The Other School of Economics

What the French protesters are telling us: it is a Social, not an Economic Issue

What the French protesters are telling us: it is a Social, not an Economic Choice

Once again the French have taken on the streets and are throwing barricades and slogans at their government. This time the spark which ignited the protests is the project to lift the legal retirement age from 60 to 62.

Depending on your school of political persuasion and your self-perceived maturity in economic and business matters, your reaction probably ranges from contempt for those indoctrinated unionists and mindless students, to sympathy or even nostalgia for the hippie years of upheaval.

Paris, 16 October 2010 – AFP photo, Fred Dufour

There is even a chance that you might commiserate for the few tourists inconvenienced by the disruptions, or be dismayed at the idea that gas stations are drying-up because of refineries blockades. Could you seriously imagine a modern western country running out of gas?

This really leaves observers wondering why the French are so uptight about those 2 more years added to their working life; especially when the UK retirement age will rise to 66 and Germany is going to 67. What is the big deal? Is it really worth scuttling the entire economy?

Well. The big deal is precisely not *just* about those 2 years per se. The big deal is about the paradigm shift towards the liberal mindset, which is what happened in the UK 30 years ago…

A Thatcher moment

French blogger @vogelsong drew a parallel with the Thatcher moment that happened in Britain during the miners’ strike of 1984-85.

The dispute was tough. It lasted for a year. In the end Thatcher prevailed. Economic rationalists had the final word.

“you know, there is no such thing as society. There are individual men and women, and there are families”

Unions were humiliated and permanently lost their political power, allowing the Thatcher government to consolidate its free market programme. The country jumped into the neo-liberal age. It was a major political and ideological victory for Margaret Thatcher and the Conservative Party. With the ultimate irony that Blair’s New-Labour ratified the changes.

It is the consensual adoption of the same orthodoxies by the Right as well as the Left that sealed the neo-liberal victory in most countries: the acceptance that financial market forces are the only tangible governing forces to be taken into account.

This is the real battleline: more than such and such policies (a tax cut here, a pension age there), it is the blanket acceptance of the liberal dogma as the only reasonable alternative that is the ultimate prize.

Since the 1980s the dominos have fallen one by one: the UK, but also the US or Australia. People might vote on a “two party” preferred basis, but the tangible alternatives really are about politician personalities and who gets the job, not about social or economic differentiated choices. “me-tooism” is the new modus operandi: the practise of adopting or imitating a policy successfully or popularly proposed by the rival party to ride a popular trend. Resulting in a failure to articulate radical differentiation.

Joe Hockey, ABC picture

What happened in Australia is a case in point

To the point of creating hilarious confusion as (right wing) Australian Liberal shadow treasurer Joe Hockey did last week when he called for the government intervention to influence and govern interest rates. A fairly left-wing concept, which has the merit to put a valid question on the table: is fixing interest rates viewed as part of the national interest and should governments have a say in it?

The responses to Hockey’s proposal illustrated how much the neo-liberal orthodoxies have now penetrated the collective psyche (you’d be excused to say ‘brainwashed’).

The main line in the mainstream was that “Hockey didn’t have a clue”. The Labour (!) treasurer described his opposite’s intervention as “incomprehensible and completely reckless.” (1). Comments which have been echoed by all sorts of professional or amateur commentators.

Well. I am impressed that so many of them seem to have PhD level economics instincts to be able to dismiss the idea so quickly.

My point is the following:
- I can respect commentators who have a considered belief in neo-liberal ideas and have done their research. Let’s debate and discuss.
- However, I fear that most of the reactions to Hockey’s comments can be explained in a less flattering manner. Could it be that decades of conservative and neo-liberal brainwashing now trigger Pavlovian unconsidered mainstream chain reactions?: “Government -> control -> banks -> red flag -> smells like socialism -> bery bery bad -> it must me shite”. End of the story.

This stage of collective conditioning is the post- Thatcher moment Nirvana: ‘the perfect peace of the state of mind’. Neo-liberal policy makers don’t need to fight hard on detailed policy proposals anymore, because brains have shifted. The orthodoxy is now accepted as “the way it should be” on the Right as well as on the Left, hence being ‘la pensée unique‘ (or ’single thinking’) (2).

The trouble is that the French seem to be quite recalcitrant, and are telling us that Society is not dead yet

Comparing what is happening on both sides of the Channel is quite chilling.

The English are being hit with a draconian economic plan that will cut ~500,000 jobs (1 in 10!) from the public services as well as some welfare payments. It will raise the age of eligibility for the national pension plan to 66 from 65. A PriceWaterHouseCoopers commentary said the shifts in government spending could even wipe out another 500,000 jobs in the private sector.

And no protests (3). The measure of the Thatcher legacy is the acceptance. So far.

In comparison “Nous le Peuple” – “Us the People”, as blogger @sebmusset posted recently, are sending a few messages here. It will be up to commentators to sort them out in the coming weeks and months but we can start to volunteer a few thoughts:

1 – We read everyday calls to ‘change the system’, to ‘shift the paradigm’, to ‘rethink the way forward’ or to stop ‘the great neo-liberal experiment’ (4). “Le laissez-faire, c’est fini – the laissez-faire is over” (5)? Well, this is now crunch time.

- You cannot in the same breath praise the advances of a more open society and refuse to hear millions on the street as Sarkozy does.
- You cannot vilify the financial system that led to the Global Financial Crisis and play in the hand of the neoliberal thinking by bailing out the financial markets, allowing the same usual suspects to grow their bottom line, while abusing and squeezing the lower and middle classes to repay the debt!

Photo: Julien M. Hekimian / Getty Images

2 – To dismiss the protesters as mindless egoistical imbeciles is a mistake:

This is the moment these guys have chosen to let their government know the limit of their legendary Gallic sense of humour.

These people marching on the streets might have not theorised in a Krugmanian manner all the parameters they are dealing with, but they understand a few things:

- that a different social choice is at stake. They are not interested in giving up the inter-generation system that underpins the pensions (younger workers support the elders).
- They are educated enough to understand that Sarkozy is pushing a domestic conservative agenda that is cynically totally opposed to the progressive face he likes to show on the international stage.
- They are also telling us that the politicians and commentators who are trying to reduce their protest to mindless posturing that have the bad taste of spoiling tourists vacation are a bit short. We could almost hear something along the lines of …

“please don’t try to influence the long term government policy today, some tourists have a plane to catch and we would not want to inconvenience them , would we. Cos you know… Keeping the Joneses happy to come to Disneyland Paris is really what matters here.”

“Don’t Spoil Our Holidays” – Tabloid France-Soir

- Your correspondent also hopes that the irony of oil supply blockade and a temporary voluntary slow-down of the economy won’t be lost as the world is wondering how to reduce energy consumption. Well. Here you go. Here is some food for thought.

“Peak Oil”: France, Martigues, 17 October 2010: Oil tankers waiting to enter port AFP PHOTO – Anne-Christine Poujoulat

3 – Finally, to the economic pundits who would want to brush all of this aside with clever financials, I would like to leave them with interesting thoughts articulated by American economist Mark Weisbrot in the Guardian:

“Once again, most of the media thinks the French are being unrealistic, and should just get with the programme like everyone else. The argument is that life expectancy is increasing, so we all have to work longer.”

However he observes that “the GDP per person has increased by 45% since the retirement age was last fixed. The increase in life expectancy has been very small by comparison.”

“The growth in national income over the next 30 or 40 years will be much more than sufficient to pay for the increases in pension costs due to demographic changes, while still allowing future generations to enjoy considerably higher living standards than people today. It is simply a social choice as to how many years people want to live in retirement and how they want to pay for it.

If the French want to keep the retirement age as is, there are plenty of ways to finance future pension costs without necessarily raising the retirement age. One of them, which has support among the French left (and which Sarkozy claims to support at the international level), would be a tax on financial transactions. Such a “speculation tax” could raise billions of dollars of revenue – as it currently does in the UK – while simultaneously discouraging speculative trading in financial assets and derivatives. The French unions and protesters are demanding that the government considers some of these more progressive alternatives.”

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We should ponder what makes this country still have the ability to reactivate its immune defences like that. Not being naïve about the many not-so-glamorous aspects of French society (the same as everywhere else really: temptation to materialism, inequalities, latent racism, yadi yada…) there is still a “cultural exception” that is driving the neo-cons nuts. The French should keep it that way.

{ leLaissezFaire & NKN }

Photo: Franck Prevel / Getty Images

References

(1) ABC’s Lateline 21/10/2010 – http://www.abc.net.au/lateline/content/2010/s3045053.htm

(2) ‘La pensée unique’ is best translated by ‘the single thinking’:  The expression was coined in 1995 by Ignacio Ramonet, editor-in-chief of Le Monde diplomatique and founding member of think-tank and activist organization Attac. ‘La pensée unique’ describes the claimed supremacy of neoliberalism as ‘the only alternative’. The British variation being Margaret Thatcher’s ‘There Is No Alternative’  slogan when arguing that free markets, free trade, and capitalist globalization are the only way in which modern societies can go, as any deviation from this doctrine is certain to lead to disaster.

(3) – Tariq Ali, The Guardian – Why can’t we protest against cuts like the French? – http://m.guardian.co.uk/?id=102202&story=http://www.guardian.co.uk/politics/2010/oct/19/protest-against-cuts-french )
- US economist Joseph Stiglitz: “When I look at France I somehow feel that there may be a more healthy response to get in the street and say ‘something’s wrong here’.”

(4): Kevin Rudd: The Monthly Essays | February 2009  http://www.themonthly.com.au/monthly-essays-kevin-rudd-global-financial-crisis–1421

(5): Nicolas Sarkozy, 2008 : «le laisser- faire, c’est fini. Le marché qui a toujours raison, c’est fini». http://www.liberation.fr/politiques/010133587-le-laisser-faire-c-est-fini

See also French Bloggers:
- Seb Musset: http://sebmusset.blogspot.com/ – http://twitter.com/sebmusset
- Vogelsong: http://piratages.wordpress.com/ – http://twitter.com/vogelsong

Photos from http://www.990px.pl/index.php/2010/10/20/francja-fala-protestow/