Thursday, April 3, 2014

Simon Wren-Lewis on the Responsibility Pact

Here:
Why does the economic policy pursued or proposed by the left in Europe often seem so pathetic? The clearest example of this is France. France is subject to the same fiscal straightjacket as other Eurozone countries, but when a left wing government was elected in April 2012, they proposed staying within this straightjacket by raising taxes rather than cutting spending. Although sensible from a macroeconomic point of view, this encountered hostility from predictable quarters, as I noted here. But in January this year President François Hollande announced a change in direction, proposing tax cuts for business and public spending cuts. When your macroeconomic announcements are praised by Germany’s foreign minister as courageous, you should be very worried indeed. Any hopes that Hollande might lead a fight against austerity in Europe completely disappeared at that point.

You could argue that France was initially trying to oppose irresistible economic and political forces, and no doubt there is some truth in that. But what was striking was the manner in which Hollande announced his change in direction. He said “It is upon supply that we need to act. On supply! This is not contradictory with demand. Supply actually creates demand“. This is not anti-left so much as anti-economics. Kevin O’Rourke suggests this tells us that to all intents and purposes there is no left in many European countries. It would indeed be easy to tell similar stories about the centre left in other European countries, like Germany or the Netherlands. With, that is, the possible recent exception of the Vatican!

Bouvet on Valls

Political scientist Laurent Bouvet analyzes the ascent of Manuel Valls as the advent of a new configuration of the governmental left. Bouvet describes the first 2 years under Hollande as an attempt at a Mitterrandian synthesis between a Rocardian "second left" distrustful of state management of the economy, favorable to decentralization, deregulation, and self-management (if one deforms the word a bit to mean not autogestion of the workplace by workers but management of the economy by leading firms) and another left "antiliberal" in its economics but "liberal" in its "cultural" and "moral" values and dedicated to individual "liberation." Valls was the leader of the former faction, Taubira of the latter, in Bouvet's view.
L’actuel président de la République a cru pouvoir être celui, comme Mitterrand en son temps, qui pourrait faire la synthèse de ces deux nouvelles familles, à la fois confiant dans son habileté tactique et conforté par une campagne présidentielle qui les a facilement réunies en 2012 autour d’une volonté commune de faire tomber Nicolas Sarkozy.
Las, il s’agissait d’une illusion qui s’est vite dissipée une fois au pouvoir. Ces deux nouvelles gauches se sont en effet révélées, petit à petit, à l’occasion des grands choix économiques et à propos des questions «de société» qui sont venues en débat. La conscience des fractures qui les séparent s’est ainsi considérablement accrue ces derniers mois.
On peut parier que l’action de Manuel Valls à Matignon rendra plus clair encore le schéma qui s’est ainsi esquissé depuis deux ans. Face à une telle clarification, le président de la République n’aura alors pas d’autre choix, s’il veut continuer d’exister politiquement et proposer à nouveau sa candidature en 2017 que de maintenir une forme d’équilibre entre les deux pôles, sans jamais donner le sentiment qu’il néglige trop l’un au profit de l’autre, et ce malgré leur éloignement. C’est dans cet exercice quasi-impossible que réside la clef de la réussite ou de l’échec de son quinquennat.