The French Election And The Global Economy

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The complex circumstances of modern economies tying domestic production to global trade have given retrograde voices with simple answers and emotional appeals of prejudice and racism a role and new strength in politics. The opening comes, in part, because countries have failed to use the best practices for modern development. Four main practices/principles are important, says Paul Collier, Harvard/Oxford professor, former World Bank development director: economies of scale, clusters of supporting businesses, improved infrastructure (including housing and transportation), and progressive regulation/fair practices/rapid problem solving provide stability and future growth.

Modern economies requiring planning for success and the intellectual property of government becomes important. This knowledge should not be crude racism infused in government institutions but development’s best practices that widely benefit all.

The market’s “invisible hand” of (too often hidden!) must become a guiding hand, transparent, ensuring the broad population understands and supports its goals.

The current era is a time of capital excess. In a economic irony (technically, an inversion), one of the by-products of this excess is waste: great riches produce even greater waste.

Think beyond Imelda’s shoes (today replaced in the Philippines by a state-ordered pogrom against citizens that has nightly hunted down minor offenders and killed thousands without arrests or trails in the name of fighting the drug trade–ordered by a man Trump invited to the White House). Think abandoned industrial cities, unemployed workers, lost industries–waste. Jettisoned because its capital production was no longer needed! (Detroit fell, but not Grosse Point!) Capital itself can generate larger returns than industrial production contributes (except in developing economies).

Apple is an example; it holds in cash more than $240 billion. Its cash alone makes it the 42nd largest GDP if it were a nation! It doesn’t need production–it can grow by cash.

The fights over jobs exported, dying industries, taxes, and trade miss the point! They misguide thinking away from the real issues and forces directing our present and future. Massive capital flows, a lack of  development plans, government by oligarchs (America) have a more devastating impact than the Chinese worker or the undocumented immigrant–and extremism is part of its waste and excess.

In France and elsewhere, critical issues like planning, development, private-public sector cooperation, local repurposing, and infrastructure growth cannot be ignored. The keys to development are always more than the will of a single leader. The entire vision and collective practices of a nation are keys. Clearly Germany and China understood global markets and growth better than their competitors, including the US which now wants to take its ball and go home–advancing its own decline.

In the end, an economy is a set of ideas. Politics often lag s on critical issues, focuses too much on public budgets and taxes–the bankers often have more influence on jobs. Quit blaming Merkle and endorsing racists, and ask: what was France’s vision–what economies of scale did it take advantage of, what business clusters repeated the success of its vineyard clusters, what infrastructure did it build to advantage business, and did its regulations stifle entrepreneurship? These are more critical to France’s future.

Finally, instead of hard thinking, politicians are encouraging easy answers. Many reactions are flag-wrapped in hate and fear. In America, Steve Bannon declares his intent to “deconstruct the administrative state;” Russia uses cyber-technology to influence and sway voters’ attitudes and choices; the President declares the constitution and vision of the Founding Fathers “archaic,” pronounces for its own “good, “the country needs a “good shutdown.”

We hear the rhetoric of fear and punishment/retribution standing in for good policy! Cultural nativism and dismantling institutions (federal lands are under attack by the private realtor!) will return America to a new Dark Age; its sick and elderly rationing food and dying–voices and lives lost to greed because of lies and fear.

_95839426_23a101dd-ce84-48b5-8791-6f871ef0cf91Emmanuel Marcon and Marine Le Pen, candidates for France’s President. Election, this Sunday.