Professor @EHESS_fr & @TSEinfoPast
Président Association Française d'Economie des Transports
Conference Director of the World Conference on Transport Research
I have argued for the introduction of a specific defense tax to finance at least some fraction of the additional European defense effort, the rest being financed by debt.
There are two reasons for pushing such a tax. The first is economic. As the defense effort will, I am afraid, last a long time, it will eventually have to be financed by taxes. Best to start today. The second is political and, in my mind, more important. I think it essential to send the signal that defending Europe is not free. (To be clear and avoid the usual reaction to higher taxes: French deficits must be reduced, but one can reduce the deficit and still introduce a new tax if justified).
But I have just learned something interesting: The French constitution forbids the use of dedicated taxes. (Giscard d’Estaing cheated and introduce a “taxe secheresse” in 1976). And, indeed, the public finance textbook tells us that such dedicated taxes are a bad economic idea.
I wonder whether we should not revisit this stance. If people know where their money is going, they may be more open to contribute.
I made the same argument, with Jean Tirole, for rethinking inheritance taxes or, more generally, taxes on donations: If people knew that when they give one euro to their kids, they have to give 20 cents to a fund aimed at improving the education of poorer kids, they might feel differently about such taxes.
The argument goes beyond defense and donations. People worry about their taxes going into a big bucket and do not associate what they pay with what is done with it. In some cases, dedicated taxes may help.
A discussion with Larry Summers about the effects of tariffs and other US policies on the US and on Europe. https://t.co/lXCVDWx8B8
Larry’s place setter (15 minutes at the beginning) is a master class in showing the five fallacies underlying the US approach.
In mine (the next 15 minutes), I argue that, as a result of Trump and Putin, Europe has an Overton window, to react constructively and do things that it was unable to do in the past.
@CGollier@nytimes En effet. Cependant quand on reçoit 2,2 Mds $ de subvention du gouvernement fédéral, cela oblige quelque peu, non? Cette université privée ne peut pas alors ne pas tenir compte du vote démocratique du peuple américain. Une leçon à ne pas oublier.
Since the US tariff rate on imports was 2.5%, it should be 2.7%. Very far from the 20% imposed yesterday. Either it is a margin for bargaining or it is a misunderstanding of the VAT.
According to Trump administration's formula to compute reciprocal tarifs, the change in tariff rate applied to EU goods and services should be 8% since the goods and services imports of US from the EU are $924Billion and exports are $797Billion. 1/2
https://t.co/fh1hPxPBif
Happy to announce that the website of the next World Conference on Transport Research to be held in Toulouse on July 6-10, 2026 is online. You are invited to submit your scientific contributions on the submission platform at https://t.co/aqbS9DRTID
Enough of the European gloom and doom. In the new world environment, Europe can and should have a major and exciting role to play. Namely, help create “coalitions of the willing”.
The argument, based on a new article with @pisaniferry, https://t.co/2EhIycDIa3
The Trump administration is systematically trampling on the traditional rules of international trade, and more generally, the rules of international behavior. Hampered by unanimity rules, multilateral institutions, be it the UN, the WTO, the WHO, etc, are increasingly unable to function.
Yet , many if not most countries are still willing to respect those rules, work to fight climate change, make sure that multinational companies pay their fair share, that tariffs, if used, are used for the right reasons and not to bully others, and so on.
The European Union, which has had to get 27 countries to agree to such rules, is in a unique position to lead and help the formation of coalitions of the willing, namely the set of countries willing to work to achieve specific goals, such as climate, taxation, trade, and looking for reliable partners, who will accept and then respect the rules .
By itself, the European Union is too small to make a large enough difference. Thus, it must enroll other non-EU countries. And if some EU countries do not want to participate, so be it. The proof of concept may be the Schengen agreement, which does not include all EU members but also includes some non EU members.
In general, it is essential to go far beyond Europe, work in particular with some of the Brics. Avoid "the West against the Rest". In that context, a major negotiation with China, recognizing the relevance of security considerations, the desire to protect certain industries, the rules determining the use of tariffs, would be a strong signal that the EU is not following the US blindly and that much of the world wants to continue to play by reasonable rules.
The linked note shows three areas where such coalitions look both essential and feasible, climate, trade and taxation. It discusses, in each case, what the rules could be both within the coalition and vis a vis countries outside, and how they can build on existing agreements.
There are a million technical issues to be solved in creating such coalitions. And obviously, Europe has other problems to solve, its low growth, its absence from some of the frontier technologies, how to respond to US tariffs, and so on. But we believe that, given today’s reality and geo political tensions, helping put place reasonable rules of international engagement is an exciting goal for Europe to set for itself.