Groeigedreven inflatie, in mensentaal

Als er economische groei is, volgt inflatie, maar hoe kan je dat aan een leek uitleggen?

Stel je voor dat een producent z'n productiviteit met 10% kan opdrijven en alles verkocht krijgt aan de lopende prijs. Er zal dan meer liquiditeit nodig zijn, dus de monetaire basis moet vergroten, zoniet is er hetzij een overproductieprobleem, hetzij deflatie als de prijzen dalen. Dat zou leiden tot het uitstellen van consumptie tot de goederen lager geprijsd op de markt komen, of er in elk geval van uitgaande dat het geld dat opzij gezet is, in de toekomst meer waard zal zijn. Dit is destructief voor de economische groei.

De centrale bank heeft dus geen andere keuze, wil ze prijsstabiliteit garanderen, dan om geld bij te drukken zodat de groei mogelijk is. Aangezien voornoemde producent meer middelen heeft, kunnen zijn leveranciers en dienstverleners daar ook een graantje van meepikken. Zij verhogen hun prijzen, maar niet hun productiviteit. Het gevolg: de nominale economie groeit, maar de reële economie niet. Het verschil is inflatie, namelijk ontwaarding van de munt. De centrale bank kan dit binnen de perken houden door de rente te verhogen via een hogere interest op de reserves die de banken aanhouden, waardoor er meer gespaard wordt, of door via openmarktoperaties overheidspapier te verkopen, wat geld uit de omloop haalt en bedrijven verplicht om eigen obligaties aan een hogere rente te verkopen, aangezien het aanbod aan papier is toegenomen.

Tegen beter weten in

Na de spijbelaars, de stakers. Het politiek debat in België verplaatst zich woensdag weer naar de straat, en ondanks de lichte frictie die zoiets veroorzaakt, is er geen sprake van een crisis. Want hoewel we jaar na jaar qua stakingsdagen en protestmarsen andere Europese lidstaten het nakijken geven, leidt dit niet tot de chaos die bijvoorbeeld Frankrijk teistert, of de sociale verdeeldheid in de rest van Europa die de Europese Unie bedreigt. Onze protesten zijn namelijk niet revolutionair, maar moeten gezien worden als een drukkingsmiddel dat deel uitmaakt van democratische besluitvorming. Terwijl president Macron met town hall-meetings het sociaal overleg persoonlijk probeert over te nemen, hebben wij in België het kader en de traditie om dit op een georganiseerde manier te laten verlopen. Geen gele hesjes, maar groene, rode, en blauwe. Het twistpunt nu is in de eerste plaats het interprofessioneel overleg dat sinds de vernieuwde loonnorm sterk aan banden gelegd is: door een veiligheidsmarge van minstens 0.5% in acht te nemen en de lonen te koppelen aan de evoluties in Frankrijk, Nederland, en Duitsland, is de vooropgestelde maximale loonstijging 0.8% voor de komende twee jaar. De wet laat niets anders toe.

In het IPSWICH-project[i] in het kader van het Belspo-BRAIN onderzoeksprogramma bestudeerden we de problematiek van werkende armen met een institutionele bril op, en daarin komt de collectieve loonvorming centraal te staan. Johan Albrecht en Bruno Merlevede legden in De Standaard van 2 februari al de link tussen de opkomst van de werkende armen en de onlusten in Frankrijk, die een kostenplaatje van ettelijke miljarden en meerdere slachtoffers met zich meebrachten. Aangezien het loon van een Franse werknemer die meer dan het minimumloon verdient niet automatisch geïndexeerd wordt, ziet deze bij elke prijsstijging de armoedegrens naderen en dit voedt het ongenoegen. Omdat het sociaal overleg in België veel verder staat, zijn de lonen welvaartsvast en is het aandeel werkende armen al twintig jaar onveranderd bij de laagste van Europa. De loonnorm van 1996 was bedoeld als een manier om die ondergrens te vrijwaren, maar tegelijk een ontsporing van de loonkosten te voorkomen. Vanaf 2009 heeft men met crisismaatregelen de marge echter sterk gereduceerd, met daarbovenop het bevriezen van de index in 2015, en sinds 2017 is de loonmatiging wettelijk verankerd. Ons onderzoek heeft aangetoond dat daardoor de loonverdeling onaangeroerd is gebleven: ook sectoren met minder groeimarge gingen immers de loonnorm vooropstellen. Als de vraag naar deze producten en diensten niet erg prijsgevoelig is, hoeft dat geen probleem te zijn.

Toch is de krappe loonnorm een onnatuurlijk gegeven: enerzijds worden de sectoren en bedrijven in slaap gewiegd of gaat men op allerhande manieren proberen de loonnorm te omzeilen, wat tot niet-geobserveerde ongelijkheid leidt, en anderzijds kan je geen stabiel loonaandeel in het BBP bekomen wanneer de groei van lonen geplafonneerd is maar de groei van kapitaalopbrengsten niet. Dat is geen duurzaam scenario dat men op Europees niveau kan veralgemenen zonder opnieuw op een crisis af te stevenen.[ii] Een minimale marge om economische groei om te zetten in brutoloonstijgingen en niet in cheques, auto's, aanvullende pensioenen of winstdeelnames, zou het sociaal overleg activeren en efficiënter maken, en het laat zelfs een verlaging van de belastingsvoeten toe. Binnen het keurslijf van de huidige loonnorm is zo'n vereenvoudiging evenwel onmogelijk. Meer principieel kan men zich afvragen of het niet in strijd is met het subsidiariteitsbeginsel om de loonvorming quasi volledig aan de overheid over te laten, met één vaste norm voor de hele economie, die enkel gericht is op kostencompetitie. De loonnorm is vaak geïnterpreteerd als ruggensteun voor de werkgeverszijde, maar geldt dit nog met de huidige arbeidsmarktkrapte, en wat als er geen akkoord komt? De sociale partners hebben er dus beide belang bij hun onafhankelijkheid terug te winnen. Alvast de vakbonden laten straks van zich horen, in navolging van de scholieren, tegen het beter weten in.

[i]Ipswich-project gefinancierd door Belspo-BRAIN (2018): 'Werkende armen en veranderingen in werk, inkomen, en de gezinssamenstelling'

http://www.belspo.be/belspo/brain-be/themes_4_Strategic_nl.stm#IPSWICH https://hiva.kuleuven.be/sites/ipswich

[ii]CAWIE III 'Inclusive Growth in Europe after Austerity' (2018), gefinancierd door de Europese Commissie https://hiva.kuleuven.be/sites/cawie3

Billionaires

It seems that in the world today, the 1% are escaping their responsibilities. They cannot get away with only philanthropy – billionaires should pay "a fair share" of taxes, which means higher marginal taxes on wealth. At the Davos summit, Rutger Bregman referred to the 91% income tax under Eisenhower.

Others will counter that the Laffer curve needs to be taken into account: at some marginal tax level, tax avoidance will become an issue. Sure, but we also got technology to counter this issue that Laffer didn't have at his disposal.

So naturally I'm in favour of taxation, for the simple reason that income inequality should be limited in order to maintain social equality and an inclusive economy to which each can contribute and in which each can consume. This is even a condition for growth.

Yet I don't agree with the 1% rhetoric. Instead, I believe that as organizations, enterprises, and people acquire wealth over certain thresholds, their influence expands for good reasons. The market is also some form of democracy, and as with other forms, like the electoral meritocracy, it has its pitfalls. However, with great power comes great responsibility. The accountability of the rich should go beyond paying taxes. They have an exemplary function and should contribute to society in a positive way, and this is a matter of morals but also of monitoring. The 1% should work together with the state to provide for the 99%.

Then I don't see a clear distinction between a national bank that takes money out of the economy to increase interest rates, and a single person or organisation that does the same. Then I don't see a difference between schooling projects funded by a government agency, or by a committee nominated by the 1%. Of course, it is not just that a very small number of people are a millionfold better off than a very large number of people, and when I say that they should provide for them, I mean that they should. In the same way, the people can accept or overthrow a king. The 1% should deliver or go down. What you pay to them is just an additional tax, and you should expect value for money, just as you expect from the State.

The real issue is uncontrollable wealth that distorts social life: an elite of 10% to 20% that enjoys the pleasures of this world based on exploitation of the ones below. They should be taxed more, because we expect the morals, but less the actions that we expect from the 1%. Let's call this group the 19%, and let them not believe they are the 1% in the making. They will never be if they don't occupy a natural monopolist position, as Google, Facebook, Microsoft in the digital world do, and a limited number of car manufacturers and petrochemical companies in the manufacturing and utility sector. The latter are identifiable, the former are anonymous but perhaps more pretentious. We can just take the yacht.

Four conditions for social dialogue

What makes collective bargaining work and what makes it worthy of institutional support? In a recent EU workshop, we have been discussing the case of Belgian and also possible lessons for other EU Member States. I will briefly summarize the discussion and draw my personal conclusions.

The social dialogue construction

I like to compare social dialogue with a simple building that has four walls and a roof. Most people will agree that a roof is almost sufficient as a shelter, but it needs the walls to support its function. Note that at the heart of social dialogue, which is bipartite (between employers' federations and trade unions) or tripartite (adding the state or government), there is always some form of collective bargaining. The terms are therefore often interchanged.

Coincidentally, we came up with four conditions for a solid structure for social dialgue:

1. Representativeness

This answers the question of who is sitting around the table. The legitimacy of social dialogue depends on the position of the participating actors. For instance, the unionization rate should be high enough to show the force of collective action, while the employers' density rate equally should be high to ensure enforcement of the agreements and no undercutting by rogue employers. It could be that the actors involve only represent a part of the economy or a limited number of companies.

2. Rules and procedures

Social dialogue can be an informal or a formal matter, but it should ideally take place within a legal or paralegal framework that sets out the structure, procedures, and rules. This should be clear, transparent, and with some degree of universality. In closed shop negotiations, the rule is that what is negotiated, only affect affiliated parties, and no other parties (e.g. non-unionized workers) are allowed. More developped collective bargaining has a much wider scope, leading to agreements that are binding to all parties, even non-affiliated, through legal extension. This means that the agreements, which essentially are private contracts, obtain the status of a law. This is the material aspect of social dialogue, answering the question how dialogue is done.

3. The process

The rules and procedures are an empty box that needs to be filled. This happens through a process of negotiation, and the contents answer the question what is the stake in the game. This is rather intangible, and relies to the influence the parties have, the sense of ownership and responsibility, the shared goals and trust in the system, and the ability to reach a consensus or compromise. Beside the fact that collective bargaining is essentially a power game, social dialogue also relies on a mutual understanding.

4. The outcomes

Social dialogue is sometimes an end in itself, ensuring information and communication about decisions that are taken by the organization, and allowing some codetermination. It may also reach further, contributing to the interests of an economic sector or the national economy, as well as other social goals (inequality, poverty, democracy). Social dialogue is justifying its existence by answering the question why it takes place. This also implies a cost-benefit calculation: as negotiations take time and take away individual degrees of freedom, which are replaced by collective arrangements, the benefits should compensate the losses. An easy example is an agreement that would need to be negotiated in every company and lead to similar results, is better done just once. Also, some agreements would be preferred by most companies if all others would do the same, but avoided if there was no guarantee that this would take place. For instance, higher salaries may respond to the reservation wage of workers, but a firm that implements the higher wage would be outpricing itself on the market, while others continue a practice that leads to a loss in the workforce and therefore for the sector, but at least manage to survive another turn.

Lessons for Belgium

The Belgian system of collective bargaining is a well-known archetypical example of post WW II social dialogue. It is the end of a buildup that actually started after WW I, where the working class organized its interests against the power of the ruling capitalist class. It is also a compromise between two ideologies: on the one hand a militant socialist movement that strives for a revolution, and on the other hand the corporatist, Christian, anti-socialist and even fascist idea of a common interest between workers and employers. It is a little known fact that indeed the nazi's spurred employee participation of employees in the workplace during the occupation of the country. Yet both the elements of opposition and interdependence are present as it is. For instance, collective action (strikes) is less constrained as in other countries, and trade union representatives are protected against dismissal, while at the same time, trade unions are represented in the OSH committee, in the company council (but without decision power), in sectoral and national joint committees and tripartite bodies.

An interesting observation is that the 'outside options' currently go in two directions. On the one hand, there is popular protest and the threat of striking, on the other hand, there is the state that represents the interests of the ruling class. As a side note, this is a critique of the state that liberals and socialists share, although the former are accused of being 'neoliberal' (e.g. effectively using the state to manipulate the free market), and the latter of being 'statist' (e.g. aiming for a maximal state), which is twice correct.

Either way, although social dialogue / collective bargaining is very well organized and institutionally integrated in Belgium, it's independence is not absolute. Even if it never was, and some 'grease' to facilitate bargaining has often been necessary, today this takes a legal form that explicitly constrains collective bargaining: because of a lack of trust by the 'third party', the state imposes a number of laws and procedures (e.g. on wage growth, training plans, ageing plans, gender inequality. To the outsider, or to the social partner that benefits from the state option, even if it is an agreement of last resort (in which case the negotiator only loses time by not reaching an agreement in his favour), this may seem wise. In reality, it is a loss of sovereignty and independence of collective bargaining, taking away the benefits of the system and mainly its flexibility, as the government is only a remote player. However, it is not only the lack of trust by the government and its ambition to plan the economy that reduces the scope of collective bargaining, but also the belief of the social partners themselves that collective bargaining will deliver the desired results or that a consensus or compromise is possible. Hence there is a couple of bricks missing in the third wall (the process), as they have been used to fortify the second (rules and procedures). The roof is still on the building, but it is more unstable now.

Lessons for Europe

The problem of best practices is that there is a reason why institutional structures have a certain form, and therefore a nice dress doesn't always fit on someone else. This is the functionalist view but it should not take away the ambition to converge. Yet it should be clear that the practices of Belgium, Germany, and the nordic countries cannot be immediately introduced in, for instance, the new members states with a much weaker tradition of social dialogue. Even if all parties would agree that the building consists of those four walls and a roof, and then allows social and economic development, there are no incentives to start building it if there are no immediate gains.

This perspective is most often totally lacking in the political discourse: the reason why workers join a trade union is not macro-economic growth. A union has three functional levels: the first, as a service provider; the second, as a representative organization; and the third, as a social actor. The first level, services, is what matters most: trade unions provide legal protection, voice at the workplace, and in the case of Belgium, do the administration of unemployment benefits, and aid in the shifts from and towards sickness leave, training, and retirement. The second level is, representation, is more important from a legal and institutional point of view - concluding agreements - but in countries where this is all that remains of workers' organization, it quickly fades out because of free-riding tendencies. The third level, social action, is ideological, and relates in part to the origins of the trade movements: one from the revolutionary socialist movement, one from the corporatist christian movement, and one from the liberal movement that recognizes the freedom to organize interests. At the third level, trade unions also contribute to democracy,  as the main player in the civil society, with a more direct link with the members in contrast to political parties that are periodically elected and where no membership fee is required. Hence, the vote that workers cast is 'voting with the feet', a saying by Lenin that was taken up by Tiebout and many scholars (Hayek, Friedman, Hirschman) later on.

Hence we should be careful on the one hand not to confuse the origins and the structure of the system (the Althusser argument). Other countries will not replay the history of Belgium, nor will it be possible to directly copy the structure, even if they have the finished building in mind. However, too often the statements of either party, whether it is the state, the trade unions, or business organizations, is that institutional traditions are too different and welfare state levels cannot be generalized, so that nothing should be undertaken. This goes beyond the fact that good ideas don't stop at the border and beyond the need for higher-level coordination of social developments in a unified economical sphere. Rather, a number of steps can be set to build up the four walls, so that already they provide shelter against the wind, if not against the rain. For instance: workers can gain influence at the company level, and discussions on OSH can lead to more safety as a direct outcome that is more efficient than legal formalism. Rules and procedures are developed on the go, and representativeness is an endogenous outcome when gradually more rights are given to the parties. In other words: the stepping stones are building bricks. The role of the state is rather to nudge and facilitate than to impose practices that lack foundation. This is not only the case in developing systems of social dialogue, but also, as outlined above, in mature regimes.

The labour share and disemployment

A Spanish unionist asked me what happens if productivity increases because of disemployment. Would the 'wage rule' still hold? The wage rule is that wages should follow productivity and inflation, in order to keep the wage share constant.

The answer is yes, because the composition of the work force and output have both changed. Suppose low-paid, low-productivity workers were dismissed, then the output per worker will increase, but as the high-productivity workers are already better paid, this implies a natural increase of the average wage. You don't have to negotiate anything. However, if there is an additional increase in productivity, because of productivity enhancing investments, that would be the basis for wage claims.

This choice implies that you stick with the 'single productivity' measure. Wage claims in one, suppose a labour-intensive, sector based on overal productivity growth will cause the labour share in that sector to further increase. Now, on the demand side it does not matter which sector delivers the disposable income, but at the labour market, deviations from the sectoral labour share derive from the production technology (the amount of capital and labour that is optimal for any production level). This implies that a shift in the structure of the economy will create imbalances: suppose well-paying sectors would entirely disappear and only the car industry remains with high output but low wages, then there would not be enough disposable income and either car prices would drop or wages should increase.

Marx' chicken and egg problem

Although I have read Capital, Vol. I, and I would recommend everybody to do so, it is actually very light on theory, and I never gave the economics much thought. My suspicion has always been that the so-called revolutionary economics of Marx was a description of value in equilibrium on a competitive market.

I am sure others have devoted proper attention to Marxist economics, but for the sake of amusement, and also because of the tiring ridiculous critique that a labourer can increase the value of its produce, according to Marx, by spending more time making it, I want to give it a try.

In economics, for profit maximisation, the first order condition for labour is that the wage (marginal cost) is equal to the marginal product (marginal revenue). This is very understandable: if an additional worker delivers more then he costs, the employer is most interested in recruiting the worker. Also, every worker before the last worker has delivered a greater discrete revenue, because of the law of diminishing returns, so that if all workers are paid the last (and highest) wage, the firm is still profit maximising.

Actually, this is a nice side-step: the firm has no other choice but to pay all workers this wage. The simplest example is when there are competitors, where workers can go to earn the equilibrium wage. In other words, and individual firm is a wage-taker,  and faces a perfectly elastic labour supply curve. But also in the case of a monopsony, the worker may quit the firm to be recruited back at a higher wage. What this implies is that the marginal cost of hiring an extra worker is actually above the supply curve. This is the reason monopsonists hire less workers at a lower wage, increasing their welfare but reducing overal welfare.

Either way, on the labour supply curve, the wage claims of workers are given. A worker will individually offer more working time for higher earnings. The price of one hour of work is the value of one hour of leisure. So anybody who claims that propensity to pay is the driving force of value is right and wrong at the same time: it is correct, but it can also go back to time and the willingness of employers to buy it from workers. And the employer is willing to pay according to the willingness of the consumers to buy the products produced. Hence it is a chicken and egg problem.

However, imagine a product is not in high demand at all, but requires exactly the same skills and schooling another product requires. The propensity to pay will be very low, and the product will not be produced, because the labour can be put to use  for another product at the desired wage level desired.

But then what defines the value of one hour of leisure? This might depend on what can be made and earned in that hour, which depends on what the consumer is willing to pay. Yet at the same time, it increases with schooling, that is a time investment, both of the worker and of his teachers. This investment has to be bought. Hence in both directions, again, we see that the product values the time, and time values the product. To me there appears to be no contradiction. One should know that the discipline of economics has evolved and great theories are now summarised in understandable graphs. The prosaic theories however, much like many continental philosophical ideas today, did not make the assumption as explicit and the interconnections between different markets as clear as do economic theories nowadays (or better, in a recent past, because the complexity of new theories has obscured the explicitness of assumption). Some people prefer that tradition, perhaps for political reasons, but for me it's not worth my time.

Super Mario en het pensioen op punten

Toen de drievoudige ex-wereldkampioen Mario De Clerck besliste om op zijn 50ste te stoppen als sportdirecteur in het veldrijden, verwees hij naar zijn voorgangers die geen eeuwig leven beschoren waren: "ik weet wat zij ervoor hebben gedaan, en hoelang zij van hun pensioen konden genieten, en ik weet wat ik voor de sport heb gedaan." Een goed verstaander begrijpt dat de medische begeleiding van topsporters niet noodzakelijk levensverlengend is.

Mario De Clerck zal zeker nog tijd nodig hebben om te schrijven aan zijn langverwachte novelle op basis van zijn fictief dopingdagboek, en hij maakt de juiste redenering: in plaats van alle burgers een gelijke loopbaan te geven, kunnen we hen misschien beter gelijkstellen in de periode waar men kan genieten van z'n oude dag. Tijdens de loopbaan moeten dan compensaties gegeven worden voor de effecten op de levensverwachting van een slopende baan.

Dat levert twee problemen op: ten eerste weet men niet precies wanneer men gaat sterven en is dat op zich een taboe-onderwerp, ten tweede is dit niet één-op-één aan een beroep te linken. Het huidige debat over zware beroepen gaat daarom over de verschillende pensioenleeftijd voor verschillende beroepscategorieën, maar negeert verder het feit dat hetzelfde beroep tot een verschillende fysieke en mentale belasting kan leiden. In het pensioensdebat is er daarom ook niemand die een plan heeft om de werkenden effectief in staat te stellen om te blijven werken tot de verhoogde pensioenleeftijd.

Hoe kan het wél: stel je voor dat we de wielersport als een aberratie blijven beschouwen, maar andere werkenden vanaf 55 de vrije keuze laten om op pensioen te gaan. Daarbij krijgen ze een basispensioen dat gekoppeld is aan de levensduurte, en een bijkomende verdeling van de pensioensafdrachten volgens het puntensysteem. Als men 40 punten heeft verzameld, tegenover een gemiddelde van 60, dan krijgt men dus 2/3de van een gemiddeld pensioen. Dit bedrag is ook nog eens degressief: na 15 jaar is de pensioenspremie bovenop het basispensioen uitgedoofd. Er staat dus een soort gelijke limiet op de pensioensduur. Bovendien kan men het repartitiesysteem altijd bekostigen, en heeft elke generatie er baat bij de beste economische structuur achter te laten om de koek te vergroten waar men later aan knabbelt.

Wat is het gedragseffect van zo'n systeem? Vooreerst zal iemand die langer denkt te kunnen werken, dit vrijwillig doen: hij of zij kan meer punten verzamelen, en zal verwachten minder lang op enkel het basispensioen aangewezen te zijn. Een andere werknemer zal echter door gezondheidsrisico's een lagere levensverwachting hebben, wat zich vertaalt in een hogere prijs van vrije tijd naarmate de jaren vorderen, en dus een hoger reservatieloon. Als het loon dat niveau niet haalt, zal men uit de arbeidsmarkt stappen, en kan men nog enig genot hebben van z'n pensioen. Mocht dat langer duren dan verhoopt, dan is de extra tijd mooi meegenomen. Bovendien zijn allerlei flexibele scenario's mogelijk waarbij men terugkomt uit pensioen en alsnog een paar jaar werkt. Om werknemers met een zware baan langer in dienst te houden zal de werkgever dus ofwel de arbeidskwaliteit moeten verbeteren, ofwel het loon moeten verhogen. Dat klinkt toch als een normale logica, ook voor veldrijders. In de huidige omstandigheden wordt hij tegemoetgekomen door de overheid, die een vroegere uitstap zonder meer goedkeurt, maar daarbij alle werkgevers en werknemers over dezelfde kam scheert. Het hele debat over burnout, stress, en de algemene jobkwaliteit belandt zo weer in de onderste schuif van het sociaal overleg, en de hoogproductieve Belgische werknemer zal blijven werken tot hij erbij neervalt.