Tuesday, 20 February 2018

A new sense of reality ?

The French in general and their ruling classes in particular have often been criticised for being unrealistic in their outlook and expectations. Foreigners are usually the first to notice it. The Nobel Prize winning American economist, Paul Krugman, for instance, in an essay written in 1997 (“Unmitigated Gauls: Liberté, Egalité, Inanité” in “The Accidental Theorist”- 1998) writes, among other things, about “the refusal of French elites to face up to what looks like reality to the rest of us…. “ in connection with the economic policies he observed  at the time. But French commentators too can be sensitive to the same characteristic in their fellow countrymen. In his well-known book “Le Mal Français” (1977) Alain Peyrefitte reports a conversation with Doctor Albert Schweitzer at his hospital in Lambarene in 1959. Schweitzer of course had both a German and a French background and was from Alsace, where the prevailing culture has always been more Germanic than French. He told Peyrefitte, in no uncertain terms, that he preferred to work with other nationalities than the French, because “they are not afraid to face reality – one of the prime conditions for changing it. Latin peoples”, he added dismissively, “prefer theory!”

There is undoubtedly more than a grain of truth in such assertions. You don’t have to live in France for very long before you start to understand the familiar jibe about the French who will not be satisfied that something works in practice unless it also works in theory! After living in France for so long however, it is interesting to look back and consider the changes that have occurred in attitudes and culture over time. A number of recent developments give me reason to think that over a period of 30 years or so, there has been a gradual embrace of greater realism in many areas of national life. While this slow evolution has probably been going on in the background for many years, it has definitely become more visible since Emmanuel Macron’s election to the Presidency in May 2017 and the first eight months in office of Prime Minister Philippe and his government. Two examples that have been in the news recently are good illustrations of what I mean: the first concerns the long-running debate about access to university and the second attitudes to fiscal deficits and public debt.

Draft legislation on conditions of access to universities is currently completing its passage through parliament and may soon become law. For the first time ever, the legislation lays down a general rule that publicly run universities may require a particular academic profile and/or school record to approve admission to certain courses. What it amounts to is greater freedom for universities to select the candidates they think are most likely to succeed.  Now, the word “selection” has always been like a red rag to a bull to many prospective students and their representative organisations. It is often forgotten, for instance, that a government proposal to allow universities to select their students was one of the triggers for the events of May 1968. It sank without trace.  In 1986, a fresh attempt to introduce a selection process was made by the government of Prime Minister Jacques Chirac. Once again, it caused massive demonstrations by high-school and university students as well as the death of a demonstrator at the hands of riot police. The proposal was withdrawn and the minister responsible resigned. Over 30 years later, the subject is once again on the table but this time, thanks perhaps to some skilful political manoeuvring and the studious avoidance of the actual word “selection", opposition has so far been muted. Some student organisations have even said, initially at least, that they are not opposed to the new system.

If this new legislation is finally adopted as presented  - and subsequently implemented - it would indeed herald a big change in attitudes. After all, it would curtail a right that has been held dear for over a hundred years, which is that success at the high-school leaving exam, the baccalauréat, automatically gives access to free higher education in a state run university. When only 1% of an age group passed the famous exam, first year students were well equipped to meet the challenges of higher education. Now that 80% of an age group pass a baccalauréat of one kind or another, many would-be students are not so equipped, and yet they, their parents and their teachers still consider that they are entitled to claim a university place. The result is that universities are full of students who benefit from the advantages of being a student but never actually finish their course. According to statistics, only 27% of students complete their first-degree course in three years, 40% in four years. As I have written before (“Nice work if you can get it” – November 23, 2017) the French higher education system, however paradoxical it may sound, is in fact highly selective, with the best high-school pupils competing hard for places at engineering, technical, business or medical schools that select their students on the toughest possible criteria. To the extent that a leader writer in “Le Monde” could write recently (November 6, 2017) in a rare admission of reality, that:” …these reactions demonstrate a singular denial of reality that perpetuates one of the most astonishing examples of French hypocrisy ……in which almost everyone rejects the idea of selective entry to higher education…. and yet everyone knows that the whole system is based on the most rigorous selection.

The other area in which reality seems to have set in concerns the recurring deficit of the annual state budget. For the past 30 years or so, not one annual budget has been balanced when proposed and not one has been balanced, let alone in surplus, at the end of the fiscal year. As a result, public sector borrowing has ballooned and, after a big push as a result of the 2008 financial crisis, public debt now amounts to almost 100% of GDP. As late as the year 2000 however, Prime Minister Lionel Jospin yielded to political pressure from his left-wing parliamentary majority to devote a tax windfall  (“la cagnotte” as it was called, meaning literally “a pot of cash”) to cutting taxes and creating more public sector jobs, rather than using it to balance the budget and pay down debt. President Jacques Chirac, a centre-right President “co-habiting” with a left wing parliamentary majority at the time, could have exerted his authority to try and stop this extra public spending but he chose not to. Another recent editorial (January 31, 2018) in “Le Monde” summed up the outcome in this way: “disgruntled voters showed him (Jospin) no gratitude and the country as a whole lost out. Almost at the same time, Germany launched a programme of structural reform that enabled it, ten years later, to dominate Europe.” This year, as the editorial goes on to point out, there is once again a fiscal windfall due to higher than expected tax revenue at the end of last year – a trend that is likely to continue. But this time, the ministers responsible for public finances and the budget have stated very publicly that any fiscal surplus resulting from faster than expected economic growth will be devoted exclusively to paying down debt. The Minister of Finance, Bruno Le Maire, has even gone so far as to say that the state will sell some of its corporate holdings to raise more money and pay down more debt. Nobody, not even Jean-Luc Melenchon and his party, has made a serious case for spending more money, despite the fact that, to take just a few recent examples abundantly covered in the media, prisons are overcrowded and understaffed, hospital Accident and Emergency departments are bursting at the seams and social care for the elderly is in crisis.

The reasons for what appears to be a new realism among politicians and in public opinion are not entirely clear, but in both the issues referred to above, it is definitely clear that the status quo is no longer tenable. In both cases too, the single-minded and clearly stated ambition of Emmanuel Macron to “profoundly transform” his country have undoubtedly triggered a greater readiness to face up to reality and imitate other countries in the EU and elsewhere that have long since taken and implemented the tough decisions that France has so often shirked.

It is again too early to say whether this greater willingness to face reality will stay the course or whether fierce resistance will appear once again, as it has so often in the past, as voters reject the consequences of what they voted for at election time. If it doesn’t occur beforehand, the ultimate test will come with a proposed root-and-branch reform of the French pension system, with it myriad special schemes, different retirement ages and pension outcomes, that has now been postponed until 2019. Emmanuel Macron promised such a reform in his election campaign and many consider it an essential step towards seriously curbing public spending, as, unlike in many other countries, pensions in France are very largely the responsibility of the state. If the proposed reform culminates in a merger of all pension schemes, the harmonisation of retirement ages and pension outcomes (Macron promised that each €1 of contribution would give the same entitlement to every future pensioner, whether from the private or public sector) then it will indeed be possible to conclude that the French have adopted a new sense of reality. But it hasn’t happened yet and on past form, the road ahead will be extraordinarily difficult to navigate.

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