Good ol' Gideon
Apr. 24th, 2012 12:30 pmAn absolutely top-notch column from Gideon Rachman in today's FT about the French election. He makes many perceptive and valid points, not least the analysis (which should be compulsory reading for all those who say how "wonderful" French life is compared to the UK and "why can't we do it the French way?") that:
However, the more interesting conclusions are political rather than economic. The eurocrisis is rapidly becoming a political crisis rather than an economic one. Yesterday the Dutch government collapsed because of differences over austerity. And Germany steadfastly refuses to accept this reality. Only yesterday Jens Weidmann, Bundesbank president, said that
The problem is that many electorates have heard this message and are saying "go tell it to the marines".
As Tony Barber also observes in today's FT
FFS, if a journalist can see this, why can't the head of the Bundesbank see it?
And so, back to the French election. Rachman raises two, somewhat contradictory, issues here.
The first is that about a third of the voters in France went for "outsiders" – those who ostensibly reject the status quo. But the seond is the more interesting. Rachman notes that, for all the rhetoric, what was most interesting was how similar were Sarkozy, Hollande, Mélenchon, Le Pen and Bayrou. All of them attacked globalization. All of them emphasized the wonders of the French social model and that the French "solution" was a model that the world should follow. Reality, as it were, took a back seat.
The differences were mainly tactical. Sarkozy is, in essence, talking about rebuilding borders. If the French can't export their own model over free frontiers, it's damned if its going to import someone else's. As Hollande said in a speech last week;
We've heard that before, in Greece. But when it comes to not having the money to pay the salaries of the people who voted for you, it's amazing how this line of "stuff the financial markets" gets forgotten.
Le Pen, meanwhile, sings the Marsellaise (not very well, I thought, but, hey, she's French and I'm not) at her campaign headquarters and also (like Sarkozy) argued for protectionism, but went further and argued for a withdrawal from the euro. To the outsider, the differences between Le Pen and Sarkozy are less than the similarities.
The extremists, or, in cases, simply the "anti-Merkels" are gaining strength. In the Netherlands it's the Freedom Party of Geert Wilders. In the June 2010 elections the PW gained more than 15% of the vote and 24 seats out of 150. That was the slow fuse that eventually led to the collapse of the Dutch government this week. That will likely lead to a new election. What percentage will the Dutch Freedom Party win – a party note that roughly follows the Le Pen line on withdrawing from the euro and banning immigration.
I would, by the way, take issue with calling either of these parties "fascist" on the grounds that they want to ban immigration. If you agree with this then effectively call James Callaghan's strategy in the late 1960s fascist, or the Australian governments since heaven-knows-when as fascist. Much though I dislike any restriction on economic movement (I think that we have it arse-about-tit banning people who want to come here to work but accepting people who want to come here because they are being persecuted somewhere else), let alone restriction based on race, it's a sad fat of life that most people support it, and they supported it in the UK when it was backed by both Labour and Conservative parties.
Indeed, the Front National in France seems to be doing it's level best to remould itself as a kind of Nationalist anti-libertarian semi-socialist "solid French" party not dissimilar to the constituency to which the Nazi Party appealed in Germany in the late 1920s. That party (and the Communist Party) were also quick to blame "the bankers" (except that the Nazis called them "the Jewish Bankers").
As I've written before, this uprising against the rentier class (for, to be sure, this is what it is) has been seen many times before, and is often the result of a long period of low inflation. Low inflation and high real interest rates work intrinsically in favour of the rentier class. It also suppresses social mobility. Low inflation is, therefore, implicitly favourable to the conservative wing of society and unfavourable to the have-nots. (I am aware that a separate discussion here would be the hyper-inflation of the 1920s and the fact that "have-nots" can also be part of the rentier class, as in Russia in the early 1990s, where pensioners' savings were wiped out).
Parties that appeal to this "have-not" group will inevitably get more votes as more people join the non-rentier class.
It's that which will make the election in the Netherlands so interesting.
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"The French know that their cherished social model – with its excellent infrastructure, healthcare and pensions – has been built on an usustainable mountain of debt".
However, the more interesting conclusions are political rather than economic. The eurocrisis is rapidly becoming a political crisis rather than an economic one. Yesterday the Dutch government collapsed because of differences over austerity. And Germany steadfastly refuses to accept this reality. Only yesterday Jens Weidmann, Bundesbank president, said that
"We can only win back confidence if we bring down excessive deficits and boost competitiveness. In such a situation, consolidation might inspire confidence and actually help the economy to grow".
The problem is that many electorates have heard this message and are saying "go tell it to the marines".
As Tony Barber also observes in today's FT
"Today's reality is that the financial crisis, whatever its origins, is stirring a potentially far-reaching crisis of legitimacy in Europe's political system".
FFS, if a journalist can see this, why can't the head of the Bundesbank see it?
And so, back to the French election. Rachman raises two, somewhat contradictory, issues here.
The first is that about a third of the voters in France went for "outsiders" – those who ostensibly reject the status quo. But the seond is the more interesting. Rachman notes that, for all the rhetoric, what was most interesting was how similar were Sarkozy, Hollande, Mélenchon, Le Pen and Bayrou. All of them attacked globalization. All of them emphasized the wonders of the French social model and that the French "solution" was a model that the world should follow. Reality, as it were, took a back seat.
The differences were mainly tactical. Sarkozy is, in essence, talking about rebuilding borders. If the French can't export their own model over free frontiers, it's damned if its going to import someone else's. As Hollande said in a speech last week;
"The French are a free people, who will not allow their future to be determined by the pressure of markets or finance".
We've heard that before, in Greece. But when it comes to not having the money to pay the salaries of the people who voted for you, it's amazing how this line of "stuff the financial markets" gets forgotten.
Le Pen, meanwhile, sings the Marsellaise (not very well, I thought, but, hey, she's French and I'm not) at her campaign headquarters and also (like Sarkozy) argued for protectionism, but went further and argued for a withdrawal from the euro. To the outsider, the differences between Le Pen and Sarkozy are less than the similarities.
The extremists, or, in cases, simply the "anti-Merkels" are gaining strength. In the Netherlands it's the Freedom Party of Geert Wilders. In the June 2010 elections the PW gained more than 15% of the vote and 24 seats out of 150. That was the slow fuse that eventually led to the collapse of the Dutch government this week. That will likely lead to a new election. What percentage will the Dutch Freedom Party win – a party note that roughly follows the Le Pen line on withdrawing from the euro and banning immigration.
I would, by the way, take issue with calling either of these parties "fascist" on the grounds that they want to ban immigration. If you agree with this then effectively call James Callaghan's strategy in the late 1960s fascist, or the Australian governments since heaven-knows-when as fascist. Much though I dislike any restriction on economic movement (I think that we have it arse-about-tit banning people who want to come here to work but accepting people who want to come here because they are being persecuted somewhere else), let alone restriction based on race, it's a sad fat of life that most people support it, and they supported it in the UK when it was backed by both Labour and Conservative parties.
Indeed, the Front National in France seems to be doing it's level best to remould itself as a kind of Nationalist anti-libertarian semi-socialist "solid French" party not dissimilar to the constituency to which the Nazi Party appealed in Germany in the late 1920s. That party (and the Communist Party) were also quick to blame "the bankers" (except that the Nazis called them "the Jewish Bankers").
As I've written before, this uprising against the rentier class (for, to be sure, this is what it is) has been seen many times before, and is often the result of a long period of low inflation. Low inflation and high real interest rates work intrinsically in favour of the rentier class. It also suppresses social mobility. Low inflation is, therefore, implicitly favourable to the conservative wing of society and unfavourable to the have-nots. (I am aware that a separate discussion here would be the hyper-inflation of the 1920s and the fact that "have-nots" can also be part of the rentier class, as in Russia in the early 1990s, where pensioners' savings were wiped out).
Parties that appeal to this "have-not" group will inevitably get more votes as more people join the non-rentier class.
It's that which will make the election in the Netherlands so interesting.
++++++++++++++