by
Robert Cauneau
26 July 2025
Introduction
In a previous article1, we made a statement that directly clashes with fifty years of public discourse in France: the budget deficit, far from being an anomaly or a moral failing, is most often the natural, mechanical, and necessary position of a modern state’s budget. We demonstrated this through the implacable logic of accounting balances, where the state deficit is simply a reflection of the savings desired by the private sector and the balance of our trade with the world.
But a logical demonstration, however rigorous, can be accused of being nothing more than an intellectual abstraction. It is now time to confront it with the test of reality, to move from theory to measurement. This article therefore offers a journey to the heart of the global economy. Using an original cartographic synthesis, based on International Monetary Fund data for nearly 200 countries, we will visualize the place each nation occupies in this vast system of interdependencies.
This factual analysis will unfold in four stages. First, we will provide a methodological clarification intended to facilitate understanding of the four-quadrant chart used as the demonstration tool. Then, we will establish the overall situation, answering the simple question: is the deficit a French exception or a global norm? Next, we will examine the rare cases of surpluses to understand what makes them so unique. Next, we will zoom in on our closest environment, the European Union, to situate France in relation to its partners and not its fantasies. Finally, we will conclude this journey by showing that the logic at work is universal, applying from the richest to the poorest countries. The objective is no longer to debate, but to demonstrate, with a clear map in hand, the emptiness of the austerity dogma and the urgent need for a paradigm shift.
Methodological Clarification: The 4-Quadrant Decoder, User’s Guide
The following analysis relies on a powerful visual tool: the sector balance chart. Before diving into the global data, it’s essential to recall how this « map » allows us to decode a country’s economic structure at a glance.
The chart positions an economy according to two fundamental and directly readable dimensions:
- The vertical axis (Y) represents the public sector balance. A country located below the horizontal line has a budget deficit; above it, it has a surplus.
- The horizontal axis (X) represents the external sector balance (the current account balance). A country located to the left of the vertical line has an external deficit (it imports more than it exports in value); to the right, it has a surplus.
But how do we interpret the third balance, that of the private sector (households and businesses)? This is where the implacable logic of national accounting operates. Since the sum of the three balances must always be zero (Public + Private + External = 0), the private sector balance is mathematically determined by the position of the other two. The diagram makes this dependence visible thanks to its 45-degree diagonal. This line represents the « zero » of the private sector. Thus:
- Below the diagonal (green area): the private sector is in surplus (it is saving collectively).
- Above the diagonal (pink area): the private sector is in deficit (it is in debt collectively).
In summary, this simple graph gives us a comprehensive understanding of a nation’s balances. It doesn’t just show data; it reveals constraints and interdependencies. It is the mirror that proves that a public deficit is not an isolated « fault, » but most often the necessary counterpart to private sector savings and our trade balance with the world. It is armed with this reading grid that we can now analyze global reality.
Argument 1: The World Map’s Verdict – Deficits are the Norm, Surpluses a Rare Exception
Having established the implacable logic of macroeconomic accounting balance, it’s time to test it against the facts. Does the obsession with the public deficit, presented as a matter of course as « good management, » survive a snapshot of the global economy? To find out, we positioned nearly 200 countries on our « map of economic models » for the year 2023, using data from the International Monetary Fund. The result is not a mere nuance. It’s an earthquake that upends the public debate.
Chart No. 1
The first observation is a stark statistical fact: the public deficit is not a deviance, but a nearly universal condition of nations. Of the 193 countries analyzed, 153, or more than 79.3%, have a budget deficit. The dogma of balance, repeated endlessly on television sets and in the corridors of ministries, is contradicted by the overwhelming reality of the facts. France and its « 50 years of deficit » are therefore not a shameful anomaly, but a reflection of a global economic normality.
The very geography of the map provides a second lesson. As our visualization shows, the two lower quadrants, those of the public deficit, are densely populated. They represent the beating heart of the global economy. Conversely, the two upper quadrants, those of the public surplus, are economic deserts. The top right quadrant (Public Surplus / External Surplus), often fantasized as the Holy Grail of economic virtue, includes only a handful of nations (27 countries). The top left quadrant (Public Surplus / External Deficit), which risks leading to dangerous private sector indebtedness, is, as theory predicts, virtually empty (13 countries). Desiring to join this ultra-selective surplus club at all costs is not an ambition; it is a profound misunderstanding of economic structures.
Finally, this overview reveals the existence of two major families of deficit countries, two coexisting « worlds. »
- The first, at the bottom left (Public Deficit / External Deficit), is the « club of large consumer economies. » France finds itself there, not alone and isolated, but in excellent company: alongside the United States and the United Kingdom. Their common thread is strong domestic demand, which, combined with their private sector’s desire to save, makes a public deficit structurally necessary.
- The second, at the bottom right (Public Deficit / External Surplus), is the « club of export giants. » Even more troubling for the dominant narrative, it includes Germany, Japan, and even China. These champions of global trade, despite their colossal external surpluses, also need public deficits to satisfy the savings appetite of their households and businesses.
The map’s verdict is therefore unequivocal. Even before entering into the detailed analysis, it forces us to abandon the question « Why is France running a deficit? » for a much more pertinent one: « Given that the deficit is the global norm, what type of deficit are we talking about, and how can we use it to serve our societal objectives? » The stage is set. The rest of the analysis will consist of zooming in on these different models to understand what they teach us about our own situation.
Argument 2: Anatomy of an Exception – Why France is not Norway
Given this overall observation, a legitimate question arises: who are these rare countries that populate the surplus quadrants, these « good students » constantly cited as examples? If fiscal virtue is so rare, how can we explain their success? The answer lies not in supposed management « wisdom, » but in the very nature of their economic DNA, which makes them radically incomparable to France.
To understand this, we invite the reader to examine the top right quadrant. The list is a revelation in itself. The champions of public and external surpluses are neither Germany nor Sweden, but names like Norway, Qatar, the United Arab Emirates, Singapore, and Macau2.
Their common thread is not a policy, but a rent. Norway, Qatar, and the Emirates are oil and gas « rentier states. » Their public finances and external balances are not the result of a diversified and competitive economy, but the direct consequence of the massive export of hydrocarbons, a geological resource that France does not possess. Their colossal surpluses are a « windfall » that allows them to both finance gigantic sovereign wealth funds and support private sector savings. Trying to imitate the Norwegian model without possessing the North Sea and its petrodollars is absurd.
Other exceptions, such as Singapore, Switzerland, Ireland, or Luxembourg, belong to a different category: that of oversized financial and fiscal centers. Their external surplus is not primarily due to the sale of goods, but to immense capital flows and the profits of multinationals that have established their headquarters there for tax reasons. Here again, this is a niche model, impossible to replicate on the scale of a large continental economy of 68 million inhabitants. These particular cases are therefore exceptions that prove the rule. They teach us a fundamental lesson: a country’s position on the macroeconomic map is, above all, a reflection of its deep structure—its geography, demographics, natural resources, and industrial history. Ignoring this in favor of focusing solely on the final budget balance figure is tantamount to comparing the financial situation of a farmer to that of an oil well heir, concluding that the farmer is a « bad manager. »
French public debate is sick of these fallacious comparisons. By refusing to analyze the structure underlying the figures, it perpetuates the myth of a French « fault » where there is only the logic of a diversified, non-rentier, and consumer-driven economy. It is therefore urgent to abandon these sterile comparisons and analyze France for what it is.
Argument 3 – The Convergence Trap – How the European Union is Pushing for a Single Model
Exotic comparisons aside, the debate turns to our immediate environment: the European Union. This is where the dominant narrative about France as a « bad student » seems most persistent. Yet, a visualization of the situation in the Member States for 2023 is enough to reveal not just a simple opposition between two blocs, but a complex and asymmetrical system, organized around a dominant core.
Chart 2
The European map does not reveal a fracture, but an orbit.
- At the center, the « sun » of the system: the surplus hypercenter. Led by Germany and the Netherlands, this bloc (bottom right quadrant) structures the entire region. Its model is based on a powerful export machine that relies on other European and global countries as outlets. These are the system’s net creditors.
- Around it, satellites with constrained trajectories. The other countries do not form a homogeneous bloc, but illustrate different strategies of adaptation or resistance to this central mode l:
- The « Adjusted » (Italy, Spain): These countries now find themselves alongside Germany in the bottom right quadrant (Public Deficit / External Surplus). But their external surplus does not have the same origin. It is not the result of export conquest, but the consequence of prolonged austerity policies that have permanently depressed their domestic demand. By importing less due to a lack of consumption and investment, they automatically moved into surplus. Their position is less a trophy than a scar.
- The Fiscal Anomaly (Ireland): Located in the « paradise » quadrant in the upper right, Ireland is a special case. Its huge current account surplus is the artificial product of multinational tax optimization. It is not a productive model, and it can in no way serve as a point of comparison.
- The Last Major « Consumer » (France): In this landscape, France appears increasingly isolated as the last major economy in the Eurozone structurally anchored in the lower left quadrant (Public Deficit / External Deficit). Its model, which relies on domestic demand, is financed by private savings and, by accounting necessity, by the public deficit.
This European orbit is not just a visual impression; it is a quantifiable statistical anomaly. When we compare the distribution of the 27 EU countries to that of the world’s nations as a whole, the figures speak for themselves:
- « Deficit/Deficit » quadrant (the « French » model): This represents 54% of the world’s countries, but only 33% of EU countries. It is therefore structurally underrepresented in Europe.
- « Deficit/Surplus » quadrant (the « German » model): This concerns only 25.4% of the world’s countries, but rises to 51.8% within the EU, where it has become the dominant model.
A reading of the European map therefore shows that the French position, far from being an irrational anomaly, is part of a coherent macroeconomic configuration, simply different from that of the dominant core. The European « mirror »—that is, the rules and representations it imposes—does not reflect a « dunce, » but a country whose model is structurally rendered untenable by an architecture designed for a different system.
Argument 4: A Universal Iron Law – From Rich to Poor Nations, the Same Logic at Work
The analysis could stop at the borders of the developed world, but the power of national accounting lies in its universality. The relationship between sectoral balances is not a matter of culture, political will, or level of wealth. It obeys an iron law, as inescapable as gravitation in physics: at any time, in any monetary economy, the sum of sectoral balances is zero. By segmenting our world map by income level, we obtain striking proof of this: from the richest to the poorest country, the dynamics of the public deficit as a necessary counterpart to net private savings remain the same. No model escapes this accounting « gravity. »
1. Among high-income countries, deficits are the absolute norm.
The graph focusing on the « rich club » is arguably the most devastating for the discourse on « good management. » Far from being a haven of surpluses, this group is overwhelmingly anchored in the fiscal deficit quadrants. For every rentier « exception » like Norway, there is a cohort of economic powers—the United States, Japan, the United Kingdom, France—that structurally operate with a fiscal deficit. Why? Because in these mature economies, the private sector’s desire to save is a powerful force. The fiscal deficit is not a sign of their decline, but a condition of their stability, by providing the net financial assets that their private sector desires to accumulate.
Chart 3
2. In middle-income countries, the deficit finances growth.
When looking at major emerging powers, the logic doesn’t change; it adapts. These nations are the scene of a race for development that requires colossal investments. The public deficit plays a crucial dual role. For countries like Brazil and India, it helps finance infrastructure while supporting the domestic savings of a growing middle class. For China, which often runs an external surplus, the public deficit remains necessary to offset one of the highest private savings rates in the world. In any case, the deficit is a functional tool for development.
Chart 4
3. For low-income countries, deficits are a matter of survival.
Finally, the graph for the poorest countries illustrates the most constrained situation. These economies face a structural « double whammy »: a desperate need for imports to build their productive base (chronic external deficit) and a vital need for public spending on education, health, and basic infrastructure. The public deficit is no longer a choice, but an absolute necessity, often financed by international aid and debt. Their position, overwhelmingly concentrated in the bottom-left quadrant, is not a sign of poor governance, but a reflection of their fragile position in the global economy.
Chart 5
Conclusion: « Closing the False Trial, Opening the Real Debate »
At the end of this cartographic journey, the observation is clear and the conclusion inescapable. Global reality does not nuance the dominant narrative on the public deficit: it shatters it. We have seen that the deficit is not a French flaw, but the normal condition of almost all nations (Argument 1). We have seen that the rare « paradises » of budget surpluses are radically non-transposable structural cases, based on rents or specific tax statuses (Argument 2). We have seen that the European system, far from being a club of equals, is a structural trap: its uniform rules, applied asymmetrically, have forced countries like Spain and Italy into a painful « normalization » through austerity, and are gradually isolating France as the last great model of domestic demand (Argument 3). Finally, we have seen that this accounting logic is a universal iron law, applying to all stages of economic development (Argument 4).
The « mismanagement » charge brought against France for the past fifty years is therefore a false one, based on ignorance, whether voluntary or forced, of the most basic economic mechanisms. The real tragedy is not our deficit, but the persistence of a narrative that prevents us from thinking about our economy correctly. By focusing on a symptom whose causes have been knowingly hidden, the political and economic elites have diverted public debate from the real issues.
Worse still, in the name of this absurd fight against an imaginary enemy, decades of underinvestment in our public services have been justified, our ability to prepare for the ecological transition has been hampered, and a form of economic stagnation has been perpetuated. The obsession with the deficit has not just been an analytical error; it has been a powerful tool of political discipline, presenting austerity not as a societal choice, but as a technical inevitability.
It is therefore more than urgent to change the conversation. The relevant question for the future of our country is not « How can we reduce the deficit? » but « How can we use our public deficit, a reflection of our collective capacity to save, to finance the immense investments we need? » How can we direct it towards rebuilding our industry, accelerating the energy transition, strengthening our healthcare system, and achieving full employment?
Ending the deficit is a pipe dream. Ending the intellectual blindness that surrounds it is a democratic necessity. Only then can we finally have an adult debate on the real choices that determine our common future.
Notes
1 This article is available here : https://mmt-france.org/2025/07/19/the-deficit-is-the-natural-position-of-the-state-budget/
2 Macao has an external balance of 31.4% of GDP, which prevents it from appearing on graph no. 1, which is itself limited to 20%.
References
FMI – World Economic Outlook Database (2023)
Kelton, Stephanie (2020). The Deficit Myth
Mitchell, William; Wray, L. Randall; Watts, Martin (2019). Macroeconomics
Mosler, Warren (2010). The Seven Deadly Innocent Frauds of Economic Policy
MMT France 