The University Bookman

 
 

Spring 2017

Elites and the Future of France

book cover imageLe crépuscule de la France d’en haut
by Christophe Guilluy.
Flammarion, 2016. Paper, 253 pages, $45.

Eamon Moynihan

The year 2017 is the two hundredth anniversary of the publication of the classic work by British financier David Ricardo, On the Principles of Political Economy and Taxation, which introduced the idea of comparative advantage. As widely known by any student of economics, Ricardo argued that it was advantageous for the British to concentrate on the production of wool and for the Portuguese to concentrate on the production of wine, and for both of them to sell a portion of what they produced to each other. Less well known is that nine years later, a farmer in northern Germany, Johann Heinrich von Thünen, published the first iteration of Der Isolierte Staat, which sought to explain why certain economic activities are located where they are, and more importantly provided an economic rationale for the existence of cities. His basic insight was that distance imposes cost. Though Thünen had not originally read Ricardo, surprisingly, they are connected. In his work, Thünen corroborated Ricardo’s theory of land rent, which emphasizes use value, and contradicted what Adam Smith had written in The Wealth of Nations, a book which Thünen, who knew English, had in fact read.

The dual (and sometimes dueling) insights of Ricardo and Thünen are helpful in making sense of the recent book by French author Christophe Guilluy, who has been cited to help explain the ability of Marine Le Pen to become a clear force in French politics. By extension, he has also been cited to explain the support for Donald Trump in his improbable victory last November. Based on the results of the recent French election, Guilluy chose an unfortunate title. An obvious translation would be The Twilight of the French Elite. Not exactly, as Emmanuel Macron, the landslide victor, is a former Socialist cabinet minister, Rothschild banker, and graduate of the prestigious École Normale. And yet, Guilluy raises important issues that are not likely to recede because of one unusual election. In fact, these issues may become more salient, as France has basically doubled down on a status quo that is clearly not providing what voters want.

Guilluy’s book is divided into four sections, the first of which is entitled “The New Citadels,” a term he uses to describe globalized cities, such as Paris, but also smaller ones such as Bordeaux or Lyon. As he tells it, these globalized cities are home to a new kind of bourgeoisie who, like their nineteenth-century antecedents, share a distinct ideology as it relates to politics, economics, and culture. But, Guilluy argues, this new ideology has been updated from the original, even if the purpose remains the same, which is to justify the success of the winners at the expense of those who are left behind. According to Guilluy, “the new dominant and superior classes impose their model in the name of modernity, openness, and even equality.” According to him, they also preach “la mixité sociale,” even if they practice what he calls “l’entre-soi,” (“insularity” or “self-dealing”), stick closely together, what he calls “le grégarisme,” and make extensive use of “networking” (le réseautage) to maintain their privileged status. Lurking behind all of this, he believes, is globalization and free market economics.

As a self-described geographer, Guilluy pays special attention to where people live and work. (For those not aware, geography is a distinct academic discipline, related to but different from what is commonly called urban economics or sometimes, largely because of the work of Paul Krugman, geographical economics. Significantly, there is often a Marxist bent to geography, although there is no intrinsic reason that this should be the case.) A key characteristic of these new citadels, Guilluy recognizes, is that real estate, especially in the nicer parts of town, has become extraordinarily expensive. The title of one sub-chapter is, “The ‘open city’ at 15,000 Euros per square meter.” He continues, “2,480 Euros a square meter, that’s the price that Parisian rock traded for just twenty years ago. It’s now more than 8,000 Euros and reaches 20,000 Euros in the western and central part of the City.” In the most fashionable arrondissements, he states, prices have risen fivefold. For a “worker saving 100 Euros a month, it would take a century to afford ten square meters in the old quarters of Paris.” This is not an “open city,” he says, but a closed one.

Along with real estate, Guilluy also discusses education and immigration. By analyzing these together, he makes what is far and away the most important observation in his book, even though he does not fully emphasize it and may even miss its significance, since he is a geographer and not an economist. On numerous occasions, he cites what he calls “residential and educational avoidance.” He also refers to efforts by prosperous urban dwellers to “find a way around the local school map,” as he decries what he calls “the ghettoization of secondary schools” and the inability to resolve the “educational failure of young people (notably young men from North Africa and the sub-Sahara).” In this context, he observes, “yuppies have no intention of playing with the future of their children,” as they seek out elite public or semi-public schools or, in the “worst case,” a private school. Who is being left out? The answer, of course, is the traditional working class. In the United States, critics of immigration have largely focused on the impact that immigrant labor has on wages, even as professional economists, including Harvard critic George Borjas, find minimal support for this assertion. What Guilluy seems to be saying is that the critics are all looking in the wrong place. The real impact of excess immigration is not transmitted through the labor market. The real impact is transmitted through the real estate market, especially as it relates to K-12 education.

The next chapter looks at globalization more broadly. Here he writes, “France like the other developed countries has become a copycat America, where the middle class is disappearing and social and regional inequalities are on the rise, all while a highly stressed multicultural society begins to emerge.” (This is a generous translation, but hopefully captures the basic argument that he is trying to make.) As many have done, he cites deindustrialization as the turning point. Thus, “The policy of massive layoffs was not announced, and even less negotiated, but it was clearly set in motion in the early 1970s, when the charts on GDP and unemployment began to move in tandem. That is when the model of globalization began to show its economic efficiency along with its ability to exclude those of more modest means.” What Guilluy means by “move in tandem” (en parallèle) is unclear, but what is clear is that economic growth began to slow down. Based on Angus Maddison numbers, GDP growth per capita in the 1960s was 54.6 percent, dropped to 29.6 in the 1970s, and then continued to stair-step down after that. Curiously, in defending the old economy, Guilluy fails to note that there were numerous efforts to forestall the process of deindustrialization. One obvious example is Great Britain under Harold Wilson and James Callaghan. The result? The Winter of Discontent that led voters to elect and then re-elect Maggie Thatcher.

As noted, a key aspect of globalization has been the disparity in economic growth by region. Here Guilluy writes, “between 2000 and 2010, 75 percent of the growth occurred in the fifteen major French metropolitan areas.” Not surprisingly, he reports that per capita income in these areas is 50 percent higher than in the rest of the country, even as they contain large concentrations of poverty in neighborhoods where immigrants dominate. At the same time, he describes a process of “desertification” among many smaller cities in what he calls the French periphery. “It is difficult to walk through the downtown of a small or medium sized city without coming across closed business and empty storefronts.” The reasons for this are not hard to understand and clearly go back to the insights first articulated by Ricardo and then Thünen. Globalization has weighed heavily on the tradable sector of the economy, such as agriculture and small manufacturing, thus the decline of the periphery. At the same time, cities not overly burdened with an industrial past have reasserted themselves as more efficient places to do business. In addition, the work that is done there is often related to globalization and the diffusion of technology that makes it possible.

Next, Guilluy turns to the politics of globalization and how its proponents have managed to implement their ideology. In his view, they have used two main tactics. The first is a quick willingness to brand their opponents as racist or fascist. Undoubtedly these are terms that are overused in politics, and he scores some points here, but for obvious reasons this may not be the first argument that someone wants to make in France, given the history of the National Front. More interesting is the charge that there has been a concerted effort to make a large portion of the population demographically invisible. As he describes it, when the media want to focus on those not doing well, they always turn to the ethnic suburbs. “This representation makes it possible to reduce the social question to an ethno-cultural question; on one hand, a middle class necessarily white and integrated, and on the other hand, a working class that is comprised of ethnic minorities.” Left out of this picture are what he says are the 60 percent of French people who live in the periphery and, in his view, have been hurt by globalization more than they have been helped. They are his silent majority.

In the final chapter, Guilluy argues that in the face of these trends, many people are rebelling, what he calls “le marronage,” a word that historically refers to slave rebellions in the Caribbean. Thus, he writes, “The rejection of the political class, of the Right, of the Left, and the unions, and the level of distrust towards the media, the experts, and more generally towards the pronouncements of the elite have all reached record levels.” Towards this end, he cites a variety of data points. He notes, for example, very high abstention rates among the working class during regional elections in 2015. He also cites polls that find that “72 percent of the French think that male and female politicians are corrupt,” and “87 percent believe that the party in charge, whether on the Left or the Right, does not care about ‘people like them.’” According to a third poll he cites, “Suspicion is particularly high with respect to journalists, since 77 percent do not have confidence in them (only one in four French people think that journalists are ‘connected to reality.’” The biggest losers in this process, he says, are the traditional parties of the Left. Interestingly, while he mainly stresses economic forces, he also cites the role of “gauchisme culturel.” Here he adds that “le mariage pour tous,” the turbo-charged version of same-sex marriage in France, plus gender theory, have “accentuated the divorce” between the Left and France’s immigrant population.

Guilluy is particularly forthright on the reality of ethnic tension in the face of widespread immigration. Thus, one sub-chapter is titled, “From the ideology of ‘mixité’ to the reality of separatism.” One group that he discusses is the country’s Jewish community, which he notes is 70 percent Sephardic. As such, they tend to be poorer than their coreligionists, who have long lived in Europe. Here again, we see the connection between economics and education. He cites data from Paris that approximately one third of Jewish students attend a private Jewish school, one third a public school typically in a more prosperous neighborhood, and one third go to a private Catholic school. More generally, Guilluy stresses that the high levels of immigration are not popular. Thus, he cites a poll that finds that “70 percent of French people believe that ‘there are too many foreigners’ in France, 60 percent saying that ‘one no longer feels at home.’” In addition, he cites a poll from 2016 that found that “61 percent of blue collar workers, 56 percent of regular employees, and 58 percent of intermediate professionals believe that ‘anti-white racism is a widespread phenomenon in France.’” So much for multiculturalism.

In a brief conclusion, Guilluy argues that the “classes populaires” should lead the fight against globalization. But is that really such a good idea? As noted in the case of Britain in the 1970’s, efforts to forestall economic change do not have a good track record, to say the least. Moreover, it is entirely likely that the slowdown in economic growth in all the developed countries is not related to economic policy, but rather to the fact that new technologies do not increase productivity in the same degree that earlier ones did, as Robert Gordon has emphasized in his monumental work on the rise and fall of American growth. Channeling Thünen, Gordon argued that some of the biggest economic advances stemmed from what he called “the networked home,” which allowed Americans, in effect, to overcome the costs associated with distance. In his view, plumbing and then gas and electricity, which made it possible to power home appliances, including the refrigerator, washing machine, dishwasher, and air conditioners, were among the biggest drivers of economic growth, and those advances are not likely to be repeated in the future. (The Internet is another technology that reduced the costs associated with distance, but many of its benefits have accrued to developing countries thanks to dramatic improvements in global supply chains.)

Besides ignoring the Gordon thesis, Guilluy also ignores the fact that in the case of Europe, it can be argued that greater integration has worked exactly as planned, corroborating the underlying theory, which can be traced back to Nobel Prize winning economist Robert Solow (the dissertation adviser to Gordon), who emphasized the importance of the relationship between capital and labor. The operating principle of the European Union is that greater economic growth could be achieved by allowing capital and labor to migrate within member countries to wherever those factors would earn the highest rate of return. The idea is that this would produce convergence, and that is exactly what has happened. Thus Ireland, for example, had 182 percent GDP growth from 1990 to 2013, and Spain 64 percent, well above France, which was 46 percent and Italy, which was 29 percent. Stated differently, in a world of slower growth, economic integration may be the only game in town.

Lastly, Guilluy seems oddly willing to accept the underlying ideology of globalization, which is that increased trade in goods and services must necessarily include increased trade in people in the form of higher levels of immigration. But there is no underlying reason that this should be the case, and obviously, the transaction costs associated with people are much different from the transaction costs associated with semiconductors or soybeans. Nation-states can within reason choose the kind of immigration they want and change those policies as circumstances dictate. Japan obviously has chosen to implement very different immigration policies from Great Britain (both are islands), and people can argue that one is preferable to the other, hopefully recognizing that neither seems to have had a major impact on productivity, which is what determines overall economic well-being. For all these shortcomings, Guilluy has raised important issues that are worthy of further discussion.  

Eamon Moynihan, a financial consultant, lives in New York City.

Posted: June 4, 2017

Did you see this one? book cover

‘As You Wish’
Jordan J. Ballor
Winter 2014

A spirit of innovation is generally the result of a selfish temper and confined views. People will not look forward to posterity who never look backward to their ancestors.

Edmund Burke, Reflections on the Revolution in France

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