Sunday, April 28, 2013

Du rififi chez le PS

As regular readers know, the PS erupted last week in a mini-rebellion against the official economic policy of Troika-approved austerity. Yesterday, Jean-Marc Ayrault tried to cool tempers, especially insofar as the attacks were directed personally at Angela Merkel. Now we have a full-blown counterattack by two ministers, Michel Sapin (labor) and Manuel Valls (interior), who denounce the attacks on Merkel and austerity as "demagogic," "irresponsible," and "insulting."

Should we now expect other ministers--Moscovici and Fabius foremost among them--to take sides in this rather embarrassing fratricidal bloodletting? Or will the president attempt to put the lid on intraparty dissent? The blowup only contributes to the widespread perception of Hollande as a weak president. Of course, he may, as I suggested the other day, be using the open dissension as a means of freeing up a bit more room for maneuver in his discussions with German and EU officials. If so, it's a risky game: Machiavellian in its way, but the author of The Prince would be the first to remind him that every leader needs to be feared, and at the moment nobody in the PS seems very much afraid of Hollande's wrath.

Will "Zombie Catholicism" Do In the Socialist Party?

The term is not mine. "Zombie Catholicism" is an invention of the indefatigable demographers Hervé Le Bras and Emmanuel Todd:
Hervé Le Bras : Dans notre livre, nous avons pointé ce qu’on a appelé « le catholicisme zombie » : malgré la disparition quasi complète de la pratique religieuse, qui ne concerne plus que 6% des Français, et 1% des 18-24 ans, il reste une manière de vivre, nous disons une « anthropologie » façonnée au cours des siècle par l’Eglise catholique.
Their analysis is that the progress made by the left in the 2012 election came about because the Right had moved to far toward the extreme, putting off these "nonpracticing Catholic" voters, whose natural political valence was in the center-right, the Christian Democrat vote, if you will:
Si le PS avait bien analysé sa progression en 2012, comme nous l’avons fait dans notre livre, il aurait vu qu’elle est due à une maladresse de la droite, qui s’est déportée trop à droite. L’UMP a oublié la composante démocrate-chrétienne de son électorat.
But the gay marriage law has alienated these same voters, according to Le Bras, and this will cost the PS in the next election:
Avec le « mariage pour tous », le PS vient à mon avis de s’aliéner ce qui a été à la base de son succès lors des dernières élections. C’est une erreur électorale énorme. Il ne pouvait peut-être pas le prévoir.
This is such a controversial interpretation, however, that even Le Bras's co-author does not agree with him:
Cela dit, Emmanuel [Todd, ndlr] n’a pas la même interprétation que moi. Son idée, c’est que le « catholicisme zombie » est un peu une façade, dans ces manifestations. Selon lui, c’est en réalité la droite dure qui a pris argument du « mariage pour tous » pour passer à l’offensive. Il a ainsi remarqué que les députés qui étaient les plus en pointe dans les manifestations provenaient plutôt de régions laïques – Mariton, Copé, etc. – pas forcément de régions catholiques.
I haven't studied this question, but my instincts incline me to agree with Todd. Nevertheless, I thought that this analysis was worth signaling to readers, who may have additional points to add to the discussion.

Saturday, April 27, 2013

Will the ECB Cut Rates?

Brad Plumer, citing Benn Steil and Dinah Walker of the CFR, argues that the answer to the question isn't as simple as it might appear.

Consider this graph:


And this discussion from Steil and Walker:

The ECB’s official inflation-rate target is “below, but close to, 2%.” Both Portugal and Greece have inflation under 1% , but the transmission mechanism from ECB rates to business borrowing rates in those two countries has been virtually severed by the crisis. In short, they need a rate cut, but the ECB can’t deliver them one.
In those Eurozone countries where the monetary transmission mechanism is still working normally—Austria, Finland, France, Germany, and the Netherlands—the GDP-weighted-average inflation rate is 1.8%, right near the ECB’s target. … Some will argue that a bout of robust inflation in the north is just what is needed to restore competitiveness in the south. But the ECB will have to willfully ignore its price-stability mandate if it is to justify a rate cut right now, and it will almost certainly need to apply more radical tools if it is to aid the south quickly.
In short, Europe is a more diverse and disparate region than, say, the United States. It has a single market and a single currency, but its constituent economies have not converged. That makes the central bank's job difficult and impedes progress toward a more centralized economic executive.

The "Political Crash" Ahead

Mediapart sees a "political crash" ahead. This has been a decisive week in the euro crisis, according to the paper. The dam has cracked, and a torrent of criticism of austerity has come pouring forth from all sides, as I've reported in previous posts. Distrust in the EU has reached alarming proportions:


It's all quite sobering. What is more, the Bundesbank drafted a report for the German Constitutional Court questioning the legality of the ECB's Outright Monetary Transaction policy, which is the only thing holding the euro together. Yanis Varoufakis sees this report, which has now been published, as either a huge error by the Bundesbank or else a deliberate strategy to sabotage the ECB and precipitate a euro crisis. "It is not within the purview of the ECB to ensure the irreversibility of the single currency," wrote the Bundesbank. As if it wished to see Germany out of the Eurozone. Here is Varoufakis:

Three statements make this is bombshell of a deposition. The first openly questions whether the ECB has a mandate to preserve the integrity of the euro; that is, to prevent the currency’s collapse. The second, in reality, questions the joint decision of Mrs Merkel and Mr Draghi to keep Greece in the Eurozone. And the third challenges Mr Draghi’s oft-stated conviction that the ECB’s broken monetary transmission mechanism should be mended as quickly as possible. Taken together, these three passages constitute an act of war against the euro as a coherent currency; especially in view of the fact that they are official depositions by the Bundesbank to the German Constitutional Court for the purpose of invoking a constitutional ban on Mr Draghi’s monetary stance.

Dissolving the Eurozone in the Name of Social Democracy

David Lizoain means to provoke: since the crisis does not appear to be producing a swing toward social-democratic majorities across Europe, he argues, perhaps the only hope for social democracy is to dissolve the euro. The logic may be flawed, but the thought, once unthinkable, is increasingly voiced aloud in both the periphery and core of Europe.

Lizoain's final point is that "dissolution would be easier if initiated by the strong partner (Germany), rather than by the periphery. If solidarity cannot be achieved through a progressive reform of Europe’s economic institutions, then perhaps it is time to consider taking them apart." The new German party Alternative für Deutschland would be only too happy to oblige him.

But could dissolution be achieved without exorbitant costs? Conventional wisdom says no, but I am told by a researcher working on the problem that there are numerous historical precedents in which dissolution of a currency union proved far less costly than predicted ex ante. Then the question is, "Would the EU survive a dissolution of the eurozone?" My sense is that it would not. Although the distinction between the two is sharp in principle, the politics of the situation blurs these sharp boundaries. Except for AfD, nearly all of the political forces calling for withdrawal from the Eurozone are also hostile to the EU.

Would the collapse of the EU be a disaster? I am old enough to recall the days when the EU stood not for the thin end of the neoliberal wedge, as anti-EU forces consider it today, but for perpetual peace in Europe after a singularly bloody half-century of war. To be sure, the Single Market has in some respects become an arena for the continuation of war by other means. Germany's dominance in a context of free trade and single currency is no accident.

In theory, the gains from trade should be shared, and indeed the periphery has gained a great deal, but in this period of adjustment, the gains are mostly forgotten and the pain of adjustment is paramount. Some fear that Germany is more redoubtable as a trading partner than it ever was as an armed conqueror. That is a dubious proposition. The peripheral countries need to reflect on their wherewithal to succeed in economic competition. Whether they want to make the changes necessary to do so should be a matter of democratic choice, not imposed obedience. But painful change will be necessary either way: maintaining the EU will require deep structural change, but dissolving it will be wrenching in other ways.

The UMP Finds Its Angle of Attack

Alain Juppé is leading the pushback. François Hollande has "broken faith" with Germany, raising a "mortal peril" for France (really?). Bartolone and Cambadélis have called for "confrontation" with France's primary European partner, and either Hollande is complicit in this or else he is a weak president who cannot command his troops and is facing an internal rebellion within his own party. François Fillon is taking a similar line, but he expressed himself in more measured terms, in part because he was in Germany yesterday.

Somewhat more surprisingly, Le Monde more or less echoed Juppé in its lead editorial:
Soit ce langage belliciste est autorisé en haut lieu, et c'est inquiétant. Soit il ne l'est pas, et c'est tout aussi inquiétant, puisque cela impliquerait que le président ne tient pas ses troupes. La réalité, c'est que le PS est en train d'imploser sur la question de la politique économique du gouvernement.
The paper also found a prominent Socialist willing to defend its defense of Germany policy (which it mutes by calling the Socialist attacks on German policy and on Germany's leader attacks on "Europe" by untamed "populists"):
Elisabeth Guigou, présidente – socialiste – de la commission des affaires étrangères de l'Assemblée nationale, ne s'y est pas trompée. Les propos de M. Bartolone, a-t-elle dit, sont "nocifs", voire "dangereux". On aimerait entendre des prises de position aussi fermes de la part du président de la République : le débat d'idées avec l'Allemagne, oui. L'affrontement, non.
Meanwhile, we have a German Social Democrat, Martin Schulz, head of the European Parliament, taking the side of the French dissidents--the first German to do so, to my knowledge:
Les gouvernements des pays de l'UE vont "beaucoup trop loin" dans la politique d'austérité, juge le président du Parlement européen, le social-démocrate allemand Martin Schulz, dans un entretien avec le quotidien belge L'Echo samedi 27 avril.
So, at last, an actual debate about European economic policy is under way. There is little hope that it will lead to a significant change of policy. There are German elections in the fall, and Germany is not about to change course now.  But we might hope for some discreet loosening now and a broader rethinking of policy after the elections--if unrest does not break out in one of the countries squeezed by austerity before then.

Is Europe's New Language on Austerity Real?

Politicians on the left who have long campaigned against austerity worry that the softer tone on spending cuts adopted by Mr. Barroso and others will bring only policy tweaks on the margins. “Are we just fiddling while Rome burns?” asked Udo Bullmann, a German Socialist. “Europe is burning,” he told Mr. Rehn in Parliament on Thursday.
Pervenche Berès, Socialist chairwoman of theEmployment and Social Affairs Committee, is skeptical that signs of greater flexibility will result in a dramatic change of policy. “They still want to kill Keynes,” she said, referring to the British economist John Maynard Keynes, who believed that fiscal stimulus, not contraction, is sometimes the best solution to crisis. “They always make minimal changes at the very last minute when they have no choice,” she added.

Friday, April 26, 2013

Harlem Désir Is Failing as Socialist Party Chief

According to Le Monde.

Socialist Party Agitation Widens

After Claude Bartolone's statement of opposition to austerity and hostility to Germany, on which I reported the other day, we now have Jean-Christophe Cambadélis, vice-president of the European Socialist Party and deputy for Paris, coordinating a statement by the French PS attacking "the selfish intransigence of Chancellor Merkel." What's more, we are told by Le Monde that this statement has been "tacitly approved by the government."

My friend and colleague Gérard Grunberg sees this as a sign that Hollande is "losing control" of his party, in which a resurgent left-wing is about to replace his prudent go-along-to-get-along strategy with one of open "democratic confrontation" with Germany, to use Cambadélis's phrase. I don't agree with Gérard. I believe that a cleavage has opened up in the party, but not because of nostalgia for an earlier era when Cambadélis was a Trotskyist militant and Grunberg was a Rocardian. More recently, however, Cambadélis was a stalwart in the DSK faction of the party. To be sure, he is a political judoka, not an economic theorist, but it doesn't take a strategist of genius to anticipate the political disaster in store for the PS if it doesn't change course. Gérard attributes the rapidly evolving dissidence to "panic" within party ranks, but I prefer to see "realism." And it's hard to square the notion of a panicky party abandoning a resolute government with the suggestion that the government has "tacitly approved" the insurrection.

Indeed, the danger I see is that the government may be trying to have it both ways, encouraging a Potemkin dissidence while privately assuring Frau Merkel, qui en a vu d'autres, that it remains on board with austerity and is holding a steady course. Remember, Hollande's mentor was Mitterrand le Florentin. This is not the moment for small-bore Machiavellianism, however. The time has come for bold action.

But not this bold: Mélenchon says all will be right if he is named prime minister. It is amusing, however, to watch him fence with Jacques Attali.

Thursday, April 25, 2013

Austerity Routed?

Henry Blodget, equity analyst and inside trader, has declared Paul Krugman the winner in his debate with austerians: yet another sign that austerity is dead. The financial world has turned against it. It's costing them money. Can the politicians be far behind? Krugman ponders the question here.

Bartolone Calls Discreetly for a Change of Course

Claude Bartolone, president of the National Assembly, says that the time has come to inaugurate Phase Two of the Hollande presidency. He is calling for a "strong intervention" by the president of the Republic and a reorientation of policy toward social issues. And he believes that Germany should be challenged, even if it means antagonizing an ally. All in all, a blast at the president, though couched in carefully chosen words.

Wednesday, April 24, 2013

Collapse of Confidence in the EU

Depuis le début de la crise, la confiance en l'Union européenne (UE) a dégringolé de 32 points en France, 49 en Allemagne, 52 en Italie, 98 en Espagne, 44 en Pologne et 36 au Royaume-Uni.

Le plus frappant, c'est que tout le monde a perdu confiance dans le projet : aussi bien les créanciers que les débiteurs, les pays de la zone euro que les candidats à l'entrée et ceux qui reprendraient bien leur indépendance. En 2007, le Royaume-Uni, qui enregistrait une baisse de confiance de 13 points, était considéré comme l'exception eurosceptique. Il est remarquable de constater qu'aujourd'hui les quatre plus grands pays de la zone euro enregistrent des niveaux de confiance encore plus bas qu'au Royaume-Uni : l'Allemagne (– 29), la France et l'Italie (– 22) et l'Espagne (– 52).

Another Anti-Austerity Voice (or Peep?)

Enrico Letta, no. 2 in the Italian Democratic Party, has been called on to try to form a government (the no. 1, Bersani, already tried and failed). One of his first statements was "Europe's austerity policy is no longer sufficient." It might be a stretch to call this a vote for anti-austerity: "no longer sufficient" is hardly outright rejection. But Mr. Letta must speak carefully, and he is sending a signal not only to Italians but to his European overseers.

How much longer will François Hollande wait before sending a signal of his own? Now that the government has vetoed amnesty measures for certain strikers who destroyed property during the wave of violence that greeted Sarkozy's retirement reform, he needs more badly than ever to shore up his credibility with the left of the Left. Mélenchon will be on TV tomorrow night and will certainly not mince words about this latest abandonment of "workers in rebellion against austerity." Hollande has given plenty of tokens to the Troika. It's time he did something for people who voted for him.

Did Copé Blunder by Joining the Anti-Gay Marriage Movement?

Criticism of Jean-François Copé's decision to go all-in in support of the anti-gay marriage movement is not hard to find within his own party. Copé apparently thought he had an opportunity to emulate the US Republican Party by capitalizing on the social cleavage that emerged around the Taubira Law. But he overplayed his hand, many say, and lost more support among moderates while taking none from the extreme right.

"L'UMP perd les électeurs modérés et n'en regagne pas du côté des extrêmes", a ajouté M. Riester, manifestement inquiet par la stratégie de droitisation de son parti."La photo avec Collard est ravageuse", a-t-il encore déploré, suite à la présence du député d'extrême droite Gilbert Collard aux côtés d'élus UMP dans la manifestation, dimanche 21 avril. "Il n'y a pas de lien entre l'UMP et le FN", a rétorqué M. Copé.
Franck Riester was one of the few UMP deputies to vote for the new law. Another interesting attack came from Bruno Le Maire:

De son côté, Bruno Le Maire s'est opposé à la volonté de Jean-François Copé de transformer la grande journée de manifestation antimariage gay, prévue le 26 mai, en une manif "anti-Hollande". "La loi est votée. La manifestation du 26 mai n'est pas la nôtre. Notre famille est celle de l'ordre républicain, celle qui respecte les textes adoptés par le Parlement", a fait valoir le député de l'Eure. "Nous ne pouvons pas nous mettre a la traîne d'un mouvement qui n'est pas le nôtre", a-t-il tranché. L'ex-ministre de l'agriculture s'oppose ainsi à la ligne fixée par M. Copé, qui consiste à jouer le peuple contre la représentation nationale.

Barroso Attacks Austerity

Another sign that austerity in Europe has run its course: arch-neoliberal José Manuel Barroso has turned against it.

José Manuel Barroso, président de la Commission européenne, n'a pas mâché ses mots en critiquant, lundi 22 avril, la politique de rigueur menée en Europe: "Autant je pense que cette politique est fondamentalement bonne, autant je pense qu'elle a atteint ses limites. Pour être couronnée de succès, une politique doit non seulement être conçue correctement, mais elle doit recueillir un minimum de soutien politique et social", a résumé José Manuel Barroso.
This is an extraordinary statement. It is the first time that a top Troika personality has publicly conceded that austerity cannot succeed without a level of popular support that it cannot conceivably command. Barroso remains convinced, of course that austerity is a "correctly conceived" policy, but he has broken with the technocratic consensus that "correctly conceived" is all that is necessary for success.

Of course he is wrong about the policy being correctly conceived, but that is neither here nor there. The empirical results are in. Austerity has been tried and failed. It's time to move on. If even Barroso can see this, there is hope of movement in the right direction. And this is the first time I've ever had anything positive to say about Barroso.

Tuesday, April 23, 2013

Dati Abandons Paris Mayoralty Race in Favor of NKM

Rachida Dati, the former minister of justice, has dropped out of the race for the Paris mayoralty, saying that Nathalie Kosciusko-Morizet was the choice of "the media and the system." It's interesting that right-wing politics these days so often involves dueling pairs of personalities: Copé-Fillon, Dati-NKM, Wauquiez-Le Maire, Baroin-Bertrand, etc.

Gay Marriage Bill Passes in France

Gay marriage is now legal in France (or will be in June). The law passed the Assembly on second reading by a vote of 331 to 225, with 10 abstentions. Apparently one of those yes votes was cast by Henri Guaino, a leading opponent of the bill, who says he "made a mistake."

Is There a Political Crisis in France?

Gérard Grunberg thinks so. Gideon Rachman is not so sure, and thinks the country is doing fairly well, although he cites other commentators who compare François Hollande to Louis XVI. Dominique Moïsi, quoted by Rachman, sees a "crisis of regime."

The current bad mood has been magnified by two things: the acrimony surrounding the Cahuzac affair and the social cleavage revealed by the gay marriage bill. Neither of these will have today's prominence a year from now. Both are distractions from the central issue, which is Hollande's embrace of the European Troika's view that austerity and structural reform will yield growth. It has become increasingly difficult to deny that this proposition is false. Hollande nevertheless feels he has no alternative. Grunberg backs him up:
Le PS soutient de moins en moins le « sérieux budgétaire » pourtant nécessaire prôné par le chef du gouvernement. L’idée, certes floue et peu fondée, d’une autre politique, refait surface à gauche, mettant en danger à terme l’euro et la solidité du couple franco-allemand.
This is a succinct statement of the conventional wisdom. But is it true? Hollande's approval rating yesterday was 26%, the lowest ever recorded in the Fifth Republic, and still sinking toward the teens. If ever there were a political reason to break with the conventional wisdom of those whom Paul Krugman calls Very Serious People, this is it. If Hollande continues on his present course, and if IMF forecasts of low European growth for the next two years are correct, the Left will be in a very weak position as new elections approach. Meanwhile, it is being challenged by displaced workers, hundreds of whom recently disrupted a party meeting. Many who voted for the PS are badly disillusioned with Hollande's betrayal of his promise to buck austerity.

So why won't he try something different? He could, for instance, announce a major stimulus program for the next two years coupled with structural reforms intended to encourage investment in growth sectors rather than defensive subventions to declining ones. The great fear, of course, is that the bond markets would then turn against France, as they did against Italy and Spain. The ECB could of course deter bond speculators if it chose, as Mario Draghi promised, to do "whatever it takes" to preserve the euro. But the ECB has shown itself willing to support only those countries that toe the line on austerity and structural reform. Would it defend France if France chose "Keynesianism in one country?" There is no certainty, but I believe that it would. And is it certain that bond speculators would reject the rejection of austerity? Not necessarily: Bill Gross of Pimco, the world's largest bond fund, yesterday attacked austerity in the EU and UK (h/t Henry Farrell). Of course, Gross has been wrong in the past, spectacularly so about the direction of US sovereign debt prices, and it is by no means certain that his fellow traders would follow his lead (they haven't always). But here is yet another sign that a bold move might be rewarded rather than punished.

I favor such a move, but I have serious doubts that Hollande will attempt it. He, like many of the older heads in the PS, remembers the 1981-83 debacle all too well. He may feel that it is now too late in his presidency, and his popularity is at too low an ebb, to risk such a dramatic departure from the line he has set to date. But for most French people, that line is now so vague and fluctuating that he arguably suffers more from trying to hold to such an uncertain course than he would from setting a more definite one in a different direction. But I think he must make a move soon if he hopes to wrest his presidency from events beyond his control. If I were Hollande, I would seek to form a new government, a government of national unity, including politicians from the Right who might be willing to defy the Troika. Surely there are some (or some who could be enticed by the opportunity to run a ministry). And then I would stake my all on an active rhetoric of hope: we can get out of this crisis, if only we look at it as we should have looked at it from the beginning: as a crisis not of governmental excess but of private sector irresponsibility for which government has assumed responsibility without acknowledging the true source and nature of the crisis, or the validity of a Keynesian remedy if coupled with a new strategic vision of active industrial policy.

Monday, April 22, 2013

Socialist Academics Contest Government's Program for University Reform

A group of Socialist academics is protesting the university reforms proposed by the government (loi Fioraso). The gist of their complaint seems to be that too much of the spirit of the Pécresse reform (LRU) has been retained, including the strong emphasis on centralized management by university presidents. The protesters want greater "collegiality," that is, more power for faculty and staff, as well as larger budgets (which they say the LRU dangled before them but never made good on).

I predicted that Hollande's election would not change much in this area, but it brings me no joy to say that I was right.

Peillon, Citing "Intellectual and Moral Crisis," Proposes a Course in "Lay Morality"

Sarkozy insisted that the école laïque had failed to replace the Church as moral educator of France's young and proposed in some vague way that the priests be brought back in. Vincent Peillon, the current minister of education, appears to share the diagnosis of failure but as a good lay republican he thinks that the école laïque can heal itself. Hence his proposal to institute a course in "lay morality." Le Monde waspishly suggests that it can think of a number of politicians who could use a refresher course, but Peillon deflects the jab by insisting that what France needs is "un sursaut collectif." A nice Gaullist idea and Gaullist word, sursaut collectif. In these desperate times, the Socialist Republic seems to feel the need of a little Gaullian backbone. I wouldn't hold out much hope for, like, you know, actual results, however.

High Price of Housing Hurts French Competitiveness

Housing costs in France are high, especially relative to Germany, and this housing inflation, through its effect on wages and salaries, hurts French competitiveness, according to this piece in Le Monde.

Saturday, April 20, 2013

Communist Senators Quit Debate in Protest of Government Tactics

The government invoked a parliamentary procedure that limited senate debate on amendments to the new labor law proposed by its Communist allies, who left the Senate chamber in protest. This was in contrast to the ten days of debate and 5,000 amendments tolerated in the discussion of the Taubira Law (on gay marriage). This is no way to treat a part of the governing coalition.

Cohn-Bendit Sees Demoralized Left

For Daniel Cohn-Bendit, the Left in France is demoralized. He blames several things. First, there is the familiar refrain that social democracy across Europe is out of fresh ideas. Second, François Hollande has alienated the working class by failing to keep promises to protect failing firms, reform the tax system, etc. And finally, the Right, he believes, has renewed itself with the agitation over the gay marriage issue and the defense of "family values."

Is this the beginning of yet another cycle in which France follows the US with roughly a ten-year delay? I think not. The dynamics in France are quite different. Despite the large demonstrations, I do not believe that the anti-gay marriage forces represent a broad political base. It has been sobering to see the large numbers of young people from the posher quarters who say that they have discovered the joys of political demonstration for the first time. As Cohn-Bendit notes, however, we have seen such mobilizations before, most notably in 1984, around educational reform issues. Although some new members of the political class were recruited via this channel, the demonstrations of that year did not fundamentally reshape the political landscape. I don't expect this time to be different. And I find it hard to believe that large numbers of Frenchmen can envision either Frigide Barjot or Tugdual Derville as national leaders.

Wednesday, April 17, 2013

The Case for Austerity Weakened

The economics blogosphere has been agitated for several days by a just-released paper exposing errors of calculation and judgment in a 2010 NBER working paper by Ken Rogoff and Carmen Reinhardt purporting to show that countries that carry a debt/GDP ratio above 90% suffer from sharply lower growth. This paper has often been cited by European officials as justification for the austerity policy imposed on the countries of the Eurozone. Matt Yglesias has a good summary of the controversy here. Paul Krugman weighs in here, here, and here.

It is no doubt too much to hope that this debate will alter the settled views of policymakers, but with anti-austerity sentiment on the rise everywhere in Europe, it can't hurt.

Death of Ari Zolberg

Aristide Zolberg was one of the great political scientists of the last half-century, with a profound knowledge of France among a vast range of other subjects. For a tribute you to the man, I refer you to Arun Kapil, who was a student of Zolberg's. I didn't know him well, but on each occasion that I met him, I came away with the impression that he was not only a brilliant man but also, more importantly, as my grandmother would have said, "a real mensch"--Yiddish for an authentic human being. I note his passing with sadness.

Tuesday, April 16, 2013

Concerns about Jobs, Growth Trump Environment

The EU market for carbon emissions, which underlies the cap and trade approach to climate improvement, is in disarray, and the European Parliament just voted down a measure intended to boost sagging prices. Not surprisingly, Europeans are more worried about jobs and growth than they are about greenhouse gases. Unfortunately, this apparent failure of the carbon emissions market does not bode well for the future of the climate.

Sunday, April 14, 2013

A German Anti-Euro Party

Alternative für Deutschland, the new German party which claims to be anti-euro but not anti-EU, will hold its founding convention today. Make no mistake: this is not an anti-capitalist uprising by angry workers who resent the wage restraint that has been imposed on them by Germany's export growth model. It is a party of the right, even the extreme right:
Claudia Roth, présidente du parti écologiste Die Grünen, reproche ouvertement aux honorables professeurs « d’aller pêcher leurs voix à la droite de la droite ». Et l’AfD peut difficilement renier la dimension populiste de son message. Selon les flyers du parti, l’Allemagne « vit la plus grave crise de son histoire » et l’introduction de l’euro a été « une décision fatale qui menace notre bien-être à tous ». Pour la nouvelle formation, les partis classiques ont échoué. Ils sont « rouillés et au bout du rouleau ». Angela Merkel n’a cessé « d’enfreindre les règles du Traité de Masstricht ». Même l’allié libéral de la chancelière, le FDP, ne trouve plus grâce aux yeux de l’AfD depuis que ses dirigeants ont tout mis en œuvre, en 2011, pour étouffer une révolte interne conduite par le jeune député Frank Schäffler. Celui-ci espérait contraindre son parti à voter contre la mise en place du Mécanisme européen de stabilité (MES).
« Leurs prises de position recoupent la rhétorique de la droite populiste. Les prophéties du naufrage national, qui soit dit en passant ignorent le rôle réel de l’Allemagne en profiteur de l’euro et de la politique européenne, se retrouvent chez tous les partis populistes européens qui s’appuient sur la même thématique de la peur et du ressentiment : la perte de la souveraineté nationale, la soi-disant immigration non contrôlée, etc. », explique le sociologue et spécialiste de l’extrême-droite Alexander Häusler. Le politologue Oskar Niedermayer préfère néanmoins qualifier la nouvelle formation de “bourgeoise-conservatrice” et estime qu’il est prématuré de la classer dans les rangs d’une extrême droite populiste à la Gerd Wilders ou à la Marine Le Pen. Sur l’immigration, le programme de l’AfD n’évoque aucunement l’islam. Il veut cependant restreindre le volume des immigrants et introduire un système de points à la canadienne pour favoriser l’arrivée d’immigrés bien formés aptes à servir l’économie allemande. Mais c’est une logique qu’adopte également le gouvernement Merkel.
The party is led by economists such as Wilhelm Hankel, Wilhelm Nölling, Karl Albrecht Schachtschneider, and Joachim Starbatty, and the former president of the Federation of German Industry, Hans-Olaf Henkel. It is remarkable that Germany, which has profited more from the euro than any other country, has developed such a robust opposition to the single currency: the AfD has scored as high as 25% in early polling. This is a party to watch. The fate of the euro may depend on it.

Friday, April 12, 2013

Gaëtan Gorce Delivers a Pessimistic Analysis of the Socialist Party

Gaëtan Gorce, a Socialist senator, is pessimistic about the future of his party, which he sees as an "oligarchy" of self-promoting "clans":


Envisagez-vous de quitter le PS ?
Malheureusement, j'y pense presque tous les jours. Je n'éprouve aucune satisfaction à en parler comme je le fais. J'ai adhéré au PS à 16 ans. Je suis plus socialiste que jamais, mais je me sens très mal à l'aise dans mon parti car je ne vois pas les choses bouger ni les moyens de les faire bouger. Le PS a subi une défaite au premier tour de la présidentielle en 2002 et n'a pas changé, il a subi l'affaire DSK et n'a pas changé. Il subit l'affaire Cahuzac et ne veut pas changer... Avant que le bateau sombre, il peut se passer un certain temps. L'agonie peut durer très longtemps. Je ne peux pas m'empêcher de faire un parallèle avec le Parti radical des années 1930 qui, comme le PS, était un grand parti, avec de grandes personnalités et un grand projet, et s'est petit à petit affadi au point de devenir simplement un élément d'un système.

Choice Words from Retiring Cohn-Bendit

Here:

Le duo Hollande-Ayrault en prend pour son grade : « L’un dirige la France comme il gouvernait le PS, l’autre confond la culture de Premier ministre avec celle de maire de Nantes » ;
Les partis politiques, qu’il aimerait voir disparaître au profit de « mouvements », mais il ajoute, réaliste et délibérément contradictoire : « Il n’y a pas de démocratie sans partis politiques, mais je ne supporte pas les partis politiques » ;
...
« La France sera dans le monde ce que le Luxembourg est en Europe ».

Thursday, April 11, 2013

Mélenchon Inventories His Possessions

He has 12,000 books. I have about the same number. Mon semblable et frère. He has rather a good time with the whole disclosure business, listing his height, weight, and pant, shirt, and shoe size. Transparency indeed.

Is the Austerity Front Crumbling?

The eurozone is reluctant to admit formally that it is changing its austerity strategy, but in fact it is searching in every corner of national budgets to alleviate the squeeze on its troubled economies, and rightly so.
Recently, member states which have missed their budget targets (and that has been most of them) have been given more time to reach their objectives, implying less fiscal tightening in the near term.
I think Davies is unduly optimistic. Such tinkering around the edges of the problem will not deal with the core reality, which is that a massive amount of wealth has been or will be destroyed (collapsing asset prices, bond write-downs, etc.), and Europe has yet to share those losses in an equitable way. Until an agreement on burden-sharing is reached, which gives some relief to the weaker economies and accepts greater burden for the stronger ones, the application of more band-aids will not stanch the bleeding.

Prochasson Biography of Furet

Historian Christophe Prochasson has published a biography of the father of the revisionist school of the history of the French Revolution, François Furet. This promises to be a very interesting book, and I have ordered a copy. Furet was the son of a banker who became a Communist before turning against the very idea of revolutionary change. His work had a profound impact on the writing of history in France and, to a lesser extent, in the United States.

Review of Streeck, "Gekaufte Zeit"

Wolfgang Streeck, one of the leading theorists in comparative political economy, has a new book, Gekaufte Zeit, in which he argues that capitalism and democracy have become incompatible because capital rejects the fetters placed on it by democratic political systems. The books is reviewed here by Philip Mader.

Case Against Sarkozy Is Weak

The evidence supporting the charge of "abuse of frailty" against Nicolas Sarkozy in the Bettencourt affair is tenuous at best, according to Le Monde, which has analyzed all the documents.

The Grand Rabbin Resigns

Grand Rabbin Gilles Bernheim, admitting plagiarism and confessing that he did not actually hold an agrégation, resigned today.

Rehn Calls for Germany to Boost Demand

Times quotes Olli Rehn, European Commissioner for Monetary and Economic Affairs:
But Mr. Rehn also echoed calls made earlier this week by the U.S. Treasury secretary, Jacob J. Lew, for Germany, the biggest economy in the euro zone and one of its most robust, to do more to spur spending and help revive growth.
“I still believe, and the commission still believes, that there is much more Germany can do in order to boost its domestic demand,” Mr. Rehn said.
Germany, he said, should do more to open its service sector to competition, to increase the number of women in the labor market and to lift wages to match greater productivity. Such steps could lead to greater exports from other euro zone economies.
Now, Olli Rehn is hardly a model of anti-austerity politics, nor is he in any sense a Keynesian. In the same breath he calls on France to cut wages and government spending. But even at the heart of austerianism, there is a sense that demand must come from somewhere, and Rehn, like Lew, is calling on Germany to step up. I cite this article to extend the answer I gave yesterday to a comment by Brent on an earlier post.

Wednesday, April 10, 2013

The Transparency Circus

For once I agree with Jean-Luc Mélenchon. On France2 last night, he denounced the current rush by deputies to publish their balance sheets as un attrape-nigaud. Without controls, without investigative authority, without specific sanctions for prevaricating, anyone can declare anything and get away with it. Jérôme Cahuzac could have listed his "patrimony" as consisting of a modest apartment and a tiny bank account, and no one would have been the wiser (except that the address of his apartment might have suggested a different valuation). The absence of a Swiss bank account could not have been verified.

The president has now announced measures to establish some legal parameters for these disclosures, but the whole project leaves me uneasy. As several deputies have alleged (mainly on the right, to be sure), it suggests an animus against wealth itself. This is foolish. As Le Monde points out, a deputy's pay already puts him or her in the top decile of French earners. A minister's salary is even higher, and there are the perks of office. So these poormouthing declarations are scarcely believable. Am I supposed to be reassured that one deputy lists his wealth as consisting of a small apartment and a bank account of 5,000 euros on a salary of 7,000 euros a month? Shouldn't I question his poor money-management skills? Where did it all go? Is he keeping a mistress or drinking his income? Should I trust such a man with the management of the nation's finances when he can't seem to put any money of his own aside? These aren't the questions we ought to be asking of candidates.

Hollande Will Get a Replacement Camel

All is well with the Republic. The Malian authorities have let it be known that they will replace the camel given to François Hollande and left in the custody of a Malian family, which apparently misunderstood the terms of custody and ate the presidential camel.

Austerity: The Battle in France Intensifies

Christian Noyer, the governor of the Banque de France, insists that the government must cut expenditures by 40 billion euros over the next two years. Meanwhile, two other ministers, Hamon and Duflot, have joined Montebourg in challenging the wisdom of Hollande's austerity policy.

Tuesday, April 9, 2013

More Plagiarism Charges against Rabbi Bernheim

Gilles Bernheim, le grand rabbin de France, has been accused of additional instances of plagiarism. More shocking still, he apparently stole from ultraright Catholic authors who wrote against gay marriage and adoption:
Quant aux notices biographiques, "elles ne sont pas faites par l'auteur que je suis", mais "par d'autres personnes, il y a des erreurs qui se véhiculent et qui finissent par devenir des vérités. Pour ma part, je le regrette profondément". Les derniers "emprunts" du grand rabbin concernent l'essai qui a paru à l'automne contre le mariage pour tous, intitulé Mariage homosexuel, homoparentalité et adoption : ce que l'on oublie souvent de dire. Un essai salué comme celui d'un "sage" par de nombreux catholiques et même cité publiquement par le pape Benoît XVI, le 21 décembre 2012.

Sur son site, Archéologie du "copier-coller", Jean-Noël Darde met en évidence le rapprochement entre certains passages de l'essai et l'ouvrageL'Idéologie du gender. Identité reçue ou choisie, du prêtre Joseph-Marie Verlinde, fondateur de la Fraternité monastique de la famille de saint Joseph. Un autre plagiat concerne la reprise, mot pour mot, d'une interview de Béatrice Bourges, présidente du Collectif pour l'enfance, catholique ultraconservatrice en première ligne contre le mariage et l'adoption par les personnes de même sexe.

Montebourg Goes Off the Reservation

Arnaud Montebourg has become the first Socialist minister to openly criticize the politics of austerity embraced by the Hollande government. He thus joins the "restive" ranks of the PS, about whom I wrote earlier. With talk of a cabinet reshuffle circulating, it may be that Montebourg senses he is on the way out and wants to shape the commentary on his departure by bidding to become the leader of the internal opposition.

He is a natural for the post, having stood to Hollande's left since the primaries. But he is also an ambitious opportunist whose commitment to anti-austerity will likely be questioned strenuously by other dissidents. Still, this is yet another sign that within the Socialist Party and even within the government, things are beginning to move.

Montebourg:
Le gouvernement a fait des efforts sans précédents pour faire face à la montagne himalayenne de dettes que le sarkozysme nous a léguée. Ces efforts, la Cour des comptes les a signalés, la Commission européenne les a soulignés. Mais le sérieux budgétaire, s'il tue la croissance, n'est plus sérieux. Il est absurde et dangereux. Il est donc plus que temps d'ouvrir le débat sur cette politique qui conduit l'Union à la débâcle.

Fillon Jabs at Copé with Financial Disclosure

Former Prime Minister Fillon has irritated his archrival, party leader Jean-François Copé, by calling for deputies to release their financial statements for public scrutiny. Copé, a corporate lawyer on the side, presumably has more to answer for on his balance sheet than Fillon, who likes to present himself as a humble country squire from the Sarthe. So we have another skirmish in the Long War to become the next president.

Monday, April 8, 2013

Gift to Hollande Meets Sad End

Grateful Malians gave François Hollande a camel as a token of their appreciation for sending French forces to Mali. At first, Hollande planned to have the animal sent to a French zoo, but this proved impracticable, so he left it in charge of a Malian family. Unfortunately, the camel has now reportedly been slaughtered and eaten:
The young two-humped animal, a gift to Mr Hollande for liberating Mali, has been killed and put in a stew, according to Jean-Yves Le Drian, France's defence minister.


Mr Le Drian was informed of the camel's demise by officers tracking Islamic terrorists in the former French West African colony and broke the news on to the Élysée Palace, according to Valeurs Actuelles magazine. (h/t RM)


Krugman: The ECB Is Backstopping France with its Printing Press

According to Paul Krugman, the ECB has assumed its proper role of lender of last resort with regard to France, because it realizes that without France, the euro will fail. Consequently, French borrowing costs have fallen sharply. Krugman sees an opportunity for genuine Keynesian stimulus. With the restiveness in the ranks of the PS discussed in a previous post, Hollande might want to consider availing himself of this opportunity. Even a tepid stab in this direction would be a bold declaration of independence from Germany and a chance to regain the initiative and do something about rampant unemployment. It is hard to imagine the cautious Hollande taking such a step, however.

Chart of French 10-yr borrowing costs

Heuliez Goes Under for the Third Time

Heuliez, an auto body manufacturer that has been trying to diversify into other lines, filed for bankruptcy for the third time. You will recall that back in 2010, when we were all still Keynesians, Ségolène Royal boasted of having saved the firm, which is located in her region (Poitou-Charente) by investing state funds. This latest failure is an object lesson in what can go wrong with such industrial policies.

Of course, it might have worked out. A large pending order from Volkswagen might have saved the firm, but it didn't come through in time. Still, in a time of general overcapacity in European automobile manufacturing, the decision to prop up a failing firm must be weighed very carefully. One of my steady criticisms of French policy is that too much state money has gone to failing firms and too little to promising startups, R&D, and infrastructure. Given the constraints on state budgets, every grant requires close scrutiny. To be sure, Obama saved the US auto industry, but the US market is very different from the European market, as French policymakers should know.

Socialist Troops Are Restive

The Cahuzac affair has triggered a public airing of socialist complaints about Hollande's economic policies that were hitherto circulated largely in private. The complaints are coming from all wings of the party, including the majority, and if any one theme unites them, it is that current policy offers no clear strategy for reigniting growth. It's a good thing that the questioning of austerity is not simply abandoned to the extremes of left and right, but it will take some leadership and some work to fashion a coherent critique out of these intraparty murmurs. Let's hope that the right person steps forward. He or she is likely to be someone not associated with the current government.

Saturday, April 6, 2013

Camus's Algerian Chronicles in English

My latest translation is out:



I will be speaking about Camus today at the Society for French Historical Studies in Cambridge, Mass., as part of a panel honoring the centenary of his birth.

Another Case of Plagiarism

This time it's Patrick Buisson, the extreme-rightist advisor of Sarkozy, who is caught red-handed.

Times Editorial Calls Hollande "Disappointingly Weak" Leader

He has, in fact, been a disappointingly weak leader since his election 11 months ago. Voters who expected him to push back against demands for more austerity from Germany’s chancellor, Angela Merkel, and other European leaders have been bitterly disappointed. France’s unemployment rate has risen steadily and is now 10.6 percent, the highest in nearly 14 years. And even before the Cahuzac scandal broke, Mr. Hollande’s approval ratings had sunk to a lowly 27 percent.
With more than four years left in his presidential term and a strong parliamentary majority behind him, Mr. Hollande does not need to worry about losing his job. But if he wants to be considered a successful president, he will have to do much better at delivering on his promises of clean government and economic revival.
I would put it somewhat differently. I would say that, like Barack Obama, Hollande has proved to be a far more centrist and far more cautious leader than many who voted for him believed he would be. Unfortunately, he lacks Obama's charisma, which has allowed the American president to retain the support of many voters who disagree with specific policy choices (such as his recent offer to cut entitlements). And Obama has a freer hand than Hollande, because he is not hampered by membership of a currency union whose economic powers are deeply committed to austerity.

But "weakness" is a loaded word to apply to a political leader. It fails to register the real constraints on action and the genuine reasons for caution in dangerous times. It also fails, in the specific cases of Hollande and Obama, to note that both men ran on platforms whose rhetorical and symbolic trappings suggested left-wing commitments belied by the fine-print of their policy positions. It was not hard to predict that Hollande would tack to the center once in office. If there was "weakness," it was on the part of those voters who succumbed to the suggestion (particularly in his Le Bourget speech) that his heart was on the left. It wasn't, and neither is Obama's. That doesn't mean that they don't deserve the support of those who stand to their left, since the alternative is far more disagreeable to contemplate.

Thursday, April 4, 2013

Review of Le Maire, Jours de Pouvoir

Stéphan Alamowitch has an excellent review of Bruno Le Maire's Jours de pouvoir, essentially a diary of the last few years of the Sarkozy regime, in which Le Maire served as agriculture minister. I am reading the book myself at the moment and can attest that the review captures its spirit accurately.

On the GUD

Historian Nicolas Lebourg writes about the history of the GUD, the extreme-right organization to which Cahuzac's friends are supposed to have belonged.

Why Was Cahuzac in the PS?

Pierre Haski raises an interesting question. What was Jérôme Cahuzac doing in the Socialist Party? Haski takes note of Cahuzac's close relations with two members of the violent extreme-right organization known as GUD (Groupe Union Défense), discussed in this Le Monde article. Cahuzac was a wealthy surgeon on the make. This, plus his choice of close friends, would seem to have destined him to end up on the right when he chose to turn to politics as a career. Was it simply opportunism? Was there an opening to run for local office on the left at the time he took the plunge? What oriented him toward the Strauss-Kahnian wing of the party? It's an interesting question in the microsociology of politics, to which I have no answer.

France's Chief Rabbi Admits to Plagiarism

One scandal seems to bring on another. Is there no morality in France? At times it seems that everyone in the public eye has something to be ashamed of. France's chief rabbi Gilles Bernheim admits to having plagiarized entire pages from the work of Jean-François Lyotard, among others. Bernheim blames his ghostwriter, however.

Further Reflections on the Cahuzac Affair

Yesterday, François Hollande announced several reforms directed against the sort of corruption that Jérôme Cahuzac has now admitted. Bernard Girard believes that this presidential intervention, marked by the president's grave and forceful tone, will help to salvage his quinquennat and rebuild his authority. Few other commentators share that view. Already there are calls for more drastic presidential action, such as a cabinet shakeup.

Of course the cabinet shakeup is the last refuge of all political scoundrels. It is what one does when something must be done, even if it's unlikely to do any good. And that may well be the situation in which Hollande finds himself at the moment. The problem is that his options are severely limited. Who would be likely candidates to replace Jean-Marc Ayrault? Pierre Moscovici is already under attack by the right for connivence with Cahuzac. Manuel Valls, often touted as the next prime minister, has been accused of failing to pursue the allegations against Cahuzac with a parallel investigation led by agencies under his control. If Hollande were to turn to Fabius, he would be accused of a panicky retreat into the Mitterrand era. Martine Aubry? She and the president do not get along. Ségolène Royal? Heavens! There are less well-known possibilities, but if the point of replacing Ayrault is to escape from an intolerable impasse, the new PM will have to appear credible from day one. I have heard rumors that, in an attempt to shake things up for real, Hollande might even look beyond the PS to, say, Bayrou or Borloo.

Any such move could easily backfire. If seen as a panic response to a crisis, it could actually weaken the presidential authority it is meant to strengthen. Meanwhile, this whole business distracts from the real problems facing France, of which tax evasion by a minister is definitely not one.

Wednesday, April 3, 2013

Quatremer on the Cyprus Crisis

Jean Quatremer has the best account I've yet seen of the colossal mishandling of the Cyprus banking crisis. For the first time we learn who did what at each stage of the unfolding crisis. The principal culprits: the Cypriot government and the Dutch finance minister Jeroen Dijsselbloem. And where was the French government input while all this was going on? If France tried to minimize the damage, Quatremer hasn't been able to find out how.

UPDATE: This other piece by Quatremer explains that France blocked the appointment of German finance minister Wolfgang Schäuble to head the Eurogroup, thus allowing the manifestly unqualified Dijsselbloem (an agricultural engineer by training) to slip into the post.

Cahuzac's Account at UBS May Have Been Opened by a Lepeniste

According to this article.

Cahuzac Reaction

You can't get much angrier than this:



European Unemployment Hits 12%

Unemployment in the Eurozone has attained its highest level ever in the euro area. Mark Cliffe, chief economist of ING, said that “it’s a bit of a vicious circle. Europe is pursuing a policy that is self-evidently failing.” Meanwhile, two books have appeared to make the case against austerity:


and

Both are highly recommended.


A reader says that the titles aren't visible. If the links to Amazon don't work, here are the titles: Robert Kuttner, Debtors'  Prison and Mark Blyth, Austerity.

Bussy-Saint-Georges, Where Laïcité Meets Multiculturalism

Scott Sayare has a nice piece in the Times about the Paris suburb of Bussy-Saint-Georges, whose enlightened mayor, Hugues Rondeau, has created an "Esplanade of Religions" honoring the many sects that reside in his growing city. His work has been praised by UNESCO as creating a "city for intefaith dialogue." "Laïcité can often be a caricature," says Rondeau.

Tuesday, April 2, 2013

Cahuzac Confesses

Jérôme Cahuzac, who had hitherto denied possessing a foreign bank account as alleged by Mediapart, has now admitted to investigating magistrates that he has held as much as 600,000 euros abroad for the past twenty years. He was immediately mis en examen for suspicion of fiscal fraud. Cahuzac had denied his guilt even to the president, who he claimed to have "looked in the eye" while proclaiming his innocence.

Territorial Reform Bogs Down Again

Although everyone agrees that there is much duplication, overlap, and waste in the administration of localities and regions in France, major vested interests are tied to useless entities so reform is difficult, as Sarkozy discovered. And now Hollande is discovering the same thing. Every PS senator opposed the reform proposed by Marylise Lebranchu, the minister for state reform, and her project has now been modified and divided into three separate bills in place of the original one.