IREF - Institute for Research in Economic and Fiscal issues
Fiscal competition and economic freedom
Jean-Philippe Delsol pointed out on a recent article the problem of democracy in Europe. Instead of having Nanny-States trying to control its people, let the people speak its own mind.The Swiss referendum on executives’ high wages is the perfect example of a people using Democracy as it should without being monitored by political elites.
Italian populism is leading us to think about democracy in Europe: are the governments taking suitable decisions or are they taking advantage from their own people that were childished because of the Nanny State? Democracy is worth better than that as shown by the Swiss people.
Democracy is getting made. In Italy, almost all voters favored of either a clown, or a former communist or a young girls offender. The Italian President of the Republic who is a former communist too, witnessed this. Communism is not done yet. It wrecked Cyprus before being sacked, even if a billion euros bailout will have to be paid by European taxpayers.
The media are shocked and are accusing the European Union to enforce too much austerity: but it is exactly the opposite. Indeed, Monti has pathetically failed in the political arena only because it was not his trade. He was wrong to ignore it. Politics is so tricky.
Politicians were not too strict: they were actually not enough strict and acted badly. They did not keep their word. They lost common sense.
Even Chancelor Merkel betrayed the Christian Conservative that voted for her because she accepted gay marriage in order to do as everybody else. She is publicly enforcing a political austerity encouraged by the ECB president but she is enforcing a lax monetary policy using different means than the FED, yet as much lethal. Monetary creation keeping up both sides of the Atlantic is an illusionary crisis exit which is accumulating bombs that can explode at the first shot. If common sense is fooled, it will have its revenge. The growing monetary bubble will explode when nobody will expect it. And it will spread as an inflation and other lethal things. It will add up to the expansion of budget deficits in spite of speeches stating the opposite in order to calm down people abused by bread and games.
Democracy is suffering from its own corruption. It is shacking on its own foundation. It maintains masses in childhood. It decides for them and at the same time is building more en more restrictions. When the European Union condemns Microsoft to a € 561 million penalty because it did not encourage its – free – customers not to purchase its own software at the same they were getting its system, the French government is about to force both employers and employees to buy insurance that they will not be able to choose. The Government decides when competition is good!
In their recent book, Patrick Huerre and Mathieu Laine (La Frace adolescente, JC Lattès) are writing that “France is a teenager in crisis”, rebellious, lazy, self-destructor. Actually, it is a corrupted democracy, especially in France, that prevents its children to grow up while refusing them to use their own freedom. These are the premises of a new totalitarianism.
Democracy has some virtues though and is still a protection against tyranny when it really works. The French government supported the European project that limited executives’ wages. But it rejoiced wrongly and too fast after the Swiss vote of March 3rd. The Swiss people did not forbid high wages at 67,9% as the French government obsessed with equality would like us to believe. It actually asked that in companies that were on the stock market, executives and board members’ wages would be first agreed by stockholders. The Swiss people merely reintroduced the principle according to which the owners of a company can influence important decisions. The rule of “say on pay”, already enforced in English speaking countries, has been strengthened by the Swiss. This referendum is the example that other solutions are available apart from a 75% tax.
The Swiss vote also proved that masses can go against experts and politicians since the Federal Council and the Parliament were opposed to the decision without giving in into populism. Democracy is not so stupid when it can really speak its mind. Yet, Socialist Governments do not want this kind of democracy that could prevent them from taking decisions and keep power. For example, the 700.000 signatures against gay marriage were all dismissed since they went against a bill that the Elysee wanted to enforce no matter what.
It is only when give back to the people its ability to speak freely that our old countries will continue to grow instead of becoming childish and losing themselves.