In the
present system, face to a strong difficulties, a government has generally two
choices:
to do a
reform and face the problem or, to delay the reform.
In
fact, each reform has its risk of failure and the advantage of a government is
to avoid to solve the a hazardous situation and to perpetually delay the
solution.
It is in
fact rare to have people on the head of a government to have the political
courage to involve itself in a difficult reform.
One
classical example are communism government. After 30 years of Maoism, the
Chinese government realise the impasse of a centralize economy and manage to
conduct powerful reform to a market economy. The Russian government realizes the incoherence of the system during
Khrouchtchev in 1956 but it could not start
any reform before Gorbachev in 1985. The danger of the reform are such then
the Brejnev government prefers to do small adjustment and due to the physical
law of entropy, the system deteriorates. The reform starts with Gorbachev in 1985 at a
time when the Russian government did not have the authority to conduct political
reforms. On
the opposite, the Chinese government realize only after 30 years of communism
the failure of the system and the need to move to the market economy. The communism party starts to experience the free market in
Schenzen near Hong-Kong in early eighties and after noticing the creation of an
active capitalism communities and the development of the spirit of free enterprise.
The Chinese communism party gradually reforms the Chinese economy into a market
economy. The reform took place in a coherent and control manner and is incontestably
one a best success in economic and social management of the century.
Another
example is the “retirement system by repartition” of the western countries. The
system was inaugurated in USA after the war during a time when the authorities
of the state was at its best and the communism influence was high. In the
seventies, the demographic prediction extrapolates the failure of the system
for the years 2005 in USA. In doing a financial analysis, it appear clear that
the system was a nonsense which was done for the benefit of the starting
generation to expense of the last generation of the system. The system has also
an hidden debt which does not appear in the country budget. The Anglo-Saxons start in the eighties a large reform of the system to move the retirement
system to system coherent with the capitalism economy the retirement system by capitalization.
The Latin
country like France decides to stay with the system by repartition and so their
government did not change anything. A reform would have undermined the present retirement pension of
current retired people and so it would present a too high political risk in a country
where the opposite electoral forces are nearly equal. In 2002, the problem is
still there and riskier than ever. The number of people who may fall in poverty
in case of failure of the retirement system in much more than in the eighties. Nobody knows if a
government might succeed to reform the system or if France will bear a collapse
because of his retirement system similar to the collapse of the communism country.
Copyright 2002
Author: Hector Archytas