The French Don’t Know Their Place (In the Global Economy)

(…..) The real divide in this round was not between the left and right but between openness and closure. Sarkozy, Hollande, and François Bayrou (centrist candidate who received nine percent of the vote) all adhere to the idea that France benefits from globalization, even if they don’t say so, and are supportive of continuing the adventure of European integration. But the National Front’s Marine Le Pen and, to a lesser extent, the Left Front’s Jean-Luc Mélenchon represent «la France du non,» those voters who turned down the European constitution in 2005 and believe that the key to a better future is reasserting sovereignty. These voters feel that they have lost their country. For them, France has been taken over by immigrants at home, by Eurocrats in Brussels, by technocrats in the international institutions, and by financiers in the global markets. They would like to send a loud message against status quo. Only by acknowledging that the election in fact hung on the question of openness can one understand Pen’s extraordinary showing. Of course, she leads a party united by nationalism and anti-immigration sentiment. Scapegoating the «other», especially if that other has North African origins or is Muslim, plays well among the fraction of the electorate she represents. And the massacres in Toulouse and Montauban last month, which saw a French-born radical Islamist of Algerian origin savagely murder soldiers and Jewish children, certainly served as a focal point and helped Le Pen at the polls. But her calls to halt immigration and give France back to the French were only a fraction of her platform. Even more than her father, Jean-Marie, who tried to broaden the National Front’s appeal with some success in 2002 election, Marine Le Pen focused her campaign on freeing France from outside pressures and constraints. She railed as much against Europe, ultraliberalism, and global markets as she did against immigrants. Indeed, the social makeup of her voters, young, with fewer chances at socioeconomic betterment than their parents, and working-class and retired people, resembles nothing so much as American Tea Partiers. In the runoff later this month, choice for French voters will come down to Nicolás Sarkozy and Hollande. And, as I argue below, that contest will not hinge on international economic policy, mostly because the candidates who offered a different vision on that front are now out of the running. In the next few weeks, Sarkozy and Hollande will try to avoid the uncomfortable truth that they are offering the same economic platform. In doing so, they will emphasize societal issues (…..)

Link: http://www.foreignaffairs.com/articles/137372/sophie-meunier/the-french-dont-know-their-place-in-the-global-economy?page=show

U.S. Growth Slows to 2.2%, Report Says

The economic recovery slowed more than expected early this year, raising fears of a spring slowdown for the third year in a row and giving Republicans a fresh opportunity to criticize President Obama’s policies. The United States gross domestic product grew at an annual rate of 2.2% in the first quarter, down from 3% at end of last year, according to a preliminary report released Friday. It was the first deceleration in a year, but it was not nearly as severe as other setbacks in the last couple of years. Mitt Romney, the presumptive Republican presidential nominee, has been hammering on economic issues all week, insisting that the president has held back the recovery and intends to do further damage. But White House focused on the bright spots in the report, like solid growth in consumer spending and a surge in residential building. “When you look at the report in the totality, I think it shows that the private sector is continuing to heal from financial crisis,” said Alan Krueger, chairman of the president’s Council of Economic Advisers. Congress should pass elements of the president’s jobs plan, he said, like one that would subsidize the employment of teachers and first responders to emergencies. “We would like to see the pace of economic growth pick up, and those additional measures which the president proposed are well targeted to the areas of weakness in the economy now”. Representative Kevin Brady, a Republican from Texas and vice chairman of the Joint Economic Committee, called the numbers “beyond disappointing”. “The damage being done by the Obama administration’s policies have produced a weak recovery”. The American economy has been growing since the second half of 2009, coming close to a 4% growth rate in early 2010 before faltering. Growth slowed nearly to a halt in the first quarter of 2011 but accelerated throughout the rest of the year. The first-quarter growth was weaker than expected. United States stock markets largely shrugged it off, however, perhaps in part because the country is growing while many economies are contracting. Economists initially predicted a much weaker showing in the latest quarter, partly because of a large accumulation of inventories in the fall and winter that needed to be worked off. But in the last few weeks, expectations rose on strong jobs reports and rising consumer confidence. Consumer spending did turn out to be the major strength early this year, growing 2.9% compared with 2.1% in the last quarter of 2011. Business investment, which had been a bright spot, declined in the most recent quarter (…..)

Link: http://www.nytimes.com/2012/04/28/business/economy/us-economic-growth-slows-to-2-2-rate-report-says.html?_r=1

Los universos paralelos, la física y la política

Una vanguardia mundial de físicos está estudiando la posibilidad de que existan universos paralelos. La posibilidad es teórica, ningún científico ha diseñado una prueba empírica para verificar la existencia de múltiples cosmos. Si cada uno funciona con arreglo a leyes independientes, es posible que el hecho de que sean inconmensurables nos condene a pensar en la posibilidad, pero no experimentarla jamás. Me recuerda a mis estudios de doctorado en Harvard hace 60 años, en un campo que no tenía ni la exactitud ni la imaginación de la física moderna: la sociología. Nos enseñaban con gran solemnidad que Estados Unidos era una sociedad de consenso, y en los debates académicos no se mencionaban apenas tres cosas: clase, sexo y raza. Es decir, vivíamos en un universo paralelo, la zona próspera de Cambridge, Massachusetts, e ignorábamos las pruebas que teníamos alrededor de la existencia de grandes diferencias culturales y sociales. A nuestros sucesores, tanto profesores como alumnos, les va mejor. Mundos culturales y geopolíticos representados intelectualmente en la universidad son variados. Muchos de quienes ejercen el sacerdocio académico reconocen que carecen de un lenguaje ecuménico. En este sentido, la puritana Harvard se parece a la católica Georgetown, pese a los valerosos esfuerzos de los jesuitas para buscar canales comunes de comunicación. Fuera de estos selectos recintos intelectuales, la política estadounidense es hoy una asombrosa exhibición de incoherencia nacional. Estados en los que la mayoría de la población cree que la intervención Gobierno federal es la responsable de nuestros problemas económicos y sociales son precisamente receptores netos del dinero de ese Gobierno. Sus electorados republicanos obtienen más dinero del Tesoro que ciudadanos de los Estados demócratas, que, sin embargo, tienen una opinión más positiva sobre el papel del Gobierno. Y esta es una contradicción de la que no se habla, que se elude. El partido que se opone a «Washington» se considera genuinamente estadounidense y piensa que los demás no lo son bastante o son completamente extranjeros. Quienes se sienten desplazados, en lo cultural y en lo económico, desprecian lo que otorgó dignidad a sus antepasados, un progresismo integrador. Su descripción del presidente Obama como un musulmán nacido en Kenia forma parte de una manera de pensar general que rechaza la nueva modernidad. Término “modernidad” pretende transmitir esperanza además de ser una descripción: la regresión de EEUU puede ser más profunda, duradera y más violenta de lo que nos gustaría creer. En Europa occidental, la soberanía popular en política económica está escandalosamente ausente. Empleados anónimos de unas agencias de calificación tienen más influencia que los Parlamentos. Sindicatos, en otro tiempo poderosas iglesias laicas, se ven reducidos a la protesta sectaria. El cristianismo social de la tradición demócrata cristiana no es más que un recuerdo. La xenofobia y el racismo ya no están solo en los estadios de fútbol. En algunos casos, han llegado a la mesa del Gobierno. Si existe una política exterior europea independiente de la de Estados Unidos, está oculta (…..)

Link: http://elpais.com/elpais/2012/03/23/opinion/1332500785_972507.html

Death of a Fairy Tale

This was the month the confidence fairy died. For the past two years most policy makers in Europe and many politicians and pundits in America have been in thrall to a destructive economic doctrine. According to this doctrine, the governments should respond to a severely depressed economy not the way textbooks say they should, by spending more to offset falling private demand, but with fiscal austerity, slashing spending in an effort to balance their budgets. (Paul Krugman – NYTimes – 27/04/2012)

Critics warned from the beginning that austerity in face of the depression would make depression worse. But the “austerians” insisted reverse would happen. Why??? Confidence! “Confidence-inspiring policies will foster, not hamper economic recovery”, declared Jean-Claude Trichet, former president of the European Central Bank, a claim echoed by Republicans in Congress here. Or as I put it way back when, the idea was that the confidence fairy would come in and reward policy makers for their fiscal virtue. The good news is many influential people are finally admitting that the confidence fairy was a myth. The bad news is that despite this admission there seems to be little prospect of a near-term course change either in Europe or here in America, where we never fully embraced the doctrine, but have, nonetheless, had de facto austerity in the form of huge spending and employment cuts at state and local level. About that doctrine: appeals to wonders of confidence are something Herbert Hoover would have found completely familiar, and faith in the confidence fairy has worked out about as well for modern Europe as it did for Hoover’s America. All around Europe’s periphery, from Spain to Latvia, austerity policies have produced Depression-level slumps and Depression-level unemployment; the confidence fairy is nowhere to be seen, not even in Britain, whose turn to austerity 2 years ago was greeted with loud hosannas by policy elites on both sides of the Atlantic. None of this should come as news, since failure of austerity policies to deliver as promised has long been obvious. Yet European leaders spent years in denial, insisting that their policies would start working any day now, and celebrating supposed triumphs on the flimsiest of evidence. Notably, the long-suffering (literally) Irish have been hailed as a success story not once but twice, in early 2010 and again in the fall of 2011. Each time the supposed success turned out to be a mirage; three years into its austerity program, Ireland has yet to show any sign of real recovery from a slump that has driven the unemployment rate to almost 15%. However, something has changed in the past few weeks. Several events, collapse of Dutch government over proposed austerity measures, the strong showing of the vaguely anti-austerity François Hollande in the first round of France’s presidential election, and an economic report showing that Britain is doing worse in the current slump than it did in 1930s, seem to have finally broken through the wall of denial. Everyone is admitting that austerity isn’t working.

The question now is what they’re going to do about it. And the answer, I fear, is: not much. For one thing, while the austerians seem to have given up on hope, they haven’t given up on fear, that is, on the claim that if we don’t slash spending, even in a depressed economy, we’ll turn into Greece, with sky-high borrowing costs. Now, claims that only austerity can pacify bond markets have proved every bit as wrong as claims that the confidence fairy will bring prosperity. Almost 3 years have passed since Wall Street Journal breathlessly warned that the attack of the bond vigilantes on US debt had begun; not only have borrowing costs remained low, they’ve actually fallen by half. Japan has faced dire warnings about its debt for more than a decade; as of this week, it could borrow long term at an interest rate of less than 1%. And serious analysts now argue that fiscal austerity in a depressed economy is probably self-defeating: by shrinking the economy and hurting long-term revenue, austerity probably makes debt outlook worse rather than better. But while the confidence fairy appears to be well and truly buried, deficit scare stories remain popular. Indeed, defenders of British policies dismiss any call for a rethinking of these policies, despite their evident failure to deliver, on the grounds that any relaxation of austerity would cause borrowing costs to soar. We’re now living in a world of zombie economic policies, policies that should have been killed by the evidence that all of their premises are wrong, but which keep shambling along nonetheless. And it’s anyone’s guess when this reign of error will end.