3. Vary the weight of public investment with the business cycle.

• In both private and public management, a new investment increases the inventory of the entity’s properties. An expense, whether recurring or new, has no such effect.

The rule on budgetary results, the next directive, concerns exclusively public revenues and public expenses, the latter understood to include the periodic allocations for amortizing public debt¹⁰⁹.

• At the scale of national economies, the most significant base 100 is total income before taxes. The weights discussed here are assessed against this total, for which GDP serves as an approximation.

Placement income is the smallest part of this total, and labor income the largest, once enough growth has produced this effect, as set out in the chapter Distribution. But if this effect, and another distribution — that of total labor income, set out in the chapter Wages — are kept outside what a nation’s economic policy and public-finance management take into account, then public redistributions inevitably proliferate in that nation, working against what makes distribution through income proper both just and beneficial¹¹⁰.

• Public spending consists of expenses and investments. Only an entity’s investments, let us recall, increase the properties — the assets — of that entity.

Let us also recall that amortizing public borrowing — that is, repaying the principal and paying the interest — belongs entirely to public expenses. This amortization, which comes after the loan is subscribed, takes nothing away from its immediate crowding-out effect: at the moment they are subscribed, public loans reduce by as much the placements financing private investment, lowering the contribution of those investments to growth and job creation.

• As long as the permanent stimulus through new placements in capital remains obstructed, the priority for growth is to remove these obstacles. They persist as long as the full remuneration of placement in capital has not been established.

How to bring this about is set out in the next chapter, against the belief in the systemic viability of a capitalism with the minimum of capital, the maximum of self-financing, the employer contributions — that fiction which helps lend credibility to the perpetual demand for a lower cost of labor —, the highly toxic tangle of derivative financial products, and money creation to defer the assumption of responsibility. Although the reforms prescribed in the chapters that follow are curative, they do not prevent periods in which unemployment rises again, as it did before they were carried out.

• A temporary increase in the weight of public investment helps shorten the periods when unemployment rises. Then, despite the savings mobilized to finance this temporary increase, the permanent stimulus described above speeds the decline of unemployment.

For savings, and the fractions of them placed in debt and capital securities, are elastic. They are all the more so when the remuneration and the security of these placements are raised to levels that make them honestly attractive while keeping them little exposed to losses. They are all the more so, too, when eliminating the excess weight of public expenses removes the expectation of a rising tax burden.

• The shift into declining unemployment makes possible a cyclical reduction in the weight of public investment. Using this possibility is sound economic policy, for the following reason.

A country’s prosperity reaches its peak by avoiding both the atrophy and the hypertrophy of public services, taken as a whole and by category of service (hence trade-offs that show governing and legislating are no sinecure). While unemployment is falling, reducing the weight of public investment helps avoid the hypertrophy of state services. At full employment, stabilizing that same weight helps avoid their atrophy.

• Fluctuating the weight of public investment with the business cycle yields the structural stability of that weight. Explicitly embraced and actually achieved, such stability builds confidence in the soundness of a national economy.

Alongside the permanent stimulus through direct placements in new capital, this long-run stability makes lighter public expenses, and refusals to make them heavier, more bearable — another major contribution to avoiding the hypertrophy of public services and of the public levy. This stability must, however, be secured at a high enough level to eliminate the most damaging delays and to prevent, in decreasing order of public usefulness, the accumulation of others. Statism and individualism, raised to the level of a categorical imperative, rest on unrealistic foundations.

• Choosing the countercyclical oscillation of the weight of public investment is a fundamental option of economic policy. A nation’s political class is the more strongly driven to adopt it the more public opinion calls for it.

Why political figures fail to build clear public majorities on the major technical options of economic policy is no mystery. Their speeches are too evasive and their views too unconvincing, both on what a national economy in good health is and on the dynamics that make it so.

No communication campaign can make up for a lack of clearly defined concepts and for ill-tuned resolutions.