by Manuel Alvarez-Rivera: San Juan, Puerto Rico
French voters go to the polls this Sunday to take part in a presidential election with a total of twelve candidates on the ballot, spanning the entire political spectrum from far right to far left. However, should no candidate attain an absolute majority of valid votes, a runoff election will be held on May 6 among the top two candidates on the first round of voting. French voters residing abroad also take part in the election, as do France's overseas departments and territories - the remnants of a once-vast colonial empire.
Unlike in most other European countries with elected heads of state, the Constitution of the French Fifth Republic provides for a strong presidency, as envisaged by its founder, General Charles de Gaulle, who was brought back from political retirement in 1958, when France appeared to be on the verge of civil war over the Algeria crisis. At his behest, French voters approved a new constitution that replaced the parliamentary system of government that had existed in France under the Third Republic (1875-1940) and the Fourth (1946-58) with a hybrid system that retained some parliamentary features, but nonetheless reflected de Gaulle's views of how France should be governed.
Although the 1958 constitution retained the office of prime minister, its role in governmental affairs is clearly subordinate to the presidency - except when the party or parties supporting the president become a minority in the National Assembly (the lower house of the French legislature). In such cases, it has become customary for the head of state to "cohabit" with a prime minister from the majority opposition parties, in essence allowing the system to revert a parliamentary form of government. Nonetheless, in the three periods of "cohabitation" under the Fifth Republic (in 1986-88, 1993-95, and 1997-2002), the president continued to exercise a prominent role in certain policy areas, most notably foreign affairs.
Originally, the president was indirectly chosen by an electoral college of about 80,000 notables for a term of seven years (cut down to five after a 2000 referendum), and in 1958 de Gaulle himself was elected by this procedure as the first president of the Fifth Republic. However, in 1962 de Gaulle, who by then had successfully extricated France out of Algeria, called a referendum on his proposal to have the president elected by popular voting. Both the measure itself and the way in which it was advanced were highly controversial. At the time, France had only had a single presidential election by popular voting, in 1848, and the winner of that poll - Louis-Napoléon (the nephew of Napoléon Bonaparte) - went on to destroy the incipient Second Republic and proclaim himself Emperor Napoleon III. Moreover, de Gaulle bypassed the legislature by calling the referendum under the terms of Article 11 of the Constitution (which allows the President of the Republic to submit to a referendum any government bill which deals with the organization of the public authorities), rather than Article 89 (which specifically provides for amendments to the Constitution, requiring parliamentary approval for these). Nonetheless, French voters approved the measure by a decisive margin, and since 1965 presidential elections have been held under the two-round or runoff system of voting.
It was widely expected that General de Gaulle would be easily re-elected in 1965, but he faced an unexpectedly strong challenge from leftist leader François Mitterrand, who forced de Gaulle into a runoff election. De Gaulle won in the second round with a clear majority, but his margin of victory was not particularly impressive, considering his political stature. Since then, the French electorate has continued to deliver surprise outcomes on a frequent basis, the most shocking of all in the 2002 presidential election, when right-wing extremist Jean-Marie Le Pen of the National Front unexpectedly outpolled Socialist Party candidate (and then-Prime Minister) Lionel Jospin for second place in the first round of voting, and in the process contradicted every opinion poll, which had Le Pen in third place (nonetheless, incumbent President Jacques Chirac - who topped the poll in the first round - crushed Le Pen in the runoff; Presidential Elections in France has a comprehensive review of the French electoral system and party politics under the Fifth Republic).
So far, no presidential candidate has ever secured an absolute majority of votes in the first round of voting, in which each party has usually promoted its own candidate. Minor-party candidates have been able to garner support regardless of their electoral chances, since voters are not as pressured into supporting candidates from other parties with better electoral prospects as would be the case under a single-round plurality system: French presidential elections are not likely to be decided until the second round, and the runoff election has usually been a contest between a right-of-center candidate opposed by a leftist hopeful; the sole exceptions to this norm were in 1969 and 2002. In the latter case, a proliferation of left-wing candidates, which siphoned votes from Socialist candidate Jospin, contributed to his exclusion from the runoff vote. Consequently, some minor parties usually allied with the Socialists chose not to field their own presidential candidates in 2007, opting instead to support the Socialist Party nominee.
Nonetheless, the system has encouraged a tendency towards differentiation among the various political groups (thus reinforcing the country's multi-party system), since these can test their electoral strength by themselves in the first round of voting, but this tendency has been checked by the necessity to build alliances in order to reach and win the runoff election. At the same time, it should be noted that political parties in France tend to be more fluid than their counterparts in other Western European countries, particularly - but by no means exclusively - on the right and center (as illustrated by their frequent name changes and realignments); moreover, personalities often play a more important role in the political process than the parties themselves. Since 1965, France has chosen right-of-center presidents in all but two elections, but the country's only socialist president - François Mitterrand, who served two terms in office from 1981 to 1995 - remains the Fifth Republic's longest-serving head of state.
At the time of writing, it's all but certain there will be a second round of voting on May 6, but it's not entirely clear which two candidates will make it to the runoff. Of the dozen men and women in the race, only four appear to have a realistic chance of making it to the runoff vote: former Interior Minister Nicolas Sarkozy of the ruling, conservative Union for a Popular Movement (UMP), who has been endorsed by outgoing President (and longtime rival) Jacques Chirac; Poitou-Charentes regional president Ségolène Royal of the left-wing Socialist Party (PS), who is also the first major-party female presidential candidate in the history of France; François Bayrou, leader of the centrist Union for French Democracy (UDF); and Jean-Marie Le Pen, founder and leader of the far-right National Front (FN). Opinion polls have consistently placed Sarkozy and Royal in first and second place, with Bayrou third, sometimes within striking distance of Royal (and at times Sarkozy as well), and Le Pen further behind. Interestingly, the polls indicate that if Bayrou were to make it to the runoff election, he would easily defeat any of the other three major contenders.
In fact, Bayrou's unexpectedly strong showing on the polls (some of which have him closely behind Royal) has been a considerable source of anxiety to some Socialist leaders, who fear a repeat of the 2002 electoral disaster, when the party found itself shut out of the runoff vote; however, the Socialist Party's old guard does not appear to be too bothered concerning a poor showing by Royal, since she prevailed over them to secure the party's presidential nomination, much to their displeasure.
Royal's prospects may be also be affected by four far-left candidates on the race - a Communist and three Trotskyists - as well as by Green and altermondialisme (anti-globalization) candidates: none is expected to reach the runoff election, but they could cost Royal the votes needed to get to the second round.
On the right, Sarkozy - who has remained consistently ahead in opinion polls (although by sometimes precarious margins) - seems to be in a safer position than Royal to make it to the runoff, but a strong showing by either Bayrou or Le Pen (or both) could upset all calculations. However, while Sarkozy's exclusion from the second round may be less likely to happen than Royal's, he could conceivably fail to top the poll in the first round, which would be politically embarrassing but would not necessarily inflict irreparable damage to his campaign: Valéry Giscard d'Estaing (in 1974), Mitterrand (in 1981) and Chirac (in 1995) all overcame second-place finishes on the first round of voting and ultimately prevailed in the runoff election.
In all, the race remains difficult to predict: there has been a large number of undecided voters late into the race (as much as a third of the electorate two days before the election), which combined with the still-recent memory of the 2002 opinion polls fiasco has given an air of uncertainty to the 2007 presidential election.
Update
On Wednesday, April 25, 2007, the French Constitutional Council announced final results of the 2007 presidential election's first round of voting were as follows:
Nicolas Sarkozy - 11,448,663 votes (31.2%)
Ségolène Royal - 9,500,112 votes (25.9%)
François Bayrou - 6,820,119 votes (18.6%)
Jean-Marie Le Pen - 3,834,530 votes (10.4%)
Olivier Besancenot - 1,498,581 votes (4.1%)
Philippe de Villiers - 818,407 votes (2.2%)
Marie-George Buffet - 707,268 votes (1.9%)
Dominique Voynet - 576,666 votes (1.6%)
Arlette Laguiller - 487,857 votes (1.3%)
José Bové - 483,008 votes (1.3%)
Frédéric Nihous - 420,645 votes (1.1%)
Gérard Schivardi - 123,540 votes (0.3%)
Voter turnout in the election stood at 83.8% - the highest figure in twenty-six years. Since no candidate won an absolute majority of votes, a runoff election will be held on May 6 between Sarkozy and Royal.
Sarkozy's share of the vote was the largest polled by a center-right (and for that matter Gaullist) candidate in the past quarter-century, but at the same time, Royal's percentage was also the highest won by a Socialist candidate in the past twenty-six years, matching François Mitterrand's in 1981. More importantly, she exorcised the ghost of 2002 and made it to the runoff election - a goal which at one point had appeared somewhat uncertain.
Although Bayrou failed to make it to the runoff - a possibility hinted by some opinion polls earlier in the race - he nonetheless tripled his vote in 2002, when the UDF was largely sidelined by the emerging UMP. In the long run, Bayrou's strong showing may frustrate the UMP's plans of bringing together all of the country's center-right forces under a single banner.
Meanwhile, Le Pen's steady electoral advance finally came to a crashing halt: not only did he fail to improve upon his result in the preceding election (as he had in the last two presidential votes), but he had his worst presidential showing since the National Front became a major political force in France in the mid-1980s.
On the other end of the political spectrum, all but one of the candidates to the left of Royal fared badly (the notable exception being Olivier Besancenot, who practically matched his result in the last election); in particular, the once-powerful Communist Party continues to dwindle into electoral irrelevance. The "left of the left" appears to have suffered from tactical voting in favor of Royal, as many left-wing voters were anxious to avoid a repeat of the events in 2002, when a fragmented leftist vote led to the Socialists' exclusion from the second round.
In sum, the Ségo-Sarko showdown, once much anticipated but later thrown into doubt, has become a reality after all. France will return to the polls in less than two weeks, and opinion polls - which correctly predicted the outcome of the first round this year - already have Sarkozy leading Royal in the runoff vote.
Sarko-Ségo, or the 2007 French presidential runoff race has further coverage of the second round of voting.
Special Feature, The German Economy At A Glance
Welcome to the Global Economy Matters Blog. Below you will find the normal chronological blog posts. But first here is our Monthly Special Feature which in January 2008 focuses on Germany. Here you will find charts which provide background data on the German economy. We hope these will be of some help to the first time reader here, making it easier to contextualise, assess and get to grips with the general argument being presented on the blog. The big question which arose concerning the Germany economy in 2007 was whether or not the new found dynamism in German economic activity constituted some form of remaissance, and formed part of a global decoupling process whereby a sustainable recovery in domestic demand was taking place. Analysts on this blog never really accepted this view. The key question and central enigma associated with the German economy is really why domestic demand should have remained so congenitally weak over such a considerable period of time.
Since this phenomenon is also to be observed in the the two other societes with very high (circa 43) population median ages - Italy and Japan - we postulate that demographics and population ageing processes offer some part of the explanation here.
Basically what we can observe as societies move above the 40 median age mark are a number of stylised facts. Weakness in domestic private consumption would be one of these, absence of consumer credit driven property booms would be another, growing pressure on the national debt as the elderly dependence ratio steadily rises would be another, and growing dependence on export growth for sustaining GDP growth would be the central feature of the whole edifice.
We hope you will find the background data presented here useful in assessing the argument which we are presenting on this blog, which is basically that a key component in the longer term growth stagnation from which Germany is suffering has its roots in the underlying demographics. Basically and in the long run (possibly with a 30 year lag) fertility does matter. Please click on thumbnails for better viewing.
What follows is a very rough and ready attempt to describe in broad brush strokes how the contemporary German economy actually works. First off, and as is well known, German society is ageing, and at the same time the German population has started declining. Not only is Germany's median age rising, the proportion of the population in the key 25-49 age group is now falling.
As can be seen from the chart this crucial age group touched its highpoint in 1997/98. This could be thought of as the moment of maximum capacity for the German economy since it includes the crucial 25 to 40 household-former, first-time-homebuyer group. In terms of credit expansion, it is this group which drives a significant part of internal demand.
The age group also includes another important group, the 35 to 50 years one. This group drives an economy in productive terms, since these are the prime age workers. If you think of a society as a 100 metres sprint athlete, then there is an age when this athlete is at the maximum of his or her running potential, an age after which each time they can only run the 100 metres more slowly.
Well a society is the same in terms of its collective economic potential, without addressing underlying issues either through fertility or immigration, it can only move forward more and more slowly. Consumption becomes flat, and GDP growth - gioven the external dependence - fragile.
Private consumption has hovered pretty close to the 60% mark for many years now, while government consumption - after moving sharply upwards as a total share in the first half of the 1970s has subsequently remained pretty constant, moving around the 19% of GDP mark. The big difference has been in the importance of fixed capital formation (GFCF) which reached from 1975 to 2000hovered around the 22 - 24% of GDP mark.
Prior to 1975 GFCF was at a much higher level, while post 2000 it has dropped substantially And So what we can see is that the year between, say, 1975 and 2000, when GFCF remaind a more or less constant share of GDP, constituted - to use the language of neo-classical economics - the constant growth period of the German domestic economy.The years prior to 1975 were the convergence, or "catch-up" years
And especially the 1960s, after Germany finally broke out of the destruction and devastation of WWII - while the years after 2000 constitute what the neo-classicists would call the "balanced growth period", although as we can see, it isn't very balanced, and there certainly isn't a steady state.
2008 Forecasts: There is a consenus at the present time that the German economy is slowing. Where there is no real consensus is over the rate at which it is slowing and where and when it will settle. It is clear that GDP growth in 2007 will be below the heady 3.1% annual rate achieved in 2006. The OECD last December revised their 2007 German forecast down to 2.6%, and their 2008 one down to 1.8%. The IMF in their October World Economic Outlook forecast growth for 2007 at 2.4%, slowing to 2% in 2008. Morgan Stanley's Elga Bartsch, while optimistic that the German economy will whether the credit crunch better than most (and here she may well be right) is somewhat more sanguine, putting 2008 growth at 1.5%. In general though I rather doubt her overview that "Germany could well be on the way to becoming the new growth locomotive in Europe." and especially her suggestion that "the phase of underperformance in terms of GDP growth, which has plagued Europe’s largest economy for years, is clearly over." Unfortunately, what we are arguing on this blog is that Germany's GDP growth rates since the mid 1990s are not some special kind of "underperformance", but what can be expected from a society with a rapidly rising median age which is increasingly dependent on exports rather than domestic consumption for growth.
The EU commission in it's November 2007 forecast was also convinced that the German economy was now on a "solid growth path", forecasting 2.5% growth for 2007 and 2.1% for 2008.
I personally will be very surprised if we see growth in the region of 2% for the German economy in 2008, and I even consider the 1.8% from the OECD and 1.5% from Morgan Stanley still on the high side given the extent of downside risk. Basically the reasonably favourable depreciation rules which currently apply to German investment have been changed as of 1 January 2008, and we might reasonably expect to see some sort of impact on investment comparable with the negative shock which hit private domestic consumption following the VAT rise on 1 Jan 2007. In addition all the indications suggest that German consumption will continue to be weak in 2008. So if consumer consumption is at best flat, governemnt consumption equally so, and investment and construction weakening, we are simply lefy with export growth, and here the outlook is definitely more negative in 2008 than it was in 2007. The Spanish economy (one important German customer) is visibly wilting by the day, as is the UK (another big customer), but it is to Eastern Europe we must look for the biggest impact on German exports of any correction in 2008. Just one data point should suffice, Germany exports roughly the same value of goods to the Czech Republic (and more to Poland) as it does to China. This means that Geramny is proportionately not that exposed to any slowdown in China, but hugely exposed to any sudden shift in growth and demand in the East of Europe.
So I would say, that on current data, 1% growth in Germany in 2008 look a reasonable estimate at this point, but that this needs to be taken to mean with considerable downside risk. Germany is now tremendously dependent on what happens elsewhere, and until what does actually happen elsewhere becomes clearer it is difficult to be more precise on Germany.
The only apparent bright spot on the horizon is employment, but I am dubious that in the context of Germany's ageing workforce this will work through as some are hoping, as I expain at some considerable length in this post here. My opinion is that Germany will enter recession at some point during 2008, and that we may well have 2 consecutive quarters of negative growth. The continuing high euro will maintain pressure on German exports, and high oil and food prices will maintain pressure on the inflation front, at least in the first half of 2008. The ECB will probably switch stance towards rate reductions at some point, but since, as Elga Bartsch among many others so eloquently argues German internal consumption and investment are not especially dependent on credit conditions, easing from the ECB may not have as much impact as one would hope for.
Key Posts For Understanding The Present Path of the German Economy
Is The German Economy Heading For Recession in 2008?
Employment and Unemployment in Germany January 2008
Germany Economy, What Price the VAT Effect Now!
The German Economy, Employment, Export Shares and Age Structure
Structural Aspects of German Export Dependence
Does NeoClassical Steady State Growth Really Exist?
Sunday, April 22, 2007
An uncertain presidential election in France
2 comments:
The high turnout for this election is certainly a positive development. Clearly French voters are taking serious interest in their country's future and believe that the electoral decision will actually make a difference. I think this result is an endorsement of the viability of the democratic form of government.
That turnout is impressive, proof again that the human spirit can rise to the occasion when the need arises.
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