January 2016 newsletter – Letter from France – Unintended Consequences

In his latest letter, Alan Kirman reflects on a difficult year for France and at the disturbing perception of ‘immigrants’ that has emerged from it.

The year began badly in France, terrorists assassinated a number of the members, the cartoonists, of the satirical journal Charlie Hebdo. Though there were many who thought that the cartoons were too acerbic, there was a huge reaction with an unparalleled display of solidarity with the victims, among whom was Bernard Maris, a widely read, and, for want of a better word ‘heterodox’ economist. On the same day there was an attack on a Kosher supermarket with many victims. Again there was overwhelming sympathy for the victims. This solidarity frayed a bit at the edges as various figures tried to gain some political capital from the event but, on the whole, solidarity was the order of the day.

A gift to the ‘right’
Towards the year’s end, on Friday November 13th to be precise, there was a series of attacks on a theatre frequented mainly by young people and various cafes and their terraces in the 10th and 11th arrondissements of Paris. But this time the reaction was different. The battle cry, if I can use that unfortunate term, has been ‘La France est en Guerre’, and the leaders of the political parties have vied with each other to show their determination to ‘crush’ Daesh, or Isis, the organisation behind the attacks. The emphasis is no longer on a sober desire to make sure that the fabric of French society is untouched by terrorism, but rather to call hysterically for ‘firmer’ and firmer action. Whether this is likely to be effective or not is no longer the issue. Declaring a state of emergency, rounding up people suspected of being involved in activites favouring terrorism, banning public demonstrations including the march in favour of stronger measures to limit the effects of climate change, and suspending the freedom to cross borders within Europe without passport controls, have all been measures quickly taken and quickly approved. There is now talk of amending the constitution to allow a state of emergency to be extended to six months. All of this carries sinister echoes from the past when the suspension of various human rights accompanied the rise of fascism. Indeed the regional election results in France show a sharp rise in support for the Front National.

Those not familiar with the French scene should know that the Front National was the party of Jean-Marie Le Pen a denier of the holocaust and an avowed admirer of Hitler. His daughter who took over the party has claimed that the party is now ‘mainstream’ but all the evidence from the few towns governed by this party is to the contrary. The sort of measures proposed by them involve limiting immigration in general and preventing as far as possible the immigration of more Muslims into France. These are things that they wanted to do anyway but the attacks provided a wonderful pretext for trying to put them into practice. After the first round of the regional elections the Front National could claim to have the biggest following of any party in France.

As it happens, in the second round of the elections, in two key regions, the socialists desisted leaving a one on one combat between the ‘republican right’ and the Front National. Although it went against the grain, most of the socialist vote went to the more orthodox right wing party and the Front National did not conquer any region. This suggests that, for the moment at least, the ‘Barrage Republicaine’ is still effective against the Front National. But there are two negative aspects. In those regions where the socialists withdrew, there are no socialist representatives and secondly there is no sign that the conventional parties are interested in why people vote for the Front National and are now convinced that by ‘cracking down’ on terrorism and filtering immigrants they will bring the Front National voters back into the fold. Valerie Pecresse the successful candidate in the Ile de France now talks about putting up a ‘security shield’ around Paris!! When people feel insecure it seems unlikely that such measures will lessen that feeling.

The government came out of the elections better than expected and has also jumped on the terrorism bandwagon and reacts almost hysterically to any threat, real or imagined. Early in December, a schoolteacher, who was preparing his classes at 7 in the morning claimed to have been attacked by an intruder who injured him with a razor and scissors and who claimed that this was revenge for Daesh or Isis. Immediately, the Minister for Education and the Prefet of the Department appeared on the scene to denounce this ‘grave’ act of terrorism. Unfortunately for them, it turns out that the poor teacher was panicked about an academic inspection and injured himself to avoid facing it! Such unthinking and reactive behaviour by those in authority does little to encourage the average person to believe that he or she is in good hands.

Yet, if the problem was really to combat terrorism, as Helmut Schmidt (who died just before the attacks) once argued, fighting terrorism is a problem for the Interior Ministry and not one of a war necessitating a change in the constitution. As the Mayor of Madrid, pointed out, after the devastating attacks in 2004, in which nearly 200 people died, the Spanish constitution was not changed nor was a long term state of emergency declared.

One might, however, ask why the reaction to the two attacks has been so different and so much more radical to the second. The answer is not difficult to find. In fact, there are two reasons. Firstly the attack on Charlie Hebdo had an albeit fanatical logic, this was a journal that dared to make fun of religion in general and Mohamed in particular and the simultaneous attack on a Kosher supermarket was clearly a religious target. The attacks could thus be portrayed as part of a religious war which did not directly threaten the man in the street. Secondly national elections were further off, whereas now all the parties except the Front National, of course, were involved in the regional elections and were seeking to recover some of those who were tempted to vote for the extreme right.

One of the unexpected consequences of these tragic events was the decision to employ a large number of extra police and security forces. This, of course, meant in the short run abandoning any quick return to the deficit goals set by the EU in accord with the Maastricht treaty. France had an excuse to undertake a Keynesian stimulus which it did not have the courage to enact before. But, using a clause from the European Union treaty, Francois Hollande was able to declare that the ‘security treaty’ was more important than the ‘stability pact’ and thus to get a temporary exemption from the written rules. History repeats itself again, war or quasi- war is offering the way out of an enduring self-inflicted recession.

Ignoring the economic context…
Yet, the government does not seem to see the connection between the evolution of the economy, the rise of the right and the increase in recruitment of French youth to Daesh. They seem to have forgotten that the real minimum wage has stagnated for years now and although it has nominally kept pace with overall inflation, many of the recipients have seen their standard of living falling. Worse, these same people see little hope that their children will do any better. These are the things that drive people into the arms of Marine Le Pen. In my 2006 letter I looked at why Marseille did not erupt with the riots that took place in other French cities, and one of the reasons seemed to be that the city had invested in creating several hundred small sports centres with young local people in charge. The latter hired young ‘animateurs’ who, at least had something to lose. A small public investment apparently gave a good return. But, this month when the government had the chance to make a small increase in the minimum wage, they refused to do so on the grounds that this would, according to their forecasts and those of the European Union, aggravate the deficit problem. 

For those of us who think of the economy as a complex adaptive system in which actions are likely to have unintended consequences it is hard to believe how much faith both economists and policy makers put in their forecasts carefully generated from various administrations’ macroeconomic models. These forecasts are inevitably carefully revised and the, often quite different, revisions are treated with the same respect as the original erroneous ones. Yet the fact that the forecasts are so unreliable should not come as a surprise given all the feedbacks, both positive and negative, in the system. The unintended consequences of policies based on existing macroeconomic models and the associated forecasts may be dire.

One is tempted to make the analogy with those who attempt with somewhat primitive policies to modify the situation in the Middle East for example. As Jeff Sachs points out in a recent article, when the CIA carefully selected, trained and armed Wahabi sunnis to fight the Russians in Afghanistan, with the help of Bin Laden’s financing, they had not realised that when one Satan had been dispatched another was needed and unfortunately that was us. So the Taliban took over Afghanistan, Al Quaeda formed and attacked the US and, another myopic war led the ‘defeated’ to morph into Daesh and many people including the French paid the price.

The French have now succumbed to the idea that Daesh can be eliminated by bombing their strongholds in Syria and Iraq and by stepping up the security forces in France. This will certainly improve the unemployment situation in France but will not do much more. One is reminded of an early Peanuts cartoon in which Lucy stamps on a puddle and then looks with satisfaction at all the little puddles she has created and says ‘there, I have liberated them!’

All of this is to try to explain the current atmosphere in France, where the elections have been dominated by questions of security and economic problems are being pushed to one side. The closing down of a number of mosques and various restrictions on the members of the Muslim community will shift the distribution of Muslim youths’ willingness to take part in some extremist activity towards increasing the tail of the distribution of those that are willing to do so. That shift could translate into many new attacks just as it has translated into increasing recruitment from France by the Jihadists in Syria. The terrorists behind the recent attacks have not been new immigrants but rather French nationals, some with no police record at all. Closing the frontiers will not help with this problem, though the siren calls to restrict movement and dismantle the Schengen area are strong and politically seductive for a government which just escaped suffering a wholesale defeat in the regional elections in the middle of December.

Though the recent attacks were tragic and cast a pall over the city of Paris they were tiny compared to 9/11 and, as Doris Lessing pointed out, compared to the 3700 who died in the 30 year IRA campaign. Perhaps the most important lesson one can draw from this is that, in the end stoicism, and the eventual waning of the ferocity of the IRA led to a settlement whilst neither the war in Iraq nor that in Afghanistan has led to any such happy outcome.

One of the interesting things about writing this letter is that certain themes are recurrent but always in a modified form. As I have said, in the 2006 letter I looked at the riots in France in 2005 and the question of the identity of those responsible. Now the question is what is the identity of those guilty of the recent attacks? Although they were essentially French nationals they are largely perceived as being ‘immigrés’ even though of second or third generation just as were those responsible for the riots in French cities in 2005.

Hence the calls for restrictions on immigration. One hears the same calls in the US. Yet as Nicholas Kristof pointed out in the New York Times on December 7th no refugee in America has killed a single person in the last 12 years. In France the argument has been that terrorists will slip in to the country along with the hordes of refugees now arriving. The fact that a Syrian passport was found in one of the cars used by the terrorists was used to back up this claim. However the passport turned out to have been a forgery. The obsession with the peril from immigrants and their offspring is all the more puzzling when one observes that France has a net immigration figure of 1.09 per 1000 inhabitants (2014 figures from the INSEE ) hardly a figure to provoke the alarm that has been displayed particularly when compared with other countries such as the UK which experienced a 28 per cent year on year increase in March 2015 and Germany which also had a large influx. The complete 2015 figures which will include the recent wave of immigration from Syria and Iraq are, of course, not yet available. Nevertheless, immigration has been an increasingly important theme in French elections even though there has been a substantial drop in net migration from 2010 to 2014.

…and blaming refugees
If this focus on immigration continues the European project which has been centered around the free movement of labour may unwind. Germany has understood this and, as a result, will resist as strongly as possible the British demands for a relaxing of the rules on the treatment of immigrants. Yet the real problems faced by Europe lie elsewhere. Without a move to more integration or if one can use that unloved term, federation, it is difficult to see how the tensions inherent in the way in which the union has evolved will be eliminated. What is needed now is surely a move to cooperative solutions rather than the 20th century (to be kind) emphasis on increased competitiveness. At some point a coalition with France and Italy as key members will form to push the ‘surplus’ countries into participating in the redistribution and debt restructuring necessary to keep Europe together. But, if the debate continues to be focused on what to do about immigration this will not happen.

Yet, after these somewhat polemical remarks, for which I hope the readers will forgive me, it might just be worth reflecting on the other thing that happened in France in December, the Paris agreement on the climate (COP21). Although not binding, at last all the nations agreed that something had to be done, and somehow the worries about Europe’s future pale into insignificance in comparison to the fate of our planet. Paradoxically the fact that we are faced with this situation, is, as with the economy, yet again the result of our failing to understand much earlier that our actions have influenced a complex system and produced unintended but radical consequences. Nevertheless, the common agreement to do something about it means that the year has ended on a somewhat more optimistic note.

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