Saturday, March 29, 2014

François Hollande, French neoliberal Socialist President

François Hollande was elected President of France in 2012 on a platform of opposing the austerity policies that German Chancellor Angela Merkel was imposing on the eurozone and specifically demanding a renegotiation of the terms of the then-pending Fiscal Pact. Which should be more properly called the Fiscal Suicide Pact, since it basically makes the use of counter-cyclical policies during a recession or depression constitutionally prohibited in the signatory countries.

Soon after, Hollande's Socialist Party won an absolute majority in the French Parliament.

Since then, Hollande has become almost a caricature of the neoliberal role for "left" parties. Bill Clinton over his eight years as President provided one version, getting elected by focusing on measures to boost the ailing US economy in 1992 and ending up with the repeal of the Glass-Steagall regulations separating commercial from investment banking, an action which contributed mightily to the financial crisis that began in 2007-8.

Germany's Gerhard Schröder and Spain's José Luis Rodríguez Zapatero are both social democrats about whom I found much to admire in their roles as political leaders and heads of government. Especially their refusal to support the Cheney-Bush Administration in the Iraq War. But both wound up playing out the neoliberal script for the center-left parties.

In Schröder's case, he became Chancellor as head of Germany's first red-green coalition government in 1998 and initially followed the progressive economic and social policy on which he campaigned. (Martin Staiger gives a good account of this evolution in Schröder, Riester, Müntefering: Die Demontage der Rente Blätter für deutsche und internationale Politik 3/2014.)

Zapatero pushed through some important "left-liberal" changes of the best kind: he brought more women into the Cabinet than ever before, including Spain's first female Defense Minister; he pushed through secularization laws to reduce the Catholic Church's direct influece in public education; he legalized abortion; he pushed through same-sex marriage. But when Spain was hit by attacks on its debt by speculators after its real-estate bubble popped, Zapatero willingly knuckled under to the brutal, destructive austerity demands of Merkel and the Troika (IMF, ECB, EU Commission).

Schröder's and Zapatero's parties have both paid a serious electoral price for the damage their adoption of neoliberal policies produced. Der Spiegel's cover of its 2005-10 (07.03.2005) number could have been used as a campaign ad by Angela Merkel and her CDU in their national campaign that year. It shows a 1998 quote from Schröder: "If we haven't sunk the unemployment rate notably, then we won't deserve to be reelected." And it shows the unemployment statistics, 10.2% in November 1998, 12.6% in February 2005.

Hollande is now putting his Socialist Party in France through the same grim process. He had barely gotten elected before he abandoned the idea of demanding that the Fiscal Suicide Pact be renegotiated. He didn't even put up much if any pretence of trying. He did initially focus on closing deficits by prioritizing increasing taxes over cutting services. But after a few months of that course, he tilted to the neoliberal version of "reforms," emphasizing cutting government programs and undermining the social net.

Stefan Simons reports on Hollande's present course in Kommunalwahl in Frankreich: Hollande droht das nächste Debakel Spiegel Online 29.03.2014.

Unemployment has just hit a record high in France. The Socialists just lost control in 29 municipalities. And a second round of municipal elections is coming up tomorrow, Sunday, in which the Socialists are also expected to lose ground. So far, Hollande is insisting on what our two President Bushs liked to call staying the course.

Henrik Uterwedde analyzes Hollande's "supply-side politics from the left," as the title puts it, "François Hollande: Angebotspolitik von links" Blätter für deutsche und internationale Politik 3/2014. As he describes the French President's political situation, "Keine zwei Jahre nach seiner Wahl steht dieser mit dem Rücken zur Wand." ("Less than two years after his election he is standing with his back against the wall.") Uterwedde notes that French supporters of austerity - conservatives, liberals and neoliberal social democrats - point to the supposed success of Gerhard Schröder's neoliberal policies in Germany as a justification for pursuing similar policies in France. But:

Die Lufthoheit in der öffentlichen Debatte haben allerdings kritische Stellungnahmen, die der Reformpolitik Schröders ein durchweg vernichtendes Urteil ausstellen und diese als Ursache für Sozialabbau in Deutschland und die Wachstumsmisere in Europa ansehen.

[The airspace in the public debate at least includes critical positions, who present a thoroughly devastating judgment on Schröder's reform policy and view it as the cause of the cuts in social services in Germany and the miserable growth in Europe.]
Hollande didn't exactly try to distance himself from Schröder's neoliberal "reforms." Late last year he had Peter Hartz, whose name is already inscribed in German economic history with the "Hartz IV" policies that have played a major role in reducing incomes and decreasing job and retirement security in Germany, visit him in his Presidential palace in Paris.

In an op-ed commentary, Uterwedde described accurately the results one would expect of applying these "reforms" in Hollande from a Keynesian viewpoint (Hartz im Élysée-Palast tagezeitung 28. 01. 2014) He explains that over the past several years, wages in France have increased significantly along with French productivity, while German wages have not. This has made French products less competitive in Germany and is slowing the growth of the French economy. Uterwedde calls the German approach "loan dumping," noting that real wages in Germany fell 4.2% from 2000 to 2010:

Nicht Frankreich ist der Versager, sondern Deutschland ist der Aggressor – weil es Lohndumping betreibt. ...

Eigentlich müssten die Deutschen ihre Gehälter drastisch erhöhen, um das vergangene Lohndumping zu korrigieren. Stattdessen ist man stolz auf die Agenda 2010. Daher bleibt den Franzosen nur, ihre Gehälter ebenfalls abzusenken, wenn sie gegen die Deutschen bestehen wollen. Die Folgen sind unerfreulich: Mit den Löhnen sinkt die Nachfrage. Es kommt erneut zur Rezession. Die Preise geben nach, und Europa rutscht endgültig in die Deflation.

Hartz in Paris – dies ist das perfekte Symbol, warum der Euro auseinanderbricht.

[It is not that France is the loser, but rather that Germany is the aggressor - because it practices loan dumping. ...

Actually, the Germans must drastically increase their salaries to correct the past loan dumping. Instead, one is proud of Agenda 1010 {the general name for Schröder's neoliberal reforms}. Therefore it remains only for France to reduce their salaries, too, if they want to haold their own {in international trade} with the Germans. The results will be nothing to celebrate: with the sinking in salaries, demand sinks. A new recession comes. The prices start rolling back, and Europe slides finally into deflation.

Hartz in Paris - this is the perfect symbol for why the euro is breaking apart.]
Oddly enough, though, if his Blätter is a measure, Uterwedde doesn't seem to be much of a Keynesian. In the current situation, when France is struggling to come out of the eurozone recession, when unemployment is at a record high, when deflation is about to take hold in the eurozone if it hasn't already - Uterwedde agrees with Hollande's neoliberal position that the problems is "supply side" and can be addressed in the Reagaesque method of cutting taxes for bitness! Uterwedde writes, "Tatsächlich hat Frankreich in erster Linie kein Nachfrage-, sondern
ein Angebotsproblem." ("Really France does not have a demand problem in the first line, but rather a supply problem.")

And he concludes with an explicit endorsement of Hollande's current Merkelesque neoliberal austerity course: "Schon deshalb verdient Hollandes neuer Kurs politische Unterstützung statt beckmesserischer Kritik, auch und gerade aus linker Sicht." ("Surely therefore, Hollande's new course deserve political support instead of backstabbing criticism, also and especially from a left viewpoint.")

A neoliberal "left" viewpoint, that is. I'll stick with basic Keynesian macroeconomics and critical perspective, however "backstabbing" austerity fans like Uterwedde may find that to be. But in the Blätter piece, he sounds like just another concern troll pushing Herbert Hoover/Heinrich Brüning economics.

Uterwedde's tagezeitung article seems to be opposing the Peter Hartz type of austerity. But the

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