Without being an economist or civil servant in charge of financial questions or an MEP speaking on behalf of those who elected him, this simple non-specialist observer has, nonetheless, followed the crisis closely and is capable of formulating a number of rather unorthodox remarks.
1. Why restructuring public debt may at first appear ill-advised Should banks and other bodies that have financed or funded less solid eurozone countries at particularly high interest rates consider it abnormal to lose some of their funding if the borrower is in difficulty? Should the investors who have benefited from these rates find it abnormal to lose out in these circumstances too? Any banker of good faith, when a saver informs him that he intends to put his savings with the former, poses (or should pose) the customary question: do you want an ordinary “family man's investment”, which guarantees a modest but safe yield or a more risky investment with a much higher return? The person who chooses the second alternative must be aware of the risk they run: they benefit from a considerable “return on investment” but with the possibility that the conditions for repayment prove more difficult. Remuneration, which is significantly above the normal rate, is only justified if the conditions for this risk are accepted. If the contrary occurs, it is an example of the crime of usury (which according to Dante is punished by being sent to hell).
These considerations lead me to consider that restructuring debt in the circumstances mentioned above can represent a logical and normal conclusion, implicit in a pact between two parties to a transaction. Obviously, the lender can subsequently choose to refuse to provide any other financing. Within the EU, however, solidarity mechanisms have finally been put into place or are being planned, which imply either the issuing of Eurobonds, a common guarantee for loans to countries in difficulty, or maintaining the decision already taken by the European Central bank (ECB) to purchase treasury bonds from a country experiencing difficulty. Obviously, the counterpart to this solidarity is an imperative respect of the rules that have been put in place together and agreed to by all, with regard to budgetary deficits, and an increasing degree of common governance.
These are not constraints imposed from the outside but rules that have been freely agreed to: those who do not respect them exclude themselves from these guarantees and have to take responsibility for their own spending.
2. Let's not forget the positive aspect of reducing public spending. Austerity programmes in most EU countries provoke protests whenever public spending is reduced. This reaction is understandable and often justified. It is probable but not altogether certain that the pace for re-establishing budgetary balance will be slow and that the timetable for reducing deficits will be made more flexible. Nevertheless, we need to recognise that the cleanup operation also has positive aspects because analyses have revealed the existence of incredible abuse and waste. Getting rid of this or at least reducing it, is an enterprise that promotes public health. In this respect, constraints are positive because it is honest citizens that suffer from the irregularities revealed.
The list of abuse and waste should be broadly publicised. Those who claim to be blind but read the newspapers or drive a car, early pensions which could be described as “youth pensions”, superfluous bodies that have benefited from public funding for so long yet no longer perform a useful role - all this is almost part of our folklore, together with scandals involving the abusive use of public resources as denounced by the European Court of Auditors (which occur at both national and European levels). Tax evasion goes without saying and it is sometimes of such an incredible scale - and not only in Greece.
We shouldn't be listening to those who are protesting, because those who have been using public money abusively are mixed with those who have valid reasons to complain. The welfare state has created a massive category of bogus beneficiaries, who are sometimes hidden in the welcoming layers of bureaucracy and are sometimes boastful and almost proud of their exploits. Worrying about the risk of austerity hindering economic recovery is justifiable but let's not forget that the most dangerous enemies of healthy growth are abuses, wastefulness and inefficient public spending. The finance minister of a large member state recently asked: “How can there be robust development in a country with a population of 2 million, with 700,000 people benefiting from invalidity benefit and which costs one percentage point of gross national product? And what about tax evasion, which removes resources for the future from research and the universities?” Austerity as a cure could provide an opportunity for improving management in a number of member states.
(F.R./transl.fl)