Thursday, January 10, 2008

Central Bankers Out of Phase?

In a remarkable flexing of central-banker muscle, Jean-Claude Trichet threatened today to raise interest rates "pre-emptively" if employers and unions do not hold the line on wages in current negotiations. By contrast, in the US, Ben Bernanke promises to become even more aggressive in lowering interest rates:

In total, therefore, we have brought the funds rate down by a percentage point from its level just before financial strains emerged. The Federal Reserve took these actions to help offset the restraint imposed by the tightening of credit conditions and the weakening of the housing market. However, in light of recent changes in the outlook for and the risks to growth, additional policy easing may well be necessary. The Committee will, of course, be carefully evaluating incoming information bearing on the economic outlook. Based on that evaluation, and consistent with our dual mandate, we stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks.

As when warm moist air meets dry cold air, one should expect turbulence ahead. And one should expect renewed attacks on the European Central Bank, not least from Nicolas Sarkozy.


While listening to Sarko's news conference the other day, I did ask myself if he had lost his concentration. It seemed uncharacteristically maladroit of him to defend his failure to enhance the purchasing power of the French by asking the press the rhetorical question, "What do you want me to do? The coffers are empty. Do you want me to give orders to private firms, which I have no power to do?" A confession of powerlessness from the voluntarist president, whose slogan was, "Together, everything becomes possible!" And then to compound the blunder by saying that this year would mark the end of the 35-hour week, when so much of his economic policy had been built around the idea of offering incentives to firms and workers to voluntarily exceed the legal limit (he has since backtracked on this statement, saying he has no intention of changing the duration of the legal work week).

It was a puzzle. The always-on-message president had gone way off. What was going on? Now we have an answer--of sorts. It seems that François Fillon is worried that the Omnipresident has been distracted by Carla Bruni, who has moved into the Élysée, where she has been assigned a room for her songwriting. He skips meetings, he doesn't pay attention when people talk to him. He's laughing again and telling jokes--dirty jokes. For those who like their psychohistory lite, we have a new story line for the Sarko saga: the man who wanted the presidency to fulfill his adolescent fantasies, who felt left out as a boy and so insisted on being the center of attention as a man, now has every boy's dream, a live-in supermodel and singer-songwriter, and he is mooning away after her while his ministers drone on about such tiresome matters as inflation, GDP, and other such rot. Let Edgar Morin and Amartya Sen sort it all out while Nicolas draws hearts around the name "Carla" on the covers of all those forbiddingly thick dossiers.

Organic Intellectuals

Libération, with characteristic cynicism, sees Sarkozy's appeal to Nobel economists Amartya Sen and Joseph Stiglitz to think about new ways to measure growth as nothing but a "cynical recycling of left-wing ideas": Attention! un cynique peut en cacher un autre. This is of course unjust. Guy Mollet's contemptuous comment that "France has the stupidest right in the world" was never quite true. But among the things that Sarkozy learned from his observation of American neoconservatives and British New Laborites is that it can be useful for politicians to rub shoulders with intellectuals. Politics is more than the clash of interests, and political ideas are more than a publicly presentable cloak for naked concentrations of power. Ideas alter preferences, dissolve old coalitions and catalyze new ones, and transform the rapport des forces. Gramsci knew this, and Sarkozy--who would have guessed?--made himself a disciple of Gramsci: "I made Gramsci's analysis my own: power is won with ideas. It was the first time that a politician of the right took on that fight."

This assertion should not be dismissed as mere Sarkozyan hyperbole. The fascinating article by Jade Lindgaard and Joseph Confavreux, from which the above quote is taken, makes it clear that Sarkozy's pursuit of new ideas was systematic, carefully planned, and of long duration. He had assistance: Emmanuelle Mignon, a brilliant énarque who is now his chief of staff, organized the effort. More information about her work can be found in this interview. I will have more to say about all this in the days to come.

Thanks to Éloi Laurent for the pointer to an interesting Web site: Mouvement des Idées et des Luttes.