The importance granted to two major international meetings, the Roma G20 which has just been concluded with several agreements, and the COP 26 which will be held in Glasgow shows to which point, regarding economic and environmental issues, States action is recovering its essential character. It is a major turnaround compared to the last twenty years when the “liberal globalization” had essentially been based on the decisions taken by private actors, sometimes managed by the central banks whose independency against any public intervention was granted. The Keynesian receipts were sent back to the history sidelines and free competition between actors was considered as the only way to reach the best balance. The two crises the world is confronted with, the Covid-19 pandemic and the threat of climate warming have led to a radical turnaround. So it is not surprising that the two great countries which have not renounced at all to manage their economies, Russia and China, did not feel themselves as committed as the other ones and did not send their head of State.
To cope with the sanitary crisis, the States, atop of the measures regarding persons protection, have immediately spend huge amounts of money to allow enterprises to protecting themselves against the brutal activity falls which were hurting some sectors and to taking into charge employees who had lost their jobs. Everywhere public deficits have leaped. To make their financing possible, and to avoid that at the sanitary crisis would be added a financial crisis, central banks have launched State Bonds purchasing programs with a double consequence: States had at their disposal the necessary resources and, especially, with near-zero interest rates. In Germany, the government has even decided a temporary reduction of the VAT rate. In France, the State has offered to the enterprises which were the most affected, its guarantee. So they can borrow from their banks the necessary loans to survive and to keep their know-how until the day when the recovery comes.
At last, the States have mobilized themselves to give to their citizens the masks allowing to slowing the development of the pandemic and the jabs, once these ones were available, in order to offer them the indispensable protection for the return to a normal life. But as soon as the governments have been able to note that the pandemic seemed to be under control, they went to the second step of their action to strengthen the activity rebound. In Europe, it was the Rebound Plan with 750 billion euro having, for the first time, Community financings. In France, the government committed itself to support investments for an amount of 100 billion and in the U.S., it is the Bidden Plan, initially proposed with an amount of 3700 billion dollars but which has been divided by two to get the Congress approval, which is not yet quite done. The most revealing point regarding the mentality change is the explicit reference to the Roosevelt policy. Elected in 1932, he followed Keynes advices and launched the first rebound plan in the history to get out the country from the 1929 crisis.
The world has changed for a century. The economic thinking must now concentrate itself on the most efficient intervention tools because the great comeback of the State intervention, dedicated to give to the related countries a balanced growth trend will last. It is all the more unavoidable that the world is confronted to a second challenge, the climate warming, and traditional market mechanisms have not, until now, lead the economic agents to adopt appropriated behaviors and to make the indispensable investments to reach the objectives.
So the stake, for the COP 26, is to check that each State will propose concrete measures and give the proof of its credibility to put them into practice according to a precise agenda. This first regards energy transition which must be based on the reduction of the use of fossil fuels, which will generate, as it has been shown in the report of the French network operator, RTE, an increase of the power consumption. The States will have to support the necessary investments and cope with the social unrests which will notably come from the indispensable closure of the coal and the brown coal mines. France has known how to do it in the Eighties through the proposals of social measures and reconversion programs.
The second part of the public action, and which, itself, must be examined at the international level regards the mechanisms to be put into place to incite household and enterprises to reduce their fossil fuels consumption. Regarding that point, national statistics are misleading. A country will emit less CO2 if, instead of producing concrete, for example, it imports it. It is why an imported carbon taxation mechanism is indispensable if we want to allocate with justice the efforts asked to each country. It will also necessary to take into account the past because it is the stock of greenhouse gas accumulated in the atmosphere which is at the origin of the climate warming and not only the yearly emissions. The pressures, today exercised on China and India for instance, are not quite founded because if these two countries are now at the origin of the emissions growth, their share in the inventory in the atmosphere is far from being equal to the developed countries one since the beginning of the industrial era.
The States will have to commit themselves or to support the indispensable investments and not to base their action on hazardous technological bets about which it is impossible to forecast their success or their failure. Regarding the power mix, there is no more real debate. Renewable, to the exception of hydraulics, are and will remain for a long time intermittent until we know how to constitute the huge storage capacities necessary to guarantee supply security. No country is ready to take the risk to see the alimentation of reanimation rooms cut off in hospitals or the elevators in buildings. Nuclear power, for countries which master the technology and where public opinion is convinced about its usefulness and its safety is a solution. The other way, which allows to going faster, is the reconversion of the fuel and coal-fired power plants into natural gas power plants. That means the closure of the mines, accompanied with social measures. In Europe, that will hurt Germany and Poland. As at the time of the reunification and of the admission of East European countries into the Union, a reconversion plan supported by Brussels would be worth being considered.
The States must at last find the good incentives to make situations and behaviors evolving, but to the difference of the energy transition, the process will be much slower. The example of homes isolation is revealing. We are happy in France when a given year we have succeeded in isolating several hundred of thousands ones. But as the total number is more than 30 millions, it means that it will take more than a century to reach the objectives. So the State must put in place adapted measures to each occupation status, individual houses or buildings, multi-property or not, owner or tenant to accelerate the trend.
Whatever it is about to cope with a pandemic or to make the country economy rebounding or to face the climate challenges, the States and so their leaders, in the coming years will recover a central place to guarantee health, prosperity and social progress to their citizens. France is at the eve of a presidential election. Let’s hope that the political debate will know to concentrate itself on these essential issues.