Éric Pichet

Éric Pichet (born in 1960) is a French Business School professor specialising in market finance, monetary economics, fiscal economics, corporate governance and public sector governance.

Éric Pichet, 2013

Budgetary policy

From the Expensive 30 toe the Expensive 36

The Expensive 30

• Thirty years of lax budget policy (the Trente Dispendieuses) marked by soaring public spending in the 1980’s, the happy-go-lucky attitude of the 1990’s and finally, a policy of procrastination in the 2000’s characterised by the development of creative budgetary marketing strategies exclusively destined to delay the (always) socially and politically painful moment of addressing the accounts.
  • Le programme de stabilité et le pacte de responsabilité : la trajectoire des finances publiques de 2014 à 2017 Article in Revue de Droit Fiscal n31-35 (2014).

The Expensive 36

• At the end of the current five-year presidential term and the “Trente-Six Dispendieuses” (36 years of uninterrupted deficits from 1981 to 2017) far-reaching public expenditure reforms will be required. These will be all the more painful as they are far too late.
  • La trajectoire des finances publiques de 2014 à 2017 : impuissance du droit et vérité des comptes Article in Revue de Droit Fiscal n48 (2014).

The 2014 French Responsibility and Solidarity Pact

• The government is making another mistake, although purely ideological this time, by thinking about the responsibility pact in terms of contracts that would give rise to reciprocal concessions from companies. Indeed, the government cannot negotiate with companies because the decisions of business leaders are always individual. They are not civil servants working to orders, but free and lucid agents who make their decisions, particularly on investment and job creation, by individually assessing their risks based on the stability of the environment and the favourable outlook for returns on investment. By contrast, an effective government can, and must, create the right circumstances for investment decisions to generate the conditions for growth.
  • Le programme de stabilité et le pacte de responsabilité : la trajectoire des finances publiques de 2014 à 2017 Article in Revue de Droit Fiscal n31-35 (2014).

Tax policy

The Tax tolerance Threshold

• Despite a relative control over expenditure in 2013, the persistence of a very high public deficit (4.3%) was mainly due to an unprecedented and unexpected drop in tax revenue which confirms the existence of a tax tolerance threshold, specific to each country, and which may have been reached in France. Above this threshold, any tax increase has a counterproductive effect as compulsory taxes stifle activity by further weakening the economy’s growth potential.
  • Le programme de stabilité et le pacte de responsabilité : la trajectoire des finances publiques de 2014 à 2017 Article in Revue de Droit Fiscal n31-35 (2014).

Tax and Social Expenditures

• In the developed world taxation is always a political construct, a living organism that is always changing due to endless modifications imposed by lawmakers who are themselves sensitive to the public mood and to changes in social ideology. This is a haphazard scaffolding without an architect that lacks rationality and coherency, with tax and social expenditures- referred to here as social and tax expenditures - constituting a superstructure that is all the more complex given its roots in a tax system whose benchmark standards are subject to innumerable exceptions.
  
• In developped countries, successive governments have always acted like firemen putting out fires instead of architects designing new buildings. The tax loopholes they have created are responses to emotions provoked by a given event, or an attempt to ease social tension caused by taxpayer exasperation (and/or reflecting their power). Any rational global management policy must satisfy two imperatives: simplicity; and stability.
  • General Theory of Social and Tax Expenditures and Proposals for Recasting the French System of Tax 'Loopholes' Article in Revue de Droit Fiscal n36 (2016).

Structural reforms

The French Economy corsets

• Structural reforms and respecting European treaties are the two pre-requisites to reduce deficits in the long-term and boost the economy’s potential growth rate which, at around 1%, is much lower than the government estimates (close to 4%). It is the French economy’s ‘corsets’ that are to blame for the country’s weak growth (both potential and recorded) which itself generates the deficits and not the austerity policies made necessary by galloping deficits as partisans of the so-called demand- led policy think. The French economy is primarily ill because of its public finances.
  • Le programme de stabilité et le pacte de responsabilité : la trajectoire des finances publiques de 2014 à 2017 Article in Revue de Droit Fiscal n31-35 (2014).

Financial Institution Governance Theory

• Efficient financial regulation theories necessarily derive from lucid postulates about the general invariability of human nature, specifically where financial institution executives are involved (see the latest contributions from the field of evolutionary psychology). There is little chance that this will change much over the next few decades -but it is no use complaining, seeing as greed has always been (and will always be) one of the most powerful drivers of capitalist progress.
  • Quelle régulation financière pour le XXIè siècle ? Article in Le Cercle Les Echos (2012): Financial Regulation Theory (2012).

The Epistemology of Social Science (2011)

Éric Pichet. The Epistemology of Social Science originally L’Art de l’HDR, 2011.

• An inherent paradox of intellectual activity is that reflection (i.e.the phase were a research project is trying to process a complex problem) can be very time-consuming . Unfortunately, it is only when researchers are driven by a sense of urgency that they can make real progress.
  • p. 53.

• The aptitudes needed to conduct a real research project are fundamentally different from the ones needed for purposes of scientific vulgarisation (like education). This is because above and beyond a capacity for understanding problems and thinking and expressing oneself clearly – something that every good teacher has –an enormous amount of perseverance and stamina is necessary, and above all a scientific approach rooted in real inventiveness.
  • p. 87.

• Common wisdom holds that the most complicated thing in the universe (asides fom the universe itself) is the human brain. In actual fact, however, other objects are even more complex – starting with human society, especially today’s hypermodern society, a product of thousands and even billions of human brains; not to forget globalisation and the Internet.
  • p. 115.

• Misapprehensions about the crucial question of whether Management constitutes a scientific discipline stem, in my view, from the multiplicity of perspectives involved: theoretical; normative; technical/educational; and practical. This makes is far too easy for critics to deride practical advice developed in this field, something they assimilate far too readily (and erroneously) with ready-made solutions, ignoring the epistemological vision underlying all management studies.
  • p. 141.