Friday, June 29, 2007
In any event, Devedjian has apologized for his use of a naughty word and promised to wash his mouth out with soap. As for racaille, the author of that insult persiste et signe.
The New York Times today has an article on private equity in Europe. Here is the passage relevant to France:
In France, private equity has largely escaped the scrutiny it faces elsewhere; the country passed legislation in the last decade that offers stable tax treatment to private equity, and the conservative pro-business government of President Nicolas Sarkozy, who took office last month, is unlikely to change that.
In addition, Eddie Misrahi, director of Apax Partners in France and chairman of that country’s industry association, AFIC, said that private equity was continuing a lobbying campaign aimed at cultivating its image among union and government officials.
“We have been perhaps slightly more conscious of a possible backlash from these kinds of deals,” he said. “Apparently our British and European colleagues have only recently discovered this approach.”
1. Jean-Marie Le Pen
What unites the people on this list? Now, here's a subject on which anyone is free to comment. No special expertise required. Just spill your guts. Let's hear it.
Think the comparison implied by the title is far-fetched? Like FDR, Sarko in his first months in office has proved to be a whirling dervish of energy and activity. This article, by Arthur Schlesinger Jr., describes Roosevelt's first hundred days. I was struck by this passage:
Exactly half a century ago [the article was written in 1983], the Republic plunged into the Hundred Days - that time of tumultuous change when a flood of legislation swept away venerable market p ractices and gave the American economic system a new contour.
In the frenzied weeks from March to June 1933, Franklin D. Roosevelt sent 15 messages to Congress and steered 15 major laws to enactment: among them, central planning for industry and for agriculture, new regulation for banking and for the securities exchanges, the Tennessee Valley Authority, the Civilian Conservation Corps and a national system of unemployment relief.
''At the end of February,'' Walter Lippmann wrote when the special session adjourned, ''we were a con-geries of disorderly panicstricken mobs and factions. In the hundred days from March to June we became again an organized nation confident of our power to provide for our own security and to control our own destiny.''
The Hundred Days were only the start of a process that ended by transforming American society.
Of course one might say that FDR acted in the midst of a real crisis, one of the greatest in history, whereas Sarko assumes power in the midst of a rhetorical crisis, manufactured by déclinistes to create a sense of emergency justifying drastic action. That may be true, but Sarko and FDR, who differ so profoundly as to ideology, undoubtedly share the pragmatist's temperament:
The technique of the New Deal was improvisation and experiment. ''It is common sense to take a method and try it,'' F.D.R. said in the 1932 campaign: ''If it fails, admit it frankly and try another. But above all, try something.''"Above all, try something." That could be the motto on Sarkozy's desk.
In a comment the other day, Hervé argued that the French political class in general makes too much of délocalisations, or what we call in English foreign "outsourcing" or "offshoring," while neglecting France's high rank among countries receiving foreign direct investment, or FDI.
Hervé makes an excellent point, which reinforces Eloi Laurent's remarks about the low economic literacy of a certain class of French officials. Of course this confused discourse survives only because the economic literacy of the public at large is even lower, as Bryan Caplan attempts to demonstrate (for the US case) with empirical evidence in The Myth of the Rational Voter. (Caplan's definition of what it takes to be economically literate is rather too narrow and hamstrung by a certain orthodoxy for my taste, but I don't quarrel with his showing that vast numbers of people don't know things they ought to know to make sound political judgments.)
Nevertheless, although fear-mongering about outsourcing is to be resisted, so is complacency. As Hervé rightly observes, France ranks high among countries receiving FDI (which gives the lie, incidentally, to the notion that for any number of reasons, including high taxes, labor-market rigidities, rampant government meddling and regulation, widespread anti-market attitudes, and whatnot, capital shuns la France douce et fainéante like the plague). Indeed, incoming FDI rose to unprecedented levels in France in 2006. That said, it is also true that, according to Ernst & Young, France fell from the top ten receiving countries last year. French incoming FDI rose only 5 percent, compared with 57 percent for Germany and 44 percent for Spain. Poland and the Czech Republic also made big gains.
Two economists looking at the question of global capital flows from very different angles have recently made two other points relevant to the French political debate. Larry Summers notes the increasing inequality of income distribution:
While the most recent data available for performing these calculations come from 2004, it appears that the trend towards increased inequality is continuing and may even be accelerating, and will continue even in years when the price of stocks and other assets does not rise abnormally. It also appears that these trends reflect far more than increases in the financial return from education, as the top 1 per cent of the population has pulled away from the rest of the top 10 per cent and the top 0.1 per cent has pulled away from the rest of the top 1 per cent.*This cautionary note from the mainstream of the profession can be set alongside a recent paper by heterodox economist James Galbraith. Usually we think of Europe, with its tradition of relatively generous welfare states, as comparatively egalitarian, and the United States, in the grip of unfettered free-market ideology, as highly inegalitarian. Galbraith, in a calculated effort to épater les bourgeois, argues that this stands reality on its head. Although remuneration within particular EU countries tends to be more equally distributed than US compensation, this is not the case if we compare the lowest-wage EU countries with the highest, and this despite the single market and unified currency. He goes on from there to argue that this highly inegalitarian European reward structure is responsible for a deficiency of aggregate demand in the EU and that this, rather than the more commonly cited culprit of labor-market rigidity, is the cause of persistent high unemployment in Europe.
In other words, if you want fewer unemployed in France, don't pay French cheminots less; rather, pay Polish plumbers more.
Of course this latter argument, for whatever it may be worth, will have to be adjusted to take account of the falling unemployment in both Germany and France, as announced yesterday. Indeed, French unemployment has now dropped back to a level last seen in 1983. The fact that this has happened before any Sarkozyan reforms have been implemented should be borne in mind as political debate evolves. The government, as governments are wont to do, will no doubt credit its economic philosophy for everything good that happens from May 6 onward. The usual deflator should be applied to such claims before embarking on empirical comparisons.
*LATE ADDENDUM: For evidence of growing inequality in France, see this article. For the full study by Camille Landais on which the Libé article is based, see here.