Thursday, March 6, 2014

The Buisson Affair Continues

We still don't know who leaked the Patrick Buisson recordings, but we do know that, according to Le Monde, Buisson appears to be an even more unsavory character than he seemed when all we knew about was his frequentation of the extreme right. His habit of covert recordings is said to date from way back. He has quarreled with many people, including his own son, who no longer speaks to him, with whom he engaged in fisticuffs at TF1, and whom he used as an allegedly unwitting front for two corporations apparently involved in extracting money from the government for polling at inflated prices. And yet Nicolas Sarkozy chose this man as a trusted advisor. This lapse of judgment may slow the momentum of the Sarkocomeback, which had been gathering speed in recent weeks as the current UMP leadership was engulfed by still other scandals.

EC: Cutting Wages Will Not Restore French Competitiveness

A 2012 report from the European Commission suggests that efforts to cut effective wages, including the Responsibility Pact signed yesterday by the MEDEF and 3 trade unions, will not help French export performance as much as some hope:
This finding is summarized in the following graph taken from the 2012 imbalances report on France. It shows that price competitiveness only played a very small, almost to be ignored, role in explaining export performance of manufactured goods over the entire 1999 – 2009 period. Instead, export dynamics are to be explained by growth in export markets and non-price competitiveness. The latter is estimated as a residual and refers to the quality of the goods being produced, their level of sophistication and complexity, the efforts in terms of research and development and the ability of firms to engage in exports. As can be seen from the graph, non-price competitiveness has contributed positively to export dynamics of Germany while dragging export growth of France down.
However, this finding is completely at odds with the policy of internal wage devaluation that is actively being promoted by the Commission across major parts of Europe, stating that to improve competitiveness, wages and wage formation systems need to become extremely flexible.