In his speech to Congress on Wednesday, April 28, Joe Biden solemnly spoke these words, after pausing for a short time:
“My dear fellow Americans, runoff – the economic theory of runoff – never worked. It’s time to grow the economy from the bottom and the middle ”.
And the American president, who is celebrating his first 100 days in power, has proposed to parliamentarians to cancel the tax cuts granted to the richest under Donald Trump. A way of closing the coffin of the “Reaganomics”, this approach initiated forty years ago and which has permeated the economic policies of very many countries since then.
According to the promoters of “trickle-down” (translation of “trickle-down”), lowering the taxes of the better-off would benefit everyone, including the poorest: aren’t the rich those who innovate and create businesses and jobs ? Those who feed this savings that will finance the investment? No economist has ever defended such an idea so bluntly, but it is the one that underlies many speeches extolling the need to “release the forces of innovation”, to “create a shock of confidence” or to “Strengthen the offer”.
When Ronald Reagan and Margaret Thatcher championed this approach in the early 1980s (the term “trickle-down” dates back to this time), the rest of the Western world followed suit. Including the socialist France of François Mitterrand, jostled by this liberal wave from the West. Question: will the pendulum swing that Joe Biden has just initiated at the start of this strange year 2021 also sweep the Old Continent?
He puts an end to 40 years of ultra-liberalism: Joe Biden, the new Roosevelt
In his speech to Congress, the US president indicated the new paradigm he intends to adopt: “From the bottom and the middle out”. The economy must walk from the bottom up, from the middle out. He has walked the talk by gently spreading his arms outward. The “middle-out economics” refer to a very precise approach, the one defended in 2013 by a former pen of Bill Clinton, Eric Liu, and a venture capitalist, Nick Hanauer.
In an article published in the journal “The Atlantic”, they defended the idea that it was necessary “Unravel thirty years of a terrible policy” and refocus on the real fuel of the economy: consumer demand from the middle class. They found that the abundance of profits had never been an incentive for companies to hire, unlike the abundance of customers. On Wikipedia, there is a notice in English on “middle-out economics”, but it is still underdeveloped and it has still not been translated into other languages …
If the change of paradigm desired by Biden is emulated in other countries, Macronian France risks being completely out of step. The “streaming theory” colored the policy of Emmanuel Macron from his arrival at the Elysee Palace, when he defended his tax reforms, the partial abolition of the ISF and the flattening of the tax on the earnings of the capital. Certainly, in 2018, Emmanuel Macron ostensibly distanced himself from this word of “runoff” which pursued him: “I never reasoned in this way, you never heard me speak of runoff”, he said in a television interview.
But this is the idea he was defending in presenting his reforms a year earlier. “These tax measures aim only for one thing: to stimulate investment and innovation”, he explained. Or : “I believe in the roped party. There are men and women who succeed because of their talents […] If you start throwing stones at the front of the rope, the whole rope goes down. “ While the Minister of the Economy and Finance Bruno Le Maire abruptly increased: ” “The French economy needs capital”, well, we tax less capital. ”
Macronian tax policy, which blew up the incomes of the richest 0.1%, did not gain popularity during the Covid-19 crisis, to say the least. The French are today 72% to want a tax on high incomes, according to an OpinionWay survey. But the government refuses to open this path. One year before the presidential election, in the midst of a health and social crisis, and while the United States is initiating a long-awaited ideological shift, the tenant of the Elysee does not plan to put his costume of “president of the rich” in the closet. .