Emmanuel Macron offers false hope to France, and to the financial markets, that he can lead France into a better future. He cannot.
Share markets love Emmanuel Macron
Over the last 2 days, share markets around the world have risen by between 1% and 2%, which pundits attribute to the narrow margin that Emmanuel Macron achieved over Marine Le Pen in the first round of voting. More accurately this “positive sentiment” is supported by the move by both the French Socialist and the Republican leaders to endorse Emmanuel Macron, in a effort to ensure that the radical agenda of Marine Le Pen does not gain the central ground.
It is a false hope
Sure, if Emmanuel Macron gains the presidency, global capital will superficially be the winner, so the response of the world’s share markets is quite rational. However, it will actually be counter productive.
A robust national economy needs to work for everyone, not just for the winners. Unfortunately, Emmanuel Macron’s agenda is a program for winners, not for everyone. He wants to remove the state from the protection of workers’ pay. In other words he wants to make it easier to compete in a world where global capital can move work from one country to another, chasing the lowest wage cost commensurate with the skills required. This will increase global corporate profits in the short term, but it will also reduce the size of the French market for global corporations’ output.
Emmanuel Macron’s macro-economics is a dud approach
The loss of general prosperity, which will continue under Emmanuel Macron’s policy “prescriptions” is something that macro-economists, like Emmanuel Macron, cannot understand. Something more than macro-thinking is required.
- Global corporations mostly produce goods that the top 25% of the world’s population want, not what the poorer 75% want. The latter’s needs are still focused on food, clothing and shelter. They do not need luxury cars, such as are produced in France, or expensive food, or haute couture clothing. (It is possible that some global food companies might convince poor Africans that powdered milk is better for their children than mothers’ breast milk, but I will leave that to one side for the moment.)
- Taking jobs away from the French will reduce the prosperity of the “bottom” 50% of the population of France. They will stop buying their goods, because they can no longer afford them. In addition, the small businesses of France will be impoverished because of a loss of sales to ordinary French consumers. In turn, they will no longer be able to afford to buy more up-market motor vehicles.
For those who cannot understand the positive dynamics of the circular flow of wealth from the richer to the poorer (NOT via welfare or a universal minimum wage), I suggest they read George Cooper’s Money, Blood and Revolution, introduced on this site.
Emmanuel Macron doesn’t care about ordinary workers
There is no doubt that Emmanuel Macron is on a path to dud ordinary voters and workers. I will let his policy agenda speak for itself.
- He proposes to convince Berlin in the next six months to adopt an active investment policy and move towards greater solidarity in Europe.
- He has promised to lower the corporate tax rate from 33 percent to 25 percent.
- He wants to keep the legal work week at 35 hours but leave negotiation of real work hours to companies.
- He also argued that low-wage earners not receive certain welfare benefits.
These are all reasonable policies to address the economic malaise of France, but will have zero impact on the loss of jobs and wages for adult workers, and will not fix youth unemployment. They may fix the problems that he can see, but not those actually afflicting the nation.
Instead a real fix can be built around a move to increase the work done by French people, even increasing their hours of work. This cannot be done if France remains disadvantageously linked to the Germany economy via the Euro. It is also will be very difficult to achieve if France continues to have no control over the numbers of new potential workers entering their country.
Emmanuel Macron’s solution is a dud – it is not even a “solution.” It is just a means of putting off the evil day of reckoning. His election will make a bad situation worse, and will hasten-on an even more radical solution. French voters will not tolerate the ineffective policies of the intellectual elite for much longer.