1) What are the big ideas of your new book and why this title Reset?
The idea is simple, we have a world that has become extravagant, excessive with a lot of financial bubbles everywhere, economic and ecological slippages. This pandemic comes like a Reset, that is to say it comes to restart the world, like when we have to reset a defective device. The problem is, there are two styles of reset. The reset that works, that is to say that we start from zero but that we upgrade, that we improve the situation. And there is the very dangerous reset, the one that does not work, precisely the one where we have not drawn the works of the past and that we repeat the same errors.
In this case, it would be very dangerous and there is a risk of a kind of headlong rush on the public debt and on the printing press. We have the impression that this debt is “free”, whereas it will have to be repaid even if it will take time. The real issue of debt is what we call debt sustainability, which means that getting into debt is not serious but that this debt must be high enough for it to be generates growth that will pay back interest. The problem we have is that it doesn’t work and that we have, what we now call bad debt, a bit like cholesterol, there is good debt and bad debt.
Bad debt is the one that exists today, we distribute billions like that without knowing where it is going, to plug the gaps and it is dangerous, because it is money that will not be totally lost but that will not be fully recovered. Good debt is the one that makes investment and innovation, that is the real issue of the post-crisis period. Are we going to stay on a headlong rush with a huge public debt, sluggish growth and an activity that overall is not strong enough in terms of employment or so we will profit from this crisis to come out on top with technological innovations and investment. And this is the great debate of this post-pandemic.
2) There has been a lot of talk about decline since the start of the crisis, can you
The great debate we are having today in this reset is that some would like to see a phase of decline generated by this pandemic, that is to say that we lower the level of life This is not at all what I call my wishes since we saw during confinement that there was a decrease, that is to say a decrease in activity. If you have a decrease in activity, you have an increase in unemployment, social risks and even riots, so it is very dangerous, whether in rich countries or not.
Globally, this decrease does not work, yet we really have a concern for warming and ecology, so the only way to achieve sustainable growth in a finite world is by optimizing what exists through progress and technological innovation. If we say “this pandemic tells us that we have to decrease, we have to stop consuming” then this is extremely dangerous and it is not ecology. While if we say: “ecology is not that, true ecology is precisely that which concerns innovation”, that is to say that we will make better use of the planet , we’re going to destroy it less so we’re going to find a new energy trilogy, a new agri-food trilogy, so yes it works and in addition, it creates growth, it creates jobs. It is therefore this reset that I welcome, that is to say a reset with an upgrade, with an improvement in our daily life. Because if the life of tomorrow is to walk around with masks, stop consuming, stop traveling, stop investing etc. it is very sad the life that we are offered and in a pinch countries can do it. support and more, but emerging countries will not be able to.
It is really the great debate of the post-crisis period because we have this will to do degrowth, de-globalization and for me, it is very dangerous. We must not forget that globalization, even if it has its flaws and risks, has enabled emerging countries to increase their standard of living, their level of GDP per capita and if we break that and make money. decrease at the global level, obviously these countries will fall back into poverty so it is dangerous. Knowing that we must not do unbridled decrease. We need to rethink globalization and growth, but in a positive direction. With the reset we keep the basic device, we do not destroy everything, that’s precisely what worries me, we must save our world but not destroy it.
3) Does this reset sign the end of capitalism inherited from WWII?
We must not forget that since the Second World War, it is capitalism that has allowed us to get out of it, to rebuild with the Marshall Plan. On the contrary, there is communism which has completely collapsed, so it is clear that there is no photo Communism does not work, we already know it, it is not an alternative. This does not mean that capitalism is paradise of course it is not, but it must be improved. And it is true that since the 2000s, there has been an evolution.
Reset is a bit like the continuation of my book Un monde de bubbles. In the latter, I explain that what has been very dangerous in recent years is that we have created new bubbles to get out of crises. New stock, bond, public debt, cryptocurrency bubbles. My fear is that we will re-inflate these bubbles which have deflated a little, which is very dangerous. We must therefore avoid falling into this trap.
For me, the most dangerous bubble is not the stock market bubble, because behind it there are companies so it goes, it comes, it’s a roller coaster. What is very dangerous is the public debt bubble. Despite the surge in public debt, interest rates are extremely low and this creates what is called a moral hazard, that is to say that states are not encouraged to be serious. For Europeans, the ECB is buying back public debt, so why not continue like this. There is no desire for the sustainability of this debt and all the speeches of certain disempowering economists who say: ”but no the debt, who cares, everything is taken care of, the ECB will cancel the debt. ”That is totally wrong! The ECB does not have the right to cancel the debt, it is an incredible denial of reality! Above all, we must remain very careful, because this debt is left to our children and to future generations. And the real danger is that if you write off your debt you are a one shot gun, once you do you are no longer credible so for the new debt the interest rates will soar and it may even become the end of the euro zone, because it is clear that Germany or the Netherlands, for example, will not let this happen. So it can create a dramatic cataclysm. because it is clear that Germany or the Netherlands, for example, will not let this happen. So it can create a dramatic cataclysm. because it is clear that Germany or the Netherlands, for example, will not let this happen. So it can create a dramatic cataclysm.
4) We are therefore faced with a lack of responsibility on the part of certain States and certain institutions?
Absolutely ! The problem we had was that when there was the Subprime crisis, there was a very serious banking crisis so we had to put out the fire, that’s what we did. and very good, except that afterwards there were different strategies. In the euro zone, it took too long to activate the printing press, which led to a new recession in 2011, which was a serious monetary policy error by Jean-Claude Trichet in particular. The problem is that in 2015, in order not to slow down growth, we continued printing money, coupling stock and bond bubbles, with very low interest rates on public debt. This is what becomes very dangerous. We did the same thing with the pandemic, we first extinguished the fire but then we followed the same policy with forward flight. But beware of this public debt, there must be a return on investment. When we talk about Roosevelt’s New Deal or the Marshall Plan, of course there was public spending, but there was a strategy, investment, innovation, social and worldview, there for the moment there is none. I hope that will change, because for the moment we are putting in billions and we are saying: “get by”. As we saw during the crisis, French savings increased by more than 60 billion euros. We gave aid to the French but since he could not consume, they saved. Now is this savings going to be spent? I said it several times to Bruno Le Maire: ”be careful if you use all the cartridges during the crisis,
5) Do you think that we should review the societal vision of the economy and better explain to citizens how it works?
Exactly! It has been my workhorse for a long time. When I started, I was one of the first in France to democratize the economy. Because it is true that in France, we do not have an economic culture but rather a culture of class struggle. We are therefore not made responsible for the economy and on the contrary we should, we must tell the truth. It’s like this pandemic if we had told the truth from the start about the gravity of the situation, maybe we would have reacted better and we might not have done this dramatic confinement, which costs us extremely dear. It’s the same in economics, of course you need trust but you must not lie to people or deny reality. That is why I am saying that we need to empower leaders and all citizens.
We have just experienced a historic crisis since World War II, since the Crash of 1929 and behind we have social riots. So yes we must fight against racism but this may not be the time, that is to say that if we add a layer of societal instability to the crisis, our economy will not recover. not. It’s a shame, because if we all had this economic culture, we would say to ourselves “let’s go, we’re all in the same boat, we have to roll up our sleeves, we have to move forward”.
6) Does this book seem to carry a message of hope?
Absolutely because I think we have to keep a touch of hope, that’s my leitmotif, that is to say that we have to be optimistic but also realistic. If you are realistic, this is what allows you to be optimistic. There is a crisis, it must be called as such, it is certainly dangerous but fear does not remove the danger. If you know that you have a crisis in front of you, you will be able to react better and be able to get through it better by keeping hope. This is why in this new book I give advice to households and businesses in terms of economic and financial strategies. There will inevitably remain a part of the dark and the unknown. I often say this when there is a tsunami, it is when the sea recedes that we see the extent of the damage so it is sure that there will be breakage.
7) You are campaigning for a less exuberant world, why do you think it would be a better world?
Less exuberant precisely, that means that the bubbles are less dramatic. That is to say that today our world of bubbles loses the sense of reality. Today we have company valuations which are totally crazy and which have no relation to the results of the company, whereas normally the stock market must reflect the economic reality. Ccedil; has also it helps to set the record straight. The same applies to public debts, today we have interest rates that are much too low compared to reality, I often say that it is worse than Subprimes because for Subprimes, it is true that there are was a risk but there were high interest rates, so that means that if you only sold on time you didn’t lose money. There the danger is extremely low interest rates, sometimes even negative, we lose money. We walk on the head ! This is not at all normal. So this is where the world is more exuberant.
There is also a chapter which will surprise many I think, where I say that this overpowering of companies, of GAFAMs not to name them and of their leaders is becoming dangerous. Can we really let companies become more powerful than states? And finally impose their diktats. States will have to legislate, that we can levy taxes on these companies because all this is a real issue. Today it is a bit of the paradox of this pandemic, we had a bubble of GAFAM and everything that revolves around it and there with the pandemic it has reinforced them. This world is a bit dangerous, a bit extreme, that’s where you have to be very, very careful.
Also at the level of the distribution of wealth. There are old Franco-French demons, the problem is that those who are very rich do not invest enough and we must encourage them to do so but it is not at the level of public spending that we still need increase taxes on the middle class and the middle class +, we must leave them alone. So that’s a less exuberant world, that means where there is less gap and especially less overkill, which may be deserved but which become dangerous, so we have to legislate and besides I think that it is This is what will happen, there will surely be what we call in English spinodes, that is to say companies that will perhaps be cut into pieces. But it’s true that today we don’t stop complaining, we innovate yes but we have to keep control otherwise we fall into George Orwell 1984. That’s what I call my wishes. It should be the role of the State, of the public authorities, but as they are not efficient, they do not have the means to do so.