, it has not sufficiently defended its heritage interests, supported its entrepreneurs, nor invested in innovation, which has led to the deindustrialization of the country.

Between 1983, when François Mitterrand positioned Europe as a new political horizon, and 2005 – the date of the rejection by referendum of the treaty aimed at establishing a constitution for Europe – France believed that, without effort, it would benefit from an inevitably happy globalization.

Many believe that crises are a thing of the past. However, when, against all expectations, crises follow one another, the welfare state finds itself on its knees and each time, France returns to the same solution: Keynesian recovery, that is to say recovery through public spending.

A strategy that reaches its limits?

Yes. Poorly thought out, globalization generates deindustrialization; poorly understood, Europe feeds populism while it protects us; Repeated too often, recovery creates debt.

Why would the temptation to postpone the bill no longer be tenable today?

We are increasingly constrained by the payment of our interests. Furthermore, the more the welfare state grows and is financed by recourse to debt, the more radicalism rises, and this ends in political blockage. The current paralysis is the consequence of debt denial.

In your book, you seem to spare, in the political class, only Raymond Barre on the right and Pierre Bérégovoy on the left. For what ?

I have a lot of respect for politicians, because controlling the imagination of the French, accustomed to an all-powerful State, is a difficult exercise. Mass unemployment creates disengagement and gives considerable weapons to currents of political life which prevent any recovery.

Politicians have all tried to reform, but they can only make one reform per mandate and are always tempted to counterbalance it with significant social progress.

Raymond Barre was a man of the golden rule, but he made the country pay dearly for it by increasing the cost of labor; Balladur spent a lot; Rocard and Jospin benefited from a favorable economic climate and burned their cartridges; Raffarin, Copé and Breton were serious; Sarkozy moved away from the golden rule from the first days, then became serious at the end of his mandate with the pension reform of 2010. Hollande believed that France could regain two points of growth, but he managed as tight as possible.

And Emmanuel Macron?

Its first years were marked by budgetary discipline until the crises of the yellow vests and Covid-19, when everything went into a tailspin in an incredible way. The debt soars from 98% to 115% of national wealth.

No cry of alarm is being sounded in 2022. At the same time, Germany is making every effort to reduce its debt, which is now almost half of ours. However, their birth mortality rate is lower than ours, their citizens are well cared for, their judges are better paid… Our model no longer works.

You emphasize the demographic factor. No one anticipated the tremendous increase in life expectancy over the last fifty years or the collapse in the birth rate, which weighs doubly on the financing of our social state…

In 1981, the transition to retirement at age 60 took place without a demographic scenario. Then, in later years, we underestimated the fact that the care society would generate much higher costs. None of the founders of Social Security, in 1945, imagined that we could gain twenty years of life expectancy in thirty-five years.

However, life expectancy continues to rise, as it does everywhere in Europe, and the accompanying increase in spending is not offset either by an increase in working hours or by the private savings of retirees, which should be used to finance part of the cost of chronic end-of-life illnesses.

Instead, the percentage of French people who benefit from 100% health coverage increases every year, and the average dependent population, already the lowest in Europe, falls every year. The Germans pay 5 euros for their box of medicines, we pay 1 euro for ours, and the Barnier government fell because it wanted to raise it to 2 euros.

Could debt cancellation be a solution?

The last time the French debt was canceled was in 1797, after the Revolution and the Terror.

The increase in taxes then?

We already have the highest tax rate in Europe. We are on the verge of breaking down tax consent. For example, the total levies on the added value created by French companies (20.4%) already represent almost double that of their German competitors (11.8%). If we want to continue deindustrialization, let’s continue…

If there is no “magic money” or “easy solution”, what remedies do you recommend?

The search for scapegoats, “the rich”, “the boomers” or “the immigrants”, represents a tragic threat to French democracy. Until now, France has used the bank card of Europe, but we risk, through market pressure, having it confiscated.

At the source of the problem is this refusal to see that the aging of French society requires raising the retirement age and making pensions less generous. Pensions make up a quarter of our public spending, almost half of our social spending. We absolutely must reinvent the age group of French people aged 60-70, stop calling them “seniors” but “experts”, and reintegrate them into the world of work.

Each individual must maximize their value creation potential; this is the price for the protection offered by social democracy. Young people also need to work earlier. Or else, we will have to put an end to 100% health insurance and a reduction in the level of pensions.

This would require a political consensus which seems impossible to find!

It will come from the debate. My book is an anti-inflammatory. He presents facts. I don’t know if the campaign for the 2027 presidential election will be peaceful. It is the role of those who are responsible for the soul in France, from mayors to essayists, to ensure this. But my GPS point is clear: France will end up adapting to the longevity revolution because it will have no choice.