Generational Dynamics: Forecasting America's Destiny Generational
 Forecasting America's Destiny ... and the World's


Generational Dynamics Web Log for 19-May-07
Sarkozy begins term as activist President of France

Web Log - May, 2007

Sarkozy begins term as activist President of France

The pundits' comparison of Sarkozy to Margaret Thatcher is a dangerous one.

Nicolas Sarkozy took office as President of France on Wednesday.

Pundits have been comparing him to Margaret Thatcher, who served as Prime Minister of Britain from 1979-1990, but the comparison is a dangerous one.

One pundit writes:

"It is "Marianne" Thatcher in a red cap of liberty... this is Revolution indeed. Sarko is poised to storm the Bastille of French dirigisme and liberate the economy. He will guillotine the privileged orders in industry and the civil service. Bliss is it in this dawn to be alive...

Or possibly not. Is Nicolas Sarkozy France's Thatcher? Is he truly the great reforming president who will drag France, kicking and screaming, from its three-hour déjeuner into the competitive slipstream of the globalised free market? Either we live in more than interesting times, or it is business as usual. The clever money is on the latter. Sarkozy promises change? Oh, that kind of change - plus ça change.

Washington pundit George Will writes:

"Sarkozy wants to lower taxes, including inheritance taxes, and eliminate the tax on overtime work. That tax, along with government snoops patrolling companies' parking lots to detect antisocial industriousness, enforces the 35-hour workweek. He wants to do what Margaret Thatcher did after she was elected in 1979 because Britain was weary of being governed less by parliament than by unions. Even before Sarkozy was elected, public-sector unions -- government organized to pressure itself to fatten itself -- threatened a paralyzing national strike because he opposes allowing 500,000 employees of government-controlled companies to retire earlier than private-sector employees and with larger pensions."

And here's another pundit, Anatole Kaletsky:

"Mr Sarkozy Has Obvious Parallels With Mrs Thatcher: The Abrasive And Radical Image And The Promises To Break With The Past, Liberate Private Enterprise, Cut Taxes And Curb Trade Unions. Even More Reminiscent Of Mrs Thatcher Is The Venomous Hatred That Mr Sarkozy Inspires In The French Left."

Indeed, Sarkozy has been rushing to a quick start.

As soon as his inauguration ended on Wednesday, he hurried off to the airport and to Berlin to meet with German Chancellor Angela Merkel.

His objective is to quickly fulfill one of his campaign promises. Since France was humiliated by the 2005 referendum that rejected the EU Constitution, Sarkozy wants to lead the effort to develop a "mini-treaty" that will provide some of the changes that Constitution would have provided, but few enough changes so that a new referendum can be avoided altogether. He wants to have this mini-treaty signed by June, a month from now.

However, as controversial as this mini-treaty will turn out to be, it's nothing compared to the economic changes that Sarkozy wants to make, especially to eliminate the 35-hour work week.

Labor unions are warning Sarkozy, "We'll take to the streets." Here's how Bernard Thibault, head of the General Confederation of Labour union, with 711,000 members, describes the Sarkozy-Thatcher comparison:

"Do I think he wants to crush the unions? Yes, I do. Mr Sarkozy's plan is comparable to Mrs Thatcher's: he will try to attack union rights, especially the right to strike, to make it easier to push through his policies. If he does what he said he would do, we could have a battle and strikes against his proposals. ... Mr Sarkozy and his entourage are wrong to imagine the influence of unions is based just on the number of members. We can mobilise. We can organise many big strikes and enormous demonstrations, as we have shown."

So pundits, as well as Sarkozy's supporters and opponents, are all making the comparison with Thatcher. Sarkozy himself has referred to a technique of Thatcher's -- taming the labor unions by making "small changes," rather than large dramatic changes.

In order to understand what Nicolas Sarkozy has in common with Margaret Thatcher, it's best to start with what Margaret Thatcher had in common with Ronald Reagan.

Margaret Thatcher served the UK as Prime Minister from 1979 to 1990, around the same time as Ronald Reagan, who was President from 1981-89.

Both Thatcher and Reagan were very confrontational with the labor unions, and those confrontations were successful, as will be remembered by those old enough to recall Reagan's confrontation with PATCO, the Professional Air Traffic Controller's Organization.

This coincidence should give readers a clue that there was something going on in the 1980s that was more significant than just firm policies by Thatcher or Reagan.

The 1960s-70s were tumultuous generational Awakening eras for America and for Western Europe, filled with riots, demonstrations and actions by labor unions. By 1980, people were generally sick and tired of the chaos, and were ready to support anything that brought consensus and compromise.

Thus, the actions by Reagan and Thatcher to control labor unions were what the times demanded. As I've said many times, Generational Dynamics predicts and explains the attitudes and behaviors of large masses of people, entire generations of people. The actions of individual politicians are of interest only insofar as they reflect that attitudes of large masses of constituents.

So, contrary to the assumptions of today's pundits, politicians and journalists, it wasn't Reagan and Thatcher that confronted the labor unions; they were just doing what the people wanted at that time.

Similar remarks can be made about the general economy at that time. As I wrote about last year, economists call that era "The Great Inflation of the 1970s," a play on words from "The Great Depression of the 1930s."

In the United States, as I described, Paul Volcker at the Fed adopted a "monetarist" approach, using interest rates to control inflation rather than unemployment. There was a recession in the early 1980s, but the Fed stuck to the new policy and inflation fell sharply.

Margaret Thatcher's government followed the same policy in Britain. Unemployment spiked in 1981, and pundits began to predict that Thatcher make a "U-Turn" and back down from her policy. Her response: "To those waiting with bated breath for that favourite media catch-phrase -- the U-turn -- I have only one thing to say: you turn if you want to; the Lady's not for turning."

The unemployment spike had fallen by 1983, along with inflation, and Thatcher was credited with the successful outcome.

So all of those things happened because they were appropriate for that time in the secular generational cycle. Reagan and Thatcher really didn't have much to do with it.

That brings us to the present, with America, Britain and France in generational Crisis eras.

Anyone who knows anything about generational theory will automatically know that what works at the end of an Awakening era will not work very well in a Crisis era. You can take that to the bank, even if you don't know the facts of the situation.

But in Sarkozy's case, the facts are that he is going to move quickly and be confrontational -- just like Margaret Thatcher. And there are huge differences in the social and financial climate today.

In the 1980s, stocks were underpriced; today they're overpriced by a factor of more than 250%. In the 1980s, people were confidently looking for compromise and reconciliation, and were even willing to make economic sacrifices to achieve it; today, people are anxious and scared, and are afraid of losing what they have, so they're unwilling to make any economic sacrifices at all. Instead of compromise and reconciliation, people today are prepared for conflict and confrontation to protect what they have.

And so, Thatcher's confrontational approach is not going to work for Sarkozy. Union leader Bernard Thibault, quoted above, is right: There will be massive demonstrations and strike actions to prevent anything from changing in France's economy, and either Sarkozy will back down, or the demonstrations will get larger. But a major backdown by the labor unions, as happened to Reagan and Thatcher in the early 1980s, is very unlikely in a crisis era like today.

We already saw such demonstrations under Sarko's predecessor. When Jacques Chirac supported a law that would permit French employers to fire an employee under 26 years of age, provided that he's worked less than 2 years, a million people, mostly students, took to the streets to protest in April 2006, and Chirac backed down.

Pundits express the hope that Sarkozy will be more successful because he's received a kind of "mandate" from his election, and because he's "stronger" (or more "fascist," depending on your point of view) than Chirac, and because he's following Thatcher's model. However, in a generational Crisis era, this kind of confrontation leads to MORE confrontation, not compromise.

That's why I've characterized the comparison of Sarkozy to Margaret Thatcher as "dangerous." What Thatcher did was NOT dangerous, since it was appropriate for her time, for her place along the generational timeline. Today, at Sarkozy's place along the generational timeline, exactly the same actions produce different results, and those results can be dangerous.

June 2005: Jean-Claude Juncker, Tony Blair, Jacques Chirac
June 2005: Jean-Claude Juncker, Tony Blair, Jacques Chirac

Sarkozy's plans for a European "mini-treaty" will meet with strong opposition from those who would stand to lose something from the treaty. It's even possible that things will get as bad as in the acrimonious European Union summit meeting in June 2005, where British Prime Minister Tony Blair, Luxembourg Prime Minister Jean-Claude Juncker and French President Jacques Chirac exchanged vitriolic accusations over how the EU budget, especially the agricultural subsidies, were to be divided among the EU members. Incidentally, Sarkozy has already indicated that he will not compromise on the agricultural subsidies to France.

From the point of view of Generational Dynamics, this situation is really exciting, because there are so many players, so many possibilities and so many interactions, especially with Britain and with the European Union as a whole. It provides the opportunity to further develop the theoretical model of how governments act during a generational crisis era, 62 years after the end of World War II.

Unfortunately, Generational Dynamics predicts that the end result will be a new world war, the Clash of Civilizations world war. There are many possible scenarios leading to that result, and some of them may involve the new activist President of France, Nicolas Sarkozy. (19-May-07) Permanent Link
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