Saturday, January 18, 2014

Neoliberal Coup or Political Genius? The Two Sides of Françoise Fressoz (and François Hollande)

In her blog, Françoise Fressoz, Le Monde's political correspondent, is the scourge of neoliberalism:
De fait, lui [Hollande] et son gouvernement mettent en place tous les instruments de la régulation, mais avec un tel retard à l’allumage, une telle faiblesse syndicale, que la partie est loin d’être gagnée. Seule l’invocation patriotique, l’appel à l’union pour le redressement national pouvaient masquer dans les mots la victoire par K.-O. du libéralisme.
In the paper, however, she is an effective spin doctor for the powers-that-be, presenting the "responsibility pact" as a great leap forward:
Avec sa politique de l'offre qui rejoint toutes les thématiques du couple Bayrou-Borloo, le coup de la triangulation est quasi parfait. Le centre est remis en selle tandis que les dirigeants de l'UMP se divisent en deux camps : Alain Juppé, Bruno Le Maire, Jean-Pierre Raffarin et les libéraux-centristes prêtent une oreille attentive, les sarko-copéistes campent sur leur position d'opposition ferme.
So, which is it? A "victory by knockout for liberalism" or a brilliant exercise in political triangulation which has won over the center and split the UMP?

Of course, the answer is surely "both." If you read the second piece in its entirety, you have the impression that Fressoz and her co-writer David Revault  d'Allonnes have drunk the kool-aid, or at least the "deep background" briefings obviously given to them by Pierre Moscovici and François Rebsamen, and have decided to concentrate not on the economic substance of the pact but rather on the political strategy behind it. And their portrait of that strategy is rather convincing. Hollande has been persuaded that he cannot count on political support from the Front de Gauche for anything he does. He must therefore build a new coalition, different from the one that elected him. The Bayrou-Borloo rapprochement and the growing fissures in the UMP have given him an opening to do that. In addition, ongoing negotiations with Pierre Gattaz and the Medef have convinced him that he has more room for maneuver there than with Mélenchon, who despises him and won't give him the time of day. So he cut a deal. The deal is described as "risky," but the word is carefully chosen to fit the rhetorical strategy of the Fressoz-d'Allonnes article, which is to portray the hitherto hapless Hollande as a suddenly reborn "leader," a bold general in command of his troops.

Indeed, he is said to have quelled rumors of a Valls-led palace coup, put his ministers back in line, and "reoriented" Ayrault, who tried to go "too far, too fast" with his announced "complete overhaul" of the tax system. Here, of course, we see the Moscovici spin: Mosco resented Ayrault's attempted coup, which cut him out of the loop, and he is now kvelling about having imposed a Strauss-Kahnian line instead, while elbowing another rival, Valls, out of the limelight.

Yes, it all makes for thrilling reading, but the literary genre here is fantasy, not hard-core realism. The narrative fails to reckon with any reactions outside the walls of the National Assembly. The government will risk a no-confidence vote on the responsibility pact, daring the Front de Gauche to vote against it and counting on centrist votes to keep it in power if that happens. Brilliant.

But the narrative also implicitly assumes that results will soon be tangible: unemployment will decrease at an accelerating rate, wages will rise, firms will invest, and all because the payroll tax has been reduced a bit. Nothing is said about the consequences of the promised public-sector cuts and the consequent reduction in demand. Not a word is breathed about what might happen if employers are seen to drag their feet on the famous contreparties while sitting on the piles of cash that begin to accumulate when the cotisations familiales are eliminated. And surely the brilliant strategists at the finance ministry have given a moment or two's thought to what might lie in store if workers take a dim view of this latest "triangulation" and decide to express their lack of confidence in the administration outside the walls of parliament. How long before the positive gloss that Fressoz and d'Allonnes have put on "le tournant 2014" turns to "I told you so, unvarnished neoliberal welfare state retrenchment is a no-go in France?"

14 comments:

FrédéricLN said...

As a non-Parisian, I fear that what's happening down there is exactly this kind of things: decision makers shaping economic polities, not at all in consideration of impacts to expect, but just as a party-political triangulation mechanism. Yet it did not happen so often, Mitterrand acted just this way, Sarkozy a bit, Villepin maybe; but I don't remember other examples under the Vth Republic. Maybe because most governments know the are ignorant of economics, and prefer not to do anything substantial in this field.

Exceptions again, of some who knew something and knew they knew: Pompidou under De Gaulle and after that, Chaban with Delors, Monory under Barre, Balladur, Rocard.

One who didn't know, but understood and decided much: De Gaulle.

Some who didn't know, didn't understand, and yet take many outlying decisions: Aubry under Jospin, Sarkozy all mandate long.

About Chirac under Giscard (74-76), I don't know it his economy policies were pure party-political strategy, or just nonsense.

Regarding Hollande, I would be on faded cynicism, something under Coteau's "Puisque ces mystères nous dépassent feignons d’en être l’organisateur"
(As all these mysteries are beyond us, let's pretend we're organising them — suggested translation by a kudoz member).

In the ridiculous name "Observatoire des Contreparties", all words count ;-)

"Observatoire" because nothing can be decided or controlled, just watched from the river;

"des" because you never know what can happen, it will probably not be about jobs;

"contreparties" because what counts for the political power, is some allegiance back from the business, I give to you, you should give to ME — from people's perspective, jobs would never look like a contrepartie.

FrédéricLN said...

…… I would "bet" ……, and Cocteau's ……

brent said...

I would agree that there is no real contradiction in Fressoz's remarks: yes, Hollande has officially moved his administration into the economic neo- liberal camp, and yes, he may thus score a political coup by annexing a bloc of the center-right, or at least neutralizing them.One can deplore and admire this at the same time.

But about the Front de Gauche: it's worth noting that the FdG just split down the middle, with the larger half of the PCF abandoning JLM to run with the PS in March. Of course those Communist maInstreamers are now in the position of affiliating with an avowedly right-wing administration. This could be just what Mélenchon needs to regain control and build the FdG into a true Left opposition party, in the absence of any other Left. Not that Hollande and the PS seem to care. But if they can't fix the economy--and supply-side donations to the rich aren't a widely respected solution--the risk that this policy shift will grow a Left opposition alongside the far right one is worth considering.

PF said...

Brent: if this Hollande maneuvering actually does spur Melenchon and his party leadership to come up with better policies, political strategy, and mass messaging for the national and international problems facing France, then that would be fantastic.

At this point, the FdG has failed in carefully calibrating how to keep up pressure on the PS to provide leftist solutions, but maybe they can at least start elaborating on and building on their own constructive solutions (rather than merely critique).

Mitch Guthman said...

If it’s true that Bayrou has been urging Hollande to adopt “supply side” economics and implement another round of austerity, then it is neither surprising nor disappointing that his party has vanished into nothingness.

From the same Le Monde article: “François Bayrou, qui regarde l'intervention présidentielle à la télévision en compagnie de quelques proches, manque de s'étrangler : « C'est ce que je lui avais dit il y a dix-huit mois ! », s'exclame le président du MoDem.”

Frédéric, assuming that Bayrou is being quoted accurately, how do you think that "supply side" economics and another wave of austerity will play with the MoDem voters?

bernard said...

@Brent
"This could be just what Mélenchon needs to regain control and build the FdG into a true Left opposition party, in the absence of any other Left."

Said like a true Troskyst. As they say, one guy a party, two guys an international, three guys a break-up. Only joking of course...

Sta said...

This strategy comes too late probably. The political center of Bayrou anf Borloo is now allied to the right, including for the next municipal élection of Pau. In addition, the centrist voters despise Hollande, and even more so after his unelegant affair with an actress. At any rate, the socialists may gain voters in the center (the middle class living in large cities, working out of the public sector) but that will not be enough to make up for the losses in the traditional left (lower middle class, working class).

DavidinParis said...

If brilliance is simply clever politics in the absence of a plan that has a real chance of working, then I agree, there is some brilliance to be found in this tableau of total confusion.

Mitch Guthman said...

@ Sta,

I think you're overlooking how totally bizarre this situation has become. When you say that Bayrou and Borloo are now "allied with the right," that's not as clear as it was a few days ago.

After all, the PS is now the party advocating tax cuts for business, a second wave of real austerity and the serious whittling down, if not the outright end, to the social welfare state.

If the Socialist Party isn't now a party of the right, hasn't that term lost all meaning? So, to whom are tion has become. When you say that Bayrou and Borloo are now committed to the right, except for the FN, who is to the right of the PS?

FrédéricLN said...

@ Mitch Guthman: it's quite likely that Bayrou's quotation is accurate. For people in the political milieu like himself, Borloo, Rocard, Delors, and so on, there were only two things wrong with the PS:

* first, its complete ignorance of what makes jobs, growth, economic stability, efficiency and the whole, (under this regard, absolutely no comparison possible with the U.S. Democratic Party!)

* second, its party-political option never to ally with the democratic center, since the foundation of the present PS in 1971 (and the opposite option, l'Union de la Gauche, with the then-totalitarian PCF).

Rocard, Delors and others drew, from this last issue, the conclusion that it was necessary to become PS members, and watch economic issues secretely, without raising others members' attention. Sometimes they succeeded (1983-84, 1989-91…), sometimes they had awful "couleuvres" to eat (1981-1982, 2005-2007…).

Bayrou, Borloo and others drew, from the first issue, the conclusion that democratic, social, green issues would require to be pushed from outside PS and "la gauche", and the hope to sink that so obsolete and irrealistic French left, possibly through an alternative coalition with some or all Greens (Borloo in 1992 in Nord-Pas de Calais. Bayrou in 2007). This hope remained vain, and their performance in pushing progressive policies has been very limited at national or European level, as the right is dominated by a strange coalition between nationalist militants and some (real-estate and financial) big business interests.

So, I guess that Bayrou and Borloo hope that the left will truly admit that businesses, entrepreneurship, production, private investment, are legitimate topics and valuable accomplishments, not (or not only) enemies. That's probably what the hear when Hollande praises "l'offre", so supply-side economics.

And moreover, they may hope that this change will also make PS more open to work in common with the center.

But I think it is a "double méprise", at least.

a, the more PS will consider itself "gouverner au centre", the higher they should raise barriers against the center parties. Mitterrand dis the very same move in 1988, with full success.

b, the PS doesn't know anything in supply-side economics. Delors and Rocard's generation is retired since decades, and they haven't been replaced. Announcing a cut in cotisations by 1.5% GDP for 2017 — so AFTER the presidential term! — that should necessarily be replaced by quite similar taxes, namely CSG or others, is not supply-side economics, but only talk.

Moreover, Hollande alrealy made quite the same kind of announcements 13-14 months ago, with no impact.

Demand is not low in France (see the first graph in http://www.insee.fr/fr/themes/info-rapide.asp?id=19&date=20131224 ). If governments tried to reduce it (the Portuguese or Spanish way), not only would the left oppose to that, but the center too, for sure (I remember debates in 2003-2005 that were quite clear under this perspective).

Supply (either in companies, or by public government sevices) is, to make it short, obsolete. Under this perspective, I would be in favor of supply-side economics. In a micro-economic perspective: stop sending the most brilliant students to finance and push them into "main street economy"; stop speculating on real estate prices, and invest into real estate-based services and production; stop pushing maths and XIX/XXth century economics, and teach information systems, data engeneering, model building; stop leaving the control of economics to financial engeneering, stop offshoring profits to fiscal harbors, free main street economics from speculative loops.

I don't see that coming, at all.

Art Goldhammer said...

Frédéric, The INSEE stats you cite do NOT show that France doesn't suffer from inadequate demand. The linked data say that CONSUMPTION is up, mainly due to the increased cost of ENERGY. That leaves less disposable income available for other goods. Higher energy costs also affect the supply side and are likely to be passed through to the consumer. While I agree that there are many things that can be done in France to improve the supply side of the economy, I think it's just wrong to deny that there is also a demand shortfall.

FrédéricLN said...

@ Art: thank you for reading this long comment and replying — but the month's INSEE title is not the point (the energy prices go up and down from one month to another, so does this title), energy prices are altogether stable since the beginning of 2012 (graphs in http://www.statistiques.developpement-durable.gouv.fr/fileadmin/documents/Produits_editoriaux/Publications/Chiffres_et_statistiques/2014/chiffres-stats484-conjoncture-energetique201311-janvier2014.pdf ).

The piece of information was in the INSEE graph that shows a stable consumption since several years. Not going up, for sure (there must even be a slight decrease per capita). But no crackdow, And the foreign markets rise fast (+3.1% in 2014, IMF forecast) — but France's market share decreases.

BTW, I tried to develop my point of view in French on http://demsf.free.fr/index.php?post/2014/01/20/Hollande-economie-de-l-offre-et-centre — thank you, and thanks Mitch, for giving me the kick!

PF said...

Frédéric,
You mentioned Rocard among the moderate PS faction of the past generation. Hopefully his recent preface to Yanis Varoufakis's proposed pragmatic leftist solution to the eurocrisis helps that work get some more attention and promotion in France, among the public but also among PS policymakers:

http://yanisvaroufakis.eu/2014/01/16/modeste-proposition-pour-resoudre-la-crise-de-la-zone-euro-the-modest-proposal-4-0-published-by-les-petit-matins-with-a-foreword-by-michel-rocard/

http://www.amazon.fr/Modeste-proposition-pour-résoudre-crise/dp/2363831241/

FrédéricLN said...

@ PF : thank you. I think Jacques Delpla made the same proposal two years ago (red debt, blue debt), and I agree on the relevance of the topic. Even if I disagree on the proposal — I think that "who pays, should decide" (and conversely): asking the ECB to carry a debt, without having any means to recover the money, is a bit absurd IMHO. When central bankers lent money to States, at least they had the money (gold), and ECB has almost nothing.

BTW, I would not qualify Michel Rocard as "moderate"; his PSA was rather more radical than PS. I would qualify him as one of the PS members (and he was already so at PSA) who cared about reality, beyond political parisian arrangements.

As a matter of fact, you are right, caring about reality often pushes others to qualify you as "moderate", whatever the party, either left or right.

But the opposite should be true, imho: it requires to care about what your policies really do, to get real changes in the economy or society. And Rocard did get meaningful and lasting changes (CSG), where nothing lasted of the 1981-82 economic policies. So, if we call "radical" these who plan to get structural results, Rocard and Delors were radicals ;-) !