Over and over and over again
Surely we have reached the end of a cycle? Are we not at one of those turning points in history where one day we will have to decide which way to go? Has the time not come to rethink our economic model? With the situation apparently so complex we are right to ask these questions. Our economic model seems to be in need of a profound and fundamental change to seek for a more sustainable system – in everything. Today we are in dire need of a more wide-ranging overview of a balance that no longer exists and on the future of future generations. Like the profligate cricket of La Fontaine’s fable, we live in a system of “too much” and of “over”: over-consumption, too much debt, too much pollution, overuse of our limited natural resources, etc. – an excess of excess!
We followed a course that led us to our current economic problems. The problem of debt, unfortunately, cannot be resolved by yet more debt. However, that is what we keep on doing.
An accumulation of short-term fixes never produces a good long-term solution. At the end of the day, human beings have a tiresome tendency to resist change and always favour solutions along the lines of what they are already used to and what they have always done. This resistance to change is, in the long-term, very damaging.
These few observations, which are so simple and obvious, ought to be applied to the current financial crisis. We fight to preserve the Eurozone, to save governments from the financial abyss that looms over them and to maintain a worldwide financial equilibrium, as best we can. But is it a good idea to use resources to preserve statistics and maintain the current state of affairs? Are we not wasting resources and energy trying to fill in a bottomless pit? Is government debt (also private debt, particularly in the USA) sustainable? Even though we have a deficit of only 3%, it is still a deficit that foists the problems onto future generations. Balanced budgets are what we need, fast. The economic growth that we desire is still based on overconsumption of natural and financial resources. We need growth that is more sustainable and less artificial.
The problem of debt will not be resolved by growth. We have to find a more radical solution, simply spending less and spending better. The crisis is not just a crisis of capitalism, it is also due to aberrations of a certain socialist system approach (not in its objectives, but in the way it carries them out) and is also due to Keynesian policies. In our view, the future will be slower and more sustainable. We therefore need to look further ahead, not just to the next quarter or year. The difficulty rests in the art of making things healthier while looking after the interests of the whole community, with moderation, without excessive greed, and favouring quality over quantity.
For more sustainable finance, we have to be daring. It is naive to suppose that zero interest rates will be a solution for apathy on the markets or that they will encourage any recovery.
Excess wrecks everything. Our economic model seems to have become obsolete. We need to get back to a more virtuous circle. We are living beyond our current and – even worse – our future means. We are at the dawn of a new era. Our grandparents told us of the 1929 crisis. Today, the G20 is sticking patches on punctures, whereas what is needed is a change of inner tube, a change of tyre, or even perhaps the wheel bearings. For that, you need vision and most of all courage. Unfortunately, politicians work to the short-term, as do many CEOs, and refuse to take a long-term view. They fend off problems, pushing them ever further away, without ever fixing them now. It is high time we woke up and attacked problems in a durable manner.
F. Masquelier, ATEL Chairman