Final declaration of Le Cercle des economistes

12 proposals for a social compact of progress

The challenges raised by the Rencontres Economiques d’Aix 2017 are strikingly urgent.  Technological change and globalization have brought about unprecedented wealth, but with its long ignored suffering: democracies in jeopardy, unequal access to fundamental goods and services, work polarization, geographic imbalances, and environmental risks.

Prosperity is not merely about the search for material wealth, nor can it be summarized by the usual mentions of inclusive or sustainable growth. It relies on a humanist and sustainable social compact, balancing the necessity of technical and economic progress, on the one hand, with the preservation of freedoms, natural resources, and international openness, on the other hand. It should strive for the flourishing and realization, throughout one’s life, of individual abilities.

Despite a global economic recovery, threats jeopardize the three core pillars of the tryptic of prosperity. Institutional foundations are questioned, and nation-states’ margins of maneuver are limited; the social compact is endangered by the polarization of labour markets; and environmental risks as well as ethical interrogations about new technologies threaten our trust in progress.

Over the past five decades, technological progress and globalization supported an unprecedented economic growth, first in Western societies, then in the rest of the world. Even beyond material gains, life expectancy increased by twenty years, extreme poverty was divided by four, and women’s rights substantially increased. However, vast segments of society remained left behind by this prosperity. Half the inhabitants of the African continent remain without access to electricity. Emerging countries witness alarming levels of inequality and air pollution. In advanced economies, as labour market polarization, urban concentration, and ecological threats materialize, inequalities of opportunity breed political frustrations. Between these two worlds, migration flows stemming from insecurity, ethnic and religious conflicts, and climate change, pose a challenge to global cooperation.

Thus the opportunity given by the context of economic recovery, and the new political landscape in Europe and in France, should allow us to draft the premises of a new social compact, based upon our confidence in human progress, and guaranteeing equal opportunities throughout individual lives. It should rest upon three pillars: ensuring freedom of exchange, invention, circulation, enterprise, as a primary goal; protecting and helping those excluded from prosperity; and maintaining a spirit of experimentation and rationality. Building upon these tenets, the Cercle des Économistes chose to ask the question of shared prosperity during the 17^th edition of the Rencontres Économiques d’Aix.

Emergency reactions to the crisis, which punctuated the last decade, now leave room for the invention of a modernized model of social market economy. Economists should take part in this effort, under the guidance of three principles: defending an open international economic order; building a common European home, based upon compromises which respect national sensibilities; and a structural reshuffling of the French economic, social and political institutions. Under such values of shared and humanist prosperity, the Cercle des Économistes offers 12 avenues for shared prosperity.

I. Reconnecting with a spirit of progress: aiming for mass flourishing

1. Reviving the dialogue between innovation and education

• Launch a digital education Marshall plan for primary schooling; encourage pedagogical innovation
• Allow researchers to privately exploit their own patenting rights, including in the public sector
• Create a European network of new businesses incubators within universities

2. Curbing the excess power of “superstar” firms, notably in digital industries

• Create transnational regulation agencies in high-externalities industries
• Establish a European agenda to protect data privacy, harmonising existing national legislations
• Set up destination-based taxation for large companies in the digital sector to fight profit shifting

3. Open financing channels massively to currently excluded populations

• Ensure financial inclusion in emerging countries, and facilitate assets registration through the use and transfer of innovative cadastral technologies (blockchain cadaster in Nicaragua…)
• Entrust the Bank for International Settlements with the regulation of crypto-currencies

4. Revolutionize our conception of the State as an efficient instrument of prosperity

• Immediately implement the investment-friendly capital income tax promised by President Macron
• Rethink the perimeter of public intervention, restraining State investment to where the market fails
• Implement a principle of systematic autonomy and mobility for public service agents

II. A new impulse for environmental and social responsibility

5. Make environmental protection a priority, preserving the gains from the Paris agreement

• Replace subsidies to polluting energies with compensating transfers, using the Green Fund
• Create a “European Climate Corridor”: towards a common carbon tax of 50€/t in 10 years

6. Invent “smart cities”, associating local populations to planning decisions

• Constrain operators (Uber, Airbnb, as well as classical public services…) to share all collected data with city services in view of their use as planning devices (car use, energy efficiency…)
• Design cooperative institutions across large metropolises, modelled on the COP21 NAZCA platform

7. In France, reshape social dialogue within the company

• Promote consultative discussions about firms’ strategy, with elected delegates representing workers and local authorities, removing the “union monopoly” restriction
• Encourage firms to open equity participation to workers, while preserving risk diversification

III. Guaranteeing a lifelong right to equal opportunities

8. Make our higher education system an engine of social mobility

• Reinvent technical higher education, making the IUT last 3 years, including one of apprenticeship
• Implement a meritocratic orientation system, allowing universities to select students while offering priority placements to the top 10% students in every high school

9. Establishing an active mobility and migration policy in Europe and in France

• Coordinate European migration policies: a European refugee status, information-sharing on emergency housing capacities, strengthening Frontex contributions…
• Get rid of levies on housing sales (droits de mutation) in the case of work-related moves
• Ensure absolute portability of social housing rights from one town to another

IV. Restructuring international institutions to revive cooperation

10. Investing in basic infrastructure to accelerate development

• Refocus global aid towards universal access to drinking water and electricity within 15 years
• Finance this investment program through a downscaling of inefficient agricultural subsidies in Western countries, while preserving “green” incentives

11. Creating a true European Jobs Union, with renewed protections and opportunites

• Set up a European New Opportunities Fund to respond to industrial transformations
• Explore a European Jobs Union, with a European complement of unemployment insurance

12. Boosting the capital markets union project in Europe, and creating a European Nasdaq

• Forget about past debt mutualisation, but create safe EIB debt to finance a new Juncker plan
• Aim for the harmonization of bankruptcy law and bilateral tax treaties with extra-European States