inequality undermines democracy and the market

“Inequalities undermine democracy and the market”, declared Noureddine Bensouda, Treasurer General of the Kingdom of Morocco at the world summit on public finances held on 1er and June 2 in Tallinn, Estonia and hosted by that country’s Ministry of Finance. The event was attended by leaders of this sector from all over the world, including Morocco, represented in this by the Treasurer General of the Kingdom, Noureddine Bensouda.

The head of the TGR recalled the many challenges faced by public finances, which have increasingly faced a series of crises in recent years in an increasingly turbulent and almost volatile world. Also, he specified, decision-making in the area of ​​public finances, which requires forecasting and visibility, becomes, in this context, a complex and difficult exercise.

Public finance officials responsible for the implementation of these decisions are, because of their expertise, assigned as advisers and must accompany political decision-makers and their actions. said Noureddine Bensouda. Then lamenting, the current economic and social situation rightly considered different from those known before that some compare to the crises of the 1970s , the Treasurer General of the Kingdom indicated that“it is clear that the solutions that worked at the time, namely the use of debt, will no longer work today”.

With two years of crises having weakened the whole world and, more recently, the war in Ukraine complicating the situation, there is a need for innovation to spend better, in order to maximize the return on investment (ROI) of public expenditure and to use its leverage for the entire economy.

These two years of health crisis show that we fundamentally need more spending on health and education… In short, spending centered on people. All subjects dealing with society are political issues, and in particular public finances, further indicated Noureddine Bensouda. Innovating in terms of public spending and making the right budgetary choices must also be accompanied by judicious choices and clear and fair strategies in terms of taxation and control of the public debt as well.

To view finance as an enabler rather than a constraint, politicians and public finance decision makers need to understand the environment in which they operate. I mean both the national and international environment. At the national level, it is essential to know well the real needs of the State, companies, households and civil society (or third sector), using institutions, tools and others… which provide precise information on the reality of society. This requires establishing a relationship of trust and real proximity that could promote exchanges and collaboration. And as such, the stronger democracy becomes, the more fully it plays this role. This would work better, as citizens have been found to have less trust in their governments in the most unequal countries.

Indeed, inequalities undermine democracy and the market. Politicians need to understand this. Moreover, they should be convinced of this and change their attitude towards inequalities. It seems obvious that in a country where the citizen feels supported, cared for and protected by the community, he is less inclined to seek the accumulation of capital, since he no longer feels the need for it. And this is the path that Morocco has chosen to follow, by generalizing the health and social protection system, all categories combined: illnesses, pensions, unemployment, etc.

At the international level, decision-makers need to have a good understanding of how the world works. They must adapt their mindset to these new realities. International relations are no longer the same and the rules, once commonly accepted, seem to be running out of steam lately. Protectionism is back. And one of the most liberal countries has had to put its hand in its pocket to mitigate the effects of the very particular situation they are experiencing.

Moreover, new elements are upsetting the existing balance, such as renewable energies and all the geostrategic issues associated with them. The weight of multinationals is also an important element in understanding the international environment, particularly through their influence on tax policies (in particular tax policies) and on regulations/laws in general. But, we must not forget the consumer, one of the main drivers of economic activity, because consumption habits are no longer the same as before. New businesses are emerging (electronic, digital, etc.) and digital currencies have profoundly transformed international markets and value creation models. However, this should not make us lose sight of the link between consumption and social stratification. Consumerism can create growth, but it is far from creating a healthy society.

Understanding all this is, in fact, fundamental in order to be able to put in place an environment that takes reality into account, an environment conducive to development and promoting the full development of all these actors.

To achieve these objectives, the law must be the emanation of a well thought out and well adapted law is necessary, because the central place of the rule of law and its role are essential. This ensures the security of goods and people and brings stability and reassurance at the national, regional and international levels. Security and political stability have taken all their measures and have shown once again that they are an essential need for human beings in general and for “homo economicus” in particular.

The ever-increasing interdependence of our economies makes these crises even more complex and difficult to manage. With disrupted supply chains, rising commodity prices including energy, inflation, etc., “good governance” of public finances has become more important than ever. It is important today not only to adjust the measures according to the current situation, but also to think about ways to make our economies more sustainable for the future.

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