The French election is yet another epic clash over globalisation
If, as expected, Emmanuel Macron wins the final round of the French presidential election next week, on May 7, the world would breathe a collective sigh of relief. Last week, when Macron, 39, won the first round on April 23, euro and bank shares soared and US stocks buoyed. The captions in some international newspapers said it all. “Relief sweeps markets as Macron secures place in French run-off”, wrote the Financial Times. “World stocks surge amid relief at French election”, said the London Times. But why, you may ask, has the French presidential race generated such intense global interest? Well, the answer is simple: there is so much at stake. Specifically, the future of the European Union, of the single currency, the euro, and, indeed, of Western liberal economic and social values is at stake!
Like Brexit and the election of Donald Trump before it, the French contest is part of the ongoing global struggle between the divergent forces of economic openness and closeness, the forces of liberalism and populism. It is a continuation of the unending political clash over globalisation. And a major characteristic of this battle, again as Brexit and Trump’s election showed, is the humiliation of the French political establishment by outsiders.
For the first time in several decades, the two mainstream parties, which have dominated French politics and alternated government between each other, were humbled in this year’s presidential race. The Socialist Party, of the current president, Francois Hollande, and the Republican Party, the former governing party, lost woefully in the first round of the election. The socialists’ candidate, Benoit Hamon, secured only 6% of the votes, while the Republican candidate, Francois Fillon, had19%. This led to the rise of three “outside” candidates. Two of these, Jean-Luc Melenchon and Marion Le Pen are, respectively, far-left and far-right populists, who campaigned on similar anti-globalisation, anti-free trade, anti-immigration and anti-EU and euro platforms. The third candidate, however, Emmanuel Macron, a former investment banker and economy minister in the Hollande government, is a globalist, an economic liberal, pro-free trade and pro-EU and the euro.
It was always clear that Marion Le Pen, leader of the National Front Party, would make it into the run off, and opinion polls showed that Emmanuel Macron, who established his own party, En Marche! (On the move), just last year, would also reach the final round. However, jitters were sent through the markets when, a few weeks to the election, Melenchon began to advance in the opinion polls, gaining around 20%. This led to fears that he might overtake Macron and secure a place in the run-off along with Le Pen. A final round between the two economic nationalists would have meant that France, a major country at the heart of Europe, would have an anti-globalisation, anti-free trade, anti-immigration and anti-EU president!
With President Trump, who marked his first 100 days in office last Saturday, holding sway in the US and powering on his “America First” anti-globalist agenda, a President Le Pen or a President Melenchon in France, pursuing ultra nationalist policies, such as taking France out of the EU or the euro, closing borders and doing everything to reverse globalisation, would certainly shake European and world economic and political systems to their foundations. This was why world markets jittered when Melenchon seemed unstoppable and why they calmed and even buoyed when Macron secured a place in the run-off. In the end, Macron led in the first round, with 24%, followed by Le Pen, with 22% and Melenchon at 20%.
So, come next week, on May 7, with Macron and Le Pen facing each other in the run-off, the French electorate has a genuine choice between two sharply different candidates with diametrically opposite visions. Opinion polls suggest that Macron, who has received the endorsements of all the mainstream politicians, will defeat Le Pen by a wide margin, 61% to 39%. But in the current turbulent and unpredictable world of politics, where unhappy and frustrated voters can give the political elite a bloody nose, as they did with the Brexit vote and the election of Trump, nothing can be taken for granted.
Indeed, the fact that both Le Pen and Melenchon, the two anti-globalisation candidates, won a significant 42% of the votes in the first round shows that large segments of the French electorate share their views about what the Nobel Prize-winning economist Joseph Stiglitz described as globalisation’s discontents. Thus, even if, as widely expected, Le Pen loses in next week’s run-off, she and Melenchon remain a powerful force, and the debate about the challenges of globalisation, on which they take a strong nationalist or nativist view, cannot be ignored.
For me, as an economic liberal, I am on the pro-globalisation, pro-free trade side of the debate. I believe, as the British historian and politician Thomas Macaulay said in 1842, that “free trade (is) one of the greatest blessings a government can confer on a people”. Yet, as I have argued previously in this column, I also believe it is intellectually dishonest to deny that the gains of globalisation and free trade have not been widely shared, and that some people have been disadvantaged by greater economic openness. The two prominent dimensions of globalisation, namely open trade and technological change, with developments in automation, robotics and the so-called “gig economy”, represented by Uber, have triggered massive progress and prosperity across the world, but, sadly, not everyone has benefitted!
The trouble, though, is that while Trump, Le Pen, Melenchon and others like them are right to draw attention to “losers or victims of globalisation”, they are wrong to think that the solution lies in stopping or reversing global integration and free trade. A sensible and balanced approach that politicians should take on globalisation is to recognise and actively communicate its benefits to their citizens, while acknowledging the need for, and indeed pursuing, policies to ensure that its costs are minimised, and its benefits are maximised and more widely shared.
This approach of greater and more inclusive globalisation is what the IMF, World Bank and WTO recommended in their recent joint report, titled “Making trade an engine of growth for all”. The three institutions strongly defended open trade, arguing that “trade integration is a powerful tool to raise growth and improve living standards”. However, they also acknowledged that trade and technological change, both products of globalisation, are “leaving many individuals behind”, especially those who face job insecurity or experience depressed wages as a result of international competition. Yet, according to the global economic bodies, the solution to the economic challenges of globalisation is not protectionism or anti-globalisation interventions. Rather, governments should use domestic policies, such as training and skills development as well as targeted social support, including housing and credit assistance, to mitigate globalisation and trade adjustment costs.
The Macron- Le Pen contest certainly represents two contrasting visions of globalisation, which is reflected in the two candidates’ responses to workers’ anxieties. For instance, last week, as the Financial Times reported, Macron told union representatives, while on the campaign trail, that his government would “support businesses and retrain workers”, and “use free market for the benefit of all”. But, by contrast, Le Pen told angry workers that “free trade should be blamed for France’s de-industrialisation” and that, as president, she would not let the French people “be put in unfair competition with low-cost countries”.
Surely, the Macron vision of supporting globalisation but sharing its benefits more widely reflects mainstream thinking, and it is the right one. On the other hand, Le Pen’s populist vision of reversing globalisation and restricting trade will make France and the world poorer. Which is why a lot is at stake in next week’s Macron-Le Pen contest, an epic battle between globalist and nativist forces. I know which side I am on. Good luck France!
Olu Fasan