France's Message for Capitalism Quite Simple: Adapt or Die

Date: 17 March 2019 - 21:16

News ID: ۶۴۳۴۳

PARIS (Bloomberg) - France is sounding an alarm for the world’s advanced economies: capitalism is tearing them apart.
President Emmanuel Macron and his Finance Minister Bruno Le Maire are using France’s presidency of the Group of Seven to argue that the system fuels inequality, destroys the planet and is ineffective at delivering goals in the public interest. The country has already experienced some of the fallout firsthand in the Yellow Vest movement that erupted late last year.
They’re pushing a reinvention that includes minimum global taxes and higher levies on tech giants like Amazon and Facebook. There are echoes of that in the self-proclaimed democratic socialists in the U.S. and firebrand Congresswoman Alexandria Ocasio-Cortez, who last week said "capitalism is irredeemable.”
"If we don’t invent a new capitalism, absurd economic solutions will win over and sweep us straight into recession,’’ Le Maire said in an interview late last month.
A key example for him is Italy, where the populist government came to power riding a wave of public anger. It quickly threw out the rulebook on fiscal responsibility, sent bond yields higher and confidence lower, helping to push its economy into a slump.

At 49, Le Maire is the youngest finance minister among his G-7 counterparts. His grand ambitions also involve combating income-inequality, empowering governments to intervene in the economy, and forcing companies to be socially responsible and share more of their profits with workers.
While some measures of income inequality have declined, the IMF says that reflects growth in many developing economies. Many still feel they aren’t getting a decent share because of pay disparities, huge wealth concentration and levels of in-work poverty.
Le Maire’s call to arms reflects a panic spreading in Western democracies about voter anger. The next sting could come at European Parliament elections in May, when euro-skeptic politicians are set to make further gains.
In France, the government’s knee-jerk response to the Yellow Vests was to throw money at the problem, but there’s also been a realization that that alone won’t cut it.
Macron, barely polling ahead of Marine Le Pen’s far-right National Rally, started what he called a national "grand debate” that’s taken him and his ministers around the country to hear people’s concerns.
"You can’t fight populism with promises of more of the same,” said Societe Generale chief economist Michala Marcussen.