Social Europe

politics, economy and employment & labour

  • Themes
    • Strategic autonomy
    • War in Ukraine
    • European digital sphere
    • Recovery and resilience
  • Publications
    • Books
    • Dossiers
    • Occasional Papers
    • Research Essays
    • Brexit Paper Series
  • Podcast
  • Videos
  • Newsletter

Can Macron Pull It Off?

Dani Rodrik 11th May 2017

Dani Rodrik

Dani Rodrik

Emmanuel Macron’s victory over Marine Le Pen was much-needed good news for anyone who favors open, liberal democratic societies over their nativist, xenophobic counterparts. But the battle against right-wing populism is far from won.

Le Pen received more than a third of the second-round vote, even though only one party other than her own National Front – Nicolas Dupont-Aignan’s small Debout la France – gave her any backing. And turnout was apparently sharply down from previous presidential elections, indicating a large number of disaffected voters. If Macron fails during the next five years, Le Pen will be back with a vengeance, and nativist populists will gain strength in Europe and elsewhere.

As a candidate, Macron was helped in this age of anti-establishment politics by the fact that he stood outside traditional political parties. As president, however, that same fact is a singular disadvantage. His political movement, En Marche !, is only a year old. He will have to build from scratch a legislative majority following the National Assembly elections next month.

Macron’s economic ideas resist easy characterization. During the presidential campaign, he was frequently accused of lacking specifics. To many on the left and the extreme right, he is a neoliberal, with little to distinguish himself from the mainstream policies of austerity that failed Europe and brought it to its current political impasse. The French economist Thomas Piketty, who supported the socialist candidate Benoît Hamon, described Macron as representing ‘yesterday’s Europe’.

Many of Macron’s economic plans do indeed have a neoliberal flavor. He has vowed to lower the corporate tax rate from 33.5 percent to 25 percent, cut 120,000 civil service jobs, keep the government deficit below the EU limit of 3 percent of GDP, and increase labor-market flexibility (a euphemism for making it easier for firms to fire workers). But he has promised to maintain pension benefits, and his preferred social model appears to be Nordic-style flexicurity – a combination of high levels of economic security with market-based incentives.

None of these steps will do much – certainly not in the short run – to address the key challenge that will define Macron’s presidency: creating jobs. As Martin Sandbu notes, employment was the French electorate’s top concern and should be the new administration’s top priority. Since the eurozone crisis, French unemployment has remained high, at 10 percent – and close to 25 percent for people under 25. There is virtually no evidence that liberalizing labor markets will increase employment, unless the French economy receives a significant boost in aggregate demand as well.

This is where the other component of Macron’s economic program comes into play. He has proposed a five-year, €50 billion ($54.4bn) stimulus plan, which would include investments in infrastructure and green technologies, along with expanded training for the unemployed. But, given that this is barely more than 2 percent of France’s annual GDP, the stimulus plan on its own may not do too much to lift overall employment.

Macron’s more ambitious idea is to take a big leap toward a eurozone fiscal union, with a common treasury and a single finance minister. This would enable, in his view, permanent fiscal transfers from the stronger countries to countries that are disadvantaged by the eurozone’s common monetary policy. The eurozone budget would be financed by contributions from member states’ tax receipts. A separate eurozone parliament would provide political oversight and accountability. Such fiscal unification would make it possible for countries like France to increase infrastructure spending and boost job creation without busting fiscal ceilings.

A fiscal union backed up by deeper political integration makes eminent sense. At least it represents a coherent path out of the eurozone’s present no man’s land. But Macron’s unabashedly Europeanist policies are not just a matter of politics or principle. They are also critical to the success of his economic program. Without either greater fiscal flexibility or transfers from the rest of the eurozone, France is unlikely to get out of its employment funk soon. The success of Macron’s presidency thus depends to a large extent on European cooperation.

And that brings us to Germany. Angela Merkel’s initial reaction to the election’s outcome was not encouraging. She congratulated Macron, who ‘carries the hopes of millions of French people’, but she also stated that she would not consider changes in eurozone fiscal rules. Even if Merkel (or a future government under Martin Schulz) were more willing, there is the problem of the German electorate. Having portrayed the eurozone crisis not as a problem of interdependence, but as a morality tale – thrifty, hard-working Germans pitted against profligate, duplicitous debtors – German politicians will not have an easy time bringing their voters along on any common fiscal project.

Anticipating the German reaction, Macron has countered it: ‘You cannot say I am for a strong Europe and globalization, but over my dead body for a transfer union’. That, he believes, is a recipe for disintegration and reactionary politics: ‘Without transfers, you will not allow the periphery to converge and will create political divergence towards extremists’.

France may not be in the European periphery, but Macron’s message to Germany is clear: Either you help me out and we build a true union – economic, fiscal, and eventually political – or we will be run over by the extremist onslaught.

Macron is almost certainly right. For the sake of France, Europe, and the rest of the world, we must hope that his victory is followed by a German change of heart.

Copyright: Project Syndicate 2017 Can Macron Pull it Off?

Dani Rodrik
Dani Rodrik

Dani Rodrik, professor of international political economy at Harvard University’s John F Kennedy School of Government, is president of the International Economic Association and  author of Straight Talk on Trade: Ideas for a Sane World Economy (Princeton University Press).

You are here: Home / Economy / Can Macron Pull It Off?

Most Popular Posts

Visentini,ITUC,Qatar,Fight Impunity,50,000 Visentini, ‘Fight Impunity’, the ITUC and QatarFrank Hoffer
Russian soldiers' mothers,war,Ukraine The Ukraine war and Russian soldiers’ mothersJennifer Mathers and Natasha Danilova
IGU,documents,International Gas Union,lobby,lobbying,sustainable finance taxonomy,green gas,EU,COP ‘Gaslighting’ Europe on fossil fuelsFaye Holder
Schengen,Fortress Europe,Romania,Bulgaria Romania and Bulgaria stuck in EU’s second tierMagdalena Ulceluse
income inequality,inequality,Gini,1 per cent,elephant chart,elephant Global income inequality: time to revise the elephantBranko Milanovic

Most Recent Posts

transition,deindustrialisation,degradation,environment Europe’s industry and the ecological transitionCharlotte Bez and Lorenzo Feltrin
central and eastern Europe,unions,recognition Social dialogue in central and eastern EuropeMartin Myant
women soldiers,Ukraine Ukraine war: attitudes changing to women soldiersJennifer Mathers and Anna Kvit
military secrets,World Trade Organization,WTO,NATO,intellectual-property rights Military secrets and the World Trade OrganizationUgo Pagano
energy transition,Europe,wind and solar Europe’s energy transition starts to speed upDave Jones

Other Social Europe Publications

front cover scaled Towards a social-democratic century?
Cover e1655225066994 National recovery and resilience plans
Untitled design The transatlantic relationship
Women Corona e1631700896969 500 Women and the coronavirus crisis
sere12 1 RE No. 12: Why No Economic Democracy in Sweden?

Foundation for European Progressive Studies Advertisement

Discover the new FEPS Progressive Yearbook and what 2023 has in store for us!

The Progressive Yearbook focuses on transversal European issues that have left a mark on 2022, delivering insightful future-oriented analysis for the new year. It counts on renowned authors' contributions, including academics, politicians and analysts. This fourth edition is published in a time of war and, therefore, it mostly looks at the conflict itself, the actors involved and the implications for Europe.


DOWNLOAD HERE

Hans Böckler Stiftung Advertisement

The macroeconomic effects of re-applying the EU fiscal rules

Against the background of the European Commission's reform plans for the Stability and Growth Pact (SGP), this policy brief uses the macroeconometric multi-country model NiGEM to simulate the macroeconomic implications of the most relevant reform options from 2024 onwards. Next to a return to the existing and unreformed rules, the most prominent options include an expenditure rule linked to a debt anchor.

Our results for the euro area and its four biggest economies—France, Italy, Germany and Spain—indicate that returning to the rules of the SGP would lead to severe cuts in public spending, particularly if the SGP rules were interpreted as in the past. A more flexible interpretation would only somewhat ease the fiscal-adjustment burden. An expenditure rule along the lines of the European Fiscal Board would, however, not necessarily alleviate that burden in and of itself.

Our simulations show great care must be taken to specify the expenditure rule, such that fiscal consolidation is achieved in a growth-friendly way. Raising the debt ceiling to 90 per cent of gross domestic product and applying less demanding fiscal adjustments, as proposed by the IMK, would go a long way.


DOWNLOAD HERE

ILO advertisement

Global Wage Report 2022-23: The impact of inflation and COVID-19 on wages and purchasing power

The International Labour Organization's Global Wage Report is a key reference on wages and wage inequality for the academic community and policy-makers around the world.

This eighth edition of the report, The Impact of inflation and COVID-19 on wages and purchasing power, examines the evolution of real wages, giving a unique picture of wage trends globally and by region. The report includes evidence on how wages have evolved through the COVID-19 crisis as well as how the current inflationary context is biting into real wage growth in most regions of the world. The report shows that for the first time in the 21st century real wage growth has fallen to negative values while, at the same time, the gap between real productivity growth and real wage growth continues to widen.

The report analysis the evolution of the real total wage bill from 2019 to 2022 to show how its different components—employment, nominal wages and inflation—have changed during the COVID-19 crisis and, more recently, during the cost-of-living crisis. The decomposition of the total wage bill, and its evolution, is shown for all wage employees and distinguishes between women and men. The report also looks at changes in wage inequality and the gender pay gap to reveal how COVID-19 may have contributed to increasing income inequality in different regions of the world. Together, the empirical evidence in the report becomes the backbone of a policy discussion that could play a key role in a human-centred recovery from the different ongoing crises.


DOWNLOAD HERE

ETUI advertisement

Social policy in the European Union: state of play 2022

Since 2000, the annual Bilan social volume has been analysing the state of play of social policy in the European Union during the preceding year, the better to forecast developments in the new one. Co-produced by the European Social Observatory (OSE) and the European Trade Union Institute (ETUI), the new edition is no exception. In the context of multiple crises, the authors find that social policies gained in ambition in 2022. At the same time, the new EU economic framework, expected for 2023, should be made compatible with achieving the EU’s social and ‘green’ objectives. Finally, they raise the question whether the EU Social Imbalances Procedure and Open Strategic Autonomy paradigm could provide windows of opportunity to sustain the EU’s social ambition in the long run.


DOWNLOAD HERE

Eurofound advertisement

Eurofound webinar: Making telework work for everyone

Since 2020 more European workers and managers have enjoyed greater flexibility and autonomy in work and are reporting their preference for hybrid working. Also driven by technological developments and structural changes in employment, organisations are now integrating telework more permanently into their workplace.

To reflect on these shifts, on 6 December Eurofound researchers Oscar Vargas and John Hurley explored the challenges and opportunities of the surge in telework, as well as the overall growth of telework and teleworkable jobs in the EU and what this means for workers, managers, companies and policymakers.


WATCH THE WEBINAR HERE

About Social Europe

Our Mission

Article Submission

Membership

Advertisements

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

Social Europe Archives

Search Social Europe

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Follow us

RSS Feed

Follow us on Facebook

Follow us on Twitter

Follow us on LinkedIn

Follow us on YouTube