the sweeping generalisations of "the economist"

Here we go again. The Economist decided that all the world needs is a thatcher everywhere.

I will comment the article below and expose the weakness of some of the arguments. The picture in particular is offensive.


Here goes:
What France needs

Oct 26th 2006
From The Economist print edition
France is in a similar funk to Britain in the 1970s: a Madame Thatcher could restore its confidence

| Macko says : First of all France does not lack confidence. It is more open to change of government unlike Britain which is now replacing its parliamentary system with a president Blair. It is aping America in having an unstoppable president Blair/Brown who can deflect all questioning and accountability. Aping the US in its final decades as a superpower is not a good idea. |

THERE is a palpably sour mood in France these days. As Jacques Chirac enters the twilight months of his 11th and (surely) final year as president, he is the most unpopular occupant of the Elysée Palace in the fifth republic's history.

| Macko says : This is because Chirac is a bit of a farmer protectionist, and because the electorate wanted real change but when the election came along they had to choose between Le Pen and Chirac, So they were almost forced to keep Chirac for lack of a credible opponent. It is clear that there is a democratic demand for the social deal between employee and employer to be kept where it is |

The government of his prime minister, Dominique de Villepin, has been paralysed ever since street protests forced it to withdraw a modest labour-market reform in the spring. The French have invented a buzzword: declinism, summing up the belief that the country is unreformable.

| Macko says : Some French and not all french people invented this term, I travel to France and its the first time I ve heard this one. Maybe its heard where the Economist goes and meets industrialists and the like. It depends who you ask. |

France matters. It is the world's sixth-biggest economy, a permanent member of the UN Security Council and a declared nuclear power.

| Macko says : Correct, and what is more, its economy is not at all sickly. It has shown much resilience. Overall GDP is not a reliable guide for all kinds of comparisons. There are a lot of wrong conclusions one can reach by solely looking at GDP growth. For me GDP numbers should be accompanied by real wage rises y.o.y to show that the whole of society benefits from growth. Happiness surveys should also be a consideration. |

France was a founder of today's European Union, a driving force behind the creation of the single currency and—despite French voters' rejection of the draft EU constitution in May 2005—a longstanding promoter of deeper European integration. It is in part thanks to France's paralysis that the union is itself so uncertain of its direction. That is why Europe and the world are watching with close interest as the campaign for next spring's presidential election unfolds.

Our survey this week explains the gloomy background to that election. For ten years in a row, the economy has grown by less than the rich-country OECD average. The public finances are looking wobbly: public spending accounts for half of GDP, and in the past ten years the public debt has increased faster as a share of GDP in France than in any other EU-15 country. Above all, France suffers from stubbornly entrenched unemployment, which seems stuck at 8-10% overall, and over 20% for the young.

| Macko says : Unemployment figures are another area of lies and half-truths in comparisons between countries. Many fiddled figures are starting to really take the piss. In the UK for example where unemployment is rising, the unemployed are defined as "people who receive unemployment benefits". I can tell you that the system in the UK makes it SOOOO bureaucratic and difficult to get unemployment benefit that people don't bother (besides the amount is just enough to sustain life and has so many strings attached that it simply is not a useful stopgap until one finds the next job). Which of course then means that the jobless numbers are "creative accounting". Most common people's definition of unemployment is when somebody wants to get a half-decent job with normal hours and a fair deal between an employee and an employer and there are no such jobs on offer.

In practice when in a person in the UK loses their job and income they give in to the bombardment of consumer loan advertising. This often puts their home at risk of repossession when they frequently lose their jobs and in many cases they can't get enough money to pay off the loans if their skills are not the latest trend... Deceptive advertising is purposely created to cheat people, smallprint with massively important clauses, legalese, its all crooked, and the government never intervenes when people get fleeced although it is continuous.

Result? Britain has and incredibly high rate of repossessions and personal bankruptcies. Many depressed people start borrowing and spending money unwisely on consumerist nonsense, but I suppose it keeps the economy going in the short term.

In reality its a system that has a predatory stance towards simple minded people that think bankers are respectable people and that a loan is a fast way out of trouble on a rainy day WRONG! In reality there is a massive number of people "hobbling" or in training, or forced into the army as the sole employer in their area. We live in a time that if you are a bit dim you can die from poverty...

France was chronic joblessness, as much as anything else, that lay behind the riots and car-burnings that exploded in the banlieues of Paris, heavily populated by disaffected Muslim youths, exactly a year ago. Today, these neighbourhoods remain tense: 21,000 vehicles were burned in the first six months of this year alone—twice as many as during the three weeks of rioting. A sense of exclusion lingers.

| Macko says : All this is true, but the Thatcherite UK has similar riots (Oldham for example) , which shows that the riots have a weak relation to unemployment and more to do with lack of integration.

It is true though that if one is not smart academically or in commerce these days there are no jobs for them, decent work has become a privilege of the few, and all the industrial jobs many of the parents of these youths were doing have vanished to china, or technology has made them redundant.

Once in the trashbin of society in estates that nobody wants to live in throughout Europe (these exist equally in the UK) these young mainly unintegrated Muslims lapse into a life of petty crime and riots.

It's not impossible

Yet France is a country of contradictions. Its economy may be sluggish, | Macko says : A I pointed out before, sluggish for who? most white french do get jobs, its mainly the hordes of the Algerian unemployables in the estates that nobody wants to employ. but its workers are among the world's most productive.

| Macko says : Yep that is because french education is so much better than the English equivalent. Also when one employs the uncouth of the suburbs productivity falls, any society with almost full employment is very inefficient but happier and more balanced. However if the government is in the pocket of the people selling the loans etc, they need some distress in order to sell their loans.

Its people are famously leery of globalisation and economic liberalism, yet France boasts some of the world's most successful multinational companies. Its public sector may be bloated and its tax burden excessive,

| Macko says : ... yes when the french age get decent pensions unlike the Brits who have so many cases of old people DYING because they cannot afford heating in the winter! but hey it doesn't matter at least we have some nice numbers to show in international comparisons.

yet the quality of its public officials is widely admired. Its mass-education universities come deservedly low in the world rankings, yet Paris's famous grandes écoles are among the best in the world.

| Macko says : British universities like the ex-polys are pathetic, the UK government is trying to get foreigners to pay for its universities through high fees, because many foreigners have the misconception that British universities are like Oxford or Cambridge... Nothing could be further from the truth. In reality the unis are crap but their funding is cut year after year, so in desperation UK universities go and engage in deceptive marketing in other countries to get fee paying students. They are bad value for money but it will take years for it to be known, this is also massively adding to an academic degree inflation, which means that a degree is worth less and less...
Without a masters of science these days its you cannot seriously compete (so the Bsc has been inflated away into nothing really)

In short, France is a place in which, for almost every weakness, it is possible to find a matching strength.

The question is whether France can now build on these strengths by bringing in pro-competitive reforms—to its labour market, to its protected utilities and public monopolies, to its social model,

| Macko says : No the real question is why some are constantly beating the drum to get the new UK and open other markets so we can get in and get market share with a lot of marketing and substandard products. The reason why UK has given up on manufacturing is largely because in the 80es UK cars, stereos are synonymous with jokes and anything manufacturing with some luxury exceptions was rubbish quality. Britain could not compete because of the ills in education that it had then as much as it has them now. Productivity is kept as high as a low 2% because of immigration not because it invests in its people.

to its public services and to its stifling regulatory system. There are reasons to be optimistic. Many of France's impressive businessmen are demanding change. | Macko says : yep like keeping things regulated to keep the Brits out. Even within the EU the countries have invented new ways to keep the professions closed to cross border competition. British companies would like to see privatisation Thatcher style so these new private monopolies get created that are in effect permanent cash cows to shareholders with as little investment as possible. The pathetic level of investment that has gone in the privatised monopolies in the UK e.g. Thames water, have caused the UK to have water shortages int he summer. WATER SHORTAGES in the rainiest country in the world!! if that is not an indictment of private ownership of utilities i don't know what is. Shareholders don't invest and they raise bills. One day these companies will start having operational issues because of the lack of investment and the public will demand this to be fixed so the government will have to buy these back from the shareholders in order to fix them, it happened with the railways and Railtrack, its a real eye opener, in contrast in france you have the TGV...

Thatcherism works only in some things, certainly NOT in natural monopolies. The economist needs to explain if it doesn't know theis or it pretends it doesn't know this...

he country's demographic outlook is healthier than its neighbours. Because it is less dependent on manufacturing than Germany, Italy and Spain, France has less to fear from low-cost Asian competition.

| Macko says : Oh well yes but like the rest of the EU its the immigrants that breed for cultural reasons coming from ultra conservative parts of the world.

Because everything has been privatised including education pensions utilities, and soon to be health (despite the disaster that is the private health in the USA) People save their cash and don't have children because the economic climate does not reward long term commitments in children or indeed in marriage. Paul Belin of the Brussels Journal notes, for example, that “Mohammed is the most popular name of new born males in Brussels, Rotterdam and other major European cities.” And no wonder, considering that:

“...Just consider the demographics. The number of Muslims in contemporary Europe is estimated to be 50 million. It is expected to double in 20 years. By 2025, one-third of all European children will be born to Muslim families.”

I predict more riots and islamic parties in government.

It will always be hard to get reforms past the gauntlet of France's street protesters. But at least the government is not hobbled by the scratchy coalition politics that bedevils all attempts at reform in Germany and Italy.

| Macko says : yep ideally martial law to get our "reforms" through but fuck the electorate, who cares what the masses want | Orwellian... If the people want a socialistic goverment its not because they are stupid. Its because some societies have made some conscious choices, that for example our welfare in our old age is more important than overpriced consumer gear when we are young, that good education and relatively low immigration might not make the profits of businesses zoom up but the interests of the country are higher than that.

And others have led the way. World-weary French commentators sometimes maintain that only smaller, more homogenous countries, such as Ireland, Finland, Denmark or the Netherlands can reform.

| Macko says : Denmark is not exactly thatcherite you know! have you heard of flexicurity? Britain has more in common with a robber baron unregulated flavour of capitalism practiced in Texas, Big cars, bibles, guns, and morons praying in mega churches with malls and multistorey parking built in.

But Spain has opened up its economy

| Macko says : Bad examples, Spain is riding a ridiculous property bubble, tourism has its limit, and i think this will come to and end, possibly in tears for many Brits that have exported ridiculous valuations on property to spain. This reversal is going to perhaps trigger a correction in spain too.

and Canada has restored its public finances.
| Macko says : Again canada is not a normal country like norway, saudi, you have a tiny population with abundant natural resources, its nice for them but its not a normal state.

And look across the channel: in the 1970s Britain was suffering from declinism too. Many said that the trade unions were too strong, that reform was impossible. After all, one prime minister, Edward Heath, had made a valiant attempt at change in 1970-72, only to be unseated by a miners' strike—rather as Alain Juppé's bold reforms in 1995-97 were overturned by street protests. And yet after 1979 Margaret Thatcher showed that a determined government could shake up a sclerotic economy (and defeat the miners). It was a matter of leadership, above all.

| Macko says : Thatcher created an unequal society and the pendulum is swinging in the opposite end so the correction will be to a state more like germany in the future, i would n't buy the FTSE from now on...

The choices in spring

The real issue is not whether France is reformable—for the answer must be yes. It is whether there is a Madame Thatcher who has the courage to take on vested interests.

| Macko says : ahem to replace them with new vested interests. I don't buy this rubbish about the shiny new era. The UK has bigger problems than france... Hospitals that decline using life saving drugs to save money, railways that look like a trip to pre-soviet russia. education that is appalling at many levels but has very good marketing. In many ways the UK is very much like Tony Blair, very good at presentation and smiles, but ultimately fake, much of its successes are debatable, and its failures hidden. It is less and less democratic, and more and more cruel a society (unless you are an animal then you are ok).

The prognosis is not encouraging. On the left, three candidates will contest the Socialist Party's presidential nomination on November 16th. Even the most moderate, Dominique Strauss-Kahn, has signed up to an old-style socialist programme. Another, Laurent Fabius, has refashioned himself as a champion of the people against “hypercapitalism”. The front-runner and supposed moderniser, Ségolène Royal, has criticised the absurd rules on a 35-hour working week—but only for giving employers too much power over workers.

| Macko says : i would vote for any of them the UK needs regulation of the crooks that miss-sell pensions insurance loans and property..

On the right, Nicolas Sarkozy, the hyperactive interior minister, looks more promising. He preaches a “rupture” with past policies and an overhaul of the “social model”. Yet he was an interventionist finance minister with no apparent love for free markets, and has recently sounded softer on the need for radical reform.

| Macko says : It depends, i am sure right now there are plenty of background offers tocorrupt him into particular policies... After all all politicians have a price...

Unpromising material, but then France's dame or homme de fer does not need to be quite as ironclad as the former British prime minister. When Mrs (now Lady) Thatcher embarked on her mission to convert Britons to the joys of wealth creation, Leonid Brezhnev led the Soviet Union and many still dreamed of a socialist Utopia.

| Macko says : News for you, communism had some policies that the scandinavian counries have copied and the rest of europe should adopt. It leads to happier more balanced lives, and a more civil society. Life is all about trying to pick the best qualities of what is about, and learn from other peoples mistakes. Including that failed state across the atlantic that is losing all semblance of democracy and civility fast. A christian Iran with nuclear weapons.

By contrast, France's hostility towards capitalism may be skin-deep—kept alive chiefly because politicians like Mr Chirac pander to it instead of confronting the French public sector with the realities of a global economy in which its private sector flourishes.

| Macko says : The global economy needs global regulation, not least environmental. The time will come that the returns from foreign investment will be brought down to the levels in europe, regulated capitalism a bit more liberal than France, a lot more regulated than UK should be the aim. Most of the propaganda otherwise has corporate sponsors that would like a neo-feudal world with themselves as the barons. These powermad morons that have a perverted sense fulfilment through having power over others push us to wars and reduce our happiness

In Britain, where the private sector was much weaker, it took nearly two decades to turn around the economy.

| Macko says : AHA this gets juicy, i put it to you that the real reform of the British economy is minimal or very modest at best.
Most of the growth can be accounted for by

1. as big a property bubble as Japan's
2. Massive immigration especially to semi & unskilled jobs. These people act as deflators to the salaries but mainly pensions and other rights and negotiating position of the middle classes. The money is made by employers who get half rpice employees sleeping 7 to a room in London...
   
3. american english becoming the language of the world
4. the City
5. running an unfair ultraliberal economy inside a freetrade zone attracting investment that rightfully belongs elsewhere
6. the labour of brits is prostituted through no adequate minimum standards in redundancy, training, working hours, healthcare, free time
7. north sea oil and gas, a boom in personal indebtedness in effect spending now the money we should be saving for our old age

It should be understood that the british have been pissing in the communal pool of the EU for 20 years. Plans are afoot to stop this tax dumping on others. This will start speeding up the rate of unemployment no matter how much the figures are fiddled. The pendulum is starting to swing backwards right now, especially now the babyboomers realise that much of the money of their pensions has been spent.

If the next French president can push through the reforms needed to restore the country's competitiveness, France could rebound far more quickly than the déclinologues assert.

| Macko says : its the uk that is going to go socialist when the failures listed above but mainly when the property bubble bursts...

there are no easy solutions! beware of people peddling them