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PARIS. The people are angry with their government. Where? Just about everywhere. So what makes ongoing strikes in France so special? Nothing, perhaps, except a certain expectation based on history that French uprisings can produce important changes – or if not, can at least help clarify the issues in contemporary social conflicts.
The current ongoing social unrest in France appears to pit a majority of working people against President Emmanuel Macron. But since Macron is merely a technocratic tool of global financial governance, the conflict is essentially an uprising against policies that put the avaricious demands of financial markets ahead of the needs of the people. This basic conflict is at the root of the weekly demonstrations of Yellow Vest protesters who have been demonstrating every Saturday for well over a year, despite brutal police repression. Now trade unionists, public sector workers and Yellow Vests demonstrate together, as partial work stoppages continue to perturb public transportation.
In the latest developments, teachers in Paris schools are joining the revolt. Even the prestigious prep school, the Lycée Louis le Grand, went on strike. This is significant because even a government that shows no qualms in smashing the heads of working class malcontents can hesitate before bashing the brains of the future elite.
However general the discontent, the direct cause for what has become the longest period of unrest in memory is a single issue: the government’s determination to overhaul the national social security pension system. This is just one aspect of Macron’s anti-social program, but no other aspect touches just about everybody’s lives as much as this one.
French retirement is financed in the same way as U.S. Social Security. Employees and employers pay a proportion of wages into a fund that pays current pensions, in the expectation that tomorrow’s workers will pay for the pensions of those working today.
The existing system is complex, with particular regimes for 42 different professions, but it works well enough. As things are, despite the growing gap between the ultra-rich and those of modest means, there is less dire poverty among the elderly in France than, for example, in Germany.
The Macron plan to unify and simplify the system by a universal point system claims to improve “equality”, but it is a downward, not an upward leveling. The general thrust of the reform is clearly to make people work longer for smaller pensions. Bit by bit, the input and output of the social security system are being squeezed. This would further reduce the percentage of GDP going into wages and pensions.
The calculated result: as people fear the prospect of a penniless old age, they will feel obliged to put their savings into private pension schemes.
International Solidarity
In a rare display of old-fashioned working-class international solidarity, Belgian trade unions have spoken out in strong support of French unions’ opposition to Macron’s reforms, even offering to contribute to a strike fund for French workers. Support by workers of one country for the struggle of workers in another country is what international solidarity used to mean. It is largely forgotten by the contemporary left, which tends to see it in terms of opening national borders. This perfectly reflects the aspirations of global capitalism.
The international solidarity of financial capital is structural.
Macron is an investment banker, whose campaign was financed and promoted by investment bankers, including foreign investors. These are the people who helped inspire his policies, which are all designed to strengthen the power of international finance and weaken the role of the State.
Their goal is to induce the State to surrender decision-making to the impersonal power of “the markets”, whose mechanical criterion is profit rather than subjective political considerations of social welfare. This has been the trend throughout the West since the 1980s and is simply intensifying under the rule of Macron.
The European Union has become the principal watch dog of this transformation. Totally under the influence of unelected experts, every two years the EU Commission lays out “Broad Economic Policy Guidelines” – in French GOPÉ (Grandes Orientations des Politiques Économiques), to be followed by Member States. The May 2018 GOPÉ for France “recommended” (this is an order!) a set of “reforms”, including “uniformization” of retirement schemes, ostensibly to improve “transparency”, “equity”, labor mobility and – last but definitely not least – “better control of public expenditures”. In short, government budget cuts.
The Macron economic reform policy was essentially defined in Brussels.
But Wall Street is interested too. The team of experts assigned by Prime Minister Edouard Philippe to devise the administration’s economic reforms includes Jean-François Cirelli, head of the French branch of Black Rock, the seven trillion-dollar New York-based investment manager. About two thirds of Black Rock’s capital comes from pension funds all over the world.
Larry Fink, the American CEO of this monstrous heap of money, was a welcome visitor at the Elysée Palace in June 2017, shortly after Macron’s election. Two weeks later, economics minister Bruno Le Maire was in New York consulting with Larry Fink. Then, in October 2017, Fink led a Wall Street delegation to Paris for a confidential meeting (leaked to Le Canard Enchaîné) with Macron and five top cabinet ministers to discuss how to make France especially attractive to foreign investment.
Larry Fink has an obvious interest in Macron’s reforms. By gradually impoverishing social security, the new system is designed to spur a boom in private pension schemes, a field dominated by Black Rock. These schemes lack the guarantee of government social security. Private pensions depend on stock market performance, and if there is a crash, there goes your retirement. Meanwhile, the money managers play with your savings, taking their cut whatever happens.
There is nothing conspiratorial about this. It is simply international finance at work. Macron and his cabinet ministers are eager to have Black Rock invest in France. For them, this is the way the world works.
The most cynical pretext for Macron’s pension reform is that combining all the various professional regimes into a universal point system favors “equality” – even as it increases the growing gap between salaried people and the super-rich, who don’t need pensions.
But professions are different. At Christmas, striking ballet dancers illustrated this fact by performing a portion of Swan Lake on the cold stones of the entrance to the Opera Garnier in Paris. They were calling public attention to the fact that they cannot be expected to keep working into their sixties, nor can other professions requiring extreme physical effort.
The variations in the current French pension system perform a social function. Some professions, such as teaching and nursing, are essential to society, but wages tend to be lower than in the private sector. These professions are able to renew themselves by ensuring job stability and the promise of comfortable retirement. Take away their “privileges” and recruiting competent teachers and nurses will be even harder than it is already. At present, medical personnel are threatening to resign en masse, because conditions in hospitals are becoming unbearable as a result of drastic cuts in budgets and personnel.
Is There an Alternative?
The real issue is a choice of systems: to be precise, economic globalization versus national sovereignty.
For historic reasons, most French people do not share the ardent faith of British and Americans in the benevolence of the invisible hand of the market. There is a national leaning toward a mixed economy, where the State plays a strong determining role. The French do not easily believe that privatization is better, least of all when they can see it doing worse.
Macron is an ardent devotee of the invisible hand. He seems to expect that by draining French savings into an international investment giant such as Black Rock, Black Rock will reciprocate by pumping investment into French technological and industrial progress.
Nothing could be less certain. In the West these days, there is lots of low interest credit, lots of debt, but investment is rarely creative. Money is used largely to buy what is already there – existing companies, mergers, stock trading (massive in the U.S.) and, for individuals, housing. Most foreign investment in France buys up things like vineyards or goes into safe infrastructure such as ports, airports and autoroutes. When General Electric bought out Alstom, it soon broke its promise to preserve jobs and began cutting back. It also is depriving France of control of an essential aspect of its national independence, its nuclear energy.
In short, foreign investment may weaken the nation in terms in crucial ways. In a mixed economy, profit-making assets such as autoroutes can increase the government’s capacity to make up for periodic deficits in social security, among other things. With privatization, foreign shareholders must get their returns.
The United States, for all its ideological devotion to the invisible hand, actually has a strongly State-supported military industrial sector, dependent on Congressional appropriations, Pentagon contracts, favorable legislation and pressure on “allies” to buy U.S.-made weaponry. This is indeed a form of planned economy, one that fails utterly to meet social needs.
The rules of the European Union prohibit a Member State such as France from developing its own civil-oriented industrial policy, since everything must be open to unhindered international competition. Utilities, services and infrastructure must all be open to foreign owners. Foreign investors may feel no inhibition about taking their profits while allowing these public services to deteriorate.
The ongoing disruption of daily life seems to be forcing Macron’s government to make minor concessions. But nothing can change the basic aims of this presidency.
At the same time, the arrogance and brutal repression of the Macron regime increase demands for radical political change. The Yellow Vest movement has largely adopted the demand developed by Etienne Chouard for a new Constitution empowering citizen-initiated referendums – in short, a peaceful democratic revolution.
But how to get there? Overthrowing a monarch is one thing, but overthrowing the power of international finance is another, especially in a nation bound by EU and NATO treaties. Personal animosity toward Macron tends to shelter the European Union from sharp criticism of its major responsibility.
A peaceful electoral revolution calls for popular leaders with a clear program. François Asselineau continues to spread his radical critique of the EU among the intelligentsia without his party, the Union Populaire Républicaine, gaining any significant electoral strength. Leftist leader Jean-Luc Mélenchon has the oratorical punch to lead a revolution, but his popularity seems to have suffered from attacks even harsher than those unleashed against Corbyn in Britain or Sanders in the USA. With Mélenchon weakened and no other strong personalities in sight, Marine Le Pen has established herself as Macron’s main challenger in the 2022 presidential election, which risks presenting voters with the same choice they had in 2017.
Asselineau’s analysis, Yellow Vest strategic mass, Mélenchon’s oratory, Chouard’s institutional reforms – these are elements that could theoretically combine (with others yet unknown) to produce a peaceful revolution. But combining political elements is hard chemistry, especially in individualistic France. Without some big surprises, France appears headed not for revolution but for a long frozen combat.
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This is a gross over simplification. Pensions are deferred wages held in trust, and defined benefit plans are pooled risk.
In reality, the employee pays both sides. Wages are only a partial factor, as employers calculate total compensation to employees. This includes not only pensions, but health benefits, life insurance benefits, vacations, bonuses, etc. The employers’ contributions shrink the wage to compensate.
Some small portion of tomorrow’s workers may pay for the pensions of those working today, but certainly not all. That phenomenon occurs most often at plan start-up where older workers have not had sufficient time to contribute to the level of their benefit. A fully funded pension plan meets its obligations to pay out its obligations, under the plan, to all who have paid in. Actuaries have to sign off on whether a pension fund is fully funded.
In my own circumstances, 40+ years of setting aside money in personal savings has allowed me to be at a point where those savings pay me a monthly sum without touching the principal, and in some years add to the the principal. That is no different than a fully funded pension plan.
Thamks for covering the YELLOW VESTS Mrs Johnstone.
Same thing for the 50-year-old and older people here, in the ”french” (Desmarais-Rothschild) connection, Québec. NOT A WORD in the newspapers and MSM on the Yellow Vests. Not a damn word! Only some coverage on the Vigile.net (an alternative media) Infuriating.
As i see, the US-UK want to use the french connection of Quebec to ”make the link” for commercial exchanges between Canada-USA and the EU (and probably for NATO operations like using the military airport of Bagot, like they did for Libya, for the Crusade in Iran)…
All revolutions need a youth demographic to drive it, look at the people in image above protesting, this is not a revolution but a pitiful and impotent movement of old white people. Meanwhile as the great replacement in France nears its completion the majority non white demographic will obviously not care about such things.
Maybe things are different in France, but my understanding is that in order to meet the demands of the pension funds that are the really big shareholders nowadays, the CEOs have to downsize and cut R&D to meet the demands for constantly rising shareholder value.
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I think it is more likely that he expects Black Rock to get better returns. Macron probabally distrusts the acumen of French bankers given the toxic loans in regard to Italy they exposed France to.
I particularly agree with the conclusion on Asselineau and Chouard. Except Mélenchon has been in the political lanscape for decades and has supported war in Lybia and made “mistakes” voting in the EU parliament dozens of times. I wouldn’t count him as a real opponent, more like a controlled opposition. He didn’t call for Macron’s impeachment for example contrary to Asselineau.
Diana,
I am reading alternative media like Unz precisely with the hope to read less fake news, but this time I must say that you are writing quite a few inexact statements here; granted, it is a very complicated subject, and your french may not be acute enough to listen to comments from real specialists who appear sometimes on TV or write an opinion, and are among the very few people who understand the subject, so it is easy to write some fallacies on this subject and you can be forgiven.
All western developed countries are facing the same problem: drastic increase of life expectation, and declining working age population; this retirement system was built in 1946 when people would retire at 65 or 67, and would then have a life expectancy of 3 years; and there was a baby boom providing enough workers to pay for the system. Now when you retire you can hope to live 20 years or more, and as women don’t want to make babies anymore and prefer to enjoy life, the working age population is shrinking. How do you solve this equation ?
1. By increasing the (annual) paid contribution by the workers OR/AND
2. By decreasing the (annual) retirement benefits OR/AND
3. By delaying the retirement age.
And if you don’t balance the equation above you can:
4. Increase taxes AND/OR the State’s debt, but as the latter solution 4 is particularly unfair to the taxpayer and our children, you are left with a combination of 1+2+3.
Added to the problem is that the French are staunchly opposed to raising pension age, whereas the Mitterand socialist government stupidly lowered the age in 1981 to 60 or 62 (and we knew already at the time there was a demographic time bomb in the coming).
Macron has no choice but to try to preserve the viability of the system, like many other western governments have done (and in Northern Europe with a decent social consensus).
He also wants a more fair system, where people contributing the same amounts are receiving the same benefits, which is absolutely not the case today; what is wrong with that ? Many social categories will benefit from the new project, for example women who have interrupted their careers to raise their children, and many others. These people will of course not take it to the street and block mass transit to proclaim their joy. Because there are of course losers, mainly many privileged categories who are paying less than others to receive more than others, which is eventually paid by these same others via the taxes raised to fund the deficit they create. And these are also the people who have the power to paralyze the country: railway personnel (SNCF), mass transit of Paris (RATP) where by the way the bus drivers get a much higher pension than the same drivers in many other city in France (you find this normal ?).
But the problem is that nobody understands his reform because it is an utterly complicated matter, and so everybody is afraid of the future, which is understandable.
But for once, where I agree that Macron will often favour his bankers friends, you have to admit that, without prejudgement, he could also pull out a fair reform, albeit difficult to understand.
And a last point about the Blackrock hysteria: there is (with a few rare exceptions) no capitalization system in France; what is in the reform is that people with a high revenue (mainly the “cadres” = companies executives), will continue to pay +/-3% beyond a certain ceiling and that will give them right to nothing, they will have to complement by capitalization. That tiny group of people are also losers and they will not be a boon at all for Blackrock and further than this, there is no capitalization plan in the reform at all, the French would not want it and they staunchly stick to the “repartition” (=transfer workers-retirees) system; so, what you wrote about this, I am sorry to say, is not accurate.
Furthermore, nearly all other European countries have a 3 pillars system including capitalization, and this is much more efficient system on long term, but if the French don’t want it -and they don’t, they will have to make it with the sole “repartition” and all its disadvantages, one being that the only return it yields is the -low- growth of the national economy.
Voilà, I hope this clarifies the matter and that it draws your attention to the fact that alternative media must more than all others write accurate articles, otherwise, alt-media will easily continue to be trolled as fake news purveyors; please pay attention to this.
Thank you.
JG
Yes, France is unusual which unlike Social Security in the US has never made provisions. Instead the government has written IOU., of course, there is one glaring exception — Civil Servants have not only defined benefits but they are fully funded…
France has a simple problem; an aging population, financial promises that it has not provisioned for…ever! So either age of retirement rises, they increase the deficit, employers pay more or employees pay more. It is a zero-sum game!
You can scream bloody murder but the math is the math!
Finally, people don’t talk about the Gillet Jaune because there’s really nothing to say anymore, there were public consultations and people don’t understand the outcome because it is complicated.
France seems to have the problem that they prefer work less for the same income, as in France hours of work have fallen as income has risen.
I have read that the French banks are still highly exposed to their greedy toxic loans to Italy, who may simply say they cannot pay. France is financially fragile; Black Rock handles how many trillions? It is too big to fail.
Well, already the Tesla factory has relatively few workers, so I suppose AI developments will accelerate to make almost everything doable by machines and far cheaper. An excess of redundant workers will be the problem in the future. The French seem not short of ideas about what to do with their extra free time. Immigration is storing up trouble for this future though.
Jean Ghislain:
– I side with you in exposing the complexity of the system in place and therefore of the debate.
– I side with you in explaining the demographic challenge which is not an exclusive french problem.
– I side with you in exposing the abnormal advantages that few state owned or public companies employees enjoy and their abuse of (striking) power.
– I do not side with you in claiming that there is no capitalization system in place in France. What are the 1.5 trillion euros stored in the “assurance vie” accounts and managed by behemoths insurance companies such as AXA, Allianz, Generalli, AG2R etc? This is typical capitalization with tax shelter purposes just like any other system in many countries. The same goes for many private companies operating additional and company managed funds with several billions Euros invested in a variety of supports. What is the massive real estate ownership rate in France (much higher than neighboring Germany) if not for the purpose of investment to generate supplemental revenues, especially for retired people? There are plenty of investments supports in place for capitalization in France.
– I do not side with you in term of finance sources for the retirement system in place. Aside of the demographic issues which you rightfully stress, one of the major issue is the disappearance of revenue streams for the state which administers the retirement and other systems.
Tax breaks and tax (legal) evasion have significantly reduced the income of the state by several dozens of billions each year and continue to heavily do so.
Idiotic absence of industrial strategy and vision by successive governments has led to less than adequate investment level in the country for years and years and the attrition of many production sites which were all tax contributors before leaving or dying out.
As opposed to the US putting laws in place to fight tax inversion with its own companies, France has done nothing to penalize national companies leaving France for tax reasons. Most larger corporations established in France pays a small amount of taxes all things considered, especially when accounting for the massive state support they receive in all forms and ways ( CICE, R&D tax breaks, etc, etc…). All that deprives the state of revenues to fund its normal operation. Hence reverting to policies leading to pile up of debt to compensate for that and leave the future of a “so called” sovereign state to the hands and decision of bankers.
Finally, I would like to see a serious study comparing the effectiveness of a (unique?) capitalization system vs. a social administered one. So much partisanship exists in that debate that one fails to look at solid facts allowing for a rational exchange.
Nicolas:
I do not subscribe to your analysis.
1. France has a funding system in place in form of the “fond des reserve des retraites”. The CADES (Caisse d’Amortissement de la Dette Sociale) is in place to repay the existing debt generated by the social security system which will be done by end of 2024 (providing that no other burden is transferred to its accounts in the meantime..of course). Extra social taxes (CGS & CRDS) do finance the CADES program).
No one disputes the fact that, at the current rate of repayment, the current funding of CADES would cease to be needed by end in 2024. Maintaining the current level of CSG and CRDS thereafter 2024 will therefore generate 24 billions euros each year on. These funds can then be allocated to support any programs managed by the state, retirement system included.
2. Neither the US, nor state, nor municipal retirement systems are funded by any provisions. Just like in France, these are IOUs. Just look at the problems putting states like Illinois and several others to come in a state of actual bankruptcy. Similar to what happened in California a few years ago. As in France, the only alternative in the US is to raise taxes and consequently drive many inhabitants of these state to leave for other (less taxing) states. Until these, inturn, will be faced with the same issues since the entire US retirement/medicare/medicaid is built on IOUs exceeding 200% of its GNP.
3. I think that people (public) is way smarter than generally acknowledged and it is a gross mistake to think that, because they did not graduate from an ivy league B-School, they are incapable of following up. Indeed that is the gross mistake of Macron’s administration. A total disconnect with its own people.
Sean:
A few comments:
1. “France seems to have the problem that they prefer work less for the same income, as in France hours of work have fallen as income has risen.”
It all depends on what you mean by “income”. In the end, what matters is the actual spendable income after social and income taxes and all other (hidden) taxes contribution such as what you will pay on a liter of gasoline at the pump. So when such is taken into account, the income of french workers has rather receded (in relationship with inflation) and grown much less than in many neighboring countries of comparable development. Wages have been quasi frozen for almost a decade or have been at extreme paltry level. As a matter of fact France has undergone and is still undergoing a massive (so called) internal competitive devaluation. Low income is indeed in parts, compensated by social benefits which are curtailed everyday, hence the current uprise observed.
The other thing is to distinguish work hours done by civil servants (or assimilated) and hours done in the private sector. These are two different animals although technically operating under the same fundamental labor laws. In the end, the difference in weekly work hours between EU countries is minute. See for yourself:
https://ec.europa.eu/eurostat/web/products-eurostat-news/-/DDN-20180125-1
2. Indeed, French banks are exposed to fragile situations in Italy, Greece, Portugal or Spain. But much less so than German banks which, in addition, have a large exposure to the german 2nd or 3rd tier banks themselves and for several, in very shaky situation. Not to speak about the situation of Deutsche Bank which, in itself, is a basket case. Insurance companies like AXA or Ag2R are handling well over a trillion euros in form of capitalization by french people into tax shelter structures (called life insurance in France). No less too big to fail than black rock would be.
I guess and in a way, financial “fragility” has somehow to be gauge against actual estimated wealth. And for whatever it may be worth, this representation does not paint a very worrisome picture:
https://howmuch.net/articles/distribution-worlds-wealth-2019
3. No I side with you to the fact that AI will, without a question, be a challenge, but certainly not only in France but everywhere in the world. As a matter of fact, I believe it is way more of a coming challenge for a country like China as it is for France. A french social uprise would certainly pale in comparison to a chinese social uprise and its consequences.
Sean:
It seems to me that 2008 exposed who was foremost in the toxic loan business.
1 & 3 . I suppose you are right about the current pressure on living standards in France. Artificial Intelligence is a matter of when not if, and will mean for the ordinary worker there could be precious few jobs he could do even in the service industries. Economists tend to assume that new jobs for humans will be created to replace the old ones, but people are generally workers because they are simply lacking the brainpower for even the lowest technical professional-managerial level.
Homogenous countries like China (which has a rapidly declining number of young people ) will be able to ride that out well. A country that imports as many non European immigrants as France has (however many that actually is because the government is not collecting statistics on it) will likely to find that the very young men with nothing much to do will be convinced it is a old establishment plot. They will be like students in 1968, with an indigenous versus immigrant divide. If you look at the age structure of the population, the longer the time until mechanisation-AI has an effect the more the immigrants will be the youth even if not an absolute majority.
2. Former board member of Germany’s Bundesbank, Thilo Sarrazin says in the final analysis German taxpayers are ones ultimately standing behind the French banks. Italy is the one that might try and fail to meet its obligations. It seems to me that Italian parties appearing from nowhere got elected to extort the rest of the EU with threats of reneging, and that very real prospect is why the Germans have to have France’s back.