Monday, May 22, 2017

The Big Test

Surprisingly, the Philippe I Government is very popular, and it now seems that REM might even win an absolute majority in the Assembly. If it does, this will be taken as a mandate to proceed full speed ahead with Macron's program, the first element of which is reform of the labor code.

Elie Cohen gives an excellent analysis of the reform here (h/t George Ross). The only thing lacking from Cohen's analysis is an evaluation of the likely effects of the reform. Will it, as promised, actually reduce unemployment or increase investment? From an economist like Cohen one might expect such an analysis, but instead we get a discussion--a very lucid discussion--of how the Macron reform repairs the mistakes of similar reforms attempted by his predecessors. The discussion is entirely tactical. Avoid retreats indicating weakness and uncertainty, proceed quickly, by ordonnance if necessary, take a pedagogical approach, build on previous negotiations, enlist allies among the unions but without making unnecessary concessions.

All well and good, but the discussion makes passage of the reform a test of presidential strength and acumen rather than one pillar of a broader economic strategy. The question is whether such a strategy already exists, or whether it must be deferred until after the outcome of this first step is clear. It is as if the battlefield ahead is still too shrouded in fog to know where resistance lies. Only after the battle over labor code reform is engaged will Macron know where he must concentrate his forces for the next battle. The assumption is that this first battle is all but won, but its unfolding will reveal the shape of battles to come. I think this is probably correct, but it may also be somewhat overconfident. Even if the first battle is not lost, it may inflict substantial enough damage to slow the planned invasion. At the moment, confidence is high, but so is uncertainty. And since Bruno Le Maire could well be defeated in his re-election bid, Macron cannot even be sure who his generals will be as he prepares for coming skirmishes.

3 comments:

Robinson said...

This is a very insightful response to Cohen's piece. The piece is fine for what it is: bad tactics have made the strategic - i.e., medium term economic - impact of most previous efforts to reform the labour code an empty question. I have the impression (although work has kept me from following the French press as closely as I normally do) that Macron plans to get several more large bits of his agenda (such as school reform) passed very quickly. That is: before the year or two that it will take to judge the immediate impact of labour reform. Of course the uncertain issue of the parliamentary elections will affect how he acts. Still, why shouldn't Macron move quickly? No matter the long term affect of his reforms, he is unlikely ever to be more popular than his is now, and for the moment he can rightly claim a popular mandate for his agenda.

Art is perfectly right to say that the long term popularity of Macron's economic agenda depends upon how they affect the economy. I can only add to this, like a broken record, that the answer to *that* question depends less upon the reforms themselves, and more on what the Germans chose to do next. I should add: they seem to be behaving more flexibly than I though they would. We will have to see what this Schäuble-Le Maire group amounts to, however.


Robinson said...

It was amusing to see Macron crush Trump's hand in his vise-like grip today, while flashing his cocky crooked smile. The US President plays such absurd and petty games of dominance that it felt good to see a Frenchman standing up to him. Macron is more of an "alpha male" than that leering, lazy American mountebank.

Of course France gains little from Macron standing up to Trump's petty humiliations. It is probably wisest to smile, nod and not to play the "alpha" game at all: this Angela Merkel's strategy and she's outlasted a truly amazing number of alpha males. I am petty and I deeply enjoyed Macron's performance.

Anonymous said...

It was an amusing spectacle but it was Trudeau who taught Macron how to deal with the alpha male American handshake, which is unknown in France, by not letting go. Speaking of symbolic handshakes, there was a picture of Merkel reaching for Macron's hand at the press conference in Berlin while Macron was looking away. Interesting.