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Of Yellow Vests, French Democracy, and EU Prosperity

Emmanuel Martin, Economist and Expert, Geopolitical Intelligence Services; Lecturer, Aix-Marseille University, France

If you are interested in France, you may be asking questions about how that country’s democracy works because of the yellow vests movement (or the mouvement des gilets jaunes), which erupted in late 2018. The movement was originally a tax revolt. After years of praising the environmental benefits of diesel engines because of their lower CO2 emissions (thus ignoring the issue of fine particles), the French government announced an increase to its carbon tax, particularly for diesel vehicles. In large cities and other places considered to be economically strong, the government hoped to encourage people to use metro services and tramways instead of cars. In poorer, remote areas without public transport alternatives to private cars, this is a tax on the only viable means of transport. Following the authorities reducing the speed limit on secondary roads from 90 to 80 km per hour, and increasing and modernizing road radar — and thus the likelihood of more fines — the higher carbon taxes was the proverbial straw that broke the camel’s back. Yellow vests supporters felt that the government was implementing these transport-related taxes not for the environment or public safety but to fill the country’s coffers.

In fairness, the feeling of being over-taxed is not an exaggeration: France is one of the top countries in the Organization for Economic Cooperation and Development for tax pressure, with the country’s tax income accounting for 46.2% of GDP. No wonder early yellow vests gatherings blockaded tax offices, and the movement encouraged shopkeepers not to collect value added tax. At the time, the movement wanted to give politics and policies a dose of reason. Many participants felt strongly that the government should first manage public spending better before raising taxes again; they felt that they could, for example, reform parliament, which is costly, and reduce state subsidies to various groups. French citizens seemed finally to have connected high taxes with increased public spending — France ranks highly here too, with public spending accounting for nearly 57% of GDP1 — and were asking for serious change.

No Change After All
Soon, the yellow vests movement became less reasonable and far less pro-reform, with its cahiers de doléances (register of grievances) — an expression taken from the French revolution in the late 18th century — indeed, the register began to resemble a long letter to Santa Claus. On it were many conflicting goals, such as demands for lower taxes but calls for higher public spending; greater taxes for the rich; a higher minimum wage (which would hurt the small entrepreneurs supporting the movement) as well as a cap on wages; and a ban of business off-shoring — which would lead to less French and foreign investment and fewer jobs in France. This ragbag of positions seems to come from the programs of competing French populist parties, the National Rally on the right and La France Insoumise on the left, although the movement remained officially independent from those parties.

It is possible that the change from a tax revolt to a register of grievances could be a ‘hacking’ of the movement by people with sympathies for either of these two parties. Another possible cause is the perceived arrogance with which the government addressed the demonstrations. President Emmanuel Macron said that the government would continue with the carbon tax, but it became evident that they would have to backpedal. During the crisis, a member of parliament belonging to the government majority said she had no idea what the minimum wage was. This made the Parisian elite appear remote and arrogant, a group who seemed to care more about the ‘end of the world’ and climate change, than the struggles faced by ordinary people at the ‘end of the month’.

Divide and Rule
Arguably the most important factor in the situation is that this movement is the logical conclusion of the dysfunctional democracy created by the French political, administrative, and social model. For the millennium since the Capet kings, the history of France tells of increasing centralization to gather again the old empire of Charlemagne. It is a history of statism, of defiance towards local, regional powers (which could threaten the project of a unified France), and of defiance towards civil society itself — a history of “divide and rule”. The most radical instances of this statist trend are probably Jacobinism under the French revolution, and Napoleon Bonaparte’s imperial delirium. To some extent, French republicanism, although much more reasonable, is part of the same school of thought: that the enlightened elite should guide the people. Some philosophers thus see a conflict between French republicanism, viewed as profoundly paternalistic, and genuine democracy.

The French welfare state is also symptomatic of this trend. Economist Pierre Cahuc and sociologist Yann Algan describe the type of welfare state that was created in France in the 20th century as “centralized, corporatist, and conservative”.2 Various professional corporations compete for different social rights that are paid for by a common pool of resources, with the central government usually deciding who gets what. The system naturally encourages social groups to compete — for favors, as in the ancien régime — and thus to mistrust one another. A noteworthy consequence of that mistrust is that the French are unable to discuss social issues with one another in a horizontal manner and reach consensus. With such a competitive environment, nobody wants to lose their privileges, so conservatism rules and reform is virtually impossible.

Other People’s Money
France’s administrative system also takes a ‘divide and rule’ approach. Instead of implementing a sound, decentralized system with a fair amount of local autonomy — there is a clear link between local public spending and local taxation — this approach has produced a complicated system with too many layers of governance, in which the central government redistributes grants. The French call it a ‘layer cake’. Complex financing pipelines blur who spends what, effectively preventing accountability and, by extension, democratic control. This system inadvertently encourages an ethos of ‘I spend therefore I am’, with an obvious negative impact on public spending, taxes, and debt. This complexity contributes to fiscal myths (such as numerous, invisible, and painless taxes, or a minority of citizens paying income tax) that infantilize people by enabling them to believe that public spending is either free or paid for by others.

This defiance could also explain why many French react negatively to the EU and, more broadly, to globalization — they may well feel that they have enough of an unaccountable elite, and enough centralization, at home, so don’t need more of what’s not working for them. Despite the EU’s undeniable vast advantages for citizens, it seems to be increasingly modeled on the French system (a system that many feel institutionalizes irresponsibility) and thus produces the same outcome of mistrust. The EU is a hybrid: a federation, but without a federation’s accountable central government and instead a very weak parliament, blended with a confederation, but with less and less subsidiarity and autonomy because of its harmonization policies. This awkward hybrid is pasted onto a territory that is not even a nation, and that has few chances of being genuinely democratic. Its current redistribution schemes have caused tensions and mistrust between the ‘contributors’ and the ‘takers’.

Now seems a good time for both France and the EU to think less about dysfunctional democracy and more about accountability — a model that would foster trust and, more importantly, economic and social peace, both crucial components of prosperity.

Endnotes
1 insee.fr/fr/statistiques/2381414
2 Yann Algan and Pierre Cahuc, La société de défiance,
(Paris: Editions ENS Rue d’Ulm, 2007), cepremap.fr/en/publications/la-societe-de-defiance-comment-le-modele-social-francais-sautodetruit/

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