Dialectic
Apr 13th, 2007, 03:26 AM
Terrific summary of France's political and economic problems and the candidates in the upcoming election. Hopefully Sarkozy will win and actually start to create economic reform and take France out of the toilet it's been sinking into for the last decade.
http://www.economist.com/world/europe/displaystory.cfm?story_id=9005194
France's presidential election
The race for the Elysée
Apr 12th 2007 | PARIS
From The Economist print edition
Four candidates will determine the outcome of France's presidential election, but only three have a realistic chance of winning
AS THE French prepare to go to the polls to elect a new president, they have every reason to feel perky. The top 40 companies on the Paris bourse have been pulling in record profits. The TGV, France's homegrown high-speed railway train, has just reached the dazzling world-beating speed of 575 kph (357 mph) on the new line from Paris to Strasbourg. And after 12 torpid years under 74-year-old President Jacques Chirac, voters are about to hand power to a fresh, dynamic younger generation.
And yet the French head to the voting booths for their two-round poll, on April 22nd and May 6th, in a collective funk. They are fed up and fearful. Fearful that their jobs will disappear abroad, that their children will not find work, that the banlieues will explode again, that their welfare system will collapse. And they are tired of politicians who seem neither inclined nor capable of doing anything about it.
Not all of this declinism is justified. Elements of the methodically planned, generously financed French system still serve the country well. France's public hospitals are first-rate. Free nursery schooling has helped to boost birth rates to among the highest in Europe. French dirigisme, a tradition of state intervention reaching back to Louis XIV's finance minister, Jean-Baptiste Colbert, has delivered not just fast trains but nuclear energy and a municipal soccer pitch in every commune.
Yet in seeking to do too much, and to protect people too fully, the system has undermined risk-taking, put a brake on economic growth and imposed unsustainable costs for the long run. In each of the past five years, GDP growth in France has been below the OECD average. Today, while Germany's economy has taken off again, France's has stalled: in the fourth quarter of 2006, on a year-on-year basis, GDP grew more slowly in France than in any other European Union country except Portugal.
There are many reasons for this underperformance. They include—beneath the gloss of its top-notch global companies—a fragile industrial middle. But the single biggest problem is that not enough people work, and when they do, they do not spend enough time on the job. France's 35-hour work week is one of the shortest in the world; the employment rate for the over-55s one of the lowest; and unemployment has not dipped below 8% for 25 years. Over-protected jobs prompt employers to recruit temporary staff, thereby entrenching the very insecurity that protected job contracts are meant to prevent. Can it be coincidence that the world's biggest temping firm, Adecco, is French?
The upshot is indeed relative decline. Over the past 25 years, in terms of GDP per person, the French have slipped from seventh place in the world to 17th. Salaries have stagnated in real terms. Public debt incurred to prop up the system has grown faster than in any other EU-15 country, and now amounts to 66% of GDP.
For the past quarter-century the French seem to have accepted a sort of unwritten, profoundly conservative pact with their politicians. It goes something like this: we agree to elect you, the political class—all trained at the same post-graduate college, the Ecole Nationale d'Administration—and we will tolerate high unemployment as the price of the protection you guarantee for the rest of us. In return, you agree not to undermine that protection, and to preserve the system as it is.
Recently, however, this deal has been strained to its limits. The French no longer trust their politicians to shelter them, and are furious about it. They rejected the EU constitution in a referendum in 2005, partly in protest against an enlarged Europe that threatened to suck jobs out of France and which their politicians could do nothing about. When rioters set light to the banlieues in 2005, the French were reminded that high unemployment has a searing social cost: the failure to integrate ethnic minorities.
When students took to the streets to protest against a less-protected job contract for under-26-year-olds last year, they were agitating for the status quo. When voters turn to the far-right Jean-Marie Le Pen, who edged out the Socialist presidential candidate, Lionel Jospin, in 2002 to win a place in the run-off, they are not only expressing crude unease about immigration: they are also rejecting mainstream politicians, whom they no longer trust to tell it straight or to defend them.
Against this malaise, fully 12 presidential candidates are hoping to supply a remedy. It is a mark of France's difficulties facing up to global capitalism in the 21st century that three are Trotskyites, promising solemnly to bring about the proletarian revolution. Another is a Communist. A fifth, José Bové, is an anti-globalisation protester, once jailed for trashing McDonald's. Together, the polls give this hard-left crew over 10% of the vote. Three other low-polling candidates represent, respectively, ecology, rural life and another variety of the nationalist far right. But the outcome of the election will be determined by the remaining four candidates: Ségolène Royal on the left; François Bayrou in the centre; Nicolas Sarkozy on the right; and Mr Le Pen on the far right.
White and left
Three years ago, an upstart Socialist outsider stood for election to the regional presidency of Poitou-Charentes, against the protégée of the sitting centre-right prime minister, Jean-Pierre Raffarin. The candidate was Ségolène Royal, and she won hands down. In the family photograph of the 20 new Socialist regional presidents, she is the only woman, a streak of white amid the men in suits. Ms Royal still makes a point of being different. In her Paris campaign headquarters, an elegant left-bank apartment, she drapes necklaces along the mantelpiece, and mixes white soft furnishings with fuchsia-pink light.
Backed by her popularity in the polls, Ms Royal defied the crushing scepticism of her own party heavyweights to secure the Socialist Party presidential nomination late last year. A mother of four, whose partner, François Hollande, happens to be the party boss, she seemed to embody modernity. She talked unlike any leader on the French left, admiring Tony Blair's employment record and using taboo phrases like “labour flexibility”. She proved internet-savvy, and promised a new “participatory democracy”. At last, it seemed, here was a leader who could modernise the French Socialists.
In reality, she has turned out to be a curious blend of social authoritarianism—as schools minister, in the late 1990s, she once battled against the wearing of visible G-string underwear at school—and resolutely left-wing economics. Her platform is based on a “presidential pact” of 100 propositions and topped with ideas she has dreamed up ad hoc on the campaign trail.
Ms Royal promises to boost the minimum wage to €1,500 a month ($2,000, a 19.6% jump), increase the lowest state pensions by 5%, abolish the new flexible job contract for small firms, create 500,000 subsidised jobs for young graduates, and pay the entire salary and social charges for unskilled young people to work for a year in small businesses. She plans a big increase in spending on universities, research and innovation, and the construction of 120,000 social housing units a year.
To pay for all this, it is hard to see how Ms Royal could avoid putting up taxes. She insists, however, that she will not increase the overall tax burden. Instead, her plans, which optimistically assume annual GDP growth of 2.5%, depend heavily on that familiar fallback: eliminating waste.
As Ms Royal has criss-crossed France, posing with striking workers at a car factory outside Paris or urging a mass rally in Marseille to sing the national anthem, one word has been virtually absent from her speeches: growth. Indeed, her determination to make things juste (fair) seems to triumph over her analysis of how to achieve it. A businesswoman at an election forum organised by ELLE magazine last week asked her in what way raising the minimum wage would help entrepreneurs to create jobs. Ms Royal retorted that the minimum wage, at its current level, was simply too low to pay the rent. In other words, she seemed to be saying, the impact on job creation was not the point.
(Cont'd in next post due to length restrictions)
http://www.economist.com/world/europe/displaystory.cfm?story_id=9005194
France's presidential election
The race for the Elysée
Apr 12th 2007 | PARIS
From The Economist print edition
Four candidates will determine the outcome of France's presidential election, but only three have a realistic chance of winning
AS THE French prepare to go to the polls to elect a new president, they have every reason to feel perky. The top 40 companies on the Paris bourse have been pulling in record profits. The TGV, France's homegrown high-speed railway train, has just reached the dazzling world-beating speed of 575 kph (357 mph) on the new line from Paris to Strasbourg. And after 12 torpid years under 74-year-old President Jacques Chirac, voters are about to hand power to a fresh, dynamic younger generation.
And yet the French head to the voting booths for their two-round poll, on April 22nd and May 6th, in a collective funk. They are fed up and fearful. Fearful that their jobs will disappear abroad, that their children will not find work, that the banlieues will explode again, that their welfare system will collapse. And they are tired of politicians who seem neither inclined nor capable of doing anything about it.
Not all of this declinism is justified. Elements of the methodically planned, generously financed French system still serve the country well. France's public hospitals are first-rate. Free nursery schooling has helped to boost birth rates to among the highest in Europe. French dirigisme, a tradition of state intervention reaching back to Louis XIV's finance minister, Jean-Baptiste Colbert, has delivered not just fast trains but nuclear energy and a municipal soccer pitch in every commune.
Yet in seeking to do too much, and to protect people too fully, the system has undermined risk-taking, put a brake on economic growth and imposed unsustainable costs for the long run. In each of the past five years, GDP growth in France has been below the OECD average. Today, while Germany's economy has taken off again, France's has stalled: in the fourth quarter of 2006, on a year-on-year basis, GDP grew more slowly in France than in any other European Union country except Portugal.
There are many reasons for this underperformance. They include—beneath the gloss of its top-notch global companies—a fragile industrial middle. But the single biggest problem is that not enough people work, and when they do, they do not spend enough time on the job. France's 35-hour work week is one of the shortest in the world; the employment rate for the over-55s one of the lowest; and unemployment has not dipped below 8% for 25 years. Over-protected jobs prompt employers to recruit temporary staff, thereby entrenching the very insecurity that protected job contracts are meant to prevent. Can it be coincidence that the world's biggest temping firm, Adecco, is French?
The upshot is indeed relative decline. Over the past 25 years, in terms of GDP per person, the French have slipped from seventh place in the world to 17th. Salaries have stagnated in real terms. Public debt incurred to prop up the system has grown faster than in any other EU-15 country, and now amounts to 66% of GDP.
For the past quarter-century the French seem to have accepted a sort of unwritten, profoundly conservative pact with their politicians. It goes something like this: we agree to elect you, the political class—all trained at the same post-graduate college, the Ecole Nationale d'Administration—and we will tolerate high unemployment as the price of the protection you guarantee for the rest of us. In return, you agree not to undermine that protection, and to preserve the system as it is.
Recently, however, this deal has been strained to its limits. The French no longer trust their politicians to shelter them, and are furious about it. They rejected the EU constitution in a referendum in 2005, partly in protest against an enlarged Europe that threatened to suck jobs out of France and which their politicians could do nothing about. When rioters set light to the banlieues in 2005, the French were reminded that high unemployment has a searing social cost: the failure to integrate ethnic minorities.
When students took to the streets to protest against a less-protected job contract for under-26-year-olds last year, they were agitating for the status quo. When voters turn to the far-right Jean-Marie Le Pen, who edged out the Socialist presidential candidate, Lionel Jospin, in 2002 to win a place in the run-off, they are not only expressing crude unease about immigration: they are also rejecting mainstream politicians, whom they no longer trust to tell it straight or to defend them.
Against this malaise, fully 12 presidential candidates are hoping to supply a remedy. It is a mark of France's difficulties facing up to global capitalism in the 21st century that three are Trotskyites, promising solemnly to bring about the proletarian revolution. Another is a Communist. A fifth, José Bové, is an anti-globalisation protester, once jailed for trashing McDonald's. Together, the polls give this hard-left crew over 10% of the vote. Three other low-polling candidates represent, respectively, ecology, rural life and another variety of the nationalist far right. But the outcome of the election will be determined by the remaining four candidates: Ségolène Royal on the left; François Bayrou in the centre; Nicolas Sarkozy on the right; and Mr Le Pen on the far right.
White and left
Three years ago, an upstart Socialist outsider stood for election to the regional presidency of Poitou-Charentes, against the protégée of the sitting centre-right prime minister, Jean-Pierre Raffarin. The candidate was Ségolène Royal, and she won hands down. In the family photograph of the 20 new Socialist regional presidents, she is the only woman, a streak of white amid the men in suits. Ms Royal still makes a point of being different. In her Paris campaign headquarters, an elegant left-bank apartment, she drapes necklaces along the mantelpiece, and mixes white soft furnishings with fuchsia-pink light.
Backed by her popularity in the polls, Ms Royal defied the crushing scepticism of her own party heavyweights to secure the Socialist Party presidential nomination late last year. A mother of four, whose partner, François Hollande, happens to be the party boss, she seemed to embody modernity. She talked unlike any leader on the French left, admiring Tony Blair's employment record and using taboo phrases like “labour flexibility”. She proved internet-savvy, and promised a new “participatory democracy”. At last, it seemed, here was a leader who could modernise the French Socialists.
In reality, she has turned out to be a curious blend of social authoritarianism—as schools minister, in the late 1990s, she once battled against the wearing of visible G-string underwear at school—and resolutely left-wing economics. Her platform is based on a “presidential pact” of 100 propositions and topped with ideas she has dreamed up ad hoc on the campaign trail.
Ms Royal promises to boost the minimum wage to €1,500 a month ($2,000, a 19.6% jump), increase the lowest state pensions by 5%, abolish the new flexible job contract for small firms, create 500,000 subsidised jobs for young graduates, and pay the entire salary and social charges for unskilled young people to work for a year in small businesses. She plans a big increase in spending on universities, research and innovation, and the construction of 120,000 social housing units a year.
To pay for all this, it is hard to see how Ms Royal could avoid putting up taxes. She insists, however, that she will not increase the overall tax burden. Instead, her plans, which optimistically assume annual GDP growth of 2.5%, depend heavily on that familiar fallback: eliminating waste.
As Ms Royal has criss-crossed France, posing with striking workers at a car factory outside Paris or urging a mass rally in Marseille to sing the national anthem, one word has been virtually absent from her speeches: growth. Indeed, her determination to make things juste (fair) seems to triumph over her analysis of how to achieve it. A businesswoman at an election forum organised by ELLE magazine last week asked her in what way raising the minimum wage would help entrepreneurs to create jobs. Ms Royal retorted that the minimum wage, at its current level, was simply too low to pay the rent. In other words, she seemed to be saying, the impact on job creation was not the point.
(Cont'd in next post due to length restrictions)