Guy Sorman: The sources of sustainable growth and social equity

The first plenary session was led by Guy Sorman, French economist and philosopher. In this session, Sorman pointed out which actions should be taken in order to achieve a sustainable government.

He started by saying that economic is a science. Why? Economist are in permanent research, in an intellectual attitude and accepting criticism. That´s why economics is a science, not an ideology.

In free market economics “luck” is very important. If you were born in wrong place in the bad time, you are not lucky.

If this happens, try to follow the right economic policy. But, which is the right policy? Guy Sorman started with the things that does not work:

• Central planning, as Russia did for 70 years.
• Hiperinflation, that causes speculation and it is a tax for the poor people (very unfair). Monetary stability is better to investment in the long run.
• Lack of rule of law. There must be institutions that do not depend of the government. Government thinks in shorter terms than entrepreneurs and investors. Independent central bank and judges are essential. Also treaties and private property must be respected. Notwithstanding, he remarked “There is no free market without the state as the state is the one that makes the rules”.

Guy Sorman commented how nations continue arguing that they must tax a lot or not very much but, “no one knows what is better”. There must be some balance between welfare state and free market.

Trade is a key for development and growth. It has been argued that WTO should have regional treaties such as the European Union. The original idea was that “trade replaces war”. This notion worked in Europe (at least, until 2009) but not in Latin America.

Finally, he stated that “If you don’t have strong institutions, you have a weak economy” that’s the problem with European Union and how they managed the crisis. But, now they are creating this institutions that´s why the European Union will survive.