Читать книгу TOO MUCH MONEY - Gregory J. McKenzie - Страница 1

I was in Paris one afternoon in May of 2012. It was a city that was recovering from the Great Recession. Many construction sites were still idle. But the tourist were back in large numbers. Walking up from the western side of the Arc de Triomphe, I saw that the sun was being reflected off this massive structure. It made the façade a brilliant white vision. As I was on the less commercial side of this Paris monument, there were locals in their cars but few tourists. This was a scene of a busy Paris street just before rush hour.

I walked past the Arc de Triomphe to the other side. Now I could see nothing but tourists. In this part of Paris you will walk past the most expensive retail shops in Europe. At least for these tourists, the Great Recession was finally over. Most of France was in an economic upswing cycle. Globalization was enabling tourists to buy expensive goods, offered for sale in high rent retail stores across Paris. These tourists, including me, had flown into Paris from all over the world. It was a Paris with locals still scared by unemployment during and after the GFC. Signs of urban poverty were everywhere. There was still incidents of civil unrest. But many living in Paris in May of 2012, thought the worse days were over.

I walked among tourists from Asia (but mainly Japan), the Middle Eastern, North America, Western Europe, South America and Africa. In fact, people from all over the world had come to see this great city. They collectively outnumbered the locals that I recognised walking on the streets of Paris. I met South Africans, British and New Zealand tourists at my little hotel. Many other tourists had walked from their own hotels. Some were driving their expensive cars into expensive parking basements. The rest got taxis, the Metro or braved the beggars by waiting for buses. Americans piled into coaches that seemed to arrive at the Louvre at the same time. Lining up to see the great buildings was mandatory.

Over the entire calendar year of 2012, there were 83 million tourist visitors to France. Most of them visited the wine regions; but in Paris there were over a quarter of a million local workers engaged in servicing the city's tourism industry. All this added a full 7% to France's annual GDP for calendar 2012.

One morning in May of 2012, I had walked from my little Paris hotel that was located in The Republique quarter. On my walk to the Louvre I went past two major railway stations. Then I visited two other major tourist locations before crossing over the River Seine. Near the Champs Elyse, the boulevards were packed with pedestrians. Being the middle of a spring morning they were mainly tourists. The boulevards were clogged with traffic. Metro trains left stations fully loaded, yet it was not peak hour. Even street stalls were doing good business off the tourists.

As I walked past a fair that was clearly only temporary, there were African migrants selling items from their meager possessions. Mothers with their children were manning the stalls. Second hand items were being offered up to passing tourists. None of this was considered unusual by the few jaded residents who happened to walk past my position. Unlike the tourist they were tolerated but rarely appreciated. That was 2012!

In 2020, during the COVID-19 lock downs in Paris, it was anyone’s guess how any local businesses would survive. Tourists were frantically leaving for home ports. Even locals were staying in their homes. Schools, train stations, churches, famous tourists sites and even sporting venues were nearly deserted. On May 14, 2020 the French Prime Minister announced an 18 billion euros package for the tourism industry. He was quoted as saying:

“What is good for tourism is often good for France, what strikes (at) tourism strikes (at) France.” (Edouard Philipe, May 14, 2020.)

By 2021, the tourists were back but the people of Paris, and their President, started to notice how the most expensive street in Paris was getting to look like it could use a make over. So a plan was put in place to revive the look of the Champs Elyse and reduce traffic flows. Of course there was the Paris Olympics to consider, but this area was once loved by the locals. The French Government wants it to return to its former glory days.

Over in London, my second port of call back in 2012, the Olympics were a dim memory. In 2012, 500 000 people would arrive daily to walk around the city of London. They would come on trains, in cars (after paying the city congestion tax), on buses and in London cabs. Again I was one of them having arrived on the Euro rail train from Paris.

Tourism accounted for 9% of Britain's annual GDP. Over half of all tourists to Britain visited the city of London. But after March 2020, the lock downs saw the number of daily arrivals to the city of London fall to just 25 000 commuters. Tourist were either, stuck waiting to get a flight home, or, stuck at home with useless London hotel bookings.

No lock down can last forever. National economies require money to circulate for their survival. People had to be allowed back to work, students back to schools and sportspeople back to large venues. But some things could not return to the old normal. Tourists continued to stay home in droves. Hotel rooms remained unoccupied. Planes were grounded and parked away from airports. Trains, once filled with tourists, often ran half empty. The only congestion on the roads was due to all the bikes. It was estimated that only half the tourists turned up in London that would normally arrive in May. The London CBD was like a ghost town. Office workers were still being directed to work from home.

Governments often fight today's recession with yesterday's policies. Having survived the GFC and the Great Recession; a lot of governments were ready in 2020 with the monetary policy stimulus. But this time they were also ready to abandon any attempt at fiscal consolidation. This was due to the lessons learnt in 2012, when a double dip recession occurred in some countries. By April of 2020, large budgetary stimulus packages flowed like water from a dam. Yet unemployment rates remained high, businesses failed and private investment ceased.

Answers were as hard to find among economists as vaccines were among clinical scientists. Orthodox economists were all for using the latest monetary theory to increase the money base. Modern Monetary Theory had grown out of the quantitative easing and negative interest rate initiatives that had been used by central bankers since 2008. Keynesian economists insisted that only large budget deficits could revive depressed economies. Behavioral economists called for policies to overcome any panic buying and selling. Welfare economists warned governments that they would have to allow businesses to fail.

Politics will decide what action is approved, as well as how it is to be funded in 2021 and beyond. Politicians have become accustomed to new government bond rates at or below zero interest rates. They misinterpret this as being “free money”. Yet the trillions of dollars in debt has to be repaid. Economists can only suggest possibilities and warn against dead end packages. But this pandemic will impact on everyone. So the more everyone knows about economic pitfalls the more likely they will survive whatever is coming.

Gregory J. McKenzie

2020