France readies for a Chavez

Today’s France finds herself in a situation similar to that of Venezuela on the eve of the Chávez era. Will a demagogue emerge to lead the way?

Austerity bites in France; will a demagogue take advantage?
Fabio Rafael Fiallo
On 18 March 2013 22:05

As a connoisseur of revolutionary processes, Leon Trotsky asserted that a revolution seems impossible until it becomes inevitable. As a matter of fact, this is what happened in Venezuela in 1998, when Hugo Chávez assumed power after winning a presidential election.

Until then, Venezuela was living in what can be called a “soft democracy”. People used to go periodically to the ballots, choosing largely among the two leading, traditional parties. Judging itself unassailable, the political establishment showed scant regard for fulfilling electoral promises and meeting the expectations of the population. Inequalities were on the rise, and so were poverty levels.

Then Hugo Chávez burst onto Venezuela’s political scene. A histrionic figure, with tendencies for buffoonery, he built up his popularity by distributing among the have-nots a share of the country’s oil revenue; at the same time, like the Latin American caudillos of the old times, he steadily usurped powers.

The outcome is well-known. His management abilities were calamitous at best, bringing Venezuela’s agriculture and manufacturing industry to near-paralysis. Improvised expropriations, plus counterproductive price controls, runaway inflation, and the misuse of oil revenue to consolidate his political clout, fatten up cronies, and support foreign allies (the Castro brothers first and foremost) have indeed crippled Venezuela’s economy despite a 900 percent rise in world oil prices during the 14 years of his regime.

Today’s France finds herself in a situation similar to that of Venezuela on the eve of the Chávez era.

To be sure, the contexts are quite different. Unlike Venezuela, France is not a breeding ground for the emergence of a military caudillo à la Chávez. And unlike Venezuela, France doesn’t have oil manna to finance an economic model as lousy and inefficient as the one Chávez set up.

And yet, like in Venezuela before Chávez, public discontent in France has attained explosive proportions. And like in Venezuela, conventional parties don’t have much credibility left.

Each and every government has placed the “fight against unemployment” at the top of its priorities. And with no success.

Economic growth is at a standstill. Currently at 10.2 percent, unemployment is not far from the 10.8 percent peak reached in 1994 and 1997. In the low-income suburbs, the corresponding figure is significantly higher (22.7 percent). One-third of that population lives below the poverty line; one out of two is afraid of becoming homeless; the youth are among the hardest-hit.

This explains why the Interior Minister, Manuel Valls, has recently expressed concern for the risk of a “social explosion” (his own words) in France.

True, former President Nicolas Sarkozy did introduce some policy changes. But by and large they didn’t go as far as is necessary to reactivate the eroding competitiveness of the French industry. He didn’t remove the 35-hour workweek, which represents a millstone for the country’s economy. He raised the retirement age from 60 to 62, a too modest reform, insufficient to put the public pension system back into financial equilibrium. He didn’t touch France’s labour legislation, which, by making firing excessively expensive, turns out to be a major break to firms’ hiring new personnel.

Cue François Hollande, a socialist, with his promise to radically change tack and reenergize the economy. He hasn’t lived up to expectations, though. Constrained by economic reality and afraid of a nasty reaction from financial markets should he dare let the budget deficit grow, Hollande has turned his back to his electioneering promises, thus deceiving his constituency. He has fallen to unprecedented levels of unpopularity.

All this happens after the long nirvana of political inaction that prevailed during the twelve years of President Jacques Chirac, during which not a single reform ever saw the light of the day.

Little wonder that France’s political establishment, from left to right, is worn out, discredited and untrusted, mired to a large extent in shabby battles of egos.

Opinion polls suggest that a growing number of French citizens seem ready to jump into the unknown and place their confidence and hopes on a demagogue promising to redistribute income irrespective of efficiency considerations; someone who will let fiscal deficits grow, disregard markets’ reactions and impose price and capital controls. Like Hugo Chávez did in Venezuela.

And in the same manner that Hugo Chávez used to scapegoat the U.S. (the “Empire”), so a French Chávez would have the leisure to denounce the European Union (“Brussels”) as the main culprit of the country’s woes.

Would that magic solution succeed? Not at all. It would, on the contrary, bring France to the economic precipice. Like Chavez did with the Venezuelan economy.

But before the descent into hell is completed, there is nothing better, for a population deceived and fooled by its political elite, to take a dip in utopia. To dream before the final collapse. Like, of course, in Venezuela.

It will perhaps be necessary, alas, to go through a major economic calamity in France, as Venezuela has – as has yesterday’s Soviet Union and Mao’s China – before new political formations, more lucid and courageous than the present ones, emerge, gain the people’s confidence and introduce badly-needed supply-side policy reforms – a sine qua non for putting the country on the rails of sustained economic progress and viable social justice.

Fabio Rafael Fiallo is an economist and a former UN official. The author of four books, he writes on issues related to international politics and the world economy

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