Chris Walker is Ignorant

If you want to lecture the French on “economic reform”, it pays to have some knowledge of French economic history. If you insist on doing so despite knowing nothing, “Big Mouth Strikes Again” is not a good headline. Of course, it could be some downtrodden sub-editor’s revenge.

Anyway, Chris Walker writes in today’s Independent that Nicolas Sarkozy is “committed to privatisation, and many of the Mitterand legacy stakes are to be addressed, such as Renault, Safran, EDF, and Air France”. Renault was nationalised by Charles de Gaulle in 1945, as punishment for allegedly collaborating with the German occupier. This is not a legacy of François Mitterand, at least not one he’d admit to. EDF is also a creation of De Gaulle, or more importantly the technocrats who ran it and the Communist minister Marcel Paul. It is hard to find an argument that cheap power is a net loss for French industry. Air France has been semi-nationalised as long as it has existed.

Walker also repeats the content-free mantra that “a Thatcherite-style purge and return to free markets has not happened in France in the 25 years since” Mitterand – well, something. Mitterand came to power in 1981, 26 years ago, swung around to the franc fort in 1983, 24 years ago, went into cohabitation in 1986 with the Right, who forced him to privatise many of his nationalisations, won the Presidency again in 1988, won back the National Assembly…but on the way, French heavy industry went through a pretty grinding restructuring process, with tens of thousands of jobs lost. The whole coal industry was shut down. The French also invested heavily in the remaining big industries, which is why they can build trains and space rockets and mobile phone networks and we can’t.

Walker demonstrably knows nothing about France. However, he is an expert.

10 thoughts on “Chris Walker is Ignorant

  1. Well it doesn’t only seem to be France that he doesn’t know much about:

    “It is common in the City to complain that the “Club Med” economies are a millstone round our more dynamic necks.”

    He isn’t talking about Spain here is he? And while we are at it, the recent Greek performance has hardly been unimpressive.

    Actually, maybe you missed the most direct and telling quote here:

    “France’s employment problems are much more deep rooted. They go back to the Mitterrand government of the early 1980s and its punitive tax and nationalisation policies.”

    As you say this is stark and patent nonsense, since most of the things he is talking about go wayback beyond Mitterand. And if dirigisme is what you want to aim your sites on, then as Wolfgang Munchau doesn’t ever seem to tire of pointing out, Sarkozy is most certainly going to leave you very disappointed.

    As Barcelona FC footballer Liliam Thuram keeps pointing out, the main resemblence Sarkozy seems to have with Mrs T is in the kind of language he uses when he talks about minorities.

    Are we having a sort of anti hack-journalism summer fest on Afoe, or what :).

  2. This article by Bloombergs John Fraher would seem to be much more on the ball:

    Sarkozy, 52, heads to Brussels today to meet officials from the 12 other nations that share the euro. At the meeting, he will defend his plan to cut taxes even though they may cause the budget deficit to exceed government forecasts in 2008. He may also clash with European Central Bank President Jean-Claude Trichet; Sarkozy has slammed the bank for allowing the euro to appreciate too much and has demanded a greater say for governments in steering exchange rates.

    And while Sarkozy is almost certainly in the wrong in his insistence on political intervention in the setting of interest rates at the ECB, as I tried to suggest in the German Shock post, he is on pretty solid ground in trying to renegotiate a Stability and Growth Pact Mark III, since France’s more favourable demographics give a lot more margin for adjustment. The thing is, in order to face up to and accept this, over at Brussels and the ECB they would have to come out of denial about the significance of Europe’s differential demographics.

    Perhaps the only safe thing which can be said about Sarkozy at this point, as the Fraher article notes, is that

    “He’s shaking things up,” said Klaus Baader, chief European economist at Merrill Lynch & Co. in London. “He’s questioning some of the basic ways of behaving” within Europe’s monetary union.

  3. Edward,

    I don’t see how France is in a position to renegotiate anything. The stability and growth pact has survived, though severely injured and still bleeding, and I believe it will stay alive. I don’t even think Sarkozy is even *trying* to shake things up, he’s just in for some impression management posturing at home and using up some of the EU-cred he worked for at the summit two weeks ago.

  4. Another great Fistfulofeuros post.

    Not only is he ignorant of France, he is also ignorant, or at least, just not paying attention to anything Sarkozy has ever campaigned, said or stood for on economic reform. Sarkozy is no messianic free-market champion.

  5. Hello Tobias,

    “I don’t see how France is in a position to renegotiate anything.”

    Well if you have a look at what was actually agreed at the finance ministers meeting this is effectively what he did, even if it wasn’t put like that. What he actually sold them was some sort of version of the Laffer curve: we will cut taxes and get growth, so “maybe there’s a possibility we will be in line by 2010, but then again maybe we won’t”. From Bloomberg:

    French President Nicolas Sarkozy persuaded European finance ministers that his tax cuts may spur economic growth and keep France on track to meet a deadline to balance its budget by 2010. Sarkozy’s finance minister, Christine Lagarde, told reporters in Brussels today the president’s plans won’t swell the deficit by as much as previously forecast and pledged to reduce the shortfall this year and next. At the same time, France offered no new deficit-cutting measures.“We’re not giving up our goals of budget consolidation,” said Lagarde after a meeting with the other 12 euro-region finance ministers. “If growth is there as we hope, we’ll put all our efforts to reach the 2010 target. If that is not the case we commit to meet the goals by 2012 at the latest.”

    It’s a sort of now you see me, now you don’t kind of situation. Of course whether or not they get the growth they are promising depends on a lot more things than whether or not the Laffer curve works. Let’s just say that there are reasons for entertaining doubts.

    At the very least the decision to let France stay in the grey zone has flexibilised the meaning of the pact yet one more time. I think the issue really is going to be how they will now handle Italy if they once more time fail to come through on their promises (and this seems quite possible). I don’t know whether Filipe is from Portugal, but I simply can’t help thinking about what has happened to them there every time this issue gets raised.

    But I also wanted to draw attention to the fact that given their differential demographics, and given the fact that the only real justification for all the budget balancing was the impending demographic crunch (which will hit Germany and Italy but NOT France in the short term), a French President will be on solid ground if he starts to say “now hang on a moment, we’ve done our homework on fertility and immigration, surely this should be taken into account too”.

    With all the talk about balances and deficits, I have a proposal I want to advance at some point: the balance of payment accounts, as well as including financial capital flows should also include human capital ones, especially given the increasing importance of human capital in the knowledge economy. The traditional BoP bookkeeping is now rather out of date in this sense. I think the point, once made, is obvious, but it is funny no-one seems to have been arguing this to date.

    “I don’t even think Sarkozy is even *trying* to shake things up, he’s just in for some impression management posturing at home”

    Well this would be a kind of “public relations” take on the situation, and you may be right, although I can’t shake off the feeling that there may be some “reality impinging” fundamentals knocking around in the background somewhere.

  6. We thank the FistfulofEuros for highlighting the inspirational ramblings of the liberal-Britrag-Independent. We salute the quality of gibberish that they are able to churn out on a daily basis.

    More seriously, engaging on the Sarko issue, we have wondered how a conservative who claims to love the free-market can square away the dirigiste badge that he wears with such pride? Can anyone square this away?

  7. «More seriously, engaging on the Sarko issue, we have wondered how a conservative who claims to love the free-market can square away the dirigiste badge that he wears with such pride? Can anyone square this away?»

    That is the very essence, in a nutshell, of Gaullism.

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