Friday, April 24, 2015

Macron as Colbert

Emmanuel Macron, the symbol of Hollande's supposed neoliberal turn, now declares himself to be a Colbertist, in the finest French tradition of state capitalism:
La France a bâti après la seconde guerre mondiale un capitalisme d’Etat, fidèle à sa tradition colbertiste, et un capitalisme familial. C’est le soutien des pouvoirs publics et l’énergie entrepreneuriale qui ont rendu possibles les réussites industrielles de notre pays, et ce sont les choix industriels de long terme qui ont permis les investissements de l’économie française des « trente glorieuses ».
Sheesh. Rien que ça: revive the spirit of les trente glorieuses. But how? Well, that's where the column gets a little murky and needs greater financial acumen than I possess to decipher its meaning. There's some huffing and puffing about Google and Facebook B shares, for example:
Que dire en effet des actions B de Google ou de Facebook, pour ne citer que ces seuls exemples, qui accordent dix voix par action à leur détenteur ? Sortons de la naïveté française qui voudrait un libéralisme offert qui n’existe nulle part ailleurs ! Soyons compétitifs, exigeants avec nous-mêmes, mais cohérents avec notre vision de long terme.
Hmm. OK. In any case, the bottom line seems to be that the state is going to buy more shares in Renault, enough to constitute a blocking majority, to force Renault to do what it wants, and will later sell those shares. Beyond that, there seems to be some longer-term plan afoot to make strategic state investments in order to oblige certain firms to maintain manufacturing operations in France that they might otherwise shift elsewhere. And underneath all this, there is apparently an intention to change the way dividends are taxed and to encourage individuals to own shares in French companies rather than investing in real estate and assurances-vie.

Is there a coherent economic strategy behind this? Are large shareholders about to be given a tax break with significant distributional effects, which for obvious reasons Macron prefers not to discuss? What is the real strategy here? I confess I don't know. But this bears watching. It has the earmarks of one of those significant reforms that will ultimately change everything but that no one pays attention to while they're happening because the language in which they are expressed is addressed to tax accountants.


Mitch Guthman said...

Perhaps Macron is simply confused about which Colbert he’s meant to be aping?

Top 10 Insurance Companies said...

Nice Article sir, Keep Going on... I am really impressed by read this. Thanks for sharing with us. France National Flag Images.

FrédéricLN said...

@ Mitch Guthman: there is a very lively debate inside the French left between, let us say, "digital natives" who hope that France will at last embrace new economy and strike back in the world arena, as id did in 1885-1910; and self-claimed "colbertistes" saying that the State must organize the economy, close borders when needed, subsidize our failing industries, because if left to the rules of global market, they would certainly loose before owes that are stronger by essence (the US, China), and only State support gives us the ability to compete… as Louis XIV confronted the whole Europe… (and lost — they forget that).

Art, about "there seems to be some longer-term plan afoot" — how surprised I would be if it was the case.

FrédéricLN said...

oops, "owes that" ? unreadable and I can't understand what I meant to write. Maybe "global leaders, who" :)

Cola di Rienzo said...

So important in fact, that Macron has now published an even more abstruse English version of the same article in the Wall Street Journal:

Mitch Guthman said...

@ Cola di Rienzo,

Thank you for the link. It is a great relief to see that Macron’s “Colbertist” proposal is equally incompressible in English. And he lets his mask slip by his choice of where to publish the English version of his article. Obviously, he has chosen to speak with his own kind rather than with the people of the left.

But on the substance, perhaps some journalist would like to ask Macron to explain, for example, what would be the point of buying these shares in Renault, at an immense cost to the state, if the plan is then to quickly sell the shares, which would permit the management of the company to do whatever it wanted to do in the first place?

What is the point in spending the state’s money to buy shares in Renault without a longer term plan to revitalize the company? If the injection of money and ideas succeeds, why should the state sell its interest in Renault ——shouldn’t the people be the ones to benefit if this investment is successful?

Similarly, it seems obvious that the money sunk into Renault will be wasted in the absence of a plan to address the larger problems with globalization. To what extent does Macron believes that the difficulties of French manufacturing attributable to inefficiencies or poor practices? Does he believe that France’s difficulty in the manufacturing sector are because French workers are overpaid and underworked?

To what extent does Macron believe that the problem is result of a race to the bottom in which France competes only on price with countries that lack things for which Europe pays and thinks of as essential. Obviously examples would be environmental standards for clean air and water, workplace safety standards. Does Macron propose to accept more pollution and a lower quality of life as the price of increased “competitiveness”?

In terms of wage competition, to what degree does Macron believe that France’s supposed lack of “competitiveness” is the result of French workers being expected to compete with slave labor, child labor or convict labor? How should the social welfare state balance respect for free markets with its interest in enhancing the quality of life for its people?

What measures does Macron believe the social welfare state should be allowed in protecting itself against unfair competition from the Hobbesian state where life is “nasty, brutish and short” but the costs of doing business are so much lower? None of this was discussed by Macron. Shouldn’t some French journalist ask Macron to address those issues rather than allowing him to disguise the tired ideas of lemon socialism and neoliberalism by dressing them up in the finery of Colbertism?

Louis said...

Helpful communication trick on the theme "don't worry, the state is here", coming hot on the heels of selling Alcatel-Lucent to Nokia and much fanfare over "asking them to keep jobs in France"?

FrédéricLN said...

@ Mitch Guthman about "what would be the point of buying these shares in Renault, at an immense cost to the state, if the plan is then to quickly sell the shares, which would permit the management of the company to do whatever it wanted to do in the first place?"

There is a technicality here: the "loi Florange" gave doubled rights of votes to shareholders presents since two years in a firm's capital. But a vote by 2/3 of present shareholders can cancel that. The State bought temporarily enough shares to prevent that counter-vote, and, by the way, save the doubled rights of its previous shares.

Maybe there is a Renault-specific plan here, which would have been "colbert-dressed" as Louis suggests above.

Since Carlos Ghosn took the lead (2005), Renault wasted billions in pointless investments into irrelevant electric cars, a disastrous cars design, all of that in an awful climate at top executive level (as the departure of Carlos Tavares to PSA suggests). The Board hasn't shown any independence or counseling ability during his terms. Carlos Ghosn may have corrected his agenda during the ~2 last years, and Renault may have been set on a better path now, but his constant ability to get huge appointments for himself suggests ubris is still there. Maybe the State tries to oust him out, or at least, get some balance of powers at the Board.