How to get out of the economic crisis
I delivered the following speech on February 3 before the Toronto Board of Trade. Yesterday, the Financial Post published an excerpt under the title “Give Keynes the boot.”
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Today I would like to discuss the issues of how to solve the global economic crisis that began in 2007.
As you all know it began as a financial crisis caused by a real estate crash in the United States. It then spread around the world and caused a recession. Most governments reacted with ambitious stimulus packages that were added to the high debt levels they already had. It has now transformed itself into a sovereign debt and a budgetary crisis in particular in Europe and the United States.
Some countries in Europe like Greece are close to bankruptcy and need to be bailed out. Others such as Italy and Spain are in serious trouble. Some of them are expected to be in recession this year. Many analysts are saying that this may eventually break the European monetary union.
The U. S. for its part has been accumulating huge and unsustainable deficits for several years.
In Canada, on the contrary the situation is under control. We’ve created more jobs since the recession than we lost during the recession. Canada did pretty good in part because we had sound public finances before the crisis and because our stimulus plan was limited and well targeted mostly on needed infrastructure.
We did not lose control of our spending. We did not create unsustainable deficits. And today we are on a clear path to a balanced budget and unless the international economic situation gets worse sustained growth.
Why is it, that Canada finds itself in a relatively favourable economic situation while our partners are still having serious difficulties? Because our partners follow the economic school of thought called Keynesianism. This theory was developed by British economist John Maynard Keynes.
Keynes did not trust private entrepreneurs and the free market very much. He was a strong believer in government intervention. One of Keynes’s central ideas is that when you find yourself in a crisis or a recession the best solution is to increase government spending.
Government spending will sustain overall demand put everyone back to work and kick-start the economy. Even if you already have a big deficit and a high level of accumulated debt it doesn’t matter. You should borrow and spend.
That’s one of the paradoxes proposed by Keynes the solution to too much spending is more spending. The solution to high levels of deficit and debt is more deficit and debt.
Keynesian economists are saying that the reason why the American economy is still not fully recovering from the crisis is that the American government is not spending enough. For them annual budget deficits amounting to 10% of GDP are not enough. They are calling for even larger budget deficits. To give an idea, our budget deficit in Canada, this year, amounts to less than 2% of GDP.
There is something fundamentally wrong with this explanation. The key question you have to ask is this where does the money that governments spend come from? It has to come from somewhere. A government cannot inject resources into the economy unless it has first extracted them from the private sector through taxes or put us further into debt by borrowing the money.
Every time the government takes an additional dollar in taxes out of someone’s pocket that’s a dollar that this person will not be able to spend or invest. Government spending goes up, private spending goes down. There is no net effect no increase in overall demand.
Government borrowing has the same effect. The private lenders who lend money to the government will have less money to spend or invest elsewhere. Or they will have less money to lend to other private business people. Government borrowing and spending goes up private borrowing and spending goes down. There is no net effect no increase in overall demand.
It’s like taking a bucket of water in the deep end of a swimming pool and emptying it in the shallow end. And it’s definitely not working.
Our Keynesian friends in Ottawa the NDP and the Liberals should understand this.
Let’s look briefly at the country that has pursued this type of policy to an extreme degree Japan. Twenty years ago Japan suffered something similar to what the United States experienced recently. There was a speculative bubble in the real estate sector which finally crashed in 1990. Prices collapsed and this affected the whole economy.
The Japanese government embarked on a series of public spending programs to artificially stimulate the economy. They spent trillions of yen. But the Japanese economy stayed stagnant.
In 1990, Japan’s gross public debt was 68% of GDP. Today, Japan’s public debt is the largest in the world at about 225% of GDP. And they have very little to show for it. You don’t get richer by maxing out your credit card. Yet if we are to believe the Keynesians Japan should have been the fastest growing country in the world during the last 20 years. But that was not the case.
Here are two more examples from history that have turned out differently. Ten years before the Great Depression in 1920 and 1921 the U. S. economy experienced a very severe recession. But almost nobody knows about it today because it did not last very long. The economy went down by 17%. Unemployment went from 5% to 12%. The President at the time Warren Harding did not believe that increased government spending was the way to revive the economy. On the contrary he thought government should get out of the way.
What was his solution? He cut the American government’s budget almost by half. It went from 6.3 billion dollars in 1920 the last year of the Wilson administration to 3.3 billion in 1922. He also cut taxes.
According to our Keynesian friends and the opposition party in Ottawa that’s not at all what a government should do to revive the economy. But that’s precisely what happened. By the end of 1921 the economy had rebounded and grew for the rest of the decade. Unemployment went down rapidly to 2.4% in 1922.
What about the Great Depression itself? Many people believe that the President Roosevelt’s New Deal solved the crisis. But that’s not what happened. Despite all the new spending and new programs the depression went on and on. In 1939 Roosevelt’s secretary of the Treasury Henry Morgenthau made a startling admission and I quote: “We have tried spending money. We are spending more than we have ever spent before and it does not work. After eight years of this administration we have just as much unemployment as when we started and an enormous debt to boot!”
It is also often said that the Second World War ended the Depression. That’s not the case either. Unemployment certainly went down because millions of men were drafted. But the situation did not improve for ordinary Americans. Most basic products were rationed during the war.
The Depression actually ended after the war. That’s when government spending was drastically reduced. Government spending went from 92 billion dollars in 1945 to 29 billion dollars in 1948. That’s a reduction of more than two thirds! That’s when the post-war prosperity started. The consumer society as we know it where the average family was able to afford a fridge, a car, and a house started at that time.
Again if we follow Keynesian logic this is not what should have happened. With these spending cuts, government was reducing overall demand. The economy should have crashed. But the economy boomed because the government released resources that became available to the private sector. Government spending always competes with private sector spending for scarce resources. When you divert resources from the more productive uses that they can find in the private sector to less productive uses in the public sector you will not see growth.
To revive the economy we need to let entrepreneurs keep the means to create wealth. We need to create the best conditions possible for the private sector to become more productive.
This means first of all to restrain spending. That’s what our government is going to do with a clear plan to achieve a balanced budget by 2015. In the coming budget our government will announce cuts in government operations of between 5% and 10%. That’s a concrete way to stop competing with the private sector.
We also need to reduce taxes. Since January 1st corporate taxes in Canada stand at 15% the lowest among G7 countries. They were at 22% when we took power six years ago. That’s a concrete way to leave resources in the private sector.
We need more free trade. Our government has also announced free trade agreements with eleven countries. We are still negotiating with several other countries. We hope soon to be able to announce a very important agreement with the European Union. That’s a concrete way to promote free exchange between Canadians and the rest of the world.
Finally, we need less regulation. Unnecessary red tape is a hidden tax on entrepreneurs and weighs heaviest on those least able to bear it: small business owners. Unnecessary red tape stifles economic growth and job creation, reduces productivity and can crush the entrepreneurial spirit of Canadians.
On January 18, I unveiled the Report of the Commission to reduce Red Tape. It contains 105 recommendations to get rid of regulatory irritants and to prevent red tape from growing again. That’s a concrete way to free the private sector.
We know that sustainable growth cannot be achieved with more government spending, more debt and more taxes. That’s the Keynesians theory. That’s what the opposition in Ottawa keeps asking for. Their only solution to everything is more spending, more artificial stimulus, more debt and more taxes. What they don’t realise is that too much stimulus will act as an economic sedative rather than as a stimulant. We cannot spend our way to prosperity.
The Keynesian solution has been tested and has failed. What we need is a conservative approach witch emphasices the primary role of the private sector in creating wealth and sustaining economic growth.
Free markets made Canada a prosperous country. Free markets will also insure a strong recovery.
Thank you!
You can leave a response.
Pas un journaliste montréalais n’a le bagage et les connaissances pour écrire un tel livre. Ils se permettent pourtant à peu près tous de sous-entendre que Maxime Bernier est un idiot, quand ils ne le disent pas ouvertement. C’est pas un peu ironique quand même?
Wow, is all I can say. I love your insight and it makes sense to me.
I think that is what the present government wants to do … though they do not have the courage to cut big expendutures like the CBC. Canadians seem ready to support them in cutting the excess wages of “some” government employees and stimulate the small business by tax cuts – so they can reinvest in the economy as a whole. Again, thank you for this post.
Livre? Quel livre? “J’ai présenté ce discours le 3 février dernier en anglais devant la Chambre de commerce de Toronto.” Une lecture incomplète dès la première phrase? Ironique tout de même …
Ça tombe sous le sens vu sous cet angle mais pourquoi personne ne présente ça sous cet angle ? Je suis pour votre approche M.Bernier mais dans un élan de vouloir bien faire et de déréglementer, il ne faudrait pas faire la même erreur que Wall Street a fait et laisser les marchés et les banques sans règles aucunes ce qui on l’a vu mène au chaos comme en 2008 et en 1929 ….. La déréglementation n’a pas que du bon!
Diminuer les impôts aux petites, moyennes ou grosses entreprises afin de favoriser l’investissement et la création d’emplois, c’est beau sur papier. Mais en réalité, les entreprises sont frileuses et engrangent le peu d’argent disponible avec le résultat qu’elles sont les seules à en profiter.
God bless Maxime Bernier. Hopefully the next leader of the CPC.
i agree with what you are saying. my understanding of keynes was that the spending was to be done during a downturn and repaid when the economy rebounded. the spending and borrowing was not supposed to be constant.
Quel texte brillant! Pourquoi au Québec nos politiciens n’adoptent pas une autre école de pensée que la Keynesienne? On s’engouffre toujours de plus en plus et on ne change pas nos manières d’opérer. J’pense que le vrai problème c’est l’ignorance de bon nombre de Québécois, il faut faire une éducation populaire en matière d’économie. Ça devient trop facile pour la gauche adepte de l’école de pensée de Keyne de démoniser le premier ministre Harper.
if you ran on this platform for leader of the party, there is no doubt in my mind that i would support you. however, we have heard this dog and pony show before from others. i want to believe mr bernier, so i beg you to make me a believer.
the major flaw of neo-keynsianism is taking place right now. the 70s saw stagflation, a phenomenon that couldnt happen under keynes theory (high inflation coupled with high unemployment). the phillips curve model used couldn’t reconcile the two happening at the same time. only ludwig von mises was able to perfectly explain why liquidity injection amounted to pushing on a string (otherwise known as the liquidity trap). it is happening as we speak today with oil prices way up despite growing inventories, gold and silver on the rise, stock market on the rise despite questionable fundamentals (most profits are a result of inflation and nothing more), all while unemployment and under-employment continue to stagnate.
we have to first recognize the importance of sound money and institute it before we fix anything else, otherwise any and all fiscal policies will fail and merely produce the next great bubble.
program spending under the Conervative gov’t has increased far beyond any causes of the 2008 crisis in housing. I like what you say Max, but that isn’t what you ahve been doing.
Mathieu Pilote a dit :
“il ne faudrait pas faire la même erreur que Wall Street a fait et laisser les marchés et les banques sans règles aucunes ce qui on l’a vu mène au chaos comme en 2008 et en 1929 ….. La déréglementation n’a pas que du bon!”
Quelle déréglementation Mathieu? Je sais que c’est un discours à la mode chez la gauche québécoise, sauf qu’il y a un problème : C’EST FAUX!
À part la suppression du Glass-Steagall Act de 1933, il n’y a eu aucune déréglementation importante dans le secteur bancaire aux É.-U. qui pourrait justifier la crise de 2008. Puis en 1929, c’est l’augmentation de la masse monétaire par la Fed (une création du gouvernement) qui a causé la crise, et les interventions multiples de Hoover et Roosevelt dans l’économie qui ont causé la Grande Dépression.
En fait, s’il y a un secteur où il y a plus de réglementations aux É.-U. qu’au Canada, c’est bien dans le secteur bancaire. Si le Canada a été moins touché jusqu’à maintenant, c’est grâce à un système bancaire beaucoup moins réglementé.
Merci M. Bernier pour votre texte, même si je ne suis pas d’accord avec le mini plan de relance (stimulus) de votre gouvernement!
Very good article. Its nice to see someone in parliament criticize the flawed economic logic of the keynesians.
Vincent Brousseau-Pouliot
La Presse
Alors que le gouvernement Harper s’apprêterait à faire d’importantes réductions de dépenses, son ministre Maxime Bernier a pris la plume cette semaine dans le National Post pour réfuter les théories économiques de John Maynard Keynes selon lesquelles l’État doit augmenter ses dépenses pour combattre une récession.
Le ministre Bernier a droit à ses opinions, mais ses généralisations à l’emporte-pièce et ses omissions factuelles sont gênantes pour un ministre assigné à un portefeuille économique (Petites entreprises et Tourisme).
Selon Maxime Bernier, la Grande Dépression a pris fin avec la Deuxième Guerre mondiale et non avec le New Deal. Pour justifier son affirmation, Maxime Bernier s’appuie notamment sur une déclaration de Henry Morgenthau, secrétaire au Trésor de l’administration Roosevelt, en 1939: «Nous avons dépensé plus d’argent que jamais auparavant et ça n’a pas marché.» Dans son raccourci intellectuel, Maxime Bernier oublie un détail: Henry Morgenthau a finalement convaincu son patron de couper dans les dépenses gouvernementales en 1937 (-17% du budget en deux ans). Avec comme résultat une nouvelle récession en 1937-38 durant laquelle le taux de chômage est passé de 14,3% à 19,0%.
Autre exemple cité par Maxime Bernier dans sa «leçon» d’économie: la prospérité américaine d’après-guerre aurait commencé après que le gouvernement eut réduit ses dépenses des deux tiers entre 1945 et 1948. Bien sûr que la guerre étant terminée, l’État pouvait reprendre sa taille normale dans l’économie! Malheureusement pour la théorie de Maxime Bernier, le budget fédéral américain est simplement revenu en 1948 au même niveau qu’en 1940. Et le ministre Bernier oublie de mentionner que durant ces trois années de compressions budgétaires, le pays a subi une sévère récession (-12% du PIB entre 1945 et 1948).
Finalement, le ministre Bernier se moque des keynésiens en citant l’exemple du Japon, qui a vu sa dette passer de 68% de son PIB en 1990 à 225% actuellement. «S’il fallait en croire les keynésiens, le Japon serait le pays avec la plus importante croissance économique», écrit-il. Le ministre Bernier prend le problème à l’envers. Si le ratio dette/PIB du Japon a tant augmenté, c’est en raison de déséquilibres sur plusieurs marchés (ex: taux de change, immobilier) qui ont entraîné une croissance économique anémique. Les dépenses gouvernementales (en% du PIB) et le fardeau fiscal ont été moins élevés au Japon qu’au Canada à chaque année depuis 1990. Le Japon a un problème d’endettement, mais ça n’a rien à voir avec Keynes puisque le gouvernement japonais dépense moins que celui dont fait partie Maxime Bernier.
Comme plusieurs des détracteurs de Keynes, Maxime Bernier n’a retenu qu’une partie de ses enseignements. Selon le père de l’interventionnisme, l’État doit augmenter son rôle dans certaines circonstances quand l’économie va mal, pour le réduire graduellement quand elle reprend du mieux. Un exemple récent: le Plan d’action économique du gouvernement Harper. Un peu de rigueur intellectuelle, monsieur le ministre!
En reponse a l’article mythologique de la presse qui se veut une replique intelligente, maus qui ne tient pas la route, Jeynes ne tiens pas la route point a ligne.
Le mythe sur la recesdion de 1937;
Extrait de http://mises.org/daily/4039
Myth 1: Deficit Spending
That the deficit of 1937 was smaller than that of 1936 is undeniable. In 1937 the deficit stood at $2.2 billion, as compared to a deficit of $4.3 billion in 1936. However, it is also noteworthy that, while the deficit was half as much as that of the previous year, total government outlays decreased from $8.2 billion to only $7.6 billion.[4]
Interestingly, during 1935 — a year considered one of recovery — total government outlays measured $6.4 billion, less than during both 1936 and 1937. In fact, looking back to the years from 1933 to 1935, government spending peaked at $6.5 billion in 1934. It suffices to say that explaining Roosevelt’s recession by pointing at a decrease in government spending is severely dishonest.
It is not much more useful to look at deficit spending. True, deficit spending in 1937 was at its lowest since 1933, but it is worth mentioning that in 1938 — the same year as the economy rebounded from the 1937 dip — total government deficit spending amounted to only $89 million.
But wait, if government spending did not decrease by much in 1937, then how did the government avoid large deficits? Government receipts — money received through taxes — increased from $3.9 to $5.4 billion between 1936 and 1937. In other words, high government spending did not result in a high annual deficit because the government collected a far greater amount of tax money that year than in all previous years of the Great Depression. It is unsurprising that in 1938, government receipts increased to $6.75 billion.
Finally, while government spending did decrease between 1936 and 1937, total expenditure in 1937 was still greater than all years prior to 1936. If a contractionary fiscal policy led to a recession in 1937, how did less spending cause recovery only a few years earlier? This inchoate theory does not hold water.
Myth 2: Tight Credit
Blaming cyclical fluctuations on tight monetary policies has been a favorite pastime ever since Milton Friedman and Anna Schwartz’s extensive, albeit heavily flawed, monetary history of the Great Depression.[5] Why such a terrible depression in 1929? Restrictive monetary policy![6] Why the recession of 1937? Restrictive monetary policy, of course!
The 1937 recession came with a contraction in the money supply. The reasons for this contraction is that the Federal Reserve raised the reserve ratio in the previous months.[7] However, his explanation of the contraction is unsatisfying, because the volume of loans made and securities sold continued to rise despite the increase in the required reserve ratio. It was only after the initial fall in the stock market that bank lending began to tighten.[8]
A more plausible explanation behind the contraction of the money supply is a tightening in lending and a decrease in borrowing due to an increase in entrepreneurial uncertainty, given the drop in the stock market’s value and the growing disproportion between real wages and productivity. The fall in the supply of money was a result of the 1937 recession, not vice versa.[9]
If anything, a loose monetary policy preceding the recession was more at fault than the Federal Reserve’s ineffective attempt to lower excess reserves by raising the reserve ratio.
Causes of Roosevelt’s Recession of 1937
If it was not tight credit or low government spending, then what caused the 1937 downturn? Three main factors stand out:
An inflow of gold from Europe and an artificial increase in the dollar-gold exchange ratio caused inflation.
Meanwhile, government’s union and wage policies maintained high real wages in the face of stagnating productivity.
Finally, heavy government regulation made the stock market extremely volatile and susceptible to otherwise minor changes.
The years 1933–1936 saw an expansionary monetary policy pushed by the Federal Reserve and the federal government.[10] Within that time period, the stock of money increased by 46% and the general price level by 31%.[11] While the Federal Reserve’s rediscount rate remained at 3.5% for the majority of that time,[12] the greatest monetary inflation came as a result of the inflow of gold from Europe.
Regime uncertainty in Europe, largely as a result of the rise of Adolph Hitler in Germany, caused an influx of gold into the United States. In 1934, the government increased the price of gold from $20.67 to $35 per ounce. Banks holding this increased stock of gold were therefore keen on exchanging it for dollars, leading to a substantial increase in the money base.[13]
Ricardo Effect: the tendency for entrepreneurs to replace labor with capital-goods while the productive structure lengthens due to increases in real wages.
We know from Austrian business-cycle theory that increases in the supply of money will lead to shifts in the structure of production.[14] This means that there will be a shift toward the production of capital goods, as they seem advantageous while the interest rate — the cost to borrow capital — is low.[15] This occurs because lower interest rates imply that the share of profits made from investments in capital goods will increase, given that the cost of borrowing the necessary capital is decreased.[16]
The result is widespread malinvestment, as the decrease in the rate of interest was not preceded by a necessary increase in the volume of voluntary savings. Such was the result of the artificial increase in the price of gold in 1934. It comes as little surprise that between 1935 and 1936 there was a sudden illusionary boom in productivity.[17]
Although real wages decreased at first, by 1937 they rose by 11.6%. It is no mere coincidence that around that time the Supreme Court upheld the Social Security Act, the Wagner Act, and the National Labor Relations Act of 1935. The result of these decisions was an increase in the power of unions to coerce firms to raise wages and benefits.[18] Fringe benefits — supplements to standard wages — rose from 1.4% in 1935 to 4.2% in 1937. Accounting for the majority of the rise in cost of supplements was the required employers’ contributions toward social insurance, which by 1938 rose from 25 to 71% of the total cost of the supplements.[19]
It is also important to consider Friedrich Hayek’s “Ricardo Effect” theory. This is the tendency for entrepreneurs to replace labor with capital-goods while the productive structure lengthens due to increases in real wages.[20] The period between 1935 and 1936, as previously explained, saw an economic boom, a lengthening of the productive structure. But union activity largely disallowed entrepreneurs from replacing labor with capital goods, while real wages were rising astronomically.[21]
All that was necessary was a catalyst to bring about a slowing in the pace of credit expansion. This was provided by the stock market. Heavy regulation in the years leading up to 1937, including heavy taxes and legal impediments on inside trading, reduced incentives to invest in the market.
The result was a stock market in which a large proportion of shares were held by a relatively small pool of investors. This naturally “thinned” the markets, meaning that minor changes relating to buying and selling could reflect dramatically on the prices of individual stocks.[22] Regime uncertainty caused by increasing tax rates and several Supreme Court’s decisions led to volatile fluctuations in the stock market, as investors moved to sell their shares.
The sudden drop in value of aggregate stock indexes led to more widespread uncertainty, causing a decrease in the volume of lending. This catalyzed a contraction in the credit markets. The widespread malinvestments which occurred in 1935 and 1936 began to reveal themselves. The 1937–1938 period, known as “Roosevelt’s Recession,” was therefore a necessary readjustment period after the boom of the period 1935–1936.
More roundabout methods of production, or more capital-intensive entrepreneurial activities, were found to be less profitable than was earlier believed. Moreover, marginal profitability was undercut by the high cost of wages. The predictable result was an incredible drop in productivity and a rise in unemployment.
$20 $17
It is evident that the recession of 1937 was not a product of low government deficit spending or contractionary fiscal policy on the part of the Federal Reserve. It was, instead, a product of expansionary monetary policy and heavy government regulation.
These are important lessons to learn, for we face a new period of recession and slow recovery. We should not be fooled into believing that the economy will crumble without high government spending and loose credit organization. The actual situation is far different. Indeed, high government spending and easy money will only increase malinvestments and forestall necessary readjustments, promising a decline in prosperity.
Bref bye bye Keynes, tu ne sort pas d’une dépression en utilisant les dépense d’état, tu le désengage et tu laisse plus de moyen a ceux qui ont du succès de reinvestir pour remplacer éventuellement ceux qui ce sont planter par leur incompétence.
Quand tu met les moyens au main de l’etat tu met la decision a celui qui a le moins de competence pour trouver la croissance.
Bravo M. Bernier. Continuez votre beau travail. Les conservateurs vont finalement ramener le Canada sur le droit chemin après s’être écarté du centre vers la gauche extrême depuis quelques décennies.
Ce serait beaucoup trop long de réfuter vos arguments… Ils s’arrêtent là où ça fait votre affaire, me semble-t-il. Pour les néophytes, ça peut paraître sensé… L’erreur principale est de comparer les époques alors que les situations ne sont pas du tout les mêmes… Ça donne place à des interprétations erronées. Et à préconiser des politiques inefficaces. Personne ne peut affirmer que les politiques d’austérité européennes sont un succès actuellement…
Est-ce que c’est normal que l’écart entre les riches et les pauvres se creusent plus rapidement au Canada qu’aux États-Unis?
http://www.radio-canada.ca/nouvelles/Economie/2011/09/13/011-conference-board-ecarts-revenu-canada.shtml
Joël Godin
I need to point out the fact that keynesianism is a travesty of Keynes ideas. It was in fact developped by John R. Hicks (The father of IS-LM model). The result has simply nothing to do with Keynes thought, since Hicks failed to understand the very basis of Keynes General Theory, namely the role of uncertainity (uncertainity isn’t risk) and expectations in the dynamics of a capitalist economy. Not knowing this, for an economist, is pure ignorance since Hicks himself admitted in 1981 he did fail to comprehend Keyes. The keynesianism is in fact closer to Walrasian vison of equilibrium than to Keynes vision which is more about disequilibrium.
The best explanation for the current crisis is undoubtly the financial instability hypothesis from Hyman Minsky. What neoclassical and austrian fail to understand is the fact that a capitalist system isn’t simply a barter system where money only facilitate exchange. In fact, the simplistic vision that credit is simply a transfert of spending power from a creditor to a debtor is fundamentally flawed. What rea lly happens when a bank make a loan, it creates spending power which adds to aggregate demand, and as soon as u consider this mechanism, it becomes pretty easy to understand the dynamics involved in the cyclical nature of the economy. On that topic, a good reference to start from is the article from Steve Keen : The Roving Cavaliers of Credit.
And by the way, the main reason why Canadian economy is doing “so well” in the present context is simply because his credit bubble didn’t burst yet, we didn’t started to deleverage.