Time for a reality check for the Yellow Vests

14-1-19

Dear Partners in thought,

As the Yellow Vests were on their eighth weekend and numbered 84,000, which is a decline from past weeks but still a significant number, I could not help notice the long banner that demonstrators were carrying on Saturday in Paris. It said “Devoir de Mémoire (duty of memory) – Fourmies 1899”. It referred to the time in a Northern French town when the troops fired on workers demonstrating for an eighth hour workday. Putting aside that the event took place in 1891, it shows a certain revolutionary romanticism that points to the hard if not extreme left inserting itself astutely in the movement and which might take the lead going forward. The demonstrators from now on will increasingly be hard core political extremists (with their cohorts of associated “breakers”) which extremist parties like Les Insoumis from Jean-Luc Mélanchon (or even Marine Le Pen’s National Rally) will quietly support, unofficially as violence is not good for image, however with the hope for more votes at the May European parliamentary elections.   

As discussed, while some French are better off than others as would be the case in many societies, France is hardly a slave country where people toil like Gavroche and his friends in Les Misérables in the mid-19th century. As I mentioned in earlier Interludes and The Economist, hardly a paid agent of the French government, remind readers this week in “More égalité than you might think”, France is a very redistributive country and les riches don’t give their lesser off fellow citizens brioche to assuage their eating and living concerns. 

A quick summary might be useful for all to read including the Yellow Vests:

1. France’s tax take and its level of public spending is at 57% of GDP, the highest level of any EU country.

2. Much of the public spending goes to subsidising public services from high speed trains to universities.

3. France has still excellent infrastructure, mostly free education and top health care at little direct costs to patients. 

4. In France the top 1% earners earn less before taxes than the bottom 50%, a gap that has remained stable since 1995 unlike in most developed countries especially America. 

5. According to the OECD, France is the country among developed nations that has done the most to reduce inequality, only slightly beaten by Sweden (see chart on page 24 of The Economist this week).  

6. As INSEE (the French national statistics institute) showed this week, while the top 10% earners earn 22 times more gross income than the bottom 10% that gap is reduced to six times by taxation (incidentally explaining why many top earners go working elsewhere as they also feel the taxation pinch and they can work where they want). As discussed most Yellow Vests pay no or little direct income taxation which is the case for a majority of French people today (The Economist did not mention this latter point).  

7. Real household income grew by 8% from 2007 to 2017, more than in most European countries this in spite of the last financial crisis.                

It is not possible to argue that France is an unfair country to its population, including the lesser off, this since 1945 where the State played a direct role in rebuilding a nation shattered by defeat and occupation and needing to re-find itself indeed as a cohesive nation.

While the real issue may be a breakdown in social mobility and the impact of indirect taxation (like the recent trigger fuel tax), which alter the redistribution process and need to be addressed fairly, France has treated its population well in its entirety for decades. While societal challenges should be further addressed and respectfully recognising aspects of inequality that can be improved, the French should also take a more direct and responsible approach to their lives and taking advantage of the globalised economy rather than waiting from the State to cure all its bad aspects for themselves. Salvation is also in the minds and should be a gradual cultural process, all the more as France as we know it and its vast safety net are happily here to stay.        

We can only hope that the Great National Debate launched by Emmanuel Macron will provide the forum to make progress on the issues that triggered the current unrests though extremists and their destructive agendas should no longer take the lead. The French will eventually stop them as they do when it goes too far like in May 1968. It would be a question of time.  

France has worked well so far and will continue to do so. The time is no longer about taking the Bastille. 

Warmest regards,
Serge 

PS: For those who read la belle langue, I attach the “letter to the French” (or Lettre aux Français) about the Great National Debate sent by Président Emmanuel Macron today. https://www.elysee.fr/emmanuel-macron/2019/01/13/lettre-aux-francais

Serge Desprat- 14 Jan, 2019 (Prague)

Sliding to a world upside down? Non merci

7-1-19

Dear Partners in thought, 

As you know, Interludes are made to give you my humble take on international events that follow a certain ethos broadly representing that of Western civilisation, good and bad, that made our world. Interludes are also expressions of “common sense” in a world driven by emotions if not passions, conveying views that may not be always fashionable but are rational at least from an end game standpoint.

I will not expand on my erstwhile two favourite topics which are Donald Trump and Brexit. Borrowing from the witty Economist this week, “Trump Season 2” is starting roaringly with a potential government shutdown forever if no wall so America can stem the evident rape endemics and related ills from down South. It seems at times that the key British political leaders still would oddly prefer for different reasons, mostly partisan at heart, not to have a second referendum whatever the abysmal costs to their nation of a looming No Deal. And while the EU will likely give them a few more weeks to decide, this not to be accused, as they unfairly will, to be the source of all the post-Brexit ills that would likely befall Britain. Let’s hope that reason prevails and that taxpayer money ends up being well spent in the US and that the people in the UK are given a voice after all so they can decide their fate for themselves based on facts this time and whatever the outcome.       

Two pieces of news deserved to be mentioned this week: the resilience of the hard core “Gilets Jaunes” or “yellow vests” and their hard to find agenda in France, and the news that a boat of 32 refugees wanting to cross the Mediterranean has been at sea for more than a month being unwanted by any European and indeed EU country.   

The yellow vests are not as numerous in their eighth weekend as they were at the peak of the movement and indeed riots. There is a hard core at work that wants to demonstrate, mainly to change the (or their) world, many of them simply wanting to remove a democratically elected President and executive and feeling that it is a perfectly fine thing to do in 2019, time of the free. While they are a minority, they feel empowered to voice their wishes partly as they exist more in a world of mobile technology and social networks when people feel they exist because they can express what they want without either constraints nor restraints. They now feel that it is fully unacceptable that public order might be maintained by the police even though many demonstrators have shown a liking for free and quasi-permissible violence and looting. They feel they can do away with having executives having been elected and with a bit of push and understanding from France at large maybe they will reach their goal. This empowerment is dangerous and reminiscent of periods of history where active minorities resorted to undemocratic ways, similarly opposed to the views they would defend in the first place, to achieve their goals generally ending in the suppression of individual rights. Having started with expressions of despair at capitalism (one would think) and not making it socially with the usual French expectations from the State to “assist” (not taking into account that France is already redistributing 57% of its GDP) as well as vague but some specific wants (like on the gas tax to fund partly climate change), the yellow vests achieved their goals when Macron and the French government caved in (something that can also be discussed but may be a French choreographic feature of societal “debate”). Now they go further and like in May 1968 want to change the world we live in and rewrite how democracy works. They want the street, mobile phone and social network empowered, to rule the day. They want to decide for countries where they go just because they can scream and walk down roundabouts. So far the French are generally sympathetic, as they often are with big strikes and the like, especially when they are not bothered – and they don’t mind for the Parisians to pay for being Parisian in a very French habit. My bet is for the NIMBY factor (not in my backyard) and when riots come too close to home or their costs destroy too many of the jobs they could have benefitted from, as they start doing, yellow vest support will quickly vanish. Whatever the style of Emmanuel Macron, who is still supported by a large group of silent and reform-minded French voters, sympathy for the yellow vests will be replaced for screams of law and order and a 30 May 1968-like pro-order demonstration will materialise, reaching the very roundabouts of France. It will be difficult for the yellow vests to capitalise upon any wants they may have as they do not know what they want and are prone to contradiction as previously explained (while they likely pay no or little direct income tax with France being the ruling EU tax champion, they do not want more indirect taxation though would want increased spending to benefit them). They have no clear leaders, no coherent programme, no ability to manage anything much less a country like France. Besides screaming slogans, they can’t negotiate as they have nothing to give or really desire specifically. The yellow vests are like kindergarten kids on steroids some of whom like to break things. It is a question of time before they crumble but every weekend is costly to France (and thus Europe and its reforms) financially and in terms of image. As Macron explained recently in his own style but with accuracy: “We can’t work less, earn more, cut taxes and increase spending”.  

The latest refugee crisis in the Mediterranean shows a valiant boat of 32 brave refugees being unwanted by any EU country after one month at sea with many NGOs expressing their outrage and screams of shame as expected. The situation is certainly dire. There are a few teens and a couple of children involved. Nobody can rejoice at such an abysmal situation. One would hope that they will find a safe harbour soon. Having said this, it is also time to be honest and admit that Europe cannot welcome “all the misery in the world” (as said by French PM, Michel Rocard in 1990 nearly 30 years ago). Ms Merkel accepted one million refugees due to the combination of her pastoral and Eastern German descent with the clear need to correct the critical and ever looming German demographic time bomb. Her move made a lot of sense and was well-intended but the implementation and impact of such a massive arrival of ethnically and culturally different individuals in Germany (and elsewhere in Europe) created a change that was not foreseen and Europe was not prepared for. This move created the “Alternative für Deutschland” (AfD) movement, which incidentally scored highest in local elections where immigrants were the fewest like in Saxony, mirroring similar trends for non-mainstream populist parties and candidates with huge and unsettling societal agendas in “left out” midwestern America or Northern England where immigration fear played a big role. This massive immigration influx, which was corrected also as to ensure that skilled applicants were targeted to stay permanently (something the US could learn as they still have a lottery for any work visa applicant, regardless of skills of whether they are renewing their visa and are employer-sponsored and paying tax!) created ripple effects in other countries leading to a rise in populist parties’ fortunes and very likely to the Leave vote in Britain in June 2016. There is a great need for governments how liberal-minded and pro-globalisation they may be (and should be) to do a reality check and start understanding that national identity matters to European people and not everybody can come in and stay in Europe. There must be an immigration process that is fair and also focused on national balances at all levels lest we risk going into nightmarish integration processes throughout the continent. There is also a need now to limit immigration to skilled applicants who add to the pie of EU countries and do not end up being an additional burden to national societies in the context of a sound EU if we want the latter to grow serenely. National governments and the EU should work together to clamp down systematically on those criminal outfits that prey on refugees and bring them to European shores on false promises and in risky, if not lethal, conditions. Being aware of the Syrian war catalyst and putting aside something that may have been initially seen as a tactical negotiating advantage by Damas, there is also a need for a strong economic Marshall-like development plan to help those economies of Africa and the Middle East to keep their refugees at home – their national home. While this may sound harsh and devoid of humanity, Europe will not survive if it does not adopt a resolutely proactive policy that breaks with naive credos of the past and faces reality. This is manageable and will prevent European populist parties and their leaders ill-fitted to run modern societies and economies from seizing power democratically on the back of fears or send their nation down the economic abyss. 

Having said all that and hoping you will forgive this European “humanist-realist” for his straight, no-nonsense views, I wish you all a very happy and most healthy New Year 2019, which I also want prosperous and far less yellow in the attire.   

Warmest regards,
Serge                     

Serge Desprat- Jan 7, 2019 (Prague)

Romney 2020…

2-1-19

Dear Partners in thought,

The Washington post essay of last night, which was a clear Happy New Year salvo from Mitt Romney against Trump, was predictable and marks the start of the pre-campaign for the Republican nomination. While he has not yet declared himself, Romney, a patriot, did not come back to the frontline of politics just to represent Utah in the US Senate – something I wrote to you in earlier Book Notes and Interludes. He is a Republican of the old fashioned (and quasi-extinct) way post-Trump absorption and had to voice his serious concerns against Trump and his administration notably in relation to the damage done to America around the world. 

His words were unambiguous: “The appointment of senior persons of lesser experience, the abandonment of allies who fight beside us, and the President’s thoughtless claim that America has long been a “sucker” in world affairs all defined his presidency down”, adding that “Trump’s words and actions have caused dismay around the world” and that  his “conduct over the past two years is evidence that the president has not risen to the mantle of the office”. It is to be noted that last November he had already started in an oblique way his attack in stressing that the media was “essential to the Republic, to our  freedom, to the cause of freedom abroad, and to our national security”adding  that he would now “speak out against statements or actions that are divisive, racist, sexist, anti-immigrant, dishonest and destructive to democratic institutions”.        

Romney who managed a serious presidential campaign in 2012 is standing for the old Republican Party of the Nelson Rockefeller moderate wing. While his position is as an independent before he takes office in the Senate in two days, he would likely gather support in the future pre-Republican primaries throughout 2019 at a time when the economy will provide little shelter for Trump who will keep amassing problems largely of his own making. There is little doubt in my mind that after this clear salvo Romney will seek the Republican nomination. If and when he wins the nomination, his moderate yet conservative approach will position him well to win the presidency nationwide, also as the Democrats may go too far left and nominate someone  like Elizabeth Warren who is currently making soundings about a primary run.   

America and the world could not have wanted a better start of 2019. Very Happy New Year, Mr. Romney!

Warmest regards,
Serge 

Serge Desprat- Jan 2, 2018 (Prague)

Roller-Coaster (Europe 1950-2017) – Sir Ian Kershaw

28-12-18

Dear Partners in thought,

I would like to speak to you about “Roller-Coaster – Europe 1950-2017” a book by British historian Sir Ian Kershaw on the story of Europe and in superimposition the European Union and its predecessors in the years following WWII to our days. IK is one of the leading British historians today having made his mark with “Hitler” and “The End”, the former depicting the rise and years in power of the fateful German dictator and the latter going into the fall of Nazi Germany in late 1944 and early 1945. It is a fascinating book all the more for those who were alive during the period but were too close to it to understand it fully. It is a monumental book that captures the road traveled for 70 years focusing on its main themes but also providing ample details at many relevant levels. It is also a very timely opus at a time when the EU is going through struggling times and Britain is in the midst of dealing with Brexit in what is the most important crisis of its post-WWII history. While IK goes through modern European story and the major world events that impacted it, starting with the Korean war, he also spends time on the societal changes that took place in Europe and the world and altered perceptions of race, gender, religious belief and many features of humanity.  Incidentally this book is clearly important to understand where the EU (and its predecessors) comes from and has achieved for its member countries’s populations especially in times when easy attacks against its very nature and institutions fuse from extremist parties wanting to win elections in pointing the finger “outside”, this time to Bruxelles as the source of all ills in a well-tested fashion.

Looking at the various chapters of IK’s great book, which is a gold mine for all the detailed events that took place since 1950 in Europe, it should be fair that my comments are tainted by my own analysis of these though bearing in mind that IK and I would belong to a broadly similar camp of thoughts. In any case, the book is a must read for anyone wanting to get a very thorough account of that period of European history, especially for the younger generations who have not lived through it and thus lack historical memory to understand our times.      

In The Tense Divide, IK brings us to the real start of the Cold War with a world dividing itself in two hostile camps years only after the greatest onslaught in the history of humankind with far out events affecting Europe very directly and organisations such as NATO (North Atlantic Treaty Organisation) or the quickly aborted EDC (European Defence Community) being set up, the former as a US-led Western response to the Soviet threat in Europe. Interestingly the US already thought Europeans were not doing enough cost-wise to defend themselves while many European countries were wary of getting West Germany rearmed, the latter which did not really happen even if it contributed in other ways. It is the time of the nuclear weapon and space races which will redefine what war would mean. We are reminded of nuggets such as the Soviet Union wanting to join NATO for tactical reasons only to be rejected while the famed “missile gap” becomes a major driver for the US hawks like John F. Dulles to engage the Soviets only to realise much later that the US had 17 times more usable nuclear weapons than the Soviet Union when JFK entered the White House. It is a time of fear and resolve and one where conflicting forces seek to shape the future of a new, post-war Europe and world when the former still held centerstage in global affairs.     

In The Making of Western Europe, IK goes through the European project which should be a great reading for our times when it is under attack with Brexit and extremist parties even if counter-intuitively polls today show that there is an increasing majority of citizens of EU member countries supporting the EU. It shows the incremental steps, initially focused on coal and steel but growing wider and the key roles played by the main proponents of Europe such as Konrad Adenauer or Jean Monnet with their “never again” overriding peace driver especially between France and Germany that had been at war three times (if we include Prussia) since 1870. It is actually amazing to see that this construction of a new Europe takes place involving the fiercest earlier foes only years after WWII and in spite of all the atrocities that were unleashed. Reason seems to prevail with a departure from wanting to make the loser, all the more given what it stood for, “pay” like at Versailles in 1919, also as another mega-conflict looms and all hands will be needed on deck.    

In The Clamp, IK goes through the less than smooth tightening of the Soviet noose over all of Central and Eastern Europe and how that process went with the Yugoslav break-up (1948) and eruptions of nationalistic backlash in Berlin (1953), Budapest (1956), Prague (1968) and later in Warsaw (1981) with various degrees of bloodshed. Unlike today nationalism in the East was associated with patriotism and a fight for independence. The Communist parties throughout Central & Eastern Europe win elections like in Czechoslovakia and tighten the noose while gradually eliminating any dissent. This approach is also tried in Western Europe, like France and Italy, where the local Communist parties are the strongest in the political landscape and basking in the WWII victory also enabled by Soviet forces but will ultimately fail.         

In Good Times, IK goes through the economic prosperity associated with the post-war era, this for 30 years roughly until the 1973 oil shock and was named in France “Les Trente Glorieuses” (the glorious thirty). It was a time of societal advancement where people could climb up the ladder (a distant memory for our times and many as judged by the recent Yellow Vests uprising in France) even if some countries like Britain suffered shortages for many years until the fifties. It is a time when households can afford the new tools of prosperity like a television or a washing machine and cars become affordable and an increasing social status symbol across Western Europe and particularly its leading economies.  

In Culture after the Catastrophe, IK reviews the changes in the art, literature, theatre, music, religious attitudes and popular culture that took place in Europe against a Cold War backdrop. European culture during the 1950-1970 prosperity era in the West looked into the future with an increasing optimism. There was a deep sense that mankind coud achieve anything with an almost religious belief in science as exemplified by military-led early space exploration and the many advancements in medicine. Pop music becomes the ubiquitous medium and universal language of the youth which listen to Elvis Presley, the Beatles and the Rolling Stones in the West but also increasingly beyond the Iron Curtain representing the first signs of what would become an irreversible freedom course in later years. All is not easy as Europe goes from an unremitting despair brought by the greatest slaughter it ever knew to reach a present day of shallowness of the beginning of a materialistic consumer society that people equate with happiness. Some cannot forget as shown with the famed line of philosopher Theodor Adorno: “To write poetry after Auschwitz is barbaric” which encapsulates the struggle between the shadow of the past and the desire to break from that past and also its values. Most people wanted to forget and not revisit past misery, squarely looking at the future. In the 1950s and 1960s interest in the two world wars and the Holocaust were actually much lower than in the last quarter of the century as if the memories were too vivid and impossible to handle.      

In Challenges, IK deals with the strong “political turbulence” experienced, west and east, during the late sixties in quite different ways. In the West with the student protests and riots and the request for more individual freedoms of being. In the East with the Prague Spring and the quest for national freedom. The turbulence did not last for very long but had a deep impact especially beyond the Iron Curtain and was a prelude to the eventual fall of the Soviet bloc, which reacted quite harshly to this evolution and demand for freedom. The Invasion of Czechoslovakia in August 1968 was the last lesson the Soviets imparted on its bloc in Europe that led to a strengthening of all the regimes in the region, some mixing it with some superficial gifts of freedom (Poland and Hungary) with strong doses of local nationalism. In Western Europe, the changes brought by the student protests and their revendications for “other values” came at a time when the economic boom would stall, creating a different backdrop for a new age.          

In The Turn, IK focuses on the end of the good times and indeed the 1973 oil shock that prompted the end of the long lasting post-war boom at many economic and societal levels with the “negative primacy of economics” taking hold. Incidentally the oil shock of 1973 propelled  the oil barrel from USD 2.76 to USD 9.76 while the second oil shock set the barrel to USD 50 with its massive adverse economic impact, a level which in a crashing oil market in 2018 is considered abysmally low forty years on but in a much different and heavily globalised economy. This is the end of optimism that had characterised the previous two decades but the period also carries its fair share of positive developments with the peaceful end of authoritarian regimes in Spain, Portugal and Greece. The seventies appear as a transition decade also market by a “detente” between the superpowers and their two camps only to end when a “second Cold War” seems to start with the invasion of Afghanistan in 1979 and at the beginning of the eighties as the Soviet Union struggles to find a path forward at the end of the Brezhnev era that will herald a quick succession of caretaker leaders until Gorbachev.    

In Easterly Wind of Change, IK focuses on Mikhail Gorbatchev, the new Soviet leader as of March 1985, and Perestroika (reconstruction) which would change the nature of the ossified Soviet Union ultimately to a point of extinction on 25th December 1991 after its sphere had already collapsed after its own regional bloc in late 1989. This chapter is key as it marks the end of a divided Europe and indeed a world which for ten years will be globally unipolar and growing with the US at its helm, this without major crises in Europe with the notable exception of the Balkan wars pitting former Yugoslav states against each other and reminding the world of atrocities not seen on the old continent since WWII. While the world grows linearly and without major troubles, other powers start slowly emerging like China while a chaotic post-Soviet while Yeltsin-led Russia feels increasingly neglected by the world leader and Cold War winner, paving the way for a resurgent power seeking back its national pride under Putin.  

In Power of the People, IK deals with the period 1989-1991, which many of us lived through and was a true European revolution, largely fresh of bloodshed, enabled by Soviet Premier Mikhail Gorbatchev and combined by the power of the people in all the nations of Central & Eastern Europe under Soviet control. Such a revolution was enabled by the gradual disintegration of the Soviet Union whose leadership allowed for the collapse of its satellites states throughout CEE. There had been a prelude in 1980 with the Solidarnosc (Solidarity) movement that was later banned but was a catalyst for many in the Soviet Bloc. In late 1989 all the Soviet satellite regimes collapsed one after the other in a very short time period, most peacefully, like the DDR (with the actual Berlin Wall collapse), Poland, Hungary and Czechoslovakia, some more bloodily like Romania where 1,000 lost their lives, including leader Nikolai Ceaucescu and his wife. German reunification quickly ensued even if serious concerns were initially raised by Britain and France but also the Netherlands remembering a strong Germany and its habits of overreaching. Ultimately that revolution would end with the collapse of the Soviet Union itself, which its leader who had put the whole winds of change in motion had never wanted and would even regret.      

In New Beginnings, IK focuses on the early years of transition following the end of the European divide which after a period of joy shifted to ethnic war in the former Yugoslavia and a feeling of misplaced hopes of rapid life changes for the populations of CEE that were faced with a strong economic transition while Western Europe was trying to unite more through the EU and the changes heralded by the Maastricht treaty. These new beginnings marked by challenging and hopeful developments would go on until 9-11 in New York which were the real start of a new century with a markedly different agenda where Islamic fundamentalism, once barely noticed, would be the new challenge for the West and indeed Europe.   

In Global Exposure, IK goes through the dual narrative of the West’s fight against Islamic fundamentalism and terrorism (and its consequences such as the invasion of Iraq and the unsettling of the Middle East) as well as the advent of a globalised world which would in turn bring its many political and economic challenges. A greater number of ordinary Europeans become more aware of the intrusion of the rest of the world into their lives, this being maximised by the rapid spread of the internet. The new millenium was marked by two deep societal events: i) The 9-11 attacks albeit on US soil had a profound impact on Europe beyond the devastating introduction of Islamic Terrorism for the US in terms of attitudes towards immigration and multiculturalism and ii) the arrival of the globalised economy and its pervasive effects on everyday life all enhanced by computer technology developments and the vast expansion of a deregulated financial sector, all with instantaneous connectivity across the globe, creating an interconnected and interdependent world as never before and relying upon the credo that it would bring both growth and peace as nations that trade prosper and don’t make war.         

In Crisis Years, IK addresses the economic crisis dubbed the “Great Recession” that started in 2008 which was a turning point in the positive story behind globalisation and free markets, particularly financial. The Greek crisis as major test for the Greek people but even more so for EU resilience with the first attack on the German continental view of the future and the globalisation credo led by Alexis Tsipras (who would, like Matteo Salvini today, be more concilient later on) and Yanis Varoufakis (who would never relent even after leaving office while aptly marketing his message through lucrative books and speech tours).  The Syrian war that takes place at the end of the Arab Spring, itself a consequence of the US desire to reshape the Middle East in the 2000s leads to the most massive influx of migrants from various regions into Europe, creating crisis points notably in Italy. This massive influx of migrants in 2015 leads Germany and Angela Merkel to open borders based both on humanitarian reasons but more so on quasi-existential demographic shortages, this leading to strong opposition and the rise of populist movements across Europe. Russia finally reasserts control of its historical near abroad, scuppering EU dreams of eastern expansion, by seizing control of Ukrainian Crimea albeit a Russian-populated area and starts supporting separatist movements in eastern Ukraine, prompting the beginning of a new quasi-Cold War with sanctions being levelled at Russia and its oligarchs’ interests globally. Brexit, once unthinkable, becomes the potential future of Britain in June 2016 after a referendum that was not needed and a campaign where facts were markedly low and emotions high on both sides.   IK finishes his book addressing what is a “new era of insecurity” where history is “now” as we live through events unfolding in front of our eyes, at times too close to the action to fully understand them while being peppered by news, often via now omnipresent social media, that project news that are either increasingly biased and fact-less or far too many to absorb. Europe has been a roller-coaster of ups and downs with a heady mixture of great achievements, severe disappointments and even disasters. Europe abruptly left the insecurity of the Cold War to reach the insecurity of the multi-facetted crisis of the last decade with the strong economic blows of the Great Recession, the multiple Al-Qaeda and ISIS-inspired terrorist attacks on its soil, an externally resurgent Russia looking for a lost role, an overtly and determined ambitious China on the path for global leadership and now the rise of populism under its many forms filled by fears of the adverse impacts of globalisation, uncontrolled immigration and an ever technology-driven world altering minds and eating jobs while creating social divides between its elites and the “left outs”. Europeans should however remember that they are now living peacefully, in freedom and under the rule of law especially those residing in EU-member states and as an integral part of the leading economic bloc in the world, some of us at times forgetting what they take for granted.  
I highly recommend this book as for some of us born and living in that old world and regardless of nations, it is about who we are, Europeans.  

Warmest regards,
Serge  

Serge Desprat- Dec 28, 2018 (Prague)

And then there were none…The grown-ups that is

22-12-18

Dear Partners in thought:

You will forgive my facetious use of Agatha Christie’s famous line even if we are not dealing with a mystery but a tragedy… 
The victory Twitters and laps of Donald Trump about having won against ISIS in Syria and bringing the boys and girls home to fit the America First ethos were bound to create a strong reaction and pushback from all quarters, including the Republican legislators usually faithful to him. One could only listen to 40 year old ex-veteran Illinois congressman Adam Kinzinger who was actually speechless about the news or Lindsey Graham who felt that the honour of America was under real threat. 


DT’s declaration and decision went against many statements put out by the various departments earlier in the week, including the DoD that the fight was going on, even if ISIS had been mortally wounded, and that there was no discussion about this. It was not also that a withdrawal of 2,000 servicemen would change the face of battle (it could not) but it would change the geopolitical landscape of the Middle East leaving both Russia, Iran, not to mention the Assad regime a free hand. A withdrawal at this stage and time from one of the hottest war-torn regions with competing influences would also signify a withdrawal of America on the stage of world affairs – perhaps indeed a fit for what Lindbergh would have liked decades ago. Oh yes, America First too. It was not hard to imagine that Jim Mattis, the eminently professional and level-headed SecDef would resign in protest in a move that says it all given its magnitude that goes far beyond the Department of Defense.


For those who don’t follow the amazing choreography of the Trump administration with its comings and goings (the goings are harder as the potential cast gets thinner as we approach 2020, particularly among those in their thirties with a career ahead of them), Jim Mattis was the adult in the room (or the house, you know the one with the white painting). I recommend you reading my Book Note on “No better friend, no worts enemy” by Jim Proser who tells you more about the an and indeed the Marine.  


With Mattis gone, after many of his ilk, we seem to be left only with loyalists who are precisely selected for that reason and accept the job without being really well known as they are usually not the top of the crop in any of their disciplines (so to it’s a great on the job training scheme as long as the loyalty factor is assessed to be strong). We now have a Trump team without the usually skilled experts seen in the US administrations who are respected for what they have done and can do. There is one exception with Jay Powell, actually an erstwhile Trump appointee at the Federal Reserve Board, but he is badly failing the loyalty test and has had to make grand speeches about the independence of the Fed and “doing the right thing”. In a preview of things to come, you will have noted that the potential replacement of Nikki Haley at the UN was an ex-Fox News presenter with little experience of International affairs before she got the role of Spokeswoman at the State Department (It also shows how critical the UN is for DT, which is unsurprising but should make the nominee reflect about why she was rumoured for the job). It’s going to be an interesting ride now there is only one pilot in the plane and we know who he is. 


On a silly note, we learn today that both the US… and the UK (yes!) are behind accusations that are likely true that China (or Chinese) are behind cyber attacks on critical assets including the US Navy, NASA  and other key infrastructures arguably in a drive to steal intellectual property and related secrets to advance their global leadership rise. The truth, that may be sad, is that nations spy against each other, including the US on its allies as we saw during the Obama Administration. It is a fact of life and it is highly likely that both the US and the UK are spying on China too. It does not mean that the West should not react and defend its interests as it should. It is just amusing that the news erupts at a time when Jim Mattis is resigning and Ms. May tries to show an independent and viable  UK soon ruling the waves. Everything is linked and timing is never innocent even if the point behind the news is perfectly valid…

Warmest regards,
Serge          


Serge Desprat- Dec 22, 2018 (Prague)

Why is the second referendum predictably looming

18-12-18

Dear Partners in thought, 

It is always wise not to comment too much on events that are unfolding so rapidly as with the Brexit process even if Ms. May “kicks the can down the road” in the hope of finding more time for the outcome she would like for her deal. So far and even if MPs have finally a say in the process (which they should), nothing has shown that the most likely ultimate outcome short of a No Deal abyss would not take place if one would be able to cut through the battlefield noise. A second referendum is looming more clearly as the only viable way forward than ever, this even if a challenging choice for many, including at party level and for different reasons, at a time where there is no ideal avenue. 


Ms. May struggles to stress that a second referendum, she now de facto acknowledges as a possibility, would create “irreparable damage” on the country’s politics and would be “faith breaking” as if to steer MPs to finally vote for her unloved deal, which she thought was the pragmatic antidote to No Deal chaos. Leave MPs seem to have worked for a few days on plans for a second poll (incidentally being potentially short of potential campaign officials due to the Electoral Commission’s investigations for violation of campaign law). However they are getting ready as they can also understand simple logics. While they would bet on many Leave voters to reaffirm their earlier choice, some of them as a matter of principle, they are no longer sure as they were in 2017 that it would be enough to win the day any longer as some Leave voters would switch on the face of facts while more Britons would vote this time, especially the younger generations. As the probable majority of the UK electorate would back staying in the EU at this point in British history, the Brexiteers would then make the vote not on the EU but on democracy itself, bringing the famed “will of the people” to the fore. 


It would be a great example of sophistry if “democracy” was used as a way to attack the very democratic ability for people in a free country to revisit a matter so crucial as the one at stake, having the ability to reassess such an existential matter two and half years later in the absence of any other viable option. “Democracy” should not be used to prevent democracy itself or enshrine an outcome that may not be in the best interests of the people without giving them the ability to revisit matters when warranted. Democracy should always give people a voice, which incidentally is not the same as guaranteeing any poll outcome. Any opposition to a second referendum today, that is superficially based on the earlier “will of the people”, is in fact derived from the realisation that the people have likely changed their minds based on a fuller understanding of what Brexit means. While it is fair to recognise the right of Brexiteers to try to preserve the result of the June 2016 poll, sheer politics should not deprive the people’s basic rights to have a direct say on such a key matter today given the light of events.    


Putting aside the deafening noise and the cheap fearmongering, it is highly likely that Parliament (the “mother of modern democracy” after all), when it finally is able to regain its voice, will back a second referendum, humbly and wisely deferring to the people to make the most important choice or indeed reassessment of their generation, this possibly with the three questions we know. The British people indeed deserve a second chance and only they can finally decide for themselves.  


Warmest regards,


Serge   

Serge Desprat- Dec 18th, 2018 (Prague)

A few pointers on the tailoring of the yellow vests

9-12-18

Dear Partners in thought, 


It is the fourth weekend of the yellow vests’ demonstrations and actually riots in Paris and France even if the numbers have gone down and Sunday was calmer (in relative terms) than Saturday. The yellow vests are still hard to understand but I wanted to share a few pointers on this seemingly unstructured but potent movement:


1. Born “from nowhere” through social networks, it is not led though it organises itself to “demonstrate” (and indeed to riot) while lacking a negotiating face to settle issues with the government, something that may not be a clear objective in itself.


2. It is deeply rooted in the French revolutionary ethos as seen throughout history since 1789. Deeply, it is an anti-elite and anti-(capitalist) system revolt though without viable alternatives on offer. It is a “scream” originally rooted in despair that is real for some, focused on the protest more than on any solutions. 


3. It has not one agenda, even if it started with an opposition to fuel taxes aimed partly at fighting climate change (now recalled), but expresses multiple agendas and at times representing individual ones. 


4. Each agenda is item-conflicting like with a demand for less taxes though with a request for more forms of financial assistance, all with a general utopian flavour devoid of any sense of economic reality as if the latter was besides the point. 


5. If one common feature can be found it is the frustration against the stagnation in earning power over the last ten years, the rise of (indirect) taxes, the big level of unemployment and a strong French attachment to equalitarianism through this time a scream for the re-instauration of the ISF wealth tax (equalitarianism over freedom and in spite of the French mixed historical motto of liberty, equality and fraternity) . 


6. It is targeted against the King or Président Macron and his “distant style” and liberal economic policies as while the French love their king and clearly wanted one in May 2017, they have short memories, hate reforms and also periodically like to cut their king’s head off, at times literally. 


7. Early demonstrators are gradually shadowed by “professional” street-fighting extremists looking for clashes with police forces leading to an unprecedented level of arrests, which in spite of a very broad but non-specific support by “two thirds of the French”, risks to be discredited and create eventually a popular late May 1968 backlash still to emerge. 

8. Russian hackers are deemed to have fomented fake news on social networks to incite riots in the same vein as seen during the British referendum of 2016 and US and French Presidential elections of 2016 and 2017. On Saturday, one of the arrested rioters was wearing a yellow vest with the Russia-supported separatist Donetsk People’s Republic flag on its back. 


9. The yellow vests saga is a process of “emotional contagion” enhanced by social network technology when people get involved without clear grievances but as they wish to join “something big” that takes form against “the system” which has been in many but at times vague ways unfair to them (all of this while France has a majority of non-income tax payers and one of the highest redistribution systems in the OECD).  


10. It is very costly with a loss of EUR 1 billion as the fourth weekend was starting and a blow to the retail and tourism industries notably in Paris which will result in less taxes that could be used to enhance additional redistribution. 


11. Traditional opposition parties that have not provided any real opposition to the government since mid-2017, possibly allowing the yellow vests to emerge due to the void, have not yet taken any real credit for the events as the situation is still too unclear even if a few politicians, such as former Président Hollande (looking for an unlikely come back) and Laurent Wauquiez, the leader of Centre Right Republicans (looking for a mere “existence”), made sure they were pictured with the yellow vest crowd or wore a vest respectively.


12. It will become essential for the elite (and the media) to explain to the yellow vests that a government democratically elected in a free country like France needs to be respected and is not changed by street riots as well as conveying to “them” the need to sit down and discuss their grievances with the government in a rational and reasonable way within the context  of the institutions and economic system as we know it. Lastly it will be key to convey to the yellow vests the fact that a collapse of our economic system as we know it and can improve would lead to their own real collapse and true pauperisation.


Things are unfolding on a daily if not hourly basis but I hope these pointers are useful to understand what we know to be the “Gilets Jaunes” especially in these times of Faulknerian “sound and fury”. Keep tuned for the official communication from Emmanuel Macron this Monday. 


Warmest regards,


Serge                

Serge Desprat – Dec 9, 2018 (Prague)

A reality check is dawning upon the great Britain

7-12-18

Dear Partners in thought,

As the 11th December vote is looming it is increasingly apparent as foreseen that Ms. May will not get her deal through Parliament. It was to be expected as a forgone conclusion that no amount of wishful thinking or Churchillian rhetoric would have changed. As the government stresses the long queues at ports, the likely shortages of key goods for consumers and the Bank of England assessment of a gradual 10.5% GDP decline that a No Deal would entail in a desperate hope to sway Parliament to back the hapless deal on offer that satisfies no one, one hears more and more the only dual choice available to avoid disaster: either a “Norway +” arrangement or a once thought impossible second referendum.

The deal proposed by Ms. May is one that was negotiated and signed with the EU after arduous discussions, where the EU spoke as one. It was not the product of a diktat as it is often referred to by those Brexiteers (already preparing to deal with the expected popular backlash of the consequences of a No Deal outcome) who would ideally have an “à la carte menu”-based exit (as if one would join my club in London but only pay for and do what one wants, which is not very British after all). There was no diktat from Bruxelles, who was dealing with a much unwanted exit scenario, and the agreement that was struck reflected the best deal “for both parties” and the impossibility for the EU to surrender its existential principles and risk setting up a disastrous precedent for the future of the union.

The EU will not likely renegotiate an exit agreement with Britain as it is simply too complex and unacceptable for it to do so. A “Norway +” could have been envisaged much earlier but the British team chose to believe it could have its cake and eat it too, making a poor negotiating hard line choice in front of a 27 member country union, its main trading partner and the largest bloc in the world. Wishful thinking ran amok driven by dreams of past glory only gradually shattered by a succession of reality checks, even with the hallowed “special relationship” with America. However, as stressed in an excellent wrap up piece of “where we are and likely to go” by Philip Stephens in the FT today, the European Court of Justice, through its Advocate General, has indicated the possibility that the UK could revoke unilaterally the famed Article 50 and rescind its decision to leave the EU. If that were done, as Philip Stephens rightly argued, then a likely caretaker PM post-Parliamentary defeat could ask the EU 27 to “stop the clock” pending a second referendum with the right questions and the better facts at hand for British voters, something we know would likely be given by Bruxelles in the hope that the EU would stay eventually stronger.

This second referendum option, which has always been unfashionably the more logical one for a while and is gaining increasing momentum,  even considering the ire of some of the Brexiteers, would be the less bad (and I dare say even the best) of all options for Britain. Rather than a blow against the much heralded “will of the people”, this avenue would strengthen democracy in giving Britons a new shot, after two and half years of a revealing process and knowing the outcomes far better, at a more sensible choice of their very future. It would also allow the younger age group to take more possession of their future, something they did not in June 2016. A second referendum would not provide a foregone conclusion in terms of outcome, even if a majority leans Remain today but it would give an opportunity for an outcome that would have to be accepted by all. Even a Remain win would entail discussions with the EU for the next steps though with the likelihood that the latter would show flexibility to keep the former “in” on good terms for Britain as a win-win outcome. The UK would then stay in the EU with its people knowing far better all the key strengths the great nation derives from “being” in this great bloc and would be able to keep influencing it as it has done with success in the past. In many ways, this Brexit process would also be a valuable experience that many other EU members would learn from as we keep growing together as the leading bloc in the world.

Warmest regards,

Serge


Serge Desprat – Dec 7, 2018 (Prague)

Is Paris burning?

1-12-18

 
Dear Partners in thought,
 
Those who remember the great movie of the early sixties, partner of “The Longest Day”, will forgive me but these burning sights of the City of Lights and the Champs Elysées as a war zone these pas three weekends are unusual even for a challenging country like France that has much liked its revolutions since 1789.
 
While the 1790s, 1848 and 1968, not to mention the many times of instability like during the Algerian events of sixty years ago, have been traditional features of French history and a French trait of character, earning them the moniker of râleurs (moaners), the current events in the streets of Paris and France are puzzling. While the so-called “Gilets jaunes” (yellow vests more than waistcoats or cardigans) may have justifiable reasons to complain about the gas price hikes, especially when living in rural areas – not caring much about fighting the environment even if only a small portion of the tax would be allocated to this – their movement, which mirrors in some ways Five Stars in Italy, is hard to understand as to its dynamics or leadership. Their demands, expressed violently in what some find now an acceptable norm “as we see it elsewhere”, are also conflicting as aimed at getting everything at the some time – like less taxes and more State aid. It is assumed by the pundits to be non-political as if not pushed by any political party or pressure group. It is organised and led somehow but has no clear leaders. It is vehemently and indeed violently vocal but comes short when invited to discuss matters with the government it stands opposed to (only two representatives of the “Gillets Jaunes” showed up to a high level meeting with the government, one of them leaving after minutes).
 
While Président Macron is now unpopular (as all French Présidents eventually are) though determined to keep his course, this “Gilets Jaunes” situation was born as the regular political opposition has been non-existent in their force of counter-proposition. The only opposition for months has been of the populist kind both on the extreme left and extreme right though with no credible programmes on offer, while traditional parties have been swallowed up in the electoral tsunami of May 2017, notably the once formidable Socialist Party. If anything these current developments show the key democratic necessity of having a regular opposition able to have a dialogue with and indeed oppose the government in power, in France and elsewhere. One silver lining for the French government is that the amateurish and violent ways of the “Gilets Jaunes” will demean their message and eventually discredit them with the French people as they did in late May 1968 likely supporting the government to end the perduring chaos in the streets.
 
Warmest regards,
 
Serge
 
 
Serge Desprat- Dec 1st, 2018 (Prague)
 
 

Ongoing reflections on the incredible Brexit saga

27-11-18

Dear Partners in thought,


Following the signing of the current deal with the EU, I noticed Ms. May’s soon to be tour of the four nations of Britain which seems a bit odd as surely she knows it is the Parliament that must vote on the deal (I am being facetious) and not the nation. If wanting to get the support directly from the people, one could wonder (as some reader in the FT today rightly did) why she does not go for a second referendum with three questions (current deal , no deal and…yes remaining). If I were an MP I would not be too pleased to see my PM trying to exert pressure on my vote in that way. It is all the more odd as only between 15% and 22% of Britons support her now signed deal (with more preferring the No Deal route, terrifyingly) while Ms. May is getting more popular due to her doggedness and resiliency as she pushes a lost cause deal, showing perhaps the national admiration for the very rooted British trait of standing tough against all adversity. 


I was reading Gideon Rachman’s op-ed in the FT today where as a sensible Remainer at heart he finally express his support for the current deal which, if not good for sure, is the best one could get. I seem to remember he was at some point talking about a second referendum but now feels that it could bring “partisan bitterness and civil war”, something I hear from other reasonable people. I think that while a second referendum would clearly upset some, it is still the best outcome of all as it gives back the voice to all voters who can at last choose in a more educated way for some, likely post-Parliamentary rejection, between a “No Deal” and “Remain” based on facts and not promises. Also fearing partisan bitterness and even civil war as the extreme Brexiteers and populist activists usually speak louder and could be more violent than the Remainers, thus more prone to a civil war “of sorts” (even if I feel the latter way overstated) is not really an argument, also as after all leaving in a no deal manner could be an option and stick to vox populi “today”. Democracy would be respected and people could choose “today”. I humbly think the British people should not surrender principles and what is best for them just because it might be an easier and less painful path societally. This is not British history, fortunately for many of us in Europe.

Warmest regards,


Serge  

 

Serge- Nov 27, 2018 (Prague)