Wednesday, October 31, 2012

Ayrault Se Recadre Lui-Même

Jean-Marc Ayrault has become the primary target of the Right. He already filled that role as the head of a government whose ministers made repeated gaffes, or launched private trial balloons. Each time, he would call the offending minister on the carpet. But now Ayrault himself is the gaffeur, having announced his readiness to debate a return to the 39-hour legal work week. The Right is overjoyed. They see an imminent and ignominious end to the Ayrault government.

Of course there is no issue more highly symbolic than the 39-hour week, even if myth and reality have never coincided on the subject. Here is Denis Kessler, a lontime enemy, rehearsing the Right's indictment. The litany of charges is a mixture of truth and falsehood, and the fact is that French workers average over 39 hours of work per week, while German workers average just over 40. Unit labor costs have not diverged dramatically.

But none of this matters. What counts is the belief, almost universal on the Right, that the Left wrecked the economy with a massive vote pander that achieved nothing in the way of job creation. Ayrault may not have conceded the point, but he might as well have, and the government's attempt to walk back his remarks, starting with Michel Sapin's fatuous contention that Ayrault was merely inviting others to debate the issue and not promising an open mind on the subject himself, simply invited ridicule.

There is no decent way out of this morass, so Hollande had better just move ahead with his program, if he has one.

Sunday, October 28, 2012

What Big Business Wants

Employers of the Association française des entreprises privées, among whom one finds most of France's largest employers, have submitted a plan that they say will help to restore growth. It calls for a 30-billion euro reduction of social charges on the wages of workers earner twice the SMIC or more, to be paid for by an increase in the VAT from 19.6 to 21%. They also want a reduction of the corporate tax to align with the rate paid in other European countries. They also advocate a "pragmatic" approach to the search for shale gas.

This is such a modest and workable program in an age of unprecedented policy proposals that it is hard to see why the government wouldn't grant all the requests, just to be able to say, no matter what happens, "See, we gave you all you asked for." What's more, the proposals make sense.

Of course, Hollande has already dug in his heels against fracking, I think erroneously and prematurely. And he has already indicated a preference for the CSG over the VAT as a replacement for payroll taxes, although it's hard to see any insuperable objection to either, or to a combination of both.

If only such comity existed in the United States. The Socialists, already in trouble with their own electorate, however, may see a trap here and reject the proposal out of sheer political wariness. They shouldn't.

Friday, October 26, 2012

Anne Sinclair "Finds Serenity" with Pierre Nora

As I prepare for a day at the hospital, I am greeted with the absolutely astounding news that Anne Sinclair "has regained her serenity" with the historian Pierre Nora, whose Lieux de mémoire I translated.

Thursday, October 25, 2012

The EU Is Collapsing

Or at any rate, the EU Parliament building in Strasbourg is. The ceiling and supporting structures have developed cracks. Here is Deputy Mélenchon's characteristically mordant account:

J’étais à Strasbourg lundi et mardi. J’y retourne jeudi et vendredi. Mais la session de novembre est annulée. Elle devait avoir lieu à Bruxelles. Malheureusement les piliers qui soutiennent l’hémicycle sont fissurés. Et tout menace de s’écrouler. Cette allégorie de l’Etat de l’Union fait évidemment les gorges chaudes des mauvais plaisants de la maison. Ils sont nombreux. (h/t BrentW)
Mélenchon adds this little jab at the government back in France:

Bien-sûr, la politique choisie mène aux plus grandes difficultés sociales et elle fait le lit de la droite. Elle finira mal. Elle a déjà mal tourné partout. La zapatérisation du nouveau gouvernement est fulgurante !
"Zapaterization": the comparison of Hollande with Zapatero is not new, but the substantive may be.

Banks Healthier?

European banks may have begun their recovery since the ECB introduced its Outright Monetary Transactions. Private investors seem to have taken Draghi's action as a signal that Eurobanks will not be allowed to fail and have tentatively re-entered the market. Spanish bank borrowing from the ECB feel from a peak of 411 billion euros to under 400 billion in September.

Tuesday, October 23, 2012

Sexist Robert?

Did the renowned dictionary deliberately choose female examples for many negative traits:

- Capricieux: « C’est une enfant très capricieuse » (p.145)
- Vilain: « Eve a été vilaine avec sa soeur et elle a été punie » (p.1102)
- Peste: « Quelle petite peste, cette Sarah! » (p.779)
- Peureux: « Eve est assez peureuse » (p.782)
- Inconstant: « Sarah est inconstante dans ses amitiés » (p. 537)
- Impuni: « Elle ne restera pas longtemps impunie » (p.533)
- Moqueur: « Sarah regardait les autres avec un air moqueur (p.674)
- Gourmand: « Sarah est très gourmande » (p.477)
- Insolent: « Sarah a été insolente avec l’enseignante » (p.553)
- Bavard: « Sarah est très bavarde » (p.93)
- Paresseux: « Sarah est très paresseuse, elle n’a pas fait ses devoirs » (p.751)
- Parfait: « Elle est d’une beauté parfaite » (p.751)
- Naturellement: « Les cheveux d’Eve frisent naturellement » (p.692)
- Vexer: « Sarah se vexe facilement » (p.1098)
The evidence seems clear, but say it ain't so, Robert.

La Danse des Cons

Arnaud Montebourg has a knack for self-promotion, or is it self-ridicule. Thus we have him flogging the "made in France" (étiqueté en anglais, bien sûr, pour plus d'effet) and posing for a magazine cover in marinière while holding a Moulinex blender:

This stunt would merely have made him a leading candidate for the weekly roi des cons award. After all, what politician has not at one time or another urged his fellow citizens to "buy home rather than abroad." But the European Commission, ever vigilant for apostates from the Church of Free Trade, could not resist the opportunity to turn this non-event into une danse des cons:

Le commissaire européen au commerce, Karel de Gucht, critique le protectionnisme prôné par le ministre du redressement productif, Arnaud Montebourg, et rejette la surveillance des exportations sud-coréennes réclamée par Paris dans une interview publié mardi 23 octobre par Le Figaro.
"Monsieur Montebourg s'affiche contre la mondialisation, il est protectionniste, c'est un choix. Mais son raisonnement ne tient pas la route. La France ne peut pas, seule, redistribuer les cartes du commerce mondial.", a estimé M. de Gucht, de nationalité belge.
Well, it's perhaps difficult for a Belgian to comprehend economic nationalism, since Belgium is an experiment in survival as an economy without polity. But Montebourg's Monoprix photo op is the small beer of economic nationalism, nothing compared with Villepin's adventures in this arena. When it comes time for the Socialists to choose a new standard bearer, we will see which of today's contenders has chosen the more successful strategy. Will it be Montebourg's parlaying of a nothing ministry into an instrument for staging a presence in a bewildering variety of contexts? Or will it be Valls's more severely classical dramatization of the role of minister of the interior as guarantor of the ordinary citizen's security? Or Moscovici's epicurean self-delight at having graduated to the cour des grands, where he can pose as serious steward of the nation's finances? Or someone else entirely. Some student of French presidentialism should collect the high points of each man's parcours: we are being given an education in the uses of various portfolios in presidential image-making.

Indeed, I would go even farther and say that Hollande's failure to build an image of himself as president prior to assuming office has proved a handicap now that he is in it. He seems not quite sure of his marks, as one would say in the theater, and inevitably looks slightly out of place whenever he tries to fill the stage.

Le Président Thaumaturge

The "hyperpresident" Sarkozy earned that epithet in part because of his hypercaffeinated personality but mainly due to his omnipresence at critical events large and small, from global and regional crises to faits divers of everyday life. François Hollande, the erstwhile "normal" president, apparently feels the need for an image boost to lift his sagging ratings, hence he has been popping up in unexpected places. A woman in labor suffers a mishap on the way to a distant emergency room and there is the president, calling for hospitals closed by Sarkozy to be reopened. It was the sort of shoot-from-the-hip reaction to the fizz of publicity for which many critics reproached Sarkozy. Of course, Sarkozy was saved from many of his more extravagant follies by an almost total lack of follow-through. Hollande may be different in that regard, although budgetary constraints may take the place of fecklessness in his eventual record.

But has this hyperpresidentialism become a structural component of the modern executive? Pierre Rosanvallon has argued that a "democracy of proximity" imposes on leaders the role of accompanying citizens through individual traumas that can be read as symbols of fundamental social issues. A recidivist thus becomes an occasion for considering the flaws of the penal system, while a mother in labor serves as the pretext for pondering the maldistribution of health care resources in France. There is nothing inherently wrong with such executive responsiveness to the quotidian, even if it does suggest a sort of ambulance-chasing practice of national governance.

Does the Bundesbank Want Out of the Euro?

Paul de Grauwe, who is as prominent an expert on European political economy as there is, speculates that the Bundesbank opposes the ECB's outright monetary transactions (OMT), without which there is no salvation for the euro, because it, the Bundesbank, has always opposed the euro project and is trying to lay the groundwork for a German exit, after which the Bundesbank would again be primus inter pares among European central banks, rather than a handmaiden of the ECB.

Sunday, October 21, 2012

Lourdes Flooded

I hesitated a bit over the headline for this post. I wouldn't want to appear to be enjoying a moment of Schadenfreude at the expense of the afflicted, especially as I am afflicted myself at the moment. But really, who can resist the thought of floodwaters receding on l'avenue du Paradis and pompiers having to wash river muck out of the sanctuaries of the famous pilgrimage site?

I recently watched the film "Lourdes" with Sylvie Testud. It delves as deep as a positivist is likely to get in understanding this very curious cult of the miraculous.

Friday, October 19, 2012

Merkel and Hollande Disagree About Agreement

Angela Merkel, it was said, did not like Nicolas Sarkozy, but she was able to feign agreement with him from time to time. Apparently she cannot do this with Hollande. The two no longer even pretend to be discussing the same subjects. Hollande thinks he got a banking agreement in Brussels that will take effect before the end of the year. Merkel things there was a framework established for a future banking union and no agreement as to direct recapitalization of Spanish banks until all the details have been worked out. Hollande flatly rejected Merkel's call for a budgetary czar in Brussels and insists that Europe already has all the fiscal union it needs.

What can possibly alter this destructive cycle in the European discussion? Is it actually worse than before? Perhaps not. Open disagreement is at least informative, whereas veiled disputes merely enhanced the confusion. But I think we will soon see a market run on Spain.

Villepin Backs Copé

Dominique de Villepin has anounced his support for J.-F. Copé in the UMP leadership fight. Those who have always doubted Villepin's judgment will find new reasons to do so in this decision. Villepin at once minimized the significance of Copé's hard right turn, praised him as the leader of a new generation, and dismissed Fillon, who is all of 58 years old, as a has-been of Villepin's own generation, which he is prepared to put out to pasture--until, that is, he is called in from the cold by Copé to assume the position for which he no doubt feels himself destined.

Wednesday, October 17, 2012

A Perennial: Jouyet to Head Public Investment Bank

As if to underscore Hollande's remarks that austerity is not enough (see previous post), Prime Minister Ayrault has announced the nomination of Jean-Pierre Jouyet to head the Public Investment Bank. Jouyet is an old Europe hand: he handled Europe under Jospin and then again under Fillon. France seems to favor such perennial technicians in key economic policymaking positions.

As for the Banque Publique d'Investissement, you may recall that it was originally to have been the Banque Européenne d'Investissement, but Germany and France did not see eye-to-eye on the project, so now it is a France-only bank, seriously undercapitalized, and unlikely to accomplish much beyond financing the pet projects of regional party bosses. Or am I too cynical? There is no shortage of loanable funds in existing banks. The problem is a shortage of projects for which banks are willing to lend in the current climate of deficient demand. So creating a public bank to lend to enterprises that private bankers consider too risky has obvious dangers.

Is Hollande Part of the Problem?

Perhaps it's too soon after my surgery for me to take on the problems of the eurozone, but Hollande's interview with The Guardian is forcing my hand. He is quite critical of Angela Merkel, whom he accuses of putting German domestic politics first, and calls on his European partners to make sacrifices for the continuation of the Union. No sooner has he said that, however, than he gives "short shrift to a German push for the creation of a federalised eurozone or political union."

If that is his position, then he surely owes it to those same partners to spell out how he intends to resolve the crisis in the long run without major institutional change. Instead, he digs at those who have proposed such change: "The institutional issue is often evoked in order to avoid making choices. It hasn't escaped my notice that those quickest to talk of political union were often those the most reticent to take urgent decisions …"

In short, he wants to put all the burden of adjustment on Germany, without offering Germany anything in return. This is a strategy very unlikely to yield results, it seems to me. The crux of the issue is what a federalized eurozone would mean. Germany wants to impose budgetary discipline by means of sanctions with teeth. What Hollande ought to be proposing is a union with a broader mandate, to harmonize social policies, make transfer payments, facilitate labor mobility, and pool investments in research and education. Instead, he simply attacks austerity, as he did in the election campaign, before he implemented the primary instrument of austerity, the TSCG, after taking power.

Once again, it seems that Europe's leading politicians have squandered six months in useless posturing, while the only effective action to keep things afloat has been taken by Mario Draghi. But Draghi has warned that the ECB cannot solve this problem on its own. A political solution is needed--a solution for which he has tried to buy time with his creative financing. But Hollande does not seem to share his sense of urgency: "We are near, very near, to an end to the eurozone crisis," said Hollande. But decisions taken at the last EU summit in June had to be implemented "as fast as possible".

To be fair to Hollande, he does point out that major institutional change was tried in 2005 and failed. So perhaps he is simply being realistic. But in this case, realism seems to be heading straight into a wall.

Tuesday, October 16, 2012

Just a Brief Message

Thanks for all the good wishes. I had surgery this morning and was back home by 4 PM. Feeling pretty good, all things considered. But I will be taking a vacation from real life for a while. Whether blogging counts as real life or virtual life remains to be seen.

Monday, October 15, 2012

Last Post for a While

I have to take an enforced medical leave for the next few days. Nor sure when I'll be back or how well I'll be able to keep up with the news in the meantime. Feel free to comment here on things I should pay attention to when I'm able to.

Sunday, October 14, 2012

Fabius Fact-Checked

It's old news that the TSCG passed by the parliament did not differ by as much as a single comma from the Merkozy pact that Hollande promised to "renegotiate" during the campaign. But the fact-checkers have given Fabius's defense of the pact a thorough going-over and found that even "the growth component" agreed to later by the signatories was already in the works before the election:

Lors du sommet européen du 29 juin, M. Hollande s’était targué d’avoir joué un rôle majeur dans l’accord qui prévoyait un “pacte de croissance”. “J'avais annoncé que je voulais renégocier ce qui avait été décidé, au sens d'y mettre ce qui ne s'y trouvait pas, croissance et mesures de stabilité. Je considère que ce sommet a permis d'aboutir à cette renégociation”, s’était réjoui le chef de l’Etat.
Ce pacte de croissance prévoit l’allocation de 120 milliards d’euros en soutien de l'activité – dont la moitié en réaffectation de moyens existants –, sur plusieurs années, sans creuser davantage les déficits nationaux. Or, les éléments de ce pacte étaient en discussion depuis l’automne 2011. François Hollande a certes réussi à en accélérer l’adoption, mais on est loin de la "réorientation européenne" dont parle M. Fabius.

Muslim Council Charges Copé

The Muslim Council has filed slander charges against J.-F. Copé for his now infamous comments about Muslims enforcing Ramadan by taking pain au chocolat from schoolchildren. This, of course, is only grist for Copé's mill. Muslim anger is comprehensible, but ridicule would have been a more potent weapon than the courts, I think.

Green Official Accused

Florence Lamblin, EELV maire adjointe of the 13th Arrdt, has been accused of associating with an individual involved in laundering money for a drug ring. Lamblin's attorney denies that she is guilty of money laundering and says that "at most" she is guilty of tax fraud for attempting to repatriate 350,000 euros of an inheritance stashed away in a Swiss bank account. A tangled web which does not augur well for the lady's political career.

Saturday, October 13, 2012

Sarkozy's Private Session in New York

Europe1 has obtained a recording of Nicolas Sarkozy's private meeting with bankers and businessmen in New York. His remarks can be read here. The most interesting is perhaps his assertion that larger European states must be given more power than smaller states:

L’Europe s’est construite en disant à 27 pays, petits moyens et grands : vous avez les mêmes pouvoirs. Ca ne peut plus marcher.

On ne peut pas avoir un système où 27 pays doivent attendre que le 27e soit d’accord pour que les 26 autres puissent avancer. Ce système ne peut plus fonctionner. Et qui peut mener ce leadership ? Les grands pays : l’Allemagne, la France, l’Angleterre, notamment, qui a toute sa place en Europe.

Mais l’Europe va devoir changer énormément sa façon de se construire et de décider. Ca sera le changement ou l’état de gouffre.
This is not a particularly surprising view from a former French head of state. It enforces a view of Europe as a Franco-German duopoly imposing whatever bargain it achieves on "lesser" states. This will meet with resolute opposition, as it should. Sarkozy is right to claim, as he also does in this interview, that Europe has been slow to recognize its relative loss of status with respect to emerging powers. But he persists in his own failure to recognize that the Franco-German duopoly, for all its preponderance in Europe, is no longer the proper lens with which to view Europe's future. The continental economy needs to be rethought as a whole, with fewer national biases and greater emphasis on international complementarities. Europe suffers right now from inherent structural inequalities, but these inequalities can also be seen as an opportunity if industrial organization evolves to take advantage of them, and in the process to reduce them. It would take a much longer essay than I have time for to substantiate this point, but to my mind Sarkozy's remarks, though worth paying attention to, represent the perpetuation of a classic vision of Europe that is no longer adapted to the state of the global economy.

Tocqueville in China

So I'm told:

First there was Confucius. Then there was Mao Zedong. And now Alexis de Tocqueville tops the must-read list for avid Chinese intellectuals and bloggers.

The UMP Dogfight

I'm not sure that Claude Guéant's support for François Fillon is an advantage in his fight with J.-F. Copé or not. One might have expected Guéant, who supported the droitisation of the UMP in Sarkozy's last year, to have gone with Copé, who seems to have committed himself to extending the tactic. But Guéant, a bureaucrat at heart, may find Fillon's understated style more congenial. Who knows? Politics, like romantic comedy, is a matter of chemistry. With supporters like Guéant and Baroin in his camp, Fillon had better watch his back, but then I suppose that back-watching is part of the job description of party leadership. This contest has now been running about as long as a presidential campaign. It's time for a vote.

Friday, October 12, 2012

Lecture Canceled

As announced here earlier, I was to give a lecture at CEVIPOF in Paris on October 26. Unfortunately, a medical issue has arisen that will prevent me from traveling for a bit, and I've had to cancel that lecture. My apologies to anyone who took the trouble to register. I will also have to suspend blogging for a while from Tuesday, Oct. 16, while I recuperate. Thanks for your support.

EU Wins Nobel Peace Prize

Barack Obama won the Nobel Peace Prize before he had done anything. The prize to the EU seems like the opposite: a sort of lifetime achievement award (overlooking a few mishaps such as Srbrenica and Kosovo). Europe may be collapsing, but it's not at war. In this light, the prize, while somewhat pointless, is not absurd. But it must seem a rather bitter pill to everyone but the fatuous José Manuel Barroso, who was crowing about the award this morning. Europe would do better to take care of its problems than to sit on its laurels.

Thursday, October 11, 2012

This Is Not a Tabloid or a Scandal Sheet

Nevertheless, as Tolstoy observed, gossip is an essential part of human existence, and there is some gossip that is too juicy to ignore in a fit of high-mindedness.

Incoherence in Economic Policymaking

France has just approved the TSCG, ex-Merkozy, essentially signing on to the austerity bandwagon. At the same time, the IMF has issued its World Economic Outlook, which points out that austerity has already failed and is in fact making matters worse. The incoherence in global economic policymaking could not be more complete. And meanwhile, the US is preparing to fall off the fiscal cliff.

Here is Christine Lagarde's warning:

Christine Lagarde has urged countries to put a brake on austerity measures amid signs that the IMF is becoming increasingly concerned about the impact of government cutbacks on growth. Ms Lagarde, IMF managing director, cautioned against countries front-loading spending cuts and tax increases. “It’s sometimes better to have a bit more time,” she said at the annual meetings of the IMF and the World Bank on Thursday.
The fund warned earlier this week that governments around the world had systematically underestimated the damage done to growth by austerity.
Lagarde gets it, which should give pause to those who blame this crisis on "neoliberalism." If there were such a thing as a neoliberal consensus, the IMF would have to be part of it. But the IMF has gone off in a different direction under the leadership of Lagarde. The WEO contained this graph, which has now been widely reproduced in the blogosphere:

 Paul Krugman explains:

I and others have been arguing for a while that the experience of austerity in the eurozone clearly suggests pretty big Keynesian effects. Here, for example, is what a scatterplot of fiscal consolidation (from the IMF Fiscal Monitor) and growth (including an estimate for next year, from the World Economic Outlook) looks like.
But, you might object, maybe the causation runs the other way; maybe countries in trouble are forced into fiscal consolidation, so it’s not the austerity what did it. But the IMF has an answer to that: it looks at forecast errors versus austerity. Part of the reason for doing this is to figure out why things are going so much worse than expected; but there’s also the fact that the forecasts already included the known problems of the economies in question, so that you’re more or less getting an estimate of the impact of austerity over and above the known problems (and the initially assumed effect of austerity, which was supposed to be small).
Here, "IMF" really means IMF chief economist Olivier Blanchard and economist Daniel Leigh, the authors of "Box 1.1" in the WEO (which can be downloaded here). They argue that the "multiplier" in the world's deleveraging economies is much larger than previously thought, indeed greater than one. Hence fiscal expansion adds more than €1 to GDP for every additional euro of government spending and subtracts more than €1 for every euro slashed by zealous budget cutters. This could make the goal of returning to equilibrium an infinite regress: for every step governments think they are taking toward it, the goal actually recedes by a greater distance. That is why Christine Lagarde is warning of the dangers of a downward spiral into depression. The risk is not negligible, but political systems throughout the developed world seem absolutely incapable of recognizing it. Instead, we slouch toward serfdom.

Sarko le Barbu

Ex-Pres. Sarkozy has grown a beard, as you may have heard. No, he hasn't converted to Islam. Roselyne Bachelot thinks that he will keep the beard as long as he is content to remain out of politics, but the minute he ends his "retirement," the beard will come off.

In any case, he has been talking with reporters about his successors at both the Élysée and the UMP. About Hollande, apparently, he speaks only in mimed gestures: rolled eyes, shrugged shoulders, etc. "Il sait que ses propos sont immédiatement répercutés et qu'un manque d'élégance pourrait lui coûter cher dans l'opinion.:" But it seems that concern about lack of elegance doesn't hold him back when discussing François Fillon: he "has no balls," Sarko says of his former "collaborator." He's just a bourgeois from the Sarthe and will never win the presidency because he doesn't have what it takes to talk to "le peuple."

Take it for what it's worth, folks. Is this a covert endorsement of Copé? It's odd that Sarkozy has no harsh words for JFC, since there was no love lost between the two during his presidency. Maybe he views Copé as a stalking horse for ... himself. If and when he decides to make a comeback, a UMP droitisée by Copé would be a more suitable vehicle than a UMP bourgeoisifiée by Fillon, and Copé, who is running as Sarko bis, would be easier to dislodge than Fillon, however emasculated.

Wednesday, October 10, 2012

Paris Talk

I will be speaking Paris on Oct. 26, 12:30-2 PM, at CEVIPOF. The subject is a comparison of the US and French presidential elections of 2012. Registration is required at the CEVIPOF Web site.

Le Pen Minister?

Did Nicolas Sarkozy consider offering Marine Le Pen the ministry of the interior on the eve of the final presidential debate? According to Bernard Girard, this is the message of a forthcoming book--and the proposal came from Camille Pascal, a centrist, not from one of Sarkozy more extremist advisors such as Patrick Buisson. Remarkable if true. Ã suivre.

Tuesday, October 9, 2012

TSCG Adopted

The TSCG has been approved by a vote of 477 to 70, with 282 deputies of the Left voting in favor. In other words, the treaty would not have passed without the support of the Right. Not a brilliant victory for Hollande, but a victory, since he has now committed himself to getting along with Germany. For better or worse, he now owns what used to be called "Merkozy."

Frechman Shares Nobel Prize for Physics

Serge Haroche shared this year's Nobel Prize for Physics for his work in quantum optics.

Monday, October 8, 2012

Sunday, October 7, 2012

Regionalism on the Rise

Steven Erlanger has a nice piece in The Times about the rise of regional separatist sentiment across Europe. The paradox, as he points out, is that the European Union, which is supposed to create greater solidarity among the nations of the continent, is weakening national solidarities among regions from Catalonia to Scotland. The problem at this level is Europe's problem writ small, as it were: the rich don't want to pay for the poor and don't acknowledge that they owe their less fortunate fellow citizens anything. Interestingly, we have the same problem in the United States at the individual level: those who are better off resent the taxes they pay to support those who are worse off. In Europe, the principle of the welfare state is more widely accepted as a norm, but the body of fellow citizens--what Tocqueville called semblables--to whom one recognizes a duty of solidarity is not fixed and can vary with ambient economic conditions, as we are now discovering.

Saturday, October 6, 2012


Your humble blogger was promoted yesterday to the rank of Officier de l'Ordre des Arts et Lettres. Here I am at the podium at Harvard's Center for European Studies reminiscing about 44 years as a Francophile.

Police Dismantle a "Terrorist Cell"

"A network, almost a cell" of more than a dozen people, said to be "delinquents" converted to "radical Islam," has been dismantled by police. One man was killed, ten others were arrested, and two or three remain on the loose. The network was spread across France from Strasbourg to the Alpes-Maritimes. Ties to Salafism were noted.

Le Pen au Chocolat

Jean-François Copé is having a hard time establishing himself as Sarkozy's successor and heir apparent. It's bad enough that he has to fend off a challenge from François Fillon. But on top of that he just can't seem to get hold of the right rhetoric to prove that he is now in fact the incarnation of la droite décomplexée, the role in which his recent eponymous "Manifesto" cast him. So he's gone poaching in the Var, Le Pen country, where he came out with his now famous paean to le pain au chocolat:

« Il est des quartiers où je peux comprendre l’exaspération de certains de nos compatriotes, pères ou mères de famille rentrant du travail le soir et apprenant que leur fils s’est fait arracher son pain au chocolat à la sortie du collège par des voyous qui lui expliquent qu’on ne mange pas pendant le ramadan. »
This gem packs a lot into a small space: it manages to imply that the criminal element (voyous) coincides with Ramadan-celebrating Muslims who terrorize small children and deprive them of that quintessential snack of le Français de souche, le pain au chocolat.

This rather lame emulation of Lepenist rhetoric unleashed a torrent of laughter on Twitter. The title of this post is taken from one of those mocking tweets. Others can be read here. Like many imitators, Copé assumes that the original he seeks to copy is easily imitable. In the case of the Le Pens, it isn't.

Thursday, October 4, 2012

Private Equity Threatens to Leave France

Private equity firms are threatening to leave France because of Hollande's 75% marginal tax on high incomes, which will apparently apply to "carried interest," the private-equity term for gains by fund managers. Some 280 such firms are housed in Paris, and France is the second-largest European market for leveraged buyouts, after Britain, according to the Bloomberg report.

Entrepreneurs in (mostly high-tech) startups have also protested other proposed changes in the French tax code. The government's announcement of reduced charges on firms' payrolls may have been rushed to counter these attacks from self-styled pigeons. See Bernard Girard's comment here. And see also FT Alphaville here.

Wednesday, October 3, 2012

France's Absence from the European Debate

Jean Quatremer reinforces a point I've been making for some time now: François Hollande is failing to propose a strategy for European integration capable of inflecting Germany's wish to impose its own vision of Europe:
Alors que la France, tel un célèbre village gaulois, se querelle sur le traité d’union budgétaire, ses partenaires ont depuis longtemps tourné la page et préparent activement le coup d’après, celui du saut « fédéral » que devra effectuer la zone euro afin de donner un gouvernement à sa monnaie unique. C’est encore une fois l’Allemagne qui mène la danse. Elle use non seulement de sa puissance économique, la seule qui impressionne les marchés, mais elle profite aussi du vide politique laissé par François Hollande, un chef de l’État qui semble paralysé par les contradictions de sa majorité. Angela Merkel lui a confié, en juin dernier, qu’elle avait bien l’intention de lancer en décembre prochain le processus menant à une réforme en profondeur des traités européens, processus qui devrait aboutir en 2014. Et depuis, elle martèle, comme elle l’a encore fait le 17 septembre, que « c’est absolument le bon moment pour de coopération politique en Europe ». « C’est consternant », note un haut fonctionnaire européen : « le décalage entre le débat politique français et les discussions européennes est total. Encore une fois, la classe politique française va se réveiller dans deux ans, quand tout aura été bouclé ».
The likely result is all too predictable: Germany will have its way, and France will be obliged to accept, reluctantly, the German vision of Europe, which is based entirely on budgetary discipline and not at all on a coordinated growth agenda. To be sure, it is not clear that France would prevail if it were to press for a different outcome. Probably it would not. But its absence from the debate is distressing, and will only reinforce the arguments of the anti-Europe forces gathering to Hollande's left and right. See also this second piece by Quatremer for more on this theme.

Continuity: "Sarkozy n'a pas fait que des conneries."

Now it's official: Hollande's competitiveness policy is in a direct line of descent from Sarkozy's:

"Sarkozy n'a pas fait que des conneries. Il s'est trompé en voulant faire les choses de manière précipitée et en choisissant la TVA, mais réduire les cotisations famille n'est pas idiot", reconnaît un conseiller qui travaille sur le sujet.
The goal is to reduce payroll taxes (in this case, cotisations familiales) paid by the employer, in the hope that the cost savings will be reflected in the selling price of manufactured goods, thus increasing French competitiveness. The tax burden formerly incident on payrolls will be spread to a much broader base, probably via the CSG. The left prefers this to the social VAT because it is less regressive, presumably, although the precise details of the new tax, not yet announced, will be important here.

Tuesday, October 2, 2012

Comparative Demographics of France and Germany

France may be economically down at the moment compared with Germany, but Germany's demographic outlook is not good, as this article makes clear. If present trends continue, Germany's population will age rapidly, and its dependency ratio will increase sharply. Of course, immigration, boosted by the crisis, may ameliorate the picture somewhat. But the demographic outlook is one factor contributing to the high German savings rate, which in turn contributes to structural imbalances in the eurozone. It is important to keep this in mind.

Mitterrand in Massachusetts

In last night's senatorial debate between Republican Scott Brown and Democrat Elizabeth Warren, Brown borrowed a well-known zinger from François Mitterrand:

After Warren gave a long, three-part answer, plus “icing” for a total of four, about how Brown has been less bipartisan than advertised in voting against jobs bills, he let loose with this: “Excuse me, I’m not a student in your classroom. Please let me respond.”
Old-timers like me will recall that Mitterrand was widely thought to have won the 1981 presidential debate with Valéry Giscard d'Estaing (and possibly the election as well) when he responded to Giscard's attempt to trip him up on the franc-Deutschmark exchange rate with the statement:

I don't much like your tone, and I'm not your student.
Mitterrand then gave a precise figure for the exchange rate in question. His response was made even more pointed by the fact that he used the word élève in French rather than étudiant. The former refers to an elementary school pupil. He thus amplified his scorn for Giscard's hauteur, which many people already disliked.

How nice to see a Republican candidate in the US borrowing from a French socialist.

Can the Center Hold?

Bernard Girard considers Gérard Grunberg's thesis that France's future relations with Europe depends on compromise between the center-right and center-left, since both the left and the right are now irrevocably fractured over the question of further European integration. I have been saying this for some time, and Hollande's reversal on the TSCG, which he now makes the sine qua non of sound economic policy after having opposed it during his campaign, seems to me proof that such an "historic compromise" has already been effected in fact if not in theory. The problem is that I am not at all sure that it is a compromise that enjoys majority support, and what support it does enjoy is likely to diminish over the months ahead, as the consequences of austerity become increasingly apparent. This is an alarming state of affairs.

Crédit Agricole Will Sell Emporiki for 1 Euro

Crédit Agricole paid €2.2 billion for the Greek bank Emporiki in 2006. It now plans to sell the bank to the Greek bank Alpha for 1 euro. Is there anything else to say?

Monday, October 1, 2012

Saint Diam's

François Miclo comments on the ex-rapper Diam's TV appearance wearing an Islamic veil. Or, rather, he chastises other commentators for focusing on the veil and ignoring the substance of the interview, which was conversion from Catholicism to Islam and the discovery of faith:
Ce qui dérange, au fond, les commentateurs, c’est la « conversion » de la chanteuse, dans le sens le plus fort du terme : son changement radical de vie. Elle hausse la spiritualité au-delà de la gloire et du succès. Elle place les besoins de l’âme au-dessus de tout autre besoin. Elle parle de cette soif intarissable de Dieu que connaissent tous les mystiques : elle commet une provocation beaucoup plus grande pour notre temps que celles auxquelles elle se livrait quand elle était rappeuse.
Il y avait, dimanche soir, sur TF1, un peu de saint Augustin, chez cette femme-là. J’hésite à l’écrire, tellement il m’aurait semblé invraisemblable de le faire il y a quelques mois encore : il y avait, chez elle, comme de la grâce. Et puis, Diam’s s’arrêtant de chanter : n’est-ce pas la preuve la plus éblouissante de l’existence de Dieu, de sa grandeur aussi ?

Eurozone Unemployment 11.4%

Zone euro : le chômage à 11,4 % en août, à un niveau record

Plus de 18 millions de personnes étaient au chômage dans la zone euro en août, a indiqué lundi 1er octobre l'office européen de statistiques Eurostat.

Perhaps this will get the attention of European leaders. Austerity is proving calamitous. Something must be done.