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A museum of economics?! That’s an interesting idea. In Paris, in the Malesherbes district, such a museum really does exist: it goes by the abbreviated name of Citéco (short for Cité de l’Économie, or City of Economics). Unintentionally, its name conjures up images from our daily lives. Everyone can come up with ideas drawn from their own experiences.
In such a museum, relics from the not-so-distant past, just four years ago, could be exhibited, as they are on their way to becoming museum pieces: pounds, checks, bank cards… sometimes even the banks themselves, intentionally stripped of their functions to the detriment of all. Just looking at their storefronts, which sometimes still bear outdated advertisements for loans, credits or various facilities, is enough to show the extent to which such services have become obsolete.
You could even go further and include state institutions that have become antiquated to the point that even their officials change their status. You might think of the curator of the Museum of Electricity, the curator of the Museum of Social Security, the curator of the Museum of Public Works…
Taking this playful interlude one step further, the Parisian museum reminds us of how far we’ve drifted from real economics. The “mini-boom,” as described by business leaders to refer to the recent relative rebound in consumption, is no exception to the rule of museums. So let’s list the distortions in our current economy compared to a normal economy, as presented in the Parisian Museum. And then consider what needs to be done to, one day, return to normalcy before this unusual state of affairs becomes the accepted norm for all.
First, some figures and empirical observations indicate that the rebound in consumption primarily concerns survival consumption (supermarket products), followed by some services and leisure activities (education, healthcare, dining out). The consumption of durable goods, however, is still plummeting. This is the case for real estate, cars and even major household equipment. Only items like power generators (solar panels, batteries, UPS…) are the exception to this trend, but this is merely out of necessity.
The underground or informal economy has largely taken over, estimated at 50 to 60%. While it was already significant in Lebanon, it has now almost become the norm, fueled by all kinds of illicit activities but also by the prolonged absence of state services. In France, it hovers between 3 and 4%.
The cash economy, estimated at 45% of GDP by the World Bank for transactions in dollars, far exceeds this level when you include Lebanese pounds. For comparison, banknotes and coins worldwide represent only 10% of the currency, which is primarily composed of electronic entries in bank accounts. This is known as “scriptural money,” which is now disregarded in Lebanon and is completely worthless.
The absence of banking activity has blocked the well-known phenomenon of the money multiplier effect. What does this mean? To put it simply, if someone deposits $1,000 in cash, the bank can use this amount to multiply credit and deposit operations for individuals or entrepreneurs through electronic transfers or checks. This is the very essence of banking. And this is how that cash amount will eventually have ten times its equivalent in scriptural accounts. Hence the 10% proportion mentioned above. Nevertheless, it is a phenomenal invention to boost activity and growth – something we are now deprived of.
The state as an essential economic actor has disappeared, along with its role as a regulator, wealth redistributor and a factor in growth through infrastructure, which has also fallen into disrepair. Even basic technologies are heading towards our museum of antiques and flea markets.
We can continue by listing the various themes of the Parisian museum one by one: from exchanges to markets, from regulations to competition… and arrive at the same conclusion of the abnormality of our situation.
But let’s not fall into despair either. Because there is an advantage to establishing this kind of museum in our country: we could then use it to deposit politicians stuck in a Middle-Age mentality, or those who spread economic harm, or those with an IQ below the poverty line. There will be enough to fill entire buildings.
