Thomas Piketty How to Defeat France's Anger

Ahead of France’s presidential election on Sunday, Handelsblatt spoke with French economist Thomas Piketty about the challenge of globalization and why he wants a euro-zone parliament.
Marine Le Pen has played the globalization card many times during the French presidential campaign.

Thomas Piketty is pretty clear about who he supports in this Sunday's French presidential election: Emmanuel Macron. And yet, he of all people understands the deep-seated anger felt by many French voters that the economy and globalization has left them behind.

“Many voters are resigned” to the fact that globalization is no longer working for them, said Mr. Piketty, who wrote a seminal work on wealth and inequality called “Capital” in 2013. That lack of control, he says, is what drives the nationalism of Donald Trump or Marine Le Pen today.

Mr. Piketty is doing his best to change the argument. He and over 100 colleagues worldwide are studying ways to better distribute assets around the globe as part of the project "WID World."

The answer he says, even in Europe, is not to retreat into corners but to work to improve how globalization functions. That includes putting more safeguards into trade deals, and also making the 19-nation euro zone more democratic. A parliament for the euro zone, for example, may actually counter nationalism in France by reducing the influence of Germany in the bloc, he says.

 

Handelsblatt: Mr. Piketty, fears of social decline and inequality play a major role in the election campaign. Why is this so beneficial to the extreme right?

Mr. Piketty: Many voters are resigned, and perhaps they think: "We cannot achieve anything to better regulate globalization or convince multinationals to pay taxes. So we'll take it out on migrants, and maybe we'll be a little better off as a result." This slide into nationalism has a lot to do with the impression that capitalism can no longer be controlled.

Is it possible to better control globalization?

We need sustainable and fair partnerships instead of pure trade agreements. They can contain sections about trade, but it is a mistake to limit them to that. As far as CETA [the Candian-European Trade Agreement] is concerned, for example, I am not opposed to facilitating trade with Canada. But in 2017, a treaty must also contain provisions against the optimization of taxes, and on the environment.

What could that look like?

One section would have to define minimum taxation rates. Otherwise, we will soon face the question of how to pay for our public services. The same should apply to the environment.

What exactly are you thinking about?

It is certainly strange that we hold a climate conference with grand objectives and declarations of intent. A few months later, we conclude a trade agreement with tough conditions and legal procedures, and yet it contains no binding language on climate. There is an imbalance there. We need to get rid of it, or else other efforts arise like those of Mr. Trump and Ms. Le Pen, who say: "Let's just get out of international trade completely!" But that would not reduce inequality, and it would cause even more frustration.

Thomas Piketty wants a euro-zone parliament.

Some French people see Europe as a Trojan horse of globalization.

I remain optimistic when it comes to Europe. Many problems could be solved with better institutions, such as a parliament for the euro zone. It is not people but institutions that fail. If they were better, we could collectively achieve better results. But we keep putting this off – until after the French election, then after the German election – and then nothing happens.

Why the hesitancy?

In 1992, when we created the common euro currency, there was a great fear that lawmakers would get involved in monetary policy. We wanted to prevent this at all costs, which is why we wanted a currency union without any kind of executive arm. After the crisis of 2007, we need to realize that this doesn’t work. We cannot expect the central bank to do everything. We need a government, taxes, a budget and democracy. These debates among finance ministers behind closed doors are no longer appropriate today. Europe can no longer function like the 1815 Congress of Vienna.

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But in France, in particular, a large portion of the left is increasingly insisting on national sovereignty.

That is precisely what I do not want. I am convinced that we can improve Europe. Running the euro zone on autopilot with budget guidelines may work in theory, but it has failed in reality. Mr. Macron is caught up in the status quo too much for my taste, while (far left candidate Jean-Luc) Mélenchon and Le Pen want to destroy everything. So far, France has distinguished itself through a lack of its own proposals. If France were to propose a parliament for the euro zone, with seats being allocated in proportion to population – Germany would receive 24 of 100 seats, and four countries, Germany, France, Spain, Italy, would hold 77 seats combined. That would enable us to reach a compromise that would move us forward.

 

Thomas Hanke is Handelsblatt's correspondent in Paris. To contact the author: [email protected]