Wednesday, April 9, 2008

What Now?

If, like me, you haven't simply written Sarkozy off as the bling-bling president who lucked into the job and who hasn't a clue now that his luck has turned, you may be asking, What next? To be sure, things aren't looking at all good. The economy's response to the exhortation to travailler plus has been nil (see previous post). The global economic climate could hardly be more morose. Retirement reform has hit a major stumbling block now that the CFDT has withdrawn its support and called for a pause. University reform has angered many while having no visible impact on the quality of education. The party stumbled in the municipals and is now fractious and restive, as the fight over GMOs has made clear. The effect of l'ouverture has worn off. The reconciliation with the United States has yielded a major new obligation (in Afghanistan) without tangible improvement in French influence, stature, or diplomatic reach.* The Mediterranean Union has relapsed into the Barcelona Process. Renewed inflation is eating away at purchasing power and preventing the ECB from cutting interest rates, so the euro remains high and threatens to creep even higher, hindering exports. Ce que j'ai dit, je le ferai, you often repeated, but now you're saying that the Revenu de Solidarité Active will have to be scaled back: the coffers are empty. So what do you do now? Scott Fitzgerald said that there are no second acts in American life, but what about French life? Sarko is in desperate need of a second act, and the effort of his plume and dramaturge Henri Guaino to give him one in the form of a "politics of civilization" seems to have fizzled like a wet squib. So what next?

Well, there is the impending presidency of the European Council, but it would probably be a mistake to build expectations too high. The EU operates by consensus, moves like a snail, and resents manhandling by the French. You can try to reinvent yourself and adopt a new presidential style, but le style, c'est l'homme même (Buffon), and reserved hauteur is not this president's cup of tea. You have to fear chiraquisation, having seen it up close: the inexorable erosion of authority, the lean and hungry lieutenants, the grumbling party (la droite la plus bête du monde is not so dumb that it can't abandon a ship that lies dead in the water, sauve qui peut). You yourself said you had only a year to turn the ship around, and now you're coming up on the eleventh month with no booty, no rudder, and treacherous reefs looming just ahead.

* Judah Grunstein disagrees. Judah's probably right.

Employment

I was critical of the media the other day for failing to follow up on the effects of the various tax cuts in the TEPA package, including the effect of detaxation of overtime on hours worked. Le Monde partly remedies that deficiency today. A parliamentary study initiated by finance committee chairman Didier Migaud (PS) finds that detaxation cost the government 4.1 billion euros and yielded only 3.78 billion in increased purchasing power of workers. To be sure, the details are sketchy and impossible to interpret without further information. But the finding is worth noting. Apparently, overtime hours have not increased, however, and this has to be a disappointment to the government, which was expecting an increase of 50 percent. The measure was supposed to be an incentive to work more--a supply-side shock, if you care to use the jargon, rather than a mere fillip to demand, and an inefficient one at that, since 3.78 billion of increased demand could have been purchased for 3.78 billion rather than 4.1 billion by paying the unemployed to dig holes in the ground and fill them up again, as Keynes once observed.

Elsewhere on the employment front, the news is no better. While flows into and out of employment are high, most of the flux involves the retirement of older workers and the recruitment of replacements. Net job creation is down compared with last year. And despite high unemployment, recruitment in many job categories is said to be "difficult," suggesting a mismatch in work force skills to requirements of available jobs as well as an unwillingness of workers to move to where jobs are to be had. Recruitment in the construction trades is particularly difficult. Maybe those Polish plumbers are needed after all--and Polish roofers, carpenters, electricians, drywallers, etc. Alas, many of them are already working in Ireland, England, Germany, and even Scandinavia, as Norwegian labor-market expert Jon Erik Dolvik recently reported in a paper delivered in my seminar at Harvard. Indeed, the stimulus to the Polish economy of remittances by Poles working abroad has been sufficient that Polish workers are now more reluctant to seek employment elsewhere.

"Competition in Cowardice"

L'ouverture se ferme. Ecology secretary Nathalie Kosciusko-Morizet, tired of being slapped around by deputies of the UMP, has accused them of taking part in a "competition of cowardice" in regard to the question of genetically modified organisms (GMO). In the righteous realm of extra-parliamentary Green politicking, virtue is its own reward, but NKM, who has always been on the inside, must contend with competing interests and contending mythologies. To soybean farmers competing with GMO imports, the precautionary principle seems anything but prudent: reckless, destructive, "voluntarist" in the sense of willful and presumptuous ignorance of the facts. To the Communist Andre Chassaigne, who filed an amendment to limit areas of GMO cultivation, the culpability of the opposition is overdetermined: Monsanto is capitalist, American, conglomerate, and chemical. How can it possibly be innocent of any and all turpitude? And whoever votes to permit GMOs in France must share the guilt, c'est clair. Yet Chassaigne's amendment is identical to another filed by the UMP deputy Louis Giscard d'Estaing, whose name alone suggests a rather more benevolent attitude toward corporate leviathans. Meanwhile, NKM hints of low blows exchanged between Jean-François Copé, whom she accuses of "inelegance" as well as "cowardice," and Jean-Louis Borloo, who would apparently prefer to duck this fight. And who wouldn't, since it will be impossible to emerge with much glory from such an unedifying dust-up, in which the contestants call each other lâches, vendus, ignorants, traîtres, malhônnetes (agriculture secretary Michel Barnier said that it was "dishonest" for anyone to imply that GMOs represented a danger to health). Hell hath no fury like an environmentalist scorned, unless it is a right-wing deputy incensed by the accusation of having sold his vote to the manufacturer of 810 corn, Roundup, and bovine growth hormone.

And then, to add to the UMP's embarrassment, there's this.