Au Revoir, Austerity? The French Elections, Round One

Today, France began the first round of its presidential elections. Unsurprisingly, the candidate of the center-left, Socialist Francois Hollande, beat out the incumbent, the conservative Nicolas Sarkozy, by approximately 29 to 26 percent. In a more noteworthy development, Marine Le Pen secured 18 to 20 percent of the vote, a major triumph for her far-right, anti-immigration National Front party. In 2002, Le Pen’s father, Jean-Marie, scored almost 17 percent of the vote, although in that case, that had been enough for a run-off between Le Pen and President Jacques Chirac. Socialists and other leftists rallied behind Chirac, who beat Le Pen in a landslide. This time around, while she may miss the run-off, Marine Le Pen will potentially be the kingmaker in how she directs her supporters in the final two-week campaign between Hollande and Sarkozy.

One might assume that those who voted for the National Front will naturally prefer Sarkozy. Indeed, Sarkozy has sought to woo over those who believe immigrants are taking away jobs from French nationals and that tolerance for Islamic values is undermining traditional French secularism. He has promised to reduce immigration by 50 percent, to do away with separate halal menus for Muslim children in state schools and drawn on fears stirred up by the Toulouse killings. Still, as much as he has tried to court his country’s xenophobes, he has been unable to escape two major problems. The first is that Sarkozy is Sarkozy. Since he first took office in 2007, he has alienated the electorate with his flashy clothes, taste for upscale dining and a brash, rough personality (the U.S. embassy described him as “thin-skinned” and “authoritarian”). Try as he might to dress himself up as an outsider who speaks for the French “silent majority,” there is no escaping that he has developed an image as a “president of the rich” – and not a very charming one, at that.

The second more substantial problem is that Sarkozy has failed to deliver on getting France through the financial crisis. For all his pomp and panache (one of his few advantages over the dull, drab Hollande), Sarkozy cannot deny that unemployment stands at 10 percent (the highest level in over a decade) and that economic growth has been sluggish at best. Moreover, his advancement of austerity measures puts him at odds with a growing number of Europeans who fear severe spending cuts will only make things worse, not better. Up to now, the German government has declared that the only way to end the euro crisis is to reign in profligate governments and forcing them to live within their means – thereby establishing credibility with investors by doing away with increased borrowing or bouncing off growth bubbles. A growing number of critics, however, contend that austerity only leads to more unemployment as public sector jobs vanish and demand consequently falls, leading to less consumer spending and investment, forcing economies into suicidal vicious cycles. Cuts to social programs are never popular, but with their supposed positive aspect failing to materialize in Greece, Italy, Britain, Spain or France, popular attitudes are swarming over to the anti-austerity side.

If one needed any evidence of this, one need only look at the economic platforms of all three major French opposition candidates. Hollande has pledged to draw back on spending cuts and to impose increased taxes on millionaires to finance public investment programs. Until the Toulouse murders prompted her to relapse to her usual Islamophobic rhetoric, Le Pen sounded like a veritable left-winger by pushing a protectionist economic policy that would have France leaving the German-dominated euro zone altogether. Jean-Luc Mélenchon, today’s fourth-placed candidate, represents the Left Front, a coalition of communists and other radical leftists. Mélenchon rejects any talk of balanced budgets at all, endorsing not just higher taxes on the rich but also taking out low-interest loans and raising the minimum wage – all of which would certainly boost consumer spending and spur growth forward. Undoubtedly, some of Le Pen’s supporters will flock to Sarkozy as the only conservative option in the coming Sarkozy/Hollande showdown, but more than a few will prefer the pragmatism of their pocketbooks to the rancor of their racism – joining with Mélenchon’s supporters to Hollande’s side.

Overall, today’s result is not that surprising. Incumbents have not done well in the wake of the financial crisis. British voters turned Gordon Brown and Labour out from Whitehall in 2010. The Spanish People’s Party crushed the ruling Socialist Workers’ Party in November last year, just days after Silvio Berlusconi resigned as Italy’s Prime Minister due to pressure, external and internal, over the debt disaster. It was perhaps simply time for Sarkozy to pay the piper.

Still, it will be interesting to see how a left-wing, pro-growth government will endure against the narrative, pushed by Germany and the IMF, that Europe must stay the austerity course. While French voters may have the freedom to “throw the bums out,” they do not have control over the European Central Bank or world markets. Considering how unpopular enlarging the public sector rather than shrinking it will be to the consensus of cutting a country’s way to recovery, Hollande may have to put his proposals on hold and bend to the mainstream answer to Eurogeddon. If he does not, however, and displays the sort of boldness he is not exactly known for, this election may mean the first real challenge to “austerity as usual.”

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To Bibi or Not To Bibi: It’s Not Even a Question

In the 1980s, the British punk rock band The Clash queried, “Should I stay or should I go?” These questions and their opposing options find parallel in the work of Albert O. Hirschman, who argued that people feeling dissatisfaction choose either to “exit,” abandoning an economic, political or social institution, or to express “voice,” making their grievances known. In Israel, protestors have been exercising the “voice” option as of late. Last year, hundreds of thousands of people flooded the streets of Tel Aviv, demanding Prime Minister Benjamin Netanyahu enact a series of socioeconomic reforms. Netanyahu established a committee in August to study the protestors concerns, but then ignored its findings. Last month, hundreds of demonstrators again marched through the Israeli capital, this time in response to rising energy prices. Netanyahu went forward with the cost increases. Given his underwhelming and even dismissive reaction to the popular uprising in his country, why is Netanyahu not searching more actively for a cure to what ails his public? Why is he risking the possibility they might dare to choose “exit” (from him, if not their country) when he could respect their “voice?” This essay briefly reviews Hirschman’s theory and the nature of the Israeli social justice protests. It then concludes that Netanyahu’s lack of action on the protests represents not negligence but a personal belief in the rightness of his existing policies and a realization that, domestically or otherwise, “exit” is not possible for the Israeli people – they have nowhere else (and no one else) to go to.

In 1970, Hirschman published Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States, proposing that firms and other organizations learn about their shortcomings in two possible ways. The first, called “exit,” is when customers refuse to continue purchasing the firm’s products or when members decide to end their membership in the organization. The second, called “voice,” is when customers or members articulate their discontent either to the firm, organization or (via collective action) to anyone and everyone (Hirschman, 1970, p. 4). Hirschman notes that “exit” primarily thrives in the economic realm, where the customer can buy a competing product when displeased with one product, relying on “market forces which may induce recovery on the part of the firm that has declined in comparative performance” (ibid, p. 15). Hirschman, however, rejects the notion that one can also use “exit” in regards to the state, where it amounts to “desertion, defection and treason” (ibid, p. 17). He bemoans the tendency of political scientists with their “inferiority complex” to permit and even enable “the tool-rich economist” to dismiss political concepts in favor of economic ones (ibid, p. 19). Of course, in each election cycle, some despairing group invariably asks, “If Candidate X is elected, will the last person to leave Country Y please turn out the lights?” Yet events prove Hirschman usually correct: mass exoduses generally do not follow election outcomes or policy failures. In addition, one also finds that partisan affiliations endure widespread complaint. Despite humdrum enthusiasm for the current field of Republican candidates, for example, Republican voters in states holding primaries to determine the 2012 presidential nominee have opted to “voice” their reservations through low turnout instead of “exiting” the party for an alternative (Yaccino, 2012). When it comes to politics, the electorate finds itself constrained to trying to “send a message” to elites, directly or indirectly.

The Israeli social justice protests that began in July 2011 have taken a particularly direct form. Initially, student demonstrators led by 25-year-old Daphni Leef squatted in tents around Rothschild Boulevard in Tel Aviv in response to the high cost of living. Around 50 participants grew to between 300,000 to 450,000 in an enormous rally on September 3, 2011, by which time demands had expanded to include calls for greater spending on education and government housing projects (Rabinovitch, 2011). Importantly, polling illustrated that this “voice” represented more than grumbling from the margins. A Haaretz poll taken in July 2011 indicated that 81% of respondents stated the protests arose from “real distress” with 87% declaring support for the protestors’ goals. Additionally, only 32% expressed support for Netanyahu’s handling of the protest (Haaretz Staff, 2011). Indeed, Netanyahu proved reluctant to take decisive action on the crisis, suggesting that the problem was a lack of free competition in the Israeli economy and not the dismantling of the Israeli welfare state, as the protestors claimed. In a speech at a parliamentary event, Netanyahu said the government had to “encourage competition” but not limit “the individual’s freedom” so as not to “fall from the tree from which we pick our fruit” (Haaretz, 2011). Soon thereafter, Netanyahu offered a more conciliatory gesture by assembling a team of experts under the leadership of Israeli economist Manuel Trajtenberg to examine potential reforms. Simultaneously, however, he ruled out any increases in government spending due to fears of a “spreading global financial crisis” (Fisher-Illan, 2011). The Trajtenberg committee proposed a series of measures for the government to adopt, including reducing custom fees, eliminating barriers to imports, and cutting the defense budget by three billion shekels in order to offer free education and affordable housing. In the winter, after most of the protestors had returned to school and work as summer vacations ended, Netanyahu put on hold most of the proposals. He bowed to pressure from the defense ministry not to make any cuts to the military and from the Orthodox religious community, allocating inexpensive apartments to ultra-Orthodox Haredi Jews instead of the general populace (Haaretz Editorial, 2011). Those recommendations not immediately rejected withered in the desert of the Israeli bureaucracy, slowly picked apart by lobbyists and special interest groups (Peer, 2011). While it seemed as though Netanyahu had weathered the storm, recent developments hint that more protests are forthcoming. In late March 2011, hundreds of protestors carried torches through Rabin Square condemning government hikes in electricity and gas prices. Netanyahu reacted by merely lowering the increases rather than eliminating them, and said he would cover the shortfall by cutting spending and government jobs (Bar-Zohar and Shtull-Trauring, 2012). While Netanyahu enjoys a stable coalition in a country known for its plurality of parties and interests, one cannot help but wonder why Netanyahu has not chosen drastic action in the wake of dramatic remonstrations that have seen his public approval drop domestically. Maintaining support at home would seem even more crucial considering the fact that several prominent world leaders (Sarkozy, Obama, etc.) would be keen to see him go. Have the people’s “voice” fallen on deaf ears?

It has been argued that Netanyahu has indeed heard the people’s “voice,” but that it does not register on a cognitive level. As a firm believer in the power of private enterprise and open markets, he does not see how breaking up the welfare state (which he did as Finance Minister in 2003) could be anything but a net positive for Israel. Moreover, as a former military man, he does not respond well to criticism and prefers to shirk addressing it rather than admitting his faults. Ironically, Netanyahu’s obsession with maintaining a thriving Israeli economy – the baseline for all his arguments against increased spending on social programs – neglects the fact that the free market has led to the rise of an urban-dwelling “creative class” possessing a social conscience: innovators and entrepreneurs, who seek liberty and the diminishment of social distance between elites and the average people. Netanyahu’s doctrinaire adherence to neoliberalism and his authoritarian instincts blind him to the very discontent his economic policies created (Strenger, 2011). In many ways, this argument mirrors those advanced in theories of development, where economic advances lead to path dependent cultural changes the foster the sort of social cohesion and political participation witnessed in Israel recently (Inglehart and Baker, 2000). There is no urgency for Netanyahu to realize this contradiction, however, due to a dearth of credible opponents who could replace him. Shelly Yachimovitz, the leader of the Labor Party, lacks political experience, her background being that of a commentator on Israeli TV news. In terms of new faces, media darling Yair Lapid shares the same problem with Yachimovitz: how do you convince an electorate to entrust someone with no background in politics with the prime minister’s post? (Rosner, February 2012). Meanwhile, the largest opposition party in Israel, Kadima, boasts a new leader, Shaul Mofaz. Unfortunately for Kadima, Mofaz is yet another former general in a long list of former military officers in Israeli politics. Even worse, he has a number of traits that make him unappealing to Ashkenazi (European) Jews, who make up the bulk of the Israeli left-of-center: he is not fashion conscious, does not live in a north Tel Aviv neighborhood, lacks left-wing bona fides and is not “white” as most European Jews are. Indeed, not only is Mofaz from Eastern rather than Western stock, he was born in Iran, a country much unloved in Israel given the possibility of war between Israel and a nuclear-capable Iran (Rosner, March 2012). As a consequence of the above, Netanyahu does not need to worry about political “exit” from his brand to someone else’s in the immediate future; until such a time as someone who could be portrayed as his political equal arrives on the scene, he can afford to wave off the people’s “voice.”

Hirschman did political science a service by taking a stand against the “invading” and “colonizing” economists who injected economic tools into the discipline. When people in the political realm seek to express their views, they do not withdraw but directly or indirectly articulate. When articulation fails, however, and there are no changes from above, the electorate can only work with what it is provided. Unlike authoritarian regimes such as Russia, where state power shuts down channels of reform through force, in democracies such as Israel (and the U.S.) such channels are constrained by limited opportunities. Credible challengers do not appear out of thin air; they must be on the scene, ready to focus anger and agitation toward a productive end. When old parties hold no promise, new parties must be allowed to take root and flourish. Otherwise, participants in politics will encounter only frustration and cynicism arising from “politics as usual.” In the end, the result may be “exit” after all – that is, “exit” from politics, with apathy overcoming civic engagement.

Bar-Zohar, Ophir and Asaf Shtull-Trauring. “Netanyahu raises price of gasoline as Israeli protesters return to the streets.” Haaretz, 1 April 2012. http://www.haaretz.com/print-edition/news/netanyahu-raises-price-of-gasoline-as-israeli-protesters-return-to-the-streets-1.421860

Fisher-Illan, Allyn.  “Netanyahu faces Israeli parliament over protests.” Reuters, 15 August 2011. http://www.reuters.com/article/2011/08/15/us-israel-politics-idUSTRE77E66U20110815

Haaretz. “Netanyahu on social protests: Israel must encourage free market competition.” Haaretz, 1 August 2011. http://www.haaretz.com/news/national/netanyahu-on-social-protests-israel-must-encourage-free-market-competition-1.376454

Haaretz Editorial. “Netanyahu cares about power, not affordable living.” Haaretz, 5 December 2012. http://www.haaretz.com/print-edition/opinion/netanyahu-cares-about-power-not-affordable-living-1.399548

Haaretz Staff. “Haaretz poll: Netanyahu losing public support over handling of Israeli housing protest.” Haaretz, 26 July 2011. http://www.haaretz.com/print-edition/news/haaretz-poll-netanyahu-losing-public-support-over-handling-of-israeli-housing-protest-1.375244

Hirschman, Albert. Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States. Cambridge: Harvard University Press, 1970. Print.

Inglehart, Ronald and Wayne E. Baker. “Modernization, Cultural Change, and the Persistence of Traditional Values.” American Sociological Review, Feb 2000. 65(1). pp. 19-51.

Peer, Eran. “Netanyahu kills Trajtenberg softly.” Globes [online], Israeli business news, 15 December 2011. http://www.globes.co.il/serveen/globes/docview.asp?did=1000707144&fid=4137

Rabinovitch, Ari. “Biggest rally in Israel’s history presses PM.” Reuters, 3 September 2011. http://www.reuters.com/article/2011/09/03/us-israel-economy-protests-idUSTRE7821OS20110903

Rosner, Shmuel. “Yes, Prime Minister.” The New York Times, 7 February 2012. http://latitude.blogs.nytimes.com/2012/02/07/in-israel-election-netanyahu-will-defeat-divided-opposition/?src=tp

Rosner, Shmuel. “The Rise of Mofaz.” The New York Times, 30 March 2012. http://latitude.blogs.nytimes.com/2012/03/30/the-rise-of-mofaz/

Strenger, Carlo. “Israel’s version of the French Revolution: Liberty, fraternity, creativity.” Haaretz, 11 August 2011. http://www.haaretz.com/blogs/strenger-than-fiction/israel-s-version-of-the-french-revolution-liberty-fraternity-creativity-1.378194

Yaccino, Steven. “In One Detroit Suburb, Voters Agonize, and Settle.” The New York Times, 28 February 2012. http://thecaucus.blogs.nytimes.com/2012/02/28/in-one-detroit-suburb-voters-agonize-and-settle/