Thursday, February 26, 2009

The Guillotine Falls

Christine Lagarde was on France2 last night to respond to the news that France had added 90,200 to its unemployment rolls last month. She looked decidedly less confident than she did last December, when she also went on television to say that France was standing up to the economic storm better than its neighbors (the fall in French GDP was somewhat less than Germany's, for instance). The confidence seemed misplaced at the time, and now there can be no doubt that it was, for this is not a crisis that can be avoided by massaging the data, putting a bright face on things, or simply ignoring bad news.

The social tension is palpable. Although there has been no major explosion yet, no one will be surprised if the French descendent dans la rue before the year is out. It's in their moeurs, after all. The recent "general strike" will have been a mere dress rehearsal for a major showdown. Why do I think this may be coming? Because President Sarkozy has thus far shown no disposition to change course. He persists in thinking that the reform program he advocated during his campaign remains appropriate as a response to the crisis.

To be sure, politicians everywhere see crises not only as challenges but also as opportunities. As Rahm Emanuel put it, "a crisis is too important to waste." But in order to seize the opportunity, to advance an underlying political agenda, one has to appear to be responding to the immediate challenge. This is Sarkozy's error. He seems to be saying, "I have the solution, and it is the same solution I have had all along"--as if the detaxation of overtime, which may have made some sense in 2007, still makes sense in 2009, with offers of employment plummeting. To be sure, there are aspects of the original reforms that could easily be accommodated in a revamped crisis policy, but for some reason the president seems to be resisting all pressure to reformulate his goals. Instead, he is seeking international escape. He will press the G20 for "greater coordination" and "more stringent financial controls." These items do not constitute a political program; they're points 1 and 2 in every post-crisis leader's Boy Scout Oath.

Is the problem that there's nothing to be done, that France is in reality at the mercy of forces beyond its control? To some extent, yes, but there are always things to be done in the realm of framing the challenge. Communication had been Sarkozy's forte, but his skills as communicator seem to have abandoned him.


Unknown said...

I would suspect that a major influence in Sarkozy's fall from polling grace in recent times has to do with the fact that Largarde and others tried to tell the French last fall that they would remain broadly ok (remember the silly growth forecast at the time). People are now realizing that they are not ok and that they will suffer greatly from a massive recession - or depression, the jury is still out -, and come to believe that those in charge don't really know what they are talking about. Furthermore, the rapid deterioration of prospects since November has occurred without further - or little - government action, compared to other countries. In short, Sarkozy is not about to recover from this one any time soon.

Anonymous said...

I have recently discovered your blog and want to thank you for your excellent analyzes. I'm a novice in this area, and you have furthered my knowledge by leaps and bounds.

Regarding this posting, I find it interesting that just as the U.S. and other parts of the world have begun to show signs of turning away from principles of laissez faire capitalism, Sarkozy, Lagarde, and others appear to be turning toward those principles. Lagarde points toward de Tocqueville's writings to argue for them; indeed, if she is enamored of the American experience, then she ought to learn from our present circumstances.

The Republican party's radical free market policies have been rejected by events and by voters. Certainly, I understand it is premature to sound the death knell for "hands off" capitalism in the U.S. or elsewhere, but I do think it instructive to note that for the first time in many years an American President can openly and forcefully discuss a broadened federal role in health care (a la "universal health care") and not be immediately shouted down by politicians and public alike. There are many more examples of this in the U.S., for example, there appears to be a real chance for a revivified union movement.

In any event, Sarkozy, et al are off on a likely misguided venture if they believe they can bring about liberalisme sauvage "reforms" in a worldwide economic climate that is distinctly set against them. His intransigence may also serve only to unite his often fractious dissenters and make even smaller inroads, like changes in the 35 hour workweek "unworkable." On the contrary, Sarkozy ought to take his lessons from the realities that unregulated markets have wrought rather than from its largely disproved ideology.

Anonymous said...

"Largarde and others tried to tell the French last fall that they would remain broadly ok"

But it is very likely that they will. France is one of the least affected country, the situation isn't that bad when you compare it to Germany and Japan, or worse Spain.