Future of France under Emmanuel Macron

The world is celebrating the election of Centrist Elitist Banker Emmanuel Macron as the President of France. I already see the elites licking their lips and claiming a victory for centrist policies. Here is my breakdown of the election result.

Positives

Much like the US election, the choice was between the better of the two evil. Marine Le Pen much like her father is clearly a pro-fascist, racist and a very divisive person. Having her at the helm would have created a coalition of the despicables including Donald Trump, Benjamin Netanyahu, Recep Tayyip Erdoğan, Vladimir Putin and Rodrigo Duterte. That could have been a devastating news globally.

Concerns

By electing a pro-banker and a self-admitted centrist, two-thirds of France have rejected the concerns of the remaining one-third. One among three French actually thought it is acceptable to vote for a fascist. To be very precise, I am not calling the voters fascist. Just by voting for Le Pen, we can’t call all of them fascist or racist. There are deeply rooted economic and social concerns amongst these voters on their survival and future. These concerns have to be addressed if the next election has to be any better.

Challenges ahead

Emmanuel much like Barrack Obama is an outsider with non-radical views. For most of France, he was a safe bet. However, Obama’s tenure created a political environment which led to Donald Trump. On the contrary, Obama had a party and enough members representing his party in the American congress. Emmanuel doesn’t have that comfort. The opposition parties which supported him against Le Pen are going to stand up against him now. Here are the challenges he is bound to face.

i. EURO currency is not defensible

This is a separate book in its own right but Euro is not a defensible currency. Here are the key reasons.

1. ECB doesn’t act as a central bank in spite of Mario Draghi’s best efforts. Its fundamentals are deeply flawed.

2. The Euro contract is skewed a lot towards the German economic beliefs. That principle works only if you are a developmental state focused on exports.

3. Euro takes away the one big hold that states have over individuals, a currency printing press. This leaves states at the mercy of each other.

4. The Euro countries have different socio-political-economic backgrounds. It is not possible to merge with them through a common currency. It works for banks but not for people. It virtually makes Finance Ministers powerless.

ii. Wealth redistribution

The success of the French system lies in its Social Democracy. For the last 20+ years, France has followed the rest of the world with policies favouring the creation of wealth over equality and distribution. This has created a massive income and wealth inequality in France. The basic second grader problem with wealth inequality is the longer it stays, the wider the gaps gets and wider the gap gets the harder it is to bridge. France has led itself into this problem and unless Emmanuel gets them out of it, they are in for serious trouble.

ii. Investment is all is key for development

Economics is fundamental for people to understand social behaviours. When people do not have control over their lives and feel the situation is not improving, they will start to react in ways they normally don’t. The wages have become stagnant and French are running austere budgets for the last few years. This has resulted in a massive reduction of public spending / public debt as the bankers would like to refer. Public investment results in improved employability for the next generation, it reduces anxiety among citizens, it gives people security and hope for the next generation. By reducing this under the name of the deficit cuts, France as with much of the other European nations are fostering anxiety amongst people.

iv. Too big to fail banks

This might be a known story. The french banks have become too big to fail. The last known figures indicate that the sum of the private debt (classified as banking asset) by the top 5 French banks(BNP Paribas, Crédit Agricole, Société Générale, BPCE, Crédit Mutuel) is worth more than 110% of the French GDP and growing. If the banks collapse, they are going to bring French economy. Adding Euro into the mix, it gets trickier. France cannot devalue its currency. The French government cannot print currency to clean up its debt, a comfort available for most countries.

v. No field workers for the party

Emmanuel has just started the party as a movement. Now he has to create an entire organisation and fairly quickly. Even if he identifies like-minded people to run for the parliament, he still has to create a massive team of party worker to take his message through. Without a proper field strategy, his movement will lose its impact faster than he anticipates.

vi. Lack of Parliamentary support

For enacting any of his policies Emmanual needs the support of the parliament. It would be a surprise if he gets a majority in the parliament for any of his moves. The parties which supported him against Le Pen are now going to oppose him in all aspects. He is going to see the true face of political opposition, bickkering and back stabbing. Though he was the Minister of Economy for a couple of years, it is not the same as being the President without the full support of the parliament.It feels like the recipe for a stalemate.

In summary, I am cautiously pleased with the election of Emmanuel Macron. It definitely was the better choice. It also throws a huge challenge in front of the President and his soon to be elected parliament. There are some tough decision to be made and made very qucikly.