Good riddance, Sarkozy!

"La France forte" or "Strong France"
was Sarkozy's campaign slogan.

NEW YORK CITY
In one of the most memorable lines of his presidency, Nicolas Sarkozy threw at a French citizen who dared refuse to shake his hand, "Get lost, asshole!" ("Casse-toi, pauvre con!" in the original French- Watch the YouTube video) At this week's second round of the presidential election, the French people returned the compliment sending Sarko packing.

Two years ago, in a blog called "Sarkozy: La France c'est moi" I alerted my countrymen to the dangers of the presidency of the authoritarian and egomaniac bullshitter who tricked us into trusting him with the nation's top job. It took five years but finally the French people saw through him and gave him what Churchill once called, when he was on the receiving end of it, "the order of the boot." And rightly so.

This is of course, only Part 1 of the Sarkozy defenestration. Part 2 should be to prosecute him for the various abuses in power (some of which I mentioned in the same blog) and convict him. Hopefully this time we'll have a convicted French president who will serve his sentence, unlike Chirac (see my blog, "Real crime, fake justice") Then we could say that we have made a qualitative jump on the democratic scale by ensuring that justice is meted out to ALL citizens regardless of social status. We would thus show the way to other Western countries to send Blair, Bush & Co to jail for the crimes they have committed and for which they enjoy a scandalous full impunity.

I have seen press reports about how François Hollande "won" the election. That is simply untrue. Sarkozy lost it. Just look at the figures, less than 2% separated each candidate from victory, hardly the mark of a landslide. And yet, considering Sarkozy's disastrous record and abysmal approval ratings, Hollande should have won by a handsome 60% at least. But are we surprised at the poor showing by the Socialist candidate?

Not really. After all, he was not the first candidate for his party's nomination; that was Dominique Strauss-Kahn who was disqualified after that little incident at the Sofitel hotel in this city last year. Hollande was not even the second choice, that was party chief Martine Aubry who dithered so long about running that she finally lost to him. Many Socialist Party activists even toyed with the idea of letting Hollande's former partner, Ségolène Royal, have a second try at the presidency, but thank God they thought better of it at the last moment (I used to think that  the US with George W. Bush and Sarah Palin had a monopoly on idiots running for the presidency, but obviously in France we also have our share.) Unlike Barack Obama who fought tooth and nail to get the job (what he did with it is another issue and will be the subject of a blog come November), François Hollande was just lucky to be the least bad man at the right place at the right moment.

"Sarkozy, Outgoing President!"

So François Hollande won by default. Will he be up to the task? Will he finally solve the crippling debt crisis we have been suffering from for the past several years now? Well, considering that in his thirty years as a party apparatchik, lowly MP or local politician in a sleepy rural town he never displayed any conviction, vision or signed any remarkable policies, that would be quite a miracle. A couple of months ago, I caught him campaigning on a bright Sunday morning in a market close to my Paris home, at the Bastille. Since the debt crisis is the direct result of banking misbehavior, I put the question to him:

"Monsieur Hollande, are you going to nationalize the banks?"

"At any rate, we will reform them," he replied.

"Is that a promise?" I asked grabbing his arm. With Bertrand Delanoë, the mayor of Paris smiling that phoney smile of his just behind him, the then-candidate-now-president nodded his head reiterating that policy decision before leaning forward to kiss a kid and shake hands with well-wishers.

In case you don't believe me, here are the videos I made (they are of course in French, I appear at the end of the first video, and in the second you can hear my voice asking the question at 00:40 followed by Hollande's answer.)

So Hollande is on record promising bank reform and to get us out of the debt mess these banks brought us in. After the wasted twelve years with Chirac and five Sarkozy years, it would be great to finally have a president who can deliver.

Unfortunately, considering his record, my advice to you is not to hold your breath. We are used in France (and other Western pseudo-democracies) to being betrayed by our political class. As we say, Plus ça change...

Why Wall Street and the City are beyond salvation

What about "Save the People?
After all, financiers have only
themselves to blame for the
crisis they inflicted on themselves
and the rest of the world

RIO DE JANEIRO
I have been a keen reader of The Economist for a good quarter-century. I have always loved their writing style and irreverent humor, even the rigor it often brings to its analyses. I am less keen when it unashamedly behaves as the mouthpiece of big business and banking giants, as it does in this week's cover story and leader whose title is the self-explanatory "Save the City."

In one of its headers  The Economist  wonders why  “Strangely, California doesn’t talk down Silicon Valley”. Why would it? Silicon Valley companies produce computers and software that consumers and companies (often) love and use. What have the City and Wall Street offered ?(And how come The Economist doesn’t ask itself why “Not Strangely, the United States DOES talk down Wall Street”?) 

The Economist claims that financial markets “funnel savings to their best use”. Oh, really? How can the subprimes be considered as best use? How can the real estate bubble be considered best use? How can the various pyramid schemes be considered best use? How can the taxpayer-bailouts be considered best use? How can the encouragement to governments to spend beyond their means and create the problems we are seeing now be considered best use? How can helping Greece to cook its books (as Goldman Sachs did) be considered best use? How can ruining millions and sending many more into unemployment while the pigs gorge themselves at the trough be considered best use?

Whichever way you look at it, financiers are parasites, living off the body they attack and sucking it dry until they move somewhere else. It is time we get rid of them. If the management of money is so critical to society, like defense, justice and the rule of law, then just as we do with these areas let’s nationalize/highly regulate it so that finance can truly serve the people and not the other way round.

The argument that Britain should hang on to this industry just because it is a big contributor to GDP is flawed: there are some countries where the mafia and drug cartels create as much wealth. Should we then legalize them? “But these are criminal enterprises,” you might say quite shocked. Well, someone prove to me that financial services companies are less criminal.

“China and India have underdeveloped financial markets; Britain has the expertise,” writes The Economist. If I have any advice to give these emerging economies it is to remain underdeveloped with respect to financial markets. They don’t need to import our current mess a few years down the road, with all those hedge funds and derivatives and CDO's which nobody understands. The reason nobody understands them is the point: the less consumers understand the financial products offered to them, the easier it is for the banks to fleece them. 

As for "Britain’s expertise," the Chinese and Indians would be well advised to say, “thanks, but no thanks.”  I remember when, at the height of the financial crisis in 2008, the governor of the Czech Central Bank was asked how his country escaped the turbulence. He explained that  years back when those risky products appeared, Czech bankers came and asked him whether they should invest in them. "Do you understand what these are made of?" When they replied in the negative, the governor then advised them not to invest in products they didn't have a clue what they were about. And he was damn right as his country's bank sailed through the crisis.

Time to get back to basics and produce real products and real services that people really need.

(The blogger is currently in Brazil whose banking system, in spite of its being more regulated than the U.S. or British banking industry,  has many faults, concentration being one of them. I am also worried at the high amount of credit being freely distributed at Shylock-like interest rates to new, undiscerning consumers.  When the day of reckoning comes, and some bubbles burst, Latin America's largest economy  will be in a lot of pain.)

Real crime, fake justice: Chirac gets 2-year suspended jail sentence - UPDATED Feb. 2019

After 25 years of obfuscation,
legal maneuverings and turning a
blind eye, a French court has finally
said it out loud: Between 1995 and
2002 France was ruled by a criminal.
But if you think you will see him behind
bars, don't hold your breath: the
French political class is making sure
that one of its most  (in)famous
members is shielded from such a fate

PARIS
This week's ruling by a French court seems at first of quite earth-shattering importance: for the first time since World War II, a former French head of state is convicted of committing crimes (in this case misuse of public funds) and is sentenced to two years in jail. But look more closely and you realize that this judicial decision is as connected to justice as Alaska is to Madagascar.

The facts go back a good quarter century when Jacques Chirac was not yet president of France, just mayor of Paris (but considering how Paris is actually a midsize version of France, he was for all intents and purposes almost president.) In his Etat dans l'Etat which was his Paris fief, Chirac behaved like a medieval baron, hiring (especially for phoney jobs known in French as emplois fictifs where town hall positions were used to pay people who never carried out a single task for the city, but many for Chirac and friends), firing, using public funds as he saw fit with scant regard to rules and regulations. Why should he? He felt above such mundane things as the law. And subsequent events proved him right. It took decades for the law to close in on him, because the whole legal system in our Western pseudo-democracies is designed to punish harshly the small fry, while members of the elite remain scot-free. Among the examples used to shield Chirac from justice: while president, he made sure a new law on presidential immunity was voted so that he could remain literally above the law, even for crimes committed before he became president - and we make fun of Berlusconi who engineered laws to protect himself from zealous judges.

After Chirac left office in 2002, the Sarkozy government made sure his predecessor was left alone. Now, we all know that there is little love lost between the two men: Chirac tried every trick in the book to prevent Sarkzoy's ascent, as revenge for the "Dwarf" backing his opponent, Balladur, in a previous election. So why would Sarkozy care about Chirac's fate? If anything he should be happy to see Chirac in jail. Not really. These guys are smart, they know when it is better to put their rivalry on hold and think about higher things. Sarkozy has no interest in a judicial precedent, of having a former French president prosecuted and, God forbid, even convicted, since he knows he would then be the next one (read my blog on Sarko's own abuse of his position.)

So Sarkozy did everything he could to protect Chirac. First, he made sure that the case would drag as long as possible after Chirac left office (five years). Then,  and this is one of the more shocking aspects of the Chirac case, the public prosecutor (who in this pseudo-democracy acts on order from the government - no prize for guessing whose orders) decided to drop all charges against Chirac. Now, that was too much in light of the overwhelming evidence as gathered by all the files seized and the witnesses heard. So, a seemingly courageous judge, egged on by pro-justice militants, said, "I don't care that you drop the charges, Mr Prosecutor, there is enough in this case to convict Mr Chirac." And so he did, to two years in jail. But, and here's the rub, he made sure it was a suspended sentence meaning Chirac would not actually have to go to jail.

Yes, you have heard right. If you are lowly riff raff and get caught stealing, you can be sure you will end up as a guest of the French Republic for a few years. But if you belong to the elite, no such worry. And then you wonder why people laugh derisively at the lofty motto of the state, Liberty, Equality and Fraternity. In France, as in all other pseudo-democracies, Lady Justice is far from blind: she has one eye open to recognize VIP's and be lenient towards them. And yet, one of the first decisions of the French Revolution was to abolish all privileges that the mighty had. Two centuries on, privileges for the elite still live on. Now you understand why the "system" made sure the case dragged for how long as possible, so that even if he were to be convicted, Chirac could claim to be too old and sick to serve his sentence. And yet, read the French papers and watch television, and the whole French political class is cheering and saying, "See, we have truly independent justice." They are elated that they have managed to protect one of theirs from the same fate most of them should know: jail.

The great French fable writer, La Fontaine, wrote in the 17th century that:

Selon que vous serez puissant ou misérable, 
Les jugements de cour vous rendront blanc ou noir. 

(Depending on whether you are rich or poor
Court rulings will acquit or condemn you)
Jean de La Fontaine, Les Animaux malades de la peste, 1678.

Lest you believe that my native country is the only one where double standards apply when it comes to justice, I have some enlightening news for you: the same thing happens in other Western mock-demcoracies where the rule of law is supposed to apply. In addition to Italy's already mentioned and notorious  Silvio Berlusconi, Britain's Tony Blair and former US president George W. Bush should be in jail now for war crimes: didn't they wage a war which was found to be completely illegal (says the UN) and unjustified (say themselves after no weapons of mass destruction were found) but killed 100,000 innocent Iraqis (not to mention 4,500 American servicemen)?  Shouldn't these two men, along with a host of Israeli prime ministers and generals, be now in the dock of the International Criminal Court in The Hague? No way, only Arab, Latin American, Asian and African rulers commit crimes, not Western ones. Funny, isn't it, that when it comes to individuals we find in all countries the same proportion of criminals, but not when we deal with politicians. In the West, politicians are angels. Yeah, right!

When Juppé, one of Chirac's underlings, took the rap
for his master, a judge sentenced him to jail. But
the two-tier justice system we have in France and
other mock democracies meant that instead
of spending a single day behind bars Mr. Juppé
went to teach in a Canadian university for a
year (I didn't know Canada accepted criminals as
visiting professors) and after returning to France
he claimed back BOTH his old jobs as mayor
of Bordeaux and foreign minister. Whoever
created politicians left the shame gene out of them.
And as for us citizens who allow this to happen,
well, we have the rulers we deserve.

When Sarkozy succeeded Chirac one of his first announcements was that his administration would be "beyond reproach." A whiff of wrongdoing and you're out, he said to his ministers. Revolutionary, you'd think. Think again. Suffice it to say that the current Foreign Minister, Alain Juppé, a close aide to...Chirac, whose prime minister he even was at one point in time, was found guilty of the same crimes as his mentor in 2004 and given a (again suspended!) jail sentence of 14 months. Yes, we currently have a criminal as a foreign minister.  Even in the United States, hardly an exemplary country when it comes to the rule of law (think Guantanamo) and democracy (remember W's "election" in 2000?) any evidence (let alone court ruling) of wrongdoing  would be enough to end a politician's career. Not in France, where the political class wears its proof of corruption as a badge of honor.
Feb. 2019 update: President Macron just nominated Juppé to the highest court in the land, the Constitutional Court. Yes, your eyes aren't playing tricks on you: he who is going to ensure people uphold the country's top law is himself a convicted felon.

Speaking of America, remember that even there where the rule of law is supposed to prevail, Nixon was found to have committed crimes which led to his having to resign in shame and yet he was never bothered. His successor, Gerald Ford, in a behavior similar to what Sarkozy is doing now for Chirac, pardoned the Criminal-in-Chief thus ensuring he could spend the rest of his life enjoying the spoils of his crimes, in peace.  Well, Ford owed it to Nixon who made him president. And I am not speaking here metaphorically: it was Nixon who made Ford president, not the American people since, as few people remember, Ford was NEVER elected either as president or as vice president: he was appointed by Nixon to replace his previous VP, Agnew, after the latter resigned over (already!) a corruption scandal. The fish rots at the head, as they say.

Interestingly, Ford's outrageous act came at the same time when Chirac became mayor of Paris and was starting to put in place the intricate web of patronage, corruption, phoney jobs (but real salaries and cost to taxpayers.) If he ever worried about whether he might be held accountable one day, he just looked across the pond and the unedifying example of the White House shenanigans, and just shrugged his shoulders saying to himself, "Nothing to worry about."

For a quarter century he was right.  The wheels of justice grind slowly, if at all, when we are dealing with the elite. And yet, had justice done its job in a timely fashion, Chirac would have been caught in the 1980's and jailed (I doubt he could have claimed old age and bad health then) and we would have been spared his presidency which, by all accounts, was an utter failure. There are indeed many advantages to having an efficient justice system rather than the two-tiered parody of justice we currently have.

The struggle for equality, the rule of law, the principle that NO ONE should be be above the law, for a truly blind justice, continues.

Abolish the monarchy or reinvent it?

Let's hope for Catherine Middleton
that she escapes the fate of the three
Catherines Heny VIII married (out
of a total of six wives) :

he divorced one (Catherine of Aragon),

beheaded another (Catherine Howard)

with the last one, Catherine Parr,
surviving  a similar fate only by the
King's timely death.

PARIS

Unless you've been living on planet Mars for the past couple of weeks, you are unlikely to have missed yesterday's wedding of the heir to the heir to the British throne. The occasion has sparked some lively debate on the monarchy's future and I was surprised at the disappointing quality of The Economist's column on the topic.

I remember an excellent article they wrote a good 15 years ago called "An idea whose time has passed" which made cogently the case against the monarchy. Last week's column, on the other hand, is one of the worst I’ve read in The Economist in a long time. Although I don’t disagree with its main tenet, abolishing the monarchy, the arguments used are so convoluted that Bagehot does a disservice to the republican cause. With people attacking the monarchy this way, the House of Hanover (a.k.a Windsors)  is safe for another three centuries.  In theory I would always prefer a republic to a monarchy for the simple reason that why should the highest post in the land, that of head of state, be reserved to a single family? In a truly democratic and egalitarian society anybody should be allowed to reach that exalted position.

All the talk about modernizing the monarchy is simply absurd: how can you "modernize" an institution created in and for the Middle Ages? Its idea has just passed its time. The only way to "modernize" the monarchy is surely to abolish it.

Now, to the real world. Monarchies fall only in periods of crisis: war, revolutions and other political/social upheavals. There is no case of a peacetime “pensioning off” of the royals since, at least in European monarchies which are democratic societies, people realize that the royal family does little harm and therefore why fix what ain't broke? Instead of bothering about who should be on the throne (with limited political power) or even whether there should be a throne in the first place, people realize that there are a lot of other more serious issues  to deal with: unemployment, global warming, reforming bankers –now here’s a group of people who should head straight to the guillotine and yet our so-called democracies dare not touch them; maybe they are the true royals, our undisputed masters. And when a democracy does go to the polls to decide whether to keep the monarchy, in the only recent case (Australia), they voted to keep it (regardless of the fact that the monarch lives thousands of miles away and is now too old to visit them.) And for good reason. Look at the French model which isn’t one: the French president is for all intents and purposes an elected monarch who wields enormous power (proportionately even more than the US president) and yet we can’t say that the French are better off with him (we have yet to have a “her.”)

And why should the alternative to the current monarchical system be a republic only? One can be creative and use an intermediate system which would be more in consonance with the country’s political and institutional history. For instance, why not make the queen or king an elected position? The much-beloved (by the British and tourists) pageantry, coronation and titles will still be maintained but any British citizen could aspire to the position which they will hold for life (just like judges and some other officials in many republican democracies.) This life term wouldn’t be a democratic issue since the monarch would not hold executive power, the Prime Minister would continue with his functions. 

Actually, if it sounds like a novel idea, historically it isn’t. As recently as the 18^th century, Poland chose its kings this way. Polish kings came to the throne not through inheritance but because they had been selected by the Diet (Polish parliament.) Actually, the Poles didn’t even show too nationalistic a streak as they would cast the net wider  and along with representatives from prominent Polish families include European candidates. Thus in the 16^th century Henry of Valois, brother to the King of France, was elected king of what for most people then was faraway Poland.  Now that would be a great way for Britain to enhance its European credentials. And who knows? A couple of centuries from now latter-day Britons may well wonder how retarded it was to reserve the crown to a single family.

Arab Revolution - Phase 2: Pharaoh Falls

BOGOTA
Even from the other side of the world there is no escaping the momentous news, which explains why for the second time in a row I am posting on political developments in the Arab world. Last time, a month ago, when I wrote on the  Tunisian uprising which ended the dictatorial rule of Ben Ali, I predicted that Egypt, the heart of the Arab world, would be next. Last Thursday I emailed an old friend of mine: "This is the end of the game for Mubarak.  Following his refusal to leave power, the Egyptian people will mount an even bigger rally and protests after Friday prayers in now world-famous aptly named Liberation Square  and there is no way the military will allow him to stay. So by next week, and maybe even this weekend, he'll be gone." I was gratified to see I was right: the next day, as the weekend started, Hosni Mubarak, the last pharaoh, the absolute ruler of 80 million Egyptians for 30 decades, resigned in ignominy and fled to his home in the Red Sea resort of Sharm-al-Sheikh probably on his way to Saudi Arabia where, like an elephant cemetery, dictators retire to die.

What does this purport for the region, the world and US foreign policy? Well, much has been written, said, pontificated, hollered about by more knowledgeable people than I, so I don't need to expostulate at length. I would just like to lay to rest some myths.

Myth # 1. A lot is being said about the respect in which the Egyptian armed forces (which are taking over  during a transition period) are held. Well, if respect it is, it is the respect spawned by fear, not admiration. What is respectable or admirable about the Egyptian army? Abroad, they waged war against Israel three times, and were defeated three times. At home, they have been the backbone of the dictatorship for decades. Mubarak himself was a general, as have been all Egyptian presidents since the military (yes, they again) overthrew the monarchy in 1952 in what was a coup and not a popular uprising. How ironic that they got rid of King Farouk because he was too subservient to British interests (the power of the day) and they ended up just doing America's bidding.

Myth # 2: Don't believe a single word of all the lofty talk of Obama and Clinton about "the voice of the Egyptian people". Until this week they were backing newly appointed Vice-President Oman Suleyman to take over a vaguely defined transition. But Suleyman is as bad as Mubarak: as head of the intelligence services he has overseen every repressive policy of the last decades including torture, brutal crackdown, censorship, arbitrary arrests, rigged elections and stifling dissent. How can that be a change? Well, it isn't, and that's what America was/is after: to keep the same regime in place under a veneer of pseudo-democracy so that it can continue to implement America's policies in the region. But Vox populi, vox dei. Sometimes you just can't go against the people when they rise in their millions.


Myth #3: The free and responsible media. Yeah, right! I was mesmerized by CNN's coverage  which turned shrilly anti-Mubarak referring to him as the dictator at the height of the protests. And yet for decades you never heard anything like that. Had the Egyptian people not risen against the oppressive regime, CNN would have been glad to continue reporting on "Egyptian elections won by the president's party" and leave it at that when it was obvious that last November's elections had been rigged beyond belief. But that didn't seem to bother CNN unduly nor the US government who was quite happy as long as their buddy stayed in power. It was mind-boggling to hear US Vice-President Joe Biden refer to Mubarak as "not a dictator" and this ...as recently as two weeks ago when he was sending his armed thugs against peaceful demonstrators. Just like French minister Frédéric Mitterand protesting on TV channel Canal+ Sunday program that "Ben Ali is not a dictator" when his police was shooting his own people, and five days before he was to flee. The hypocrisy and duplicity of both mainstream media and politicians are seemingly endless. (Do I need to remind my readers about the New York Times endorsing Bush's Iraq war?)


Myth # 4: The Arabs are happy with their lot and never rise up. True, the last major Arab uprising was almost a century ago, in 1916 when they rose against their Turkish overlords in what was to be known as the Arab Revolt (with the help of legendary Lawrence of Arabia) and would lead to the creation of the modern Arab states that we know today and which are in deep crisis. Tunisia then showed the way and the Egyptians were so shamed by this little country to have done what they hadn't dared do that it galvanized them into taking their fate into their own hands. After all, don't Cairenes call their city Umm-ad-Dunia, center of the world? How could they fail where a small Arab country succeeded, they the heart of the Arab world, its most populous country?


Three more points are worth mentioning:



- Technology and especially social media were instrumental in mobilizing protesters and getting the word and pictures out. When Zuckerberg created Facebook in his dorm room several years ago I guess that if he never suspected it would quickly be worth billions of dollars, it is a safe bet to say that it never crossed his mind that it would have such political impact in countries on the other side of the globe. In the tug between the immovable object represented by Mubarak and the Egyptian protesters' irresistible force the latter won because it has Facebook on its side. 


- US foreign policy in the region is in complete disarray. It tried under Bush to foment democracy (or so it pretended) for nothing. So when Obama came to power he soon went realpolitik accepting Arab autocrats (but then did he really ever want that to change?) and, bang, Arab democracy explodes in his face. It is too early to make a definite judgment, but I believe that the maturity and commitment of the Egyptian people have shown that they will not accept anything less than a free society and democratically elected leaders. And representative government in Egypt means that US policy (especially as regards Israel) will never be the same, because "Egypt will never be the same again" in Obama's words. 
  
- So, who's next? As (bad) luck would have it, the longest ruling dictator in the Arab world, buffoon Qaddafi (he came to power two months after Armstrong walked on the moon, that is 42 long years ago) just happens to be wedged between Tunisia and Egypt, the two countries  which have just chucked their dictators. You can bet that the Libyan dictator is not getting much sleep these days. And today Mahmoud Abbas, the Palestinian president, announced presidential and legislative elections for next September. Considering that his term ended in January 2009 and he decided to stay on without bothering to ask his people how they felt about it, not too soon you might think. And yet CNN has yet to call him a dictator nor does the US administration criticize him for not being elected. Algeria is another low-hanging fruit with its explosive mixture of emergency laws, repressive gerontocratic single-party government and economic. The Saudi king who rules like a medieval monarch supported Mubarak to the hilt until his last moments in office understanding very well what it would mean for his family's shocking and continuing  control of a major and wealthy Arab country if Egypt went democratic. Another same-name Middle Eastern monarch, Jordan's Abdallah II, would be well advised to stop appointing the Prime Minister and leave it to elections to decide the makeup of a government. Of course, that means that the Palestinian majority in his country and probably the Islamists would come to power, something the US (as a sponsor of  Israel) would hate to happen. But isn't democracy about letting the people choose freely their leaders, whether you like them or not?


- A lesson for US foreign policy is to accept Islamist parties, realizing that (a) the US can't anymore force its will on the Arabs, an ancient and proud people (b) that just like not all Socialist governments in democratic Europe or Latin America mean rabidly anti-American policies, some Islamist parties such as the Muslim Brotherhood may well turn out to be people the US can do business with (along the lines of the AKP government in Turkey.) And remember, most of these opponents of the US became so only after the US engaged in anti-Arab policies. Be more friendly to the Arabs, and the Arabs will be friendly to you. 


Finally, to close my thoughts on this truly remarkable and historical achievement, let me share with you  three jokes making the rounds in Cairo.


1. Why did it take Mubarak three decades to appoint a vice-president? − Because he couldn't find anybody as stupid a he is.

2. Where does the $1.5 billion in US military aid to Egypt go? − Half is spent on military equipment and half on black dye for Mubarak's hair.

3. As Pharaoh-Mummy Mubarak lies on his (political) deathbed, his counselors gather by and tell him: "Excellency, the Egyptian people are here to bid you farewell." − "Farewell?", the dying man says, "but where are they going?" 

The case for a different labor-market reform - not PELMAR

BARCELONA,
Read the mainstream economic press (by which I mean The Economist, the Financial Times, the Wall Street Journal et al.), listen to pundits from the establishment's think tanks and international organizations (OECD, IMF etc.) and you always hear the same litany again and again: to grow your economy and create more jobs you must reform your labor market. And the reform they have in mind is always the kind that curtails employee rights and benefits, never employers' - let's call it for what it is: pro-employer labor-market reform (PELMAR). With the current economic crisis, which has thrown millions of workers out of their jobs in the developed world, it is time to stop and ponder. Is this medecine the adequate one? Does it guarantee any success? Has it been responsible for increased worker participation in the labor market in the past? How does it dovetail with our Western notions of social progress?

So desperate are the current times that here in Spain (20% unemployment rate), a Socialist government has decided to abandon one of its tenets of employee protection (something not even its conservative predecessor dared consider) and reform its labor market in the sense demanded by the conventional wisdom: relaxing rules on firing employees in the hope that it would encourage companies to hire more easily. The logic is impeccable: if I can fire 'em when I want, why not hire 'em when I want? Before you jump to the conclusion that there is no other solution, it's good to look at the past. When I lived in Spain 15 years ago, unemployment was even higher than now (23%) and yet neither the Socialist administration of Felipe Gonzalez nor its conservative successor under José Maria Aznar embarked on PELMAR, even though European Commission, IMF and World Bank reports all encouraged them strongly to go through the same tired old song of making life even more miserable for employees (but brighter for the bosses) in the hope that more jobs would be created. Well, the next decade and a half saw Spain growing tremendously and the unemployment rate go down from 23% to 8%, even better than France. And this without any PELMAR, with employee rights maintained as intact as before. Now, you might say, OK, Spain is a one-off case, the exception that proves the rule, coincidence is not correlation or causality, they were just lucky.

Well, let's cross the Atlantic and check out Brazil, a country I know well since I spend several months a year there. Brazil's labor rules and regulations are even more stringent than Spain's: many employers consider it a nightmare since, once hired, an employee is almost unfirable (or, to be more accurate, it is costly to do so), and if you do and are taken to court in 90% of cases the labor tribunal will rule against you. And yet, Brazil's unemployment rate has been coming down steadily for the past decade. Yes, just like Spain, and without any need for PELMAR. 

You want a third case? Well, let's take our pilgrim stick and travel up north, to the world's most powerful and wealthiest country: the US of A, the cradle of PELMAR before PELMAR even existed, corporate paradise and worker hell. Living in the States in the early '90s I was somewhat shocked to see that in the Land of the Free and Home of the Brave people could be fired instantly with or without a cause, that many had no health insurance and had to toil double shifts at two jobs just to make ends meet. Sure, employees could go to court in case of wrongful termination but astronomical legal fees make this option all but an impossibility for most workers. Of course, you could (I dare not say "can" anymore) get a job not too long after having lost the previous one, but even this cannot hide the pain involved with stressfully looking for a job over the weekend because you were let go on Friday and needed something on Monday. Not to mention that any new job also means a period of uncertainty, adaptation and learning the ropes, making new friends among new colleagues. But at least the US unemployment rate was half that of Europe, so, you might have said, it evens out. Well, not any longer - if ever. With both the US and Europe facing the same economic crisis, the US unemployment rate has crept up to the same levels as in my native France, home of the 35-hour workweek, 8-week paid vacation, universal health care. Who is now better off? The US worker or the French one?

Still a skeptic? Let's look at the UK, right across from France, and yet in labor matters so close to the US. (Only when Tony Blair came to power was a minimum wage finally adopted.) The British unemployment rate is more or less at the same level as France. But, I'll be generous, I'll consider this current figure a statistical outlier and use the figure of better times, say 5% against France's 10% (higher than the current one, but I said I wanted to be generous to my detractors.) Since both have similar labor sizes (let's say 30 million) let's make a comparison. If France were to implement US/UK-type PELMAR (free firing, no minimum wage, little paid vacation, limited unemployment benefits, curtailed employer-paid health care plan, well, the works) it would see its unemployment reach the UK/US ideal level of a jobless rate of 5%. In other words, in the old system 3   millions French employees (10% of the working population) were miserable (because unemployed) but 90% that is 27 million were happy (because employed and protected). In the new, PELMAR-inspired scheme, only 1.5 million (5%) would miserable, but the 95%  (that is 28.5 million) would now be worse off because, sure they still had jobs, but could be fired at a whim, had fewer vacation days, limited benefits etc. What logic is that that in order to make 1.5 million people better off (and there is little doubt that a job, no matter how badly paid, is better than no job at all) we make 28.5 million worse off? The logic that says, "who cares about employees, as long as somebody else  is going to be better off": the employing companies - and the shareholders who hide behind. (Have you noticed how you always hear calls for labor-market reforms, but never for management reform? Although the financial crisis and the ensuing recession, along with the destructions of companies such as Enron, WorldCom etc. were all because of incompetent, dishonest and irresponsible management, governments, who are in hock to, when not in cahoots with, business, will resist every effort to reform management - we are seeing it now with attempts to water down the restructuring of banking management.)

Are we to go back to Dickens' England and child labor and 20-hour workdays? Have we decided against the idea of progress? If yes, then we have decreed the end of democracy, because a democracy is a system where governments arbitrate among competing interest groups in society. Once you decide that the majority must suffer so that a few can thrive, we are straight back to an ancien régime system.    

The examples I have shown from varied countries show that what drives the unemployment rate up or down is the state of the economy, not labor regulations, so there is no justification to engage in PELMAR. I can see some of you smirk and point to other culprits. One would be the state of public finances: "we are broke, can't afford it." Well, have you considered shifting budget resources from unproductive areas such as defense to more productive ones such as education? The G8 and G20 and GXX leaders love to meet on a regular basis in exotic locations and issue platitudes in their final communiqués. Why not for once do something useful and agree that all will reduce their military arsenals by half, thus liberating resources that could be put to better use for PEOPLE. We could thus finally cash the "peace dividends" that have eluded us since the end of the Cold War.

Other skeptics will then point to another culprit by saying, "Can't do anything about it anyway, it's globalization. If your costs are too high, jobs will flow to India and China." Well, not so fast. The globe-trotter and international person I am is the last one to rant against a globalized world. I am for a win-win globalized system where everybody wins, but not for one where the same old types increase their profits and the others are all worse off. I am also instinctively against government expanding its reach with too much regulation (I've always believed that a good government is a small government, if not no government.) But, if anything, the current financial crisis has shown that too little government regulation can create a worse situation.  (There is also a case to strengthen and enforce government rules against bullying in the workplace, the plague of modern business, which is inflicting untold daily misery on millions of employees all over the world.)

Let's not forget that the aim of public policy and economic growth is to enhance PEOPLE's lives. If economic growth is going to come at the expense of PEOPLE then it's time to question this economic growth. So, Yes to a global system where we all trade freely, where good and services and people can move freely, but where basic PEOPLE's rights are protected. And  No to a globalized PELMAR system  that throws us back to the Middle Ages. What next? Rediscovering the beauty of slavery, the ultimate labor-market reform?