Macron responds to the yellow vest protests

Emanuel Macron finally responded today to the protests and riots that have roiled France. In his speech, he declared that he’s heard the anger of those whose economic suffering prompted the protests and will take immediate steps to relieve their hardship.

What steps? An increase in the minimum wage, for one. Macron announced that those earning the minimum wage will receive a supplement of 100 euros per month, or about $115.

Tax relief, for another. Taxes on overtime pay will be eliminated and retiress earning less than 2,000 euros a month, about $2,270, will be exempt from a recent increase in social security taxes.

Macron had already rescinded the tax increase on diesel fuel — the measure that triggered the protests.

Minimum wage earners, retirees with modest pensions, and folks who work overtime will welcome Macron’s new measures. But they don’t go far towards alleviating the economic distress that led to protests. And they will do next to nothing to shrink the gap between the wealthy and the struggling lower middle class that is fueling so much resentment.

To be fair, there’s not much Macron can do in the short-term to address these concerns. Large-scale income distribution is off the table, as it should be. Large-scale tax cuts are also problematic because France needs vast amounts of revenue to fund its welfare system and meet its pension commitments.

Tax increases on the wealthy would accelerate the exit from France of the highly skilled and highly productive, which is already a serious problem. In fact, Macron’s reduction of the wealth tax — a move that fueled some of the current discontent — was intended to help reverse the “brain drain.” In the wake of Brexit, Macron hoped to attract wealthy Brits who would broaden the tax base and bring high-paying jobs to France.

But these positive effects will take years to kick in. Meanwhile, they cause resentment. This dynamic is symptomatic of the larger dilemma France faces.

France never had a Reagan or a Thatcher revolution. Consequently, it’s economy has stagnated for decades. Meanwhile, France continued to build up its generous health and welfare structures while immigrants kept pouring in and reaping the benefits.

The protests confirm that France is stuck. It can’t implement free market measures that would provide long-term economic benefits because these moves will be condemned as favoring the rich. It can’t restructure its welfare system because doing so will increase short-term economic misery. (It can change its immigration policies. That would help, but not enough).

Macron is stuck, as well. His dream of becoming Europe’s leader must now take a back seat to clinging to power in France. His dream of taking the lead in “saving the planet” must now take a back seat to the reliance of ordinary Frenchmen on cars.

I question whether any French leader can make significant progress towards solving the deep underlying problems that plague France. But if there is such a leader, it’s someone with the common touch, someone who is neither arrogant nor aloof, and someone who puts France first. In other words, someone other than Emanuel Macron.

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