Editorial: In the face of the Covid-19 crisis we need to rethink and rebuild our public finances differently !

1 A daunting challenge is undeniably bearing down on us as we fight our way through the Covid-19 pandemic. The health emergency is also a serious economic and social crisis, and once again public finances are on the front lines as they lie at the root of what is currently at stake. However, the public finance system is facing a completely unprecedented challenge. Admittedly, we have witnessed a series of economic crises and the transformation of the public finance model since the mid-1970s. However, we need to be incredibly vigilant as we examine the current crisis. Despite any similarities with previous ones, this current crisis is fundamentally on a different level because it was caused by a pandemic for which there is still no cure and no means of eradicating it. All we can do is erect barriers and put in place protective measures that restrict physical contact between citizens and that even go as far as quarantining them. This has in turn considerably slowed down economic development. On the other hand, the solutions we implement are systematically hindered by an evolving virus, which has been spreading erratically both in terms of its geographic footprint and time frame. As such, it has been incredibly difficult to design a public finance strategy against this backdrop. In a way, the pandemic lays down its law or, to a greater extent, forces everyone to constantly adapt to the economic and social consequences of the health measures taken to slow it down. At the same time, the situation is compounded by the fact that the public finance system must be understood through its relationships with other social, economic, legal, and labour-related components, among others. In other words, all of society’s stakeholders are concerned in one way or another.

2 It is clear for everyone that these public and private-sector stakeholders failed to assess the potential risks that we are now facing before this current catastrophe erupted. No one identified the sheer abundance and seriousness of these risks, the speed at which they are becoming increasingly dangerous or the financial costs they are accumulating. How did we get here? What do we need to do or avoid? A large majority of the population, including decision-makers and experts, are currently in a state of disarray. It seems that piecemeal solutions will only amplify our problems and reflect how powerless we are in this respect. These solutions need to address the particular complexity of our current situation and the overwhelming sense of uncertainty.

3 In addition to this current crisis, we are facing another one that is at first glance less visible: the global crisis of the state’s political model. More precisely, for around a little over the last forty years – since the onset of the crisis of the welfare state – political, economic and social leaders have never managed to establish a new order or balance between the central state, the economic and financial market, local and regional authorities and social stakeholders. Each player has adhered to its own doctrine, often within the context of corporatism and short-term goals. Society has continued to operate in “silos”. Little by little it became a system of “every man for himself and his country”, reflecting extreme individualism or, in other words, a patchwork of egoism.

4 In addition to the health, economic and social crises brought about by the lock-down and the complete or partial shutdown of the economy, we are also facing a crisis of the state, despite whatever appearances would have you believe. Since the subprime crisis and the more recent Covid-19 pandemic, state intervention has been seen as the solution for our problems and considered to be the last resort. This approach may seem rational and well-founded when we consider the capabilities of the world’s wealthiest countries, for example the United States, Germany, the United Kingdom and France. However, economic and financial might cannot prevent the shortages of goods and resources that afflicted hospitals and many other public services. We are therefore right to ask ourselves what is not working and what caused these shortages. Are we headed in the wrong direction? Is this trust in the all-powerful state a reflection of a misplaced belief, a figment of our imagination, or the idealised yet bygone era of France’s post-war boom known as the “Trente Glorieuses”?

5 States across the globe have called for increasing their debts to various degrees and sometimes by huge amounts. But if there is no economic recovery in sight, we can easily determine whether or not a given solution is viable in the long term if the measures implemented in various countries produce the desired results.

6 It is therefore crucial to plan for this possibility, reassess the model on which our society is based and, in particular, our public finance and public sector model through its relationship with the private sector. This is because states can quickly be overwhelmed if they cannot withstand successive shocks on their own and would, as a result, no longer dispose of the resources they need to survive. Risks have in fact proliferated in recent years. They are more diverse, frequent, numerous and dangerous than before. And it is more than just economic, financial and even health shocks and risks that threaten us. Others will soon appear or fuse together, some of which are already in the early stages of their development. For example, the demographic explosion, territorial fragmentation, global warming, growing social divisions, international tax evasion, etc. Addressing such challenges would require a different framework for our economic, political and social powers and another decision-making system. At the end of the day, it will involve building another public finance model. To achieve this, we must get rid of any prejudices and ideologies that are obstacles to mutual understanding. Too many false certainties end up negating the complexity that defines them and prevent us from responding appropriately to crises that break out and that are now multifaceted. While speeches and publications frequently conclude that certain events are associated with chain reactions, they are rarely tied to real-world consequences. Current intellectual attitudes with regard to the Covid-19 crisis are an example of this. While there are clearly many aspects to this pandemic, there has been no adapted approach to match its complexity.

7 Ultimately, while we are aware of the systemic effects within our societies, the resulting problems and solutions given do not link up to each other. However, while we urgently need to admit that the stakeholders in question objectively form a united front, our institutions also need to reflect this. We therefore need to redesign the decision-making process by setting up multifaceted and inclusive frameworks. We can currently observe that there is a patchwork of economic, political and social powers for which there is no institution where they can come together, plan and define common solutions to address crises, for example by developing a political model that mirrors the complexity of our societies. The health crisis we are facing should be the opportunity we need to reorganise public governance using a line of reasoning founded on the synergy between these stakeholders. We need to invent a partnership-based model with permanent advisory institutions or institutions with variable structures that bring together economic, political and social stakeholders locally, nationally and globally.

8 These are the foundations for the creation of a new welfare state that must be laid. We must urgently create a new political, economic and social balance because the world as we know it is threatened by Covid-19, not just individuals and companies. The societies and institutions we built over the years are now in an incredibly weakened state. Though, we cannot forget that artificial intelligence should help us effectively meet these challenges. We have only seen a sliver of the possibilities it has to offer us. If we are to truly believe that the world of tomorrow will not be the same as it once was, and if we are to trust the sincerity of the voices that can be heard from all over calling for the creation of a more united society, then the time has come to bring political, social and economic forces together to give a contemporary meaning to our public finances. It is now critical that we establish places where we can constantly think and work together at the local, national and global levels and that represent the diversity of the stakeholders in question.