Posts Tagged ‘France’


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140116_600-1 Martin Rowson cartoon 15.11.2013

September 23, 2013

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Workers are participating in anti-austerity strikes and protests across Europe—in France, Spain, Portugal, Greece, Italy, and Britain—as part of the European Day of Action and Solidarity.

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Tens of thousands of French workers marched on the Paris auto show and across the country to denounce hardship and job losses in a country where unemployment is at its highest since 1999 and economic growth has stopped.

French workers protest against the closing of a PSA Peugeot Citroen plant just outside Paris, with union leaders calling the move a declaration of “war.”

Reuters highlights the differences between the responses of American and French workers to the recent closing of automobile manufacturing plants in the two countries as well as the differences between the provisions made for the workers affected by the closings.

When U.S. carmakers slashed production capacity in exchange for government rescue four years ago, workers faced up to change. Though unions bargained hard for existing employees, they agreed to factory closures and cuts in wages and benefits for new hires. Thousands of workers accepted redundancy payouts and moved on, without a huge outcry.

In Europe it’s different. In July, after workers at French carmaker PSA Peugeot Citroen learned of company plans to close a plant in the suburbs of Paris, union leader Jean-Pierre Mercier went on the attack. Within hours he was calling for a “shock campaign” to force PSA Chief Executive Philippe Varin to keep the plant open.

“We have the power to make Peugeot back down, to preserve our jobs,” Mercier, head of the hard-line CGT union at the factory targeted for closure, told a crowd gathered by its gates. “We are a political bomb, a social bomb, and we intend to detonate.” . . .

Compared with carmakers’ restructuring in the United States, Peugeot’s plan is relatively modest and its deal for workers generous. The firm says all workers will be offered new jobs of some sort. Half will be transferred to its factory in Poissy, another Paris suburb. The rest will be kept on-site if Peugeot can lure a new industrial employer to Aulnay, or transferred to other factories. Those who choose to leave will receive 1,000 euros for every year they have worked at Peugeot, and help towards job-training.

“Restructuring in Chicago and Detroit was a totally different issue,” said Karl Ostler, a director at FTI Consulting specializing in industrial restructuring. “Labor laws in Europe, especially France, are far stricter and unions are far stronger.”

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Here are a few things to keep in mind while I take a brief hiatus. . .

1. Notwithstanding the conventional wisdom, Social Security is not going broke. In fact, last year it ran a surplus and, as David Cay Johnston argues, the growth of that surplus has had two major negative effects:

One effect was to finance tax cuts for those at the top, whose highest tax rate fell during the Reagan years from 70 percent to 28 percent, and for corporations, whose rate fell from 50 percent of profits to 35 percent. Those with less subsidized those with more.

The other effect was a huge increase in consumer debt, as Americans saddled with higher Social Security taxes took out loans to cover other needs. Stagnant wages played a role, but the $2.7 trillion Social Security surplus is also a factor in a $1.5 trillion increase in consumer debt since 1984.

2. And while the conventional wisdom is that art fairs (like Frieze New York) have helped to develop a wider market for artists, all they’ve done is reinforce the power of art galleries in branding a few top artists and selling their work to top-name, wealthy collectors. As Felix Salmon explains, what would be good for the other artists would be to allow them to apply for space just as galleries do.

That would be good for artists, and good for collectors. If the fairs don’t let it happen, then they clearly exist to sell collectors to galleries, rather than to sell art to collectors. Remember that, next time you go to one of these things: you might think that the art is the product being sold. But, in fact, it’s you.

3. Finally, while the conventional wisdom is that inequality played no significant role in causing the Global Financial Crisis, the problem of inequality is simply too big to be ignored. But, unfortunately, Till van Treeck demonstrates that, for mainstream economists, the only aspect of inequality that matters concerns keep-up-with-the-Joneses consumption and unwarranted government intervention into the housing market, of the sort that Raghuram Rajan has been arguing of late.

Rajan argues that many lower- and middle-class consumers in the United States have reacted to the stagnation of their real incomes since the early 1980s by reducing saving and increasing debt. This has temporarily kept private consumption and thus aggregate demand and employment high, but also contributed to the creation of the credit bubble which eventually burst.

What we’re seeing, then, is the birth of a new conventional wisdom that, once again, pins the blame on the victims of the crisis.

Fortunately, it looks like the conventional wisdom, that the victims of the crisis should continue to pay most of the costs of getting out of the Second Great Depression, is beginning to be called into question in Greece, France, and elsewhere. Let’s see if that movement against the conventional wisdom takes hold and spreads in the weeks and months ahead.

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