Eurozone links

Basically if Germany, rather than ranting on about Moral Hazard had got the ECB to print some euros and dump them in Ireland and Greece, some of which would have flowed back to Germanys bankrupt banks, via bailing out the Anglo Robbers bank.

1. Germany would not now be recession.
2. The sucide and homeless rate in Greece would be a lot less.
3. Irelands property market would have firmly started to recover.

Of course they could have given the printed euros with some caveats that we would all have appreciated like we want your hospital consultants, judges and bureaucrats to be paid the same as they are in Germany. In that case they could have helped the deficit as the growth caused by the printed money would have led to increased tax revenue, combined with reduced dole cost and public sector wage cost.

Instead we got a government that laid off vast amounts of public sector workers without just doing a significant pay cut of 30% or so (that the Germans could also insisted on!) and we now have the highest paid consultants and judges etc. in Europe and all the laid off public sector workers are on the dole expanding the defict. We now have a health service that we cannot afford and growing interest payments on the national debt that was used to pay off the gambling debts of the entitled class.

Green shoots me a***

“In western Europe we are effectively witnessing a growing inability of the ruling elite – they know less and less how to rule. ” – from the Guardian.

Thats predicated on the idea that the ruling elite aims for the prosperity of its respective nations.
The idea that a ruling elite should aim to maximise the prosperity of a nation was jettisoned, not without conincidence, with the idea that there should even be a nation state.
The ruling elites are doing there job quite well. The assumption that they should be doing it for the benefit of the wider populace is where the Guardian goes wrong.

@MH
Jonathan Guthrie recommends a solution for Irish job creation;
http://www.ft.com/intl/cms/s/1/1669aca0-1629-11d9-b835-00000e2511c8.html#axzz2IEa4KumM

@ Michael H

China Bull

http://www.mpettis.com/2012/10/07/how-to-be-a-china-bull/

Taking my life in my hands here but is Europe really in the same boat as Japan? Japan has a range of problems – extreme public debt , deflation & demography decline – that are far worse than the comparible issues in Europe

Also, the countries who could turn Japanese (by which I mostly mean deflation) are the ones in the “core”. The fate that awaits the ones in the “periphery” is quite different on the current path. Something far worse.

Lorenzo Bini Smaghi has a useful factoid in the FT today for use in zapping pub-stool economists, who see salvation in currency devaluations:

During the 1970s and 1980s, the cost of inflexibility was shifted on to the public budget and on to the value of the currency, which was devalued several times. The debt burden doubled in a decade, from 60 per cent of GDP in 1980 to 120 per cent in 1992. The Italian lira went from 250 to the Deutschemark in the mid-1970s to 990 before joining the euro.

As for Europe, rather than wait for politicians to wave magic wands, when it comes to big companies and jobs, Airbus has been a spectacular success in innovating from developments in several countries. This week it has been reported that it is considering buying a majority stake in a Spanish supplier that has been hit by credit problems. However, the aircraft firm plans to increase its dollar procurement to 40% as most of its revenues are in dollars.

Most other big European companies are old and their products are old technology but improved over time eg cars.

China will match US R&D spend in a decade and while there will be bumps on the road, its target is to have an educated workforce on a par with Europe and the US. It is focusing on alternative energy, energy efficiency, environmental protection, biotechnology, advanced information technologies, high-end equipment manufacturing and so-called new energy vehicles, like hybrid and all-electric cars.

There will be increasing competition for multinationals in their home OECD markets.

As for Ireland and jobs strategy, Forfás which would already operate in a mode: “what does the minister think?” will soon be absorbed into the Enterprise Dept’s spin machine.

The ESRI and the Central Bank produces some research in this area while it seems that little comes from the universities.

Stephen Collins in the IT reports today: “The Government has signed off on a range of measures designed to boost job creation that will be included in the 2013 Action Plan for Jobs to be published next month…The spokesman added that the Government was determined to create the conditions in which employment could grow and the measures agreed yesterday would contribute to that process.”

If George Orwell’s character Syme in his celebrated novel, ‘Nineteen Eighty-Four,’ was updating his Newspeak dictionary, he would surely include ‘process.’

…and maybe ‘innovation’?

“Most companies say they’re innovative in the hope they can somehow con investors into thinking there is growth when there isn’t,” Clayton Christensen, a professor at Harvard Business School and the author of the celebrated 1997 book, ‘The Innovator’s Dilemma,’ told The Wall Street Journal last year.

The Journal said that a search of annual and quarterly reports filed with the Securities and Exchange Commission showed companies mentioned some form of the word ‘innovation’ 33,528 times in 2011, which was a 64% increase from five years before that.

More than 250 books with ‘innovation’ in the title had been published in Q1 2012, most of them dealing with business, according to a search of Amazon.com

@RebelEconomist
“what would be on the asset side of the ECB’s balance sheet to match those euros it printed and dumped in Ireland and Greece?

Perhaps that Slovenian constitutional court has a point!”

The asset side of any balance sheet is only as good as the ability of its ‘customers’ to pay their loans. That ability in turn depends on a vibrant economy where people are gainfully occupied to such an extent that they can make savings and fund borrowings.
Do you think the asset side of the ECB balance sheet has improved or disimproved over the past few years?

The Slovenian constitutional court seem to think democracy is not to be trusted in dealing with the matter of bad banks. In my view, it is crystal why they make this argument. The losses of a minority of rich or better off people who keep their assets in banks, are being socialised on a majority who have very little assets.
Democracy would be unlikely to work for the rich in such circumstances, so it is best to avoid it.

@ Brian Woods

Africa used to be a dumping ground for French s/h cars. Now people there can buy new Chinese cars and phone handsets — some of which are good knock-offs.

However, don’t knock that!

Most Americans at least would say that Thomas Edison invented the light bulb.

However, Joseph Swan patented a carbon filament lamp in England in 1878, and Thomas Edison patented basically the same thing a year later in the US. At that time, there were no patent laws in the Netherlands, so in 1891 Royal Philips Electronics, as Philips, the electronics giant, was known at the time, could simply take the invention and claim it as its own. By 1900, Philips was the third largest supplier of light bulbs in Europe.

Ericsson of Sweden did something similar in 1876: it reverse-engineered Alexander Graham Bell’s telephone, which hadn’t been patented in Sweden.

This week’ Economist says Pascal Lamy, head of the World Trade Organisation, has suggested that Africa could be China’s biggest trade partner within three to five years. The EU is currently the no 1.

China is Brazil’s biggest trading partner and it represents nearly 20% of Brazilian exports, primarily in commodities such as iron ore, oil and soy.

@ MH: Thanks for that useful update Michael. Appreciate it.

Africa??? Most of these folk are dirt poor and barely get by on less than 2l of liquid fuel per day! If they start up that liquid fossil-fuel hill in earnest (which I genuinely doubt will happen) some western folk are going to be mighty unhappy. There simply isn’t enough of that liquid moolah to go around any more – despite all the delusional PR hype to the contrary.

Global production of liquid fuels has effectively stalled. New productions are less than the declines in historic productions. The energy cost of new resources is rising. Domestic use in major producers is increasing – fast! Available Nett Exports are declining exponentially!!! China is also a fossil fuel addict (US, EU, ditto). That’s a Boom and Bust Michael. Interesting times.

Apart from SA, the general state of Sub-Saharan Africa indigenous industry has a long history of underdevelopment. Governments are almost uniformly corrupt. Infrastructure is hopelessly maintained. Rule of the Kalashnikov is Standard Operating Procedure. The populous Mediterranean states are individually and collectively, political, religious, societal and economic messes. Christian and Islamic cultures are first cousins of each other (despite the best intentions of fundamentalists). Chinese is what? I hope they know how to handle occidental political ‘sweaty gelly’.

Mind you, this scenario is possible. Heroic oriental Buffalo Bills (in helicopter gunships) sweep the central African plains clean of herbivores to permit access to those arable lands. 😎

Q: Who will, build and maintain all that tarmac for the food trucks? Or will it be the Iron Zebra? The mind boggles!

Brazil is a better bet, but again you run smack into that liquid fossil-fuel cliff face. Thailand is a good example of what may happen if you clear-fell your protective forests.

@ All

The following, according texts “leaked” to to the FT, are the essential questions that Cameron intended to pose regarding Europe.

“There are always voices saying ‘don’t ask the difficult questions’. But it’s essential for Europe – and for Britain – that we do because there are three major challenges confronting us today.

“First, the problems in the Eurozone are driving fundamental change in Europe.

“Second, there is a crisis of European competitiveness, as other nations across the world soar ahead.

“And third, there is a gap between the EU and its citizens, which has grown dramatically in recent years and which represents a lack of democratic accountability and consent that is – yes – felt particularly acutely in Britain.

“If we don’t address these challenges, the danger is that Europe will fail and the British people will drift towards the exit.”

As to economic data comparisons between the US and the EU, one cannot help but wonder of what relevance they actually are given the profound differences of history and political organisation between the two continents.

FYI also the view of a presumably rather well-informed former Italian member of the executive board of the ECB on the problems confronting Italy.

http://www.ft.com/intl/cms/s/0/3024e2c6-600e-11e2-8d8d-00144feab49a.html#axzz2HtGoNq6r

The security situation in Libya has visibly worsened since the beginning of the uprising against dictator Moammar Gadhafi nearly two years ago. The military has been essentially dissolved and weapons from Gadhafi’s armed forces have flooded the markets in the region, ending up in the hands of various militias, including the extremists in northern Mali. Fifteen months after Gadhafi’s death, a stable and sustainable government has yet to take hold. Real control over the country rests with competing warlords, and Islamist groups in the region have profitted.

[der spiegel]

War in Mali:
The Europeans aren’t fit for purpose
16 January 2013 Süddeutsche Zeitung Munich

France’s war in Mali is a fight for all of Europe that France is fighting alone, writes the Brussels correspondent of the SZ. Brushing Paris off with a few aircraft isn’t just shirking on the part of its European Union partners, it’s a fatal blow to a common European defence.

http://www.presseurop.eu/en/content/article/3277351-europeans-aren-t-fit-purpose

@dod

currency, central bank, defence, song contest…

@docm

“The old “Italian solution” i.e. devaluation has not worked for the UK.”

Over the last 6 months trade weighted GBP averaged a smidge less than 10% below its average over the last 23 years. That’s hardly trying the Italian solution given the big swings in currency markets. For that, a country will have to break decisively from the pack and maintain it.

Greek Debt not Viable without more EU Help [IMF].

@ grumpy

I should have been more precise and have written “The UK has been unable to take advantage of a substantial de facto devaluation vis-a-vis the euro”.

The ECB provides, as you are probably aware, a useful interactive graph series for all the major currencies.

http://www.ecb.int/stats/exchange/eurofxref/html/index.en.html

If it walks like a duck and quacks like a duck etc.

Incidentally, the Irish Examiner’s veteran Brussels correspondnet Ann Cahill has as succinct an overview of the position as one could hope for with regard to the banking debt issue.

http://www.irishexaminer.com/business/bank-debt-solution-on-eu-ministers-agenda-220042.html

In Faint Praise of Competitiveness:

” .. the loss of competitiveness not only in Europe but in the rest of the … … developed West.”

Its productivity dear readers – productivity! We have not ‘lost’ competitiveness, but have simply free-gifted our productive and technological advantages (for temporary pecuniary gain) to our economic rivals!

The term competitiveness (as tossed about like confetti) is much misunderstood, misused, abused and hence mis-applied. Only the economically challenged and intellectually lazy use this term when they seek to engage in a negative critique of the illusory advantage of differences in wage and salary rates for similar activities in two distant locations. The underlying (unstated, and unchallenged) implication is that lower wage rates are ‘better’, higher wage rates ‘bad’. When in aggregate economic terms the exact opposite is actually the case. But to understand this apparent anomaly one has to engage in slow, hard thinking. Few folk do this. And you are unlikely to encounter it in media outputs.

By way of illustration. Its takes the same individual physical effort, and time (plus-or-minus the error in measuring time), to assemble an iPhone in a factory in Ballycroy as it would in a Foxconn labour laager in China. I am assuming both locations have a suitable building and the necessary assssembly-line equipment available. Irrespective of her location the employee needs to be fit and trained for the work. This mandates that she be paid a wage which would enable her to provide herself with the necessary quantity of food, clothing, shelter (and its embedded costs) and perhaps some amount toward the cost of commuting – PLUS an additional amount for various personal needs . [If a person (trained in one type of employment) should suffer un-employment and needs to undertake re-training – or even re-locate, then how will these costs be borne?] An employee cannot work productively if they are undernourished, in poor health or are burdened with significant financial worries. Employers need to pay their employees a ‘Living Wage’ if they expect them to be alert and fit for work – and they also need to provide a safe, low-risk work environment.

Light assembly work takes a fearsome toll on joints and muscles. What is the disguised economic cost to the employer of replacing an unfit employee with a trained and fit employee? Its hardly insignificant. What is the disguised (long-term) economic cost to an employee who suffers repetitive strain injury – and this disability affects their opportunity to fully engage in waged-labour activities and to care for themselves (or a family member) for the rest of their life? This common circumstance, may on careful analysis, turn out to be a highly significant external economic cost. But who’s counting?

So, one (but not the sole) issue that needs to be clearly known and understood, in an overall economic context, is the actual pecuniary differences of the many fixed, variable and external economic costs which distinguishes two distant employment locations. Clearly, the cost of transporting a finished product from Ballycroy to Dublin is considerably less than the cost of transporting the same item from China to Dublin. So who bears this additional cost? The employee, the employer or the final consumer? Someone does.

We can certainly be ‘competitive’ if indigenous employees will agree to accept lower wages (like quite low), lower taxes and other charges on their incomes (hence, less state provided services, welfare payments and pensions) and accept lower standards of health and safety in their workplaces. There are other factors which I will leave to the reader to consider. Additionally, the employer needs to be un-burdended of the many ‘environmental’ and bureaurcratic costs they experience. The implication of these reduced economic costs is that all general living expenses and costs are also reduced proportionately and in parallel. This is most unlikely. So, the intellectually challenged advocates of ‘competitiveness’ have got to engage in some additional explaining. This also is unlikely.

Only a gobshite commentator will compare (without a careful explanation of the context) the differences in Labour Unit Costs as a reliable measure of economic ‘competitiveness’. When what they should be comparing is the ratio of the amount of the local Living Wage (not the Subsistence Wage) relative to the local living costs – and that ratio must be greater than unity! If employees (and employers) do not have a sufficient money surplus (after all costs have been deducted from their incomes) then it is axiomatic that you will not achieve a positive, advancing level of aggregate economic wellbeing.

Its just too easy to target the most salient and readily available cost – the Unit Labour Cost.

“If you encounter any Competitiveness (or Free Market) Buddahs on your road – slay them!”

ps: @ JC: Dey wouda tolt him to “kommit suaside.” 😎

Bloody constitution eh Michael and it’s auld guff on rights. Sure we should just ditch it fit a nice oligarchic friendly junta instead I guess?

@docm

I don’t think you can sensibly say the UK did not benefit from sterling’s depreciation from late 2008 because you don’t know what would have happened to the UK economy without it. Given the Anglo-Saxon property speculation, high levels of consumer debt etc I think it is difficult to argue the UK would not have had a worse economic performance without it.

You may recall that Sterling was touted as the new Deutschmark by the Conservative government after 1990, when it had appreciated significantly on a trade weighted basis to around 97.

The ERM exit took that back to a far more sensible average of 84 (not really going much below 80 at any point). This was a level many of us thought sustainable, and some others had declared would cause 8% plus inflation rates and a new inflationary spiral. (sound familiar?)

In 1998 & 99, sterling appreciated again, back through 90 and ended up basically going sideways around 100 for a decade. In ’08, it dropped from having been right at the top of its range to, briefly, right at the bottom in the mid 70 odds. Over the last year it has averaged around 82 and a bit.

These moves over such a long timescale are actually comparatively dull and modest for FX.

It is likely that the 1999 appreciation and the property boom that allowed sterling to maintain those high levels for a decade was unhelpful to exporting industry and skewed the economy in a way that would take as long to un-skew.
Sterling is not now at “devalued levels” as if it had sneakily done an Italy or Argentina, it is simply out of its long overvalued boom territory and at a sensible level.

It could go significantly lower. If so, expect the French to get very vocal, as they are a direct price competitor in the defence business – and without that France’s trade balance…

@docm

Just as an afterthought, it is worth noting that house prices have hardly fallen at all in the UK, and that has had a significant effect in avoiding the debt deflation Ireland is experiencing.

Instead, the currency fell around 20% from the peak, broadly reversing its boom-sustained appreciation (which itself took the edge of nominal property price rises).

Ireland of course, closed its collective eues and ears, and chose to go a different route – joining the big boys.

@ MH: You raise some interesting points re Constitution and property.

Do folk who use invoke our Constitution on the protection of property actually bother to read it – like all of Article 43 – especially 43.2.2? Do they actually even understand what 42.2.2 is meant to prevent? And for what its worth, have they any knowledge and basic understanding of the ‘proscriptions’ implied in some of the sub-sections of Art 45 ?

We have only one inalienable right – to our life. And if preserving that life should require the use of lethal force – so be it! All other so-called rights are actually human endowed entitlements and privileges to be excercised – (and this part is always omitted), provided we do no harm to others!

Ok – bond yields are respectable because the ECB will buy them if there’s a problem. So weirdly if Ireland reebtees the market it will be selling bonds ultimately to the ECB. That will also be true of the other peripheral countries. Now, the only way the plan gets unhinged is if something bad happens. That something is most likely going to be Greece. Greece is Europes sovereign Lehmans. It cannot be contained

@all …. never ending Greek crisis … and EX ineptitude

Greece needs more European money to help with debts, says IMF
Greece will need additional help from its European partners as soon as next year to bring its huge debt under control, a senior IMF official has said.
[h/t nakedcapitalism]

http://www.telegraph.co.uk/finance/financialcrisis/9811748/Greece-needs-more-European-money-to-help-with-debts-says-IMF.html

@DOCM DOCM

Good to see link to Anne Cahill – I scan her stuff on a daily basis …

@gtfaway

“If we want to change these rights we can. But I suspect we wouldn’t when we see what they would entail.”

You did (not you personally, of course) – you voted top exempt from the protection of the constitution, any act or law necessitated by adherence to the terms of the Fiscal Compact Treaty.

Thing is though, a lot of people voted for it without any debate of this point – it was all about access to the next short term bailout. Still, you voted for it.

@ All

FYI an informative slide presentation by a member of the Executive Board of the ECB on what is actually going in the EA engine room and wider afield.

http://www.ecb.int/press/key/date/2013/html/sp130118.en.html

This euro undertaking is not going to implode anytime soon.

“The problem is a very difficult one. A centralised ‘ex-post’ transfer scheme is necessary, but does not seem to be politically feasible. The adopted Macroeconomic Imbalances procedure, a mere ‘ex-ante’ monitoring device – akin to a score board – for detecting ‘asymmetries’ is probably counter-productive. Instead of transferring resources to countries suffering shocks, it punishes them.” [Manasse]

The German Ideology of Merkel, & ECBundesbanke, and its underlying calvinistic streak, has increaed assymetry …. making matters worse

@docm

“The point I am trying to make is simply that the constraints of the euro are seen by many as the source of all difficulties. If this were true, the UK would be in the same situation as Sweden, by way of example, whose currency has strengthened considerably but whose industry is till managing to survive and, indeed, prosper, because the country has grasped the nettle of fundamental structural reform”

Why would Britain be in the same situation as Sweden, since the Swedes were careful not to join in the borrowing splurge that the Brits were quite keen on? The distortions that occurred in the UK did not in Sweden.

The interesting point imho is that Sweden illustrates just what a vast PR sales task is there for the opponents of austerity – EVEN the Swedes think they have no choice but to tighten their belts.

Outside the periphery, in the public’s’ mind, the Keynesians have simply lost the argument (at least for a while). Politically, that is very interesting.

@ grumpy

Picked up coincidentally from the Web!

http://www.slate.com/articles/news_and_politics/the_pivot/2012/10/sweden_when_its_banks_failed_the_scandinavian_country_made_a_miraculous.html

You will note that there was also a major devaluation (over 30%) in the Swedish success story to which the American author seems to attach little importance. Wolfgang Munchau thinks that this is the explanation.The continued appreciation of the crown (recovering from a wobble some time ago when the markets thought Swedish banks were, once again, in trouble because of careless lending in the Baltic states) will put his view to the test. I would be of the view that the devaluation played a major but temporary role but it is the reforms which made the economic improvement permanent.

http://www.ft.com/intl/cms/s/1/042da2f2-40e9-11db-827f-0000779e2340.html#axzz2ISovohRg

DOCM

If this were true, the UK would be in the same situation as Sweden, by way of example, whose currency has strengthened considerably but whose industry is till managing to survive and, indeed, prosper, because the country has grasped the nettle of fundamental structural reform.

This is what Ireland is failing to do.

This is wrong.

Sweden has indeed done much better than the Eurozone countries in coping with the European component of the global financial crisis but it is either chronically misinformed or actively dishonest to think that this is due to Swedish belt tightening, lack of structural reform in the UK (did you miss Thatcherism?) or Irish profligacy.

Take a look at http://appsso.eurostat.ec.europa.eu/nui/submitViewTableAction.do?dvsc=9,

and graph “Total General Government expenditure” as “Percentage of GDP”

In 2007 Sweden’s government spending was 1.4 times higher than Ireland’s as a percentage of GDP. In 2011, four years into the European component of the global financial crisis Swedish “belt tightening” had resulted in Government spending/GDP ration remaining the same (51%) as before the GFC. Even in 2011 with the multi-billion cost of the financial sector rescue and reduced revenues thanks to unemployment Irish government spending as a percentage of GDP was lower than Sweden’s, as was the UK’s.

This crisis is not about excessive government spending, except as it pertains to bailing out the financial sector.

As for structural reforms Sweden has a higher proportion of the workforce employed by the government, 25% more paid holidays and so on and so forth (minimum wage levels are at or above Irish rates). If Ireland or the UK were to “structurally reform” themselves to be more like Sweden it would require a terrific lurch to the left.

Sweden has done well because of well managed natural resources and sound social democratic policies (even under its current conservative government) but it has also enjoyed the advantages of being outside the Euro and has not engaged in badly thought out fiscal tightening in the midst of a global recession, the UK is outside the Euro but lost its advantage due to being in the grip of Austerian toffs and Ireland has the worst of both worlds.

It is not so difficult to understand, is it?

@shay

Are you and docm really as far apart as you think?

“As for structural reforms Sweden has a higher proportion of the workforce employed by the government, 25% more paid holidays and so on and so forth (minimum wage levels are at or above Irish rates). If Ireland or the UK were to “structurally reform” themselves to be more like Sweden it would require a terrific lurch to the left.”

Putting aside mortgage and consumer debt for a moment. Just with regard to the principle, if it were possible for someone to accomplish it, would a significant increase in numbers (productively and efficiently) employed in the PS, combined with reductions in PS pay / pensions per employee (to Nordic rates, or even below for a time) be:
a) a shift to the left
b) a shift to the right
c) politically neutral

I suspect that to established PS employees, especially senior ones, it would be a shift to the right, to the unemployed or economic emigrees who might obtain a useful carrer it would be a shift to the left. What would it be in the round?

Would it, in addition, be more sensible?

It might be time to ban the word “reforms” since it seems to mean entirely different things to different people. It is a buzzword.

@Grumpy

Are you and docm really as far apart as you think?

I believe that the issue of public sector pay is a bit of a distraction from our main problems right now (and I have always worked in the private sector). However grossly overpaid the head of Coillte is the man did not contribute in a serious way to our current problems, cutting his pay drastically, though it would make me happy, will not help Ireland’s economic situation much – one sixty five billion euro bank bailout equals two hundred and sixty thousand years of Coillte chief executive salary or one hundred and forty years of pay for all two and a half thousand of Ireland’s overpaid hospital consultants (who help keep people alive).

Society would probably be a better place if areas like education, scientific research, public safety and health enjoyed a premium in pay but work done in the public and private sectors should generally be paid the same, whether that requires public sector pay cuts or private sector collective bargaining.

It might be time to ban the word “reforms” since it seems to mean entirely different things to different people. It is a buzzword.

Absolutely, “reform” is a weasel word and as every school child used to know it has been synonymous with anti-democratic policies since Roman times.

@ grumpy

The words “as public servants,” are missing after “bench-marking”

Bank bond-holders: they must never be touched or the whole banking edifice will run rife with contagion.

On the other hand, burn them, burn them with fire: they made dreadful investment decisions. Why should tax-payers pay for their mistakes?

‘EU approach to solving state solvency problems is baffling and inconsistent’
Colm McCarthy

“Cyprus has had an even bigger banking bust than Ireland. Its banks, swollen with, it is alleged, hot money deposits from Russia and elsewhere, had become big holders of Greek government bonds and suffered huge losses in the Greek default last year. They are now bust, as is the Cypriot government. The bailout will have to be, relative to the island’s GDP, even bigger than the bailouts for Greece, Ireland and Portugal. The IMF, conscious of the failure to deal properly with Greece in May 2010 when debt restructuring was long-fingered, believe that there is no point leaving Cyprus with an impossible debt burden and are insisting on haircuts all round, including for bank bondholders and even depositors. In this they are being supported by some German politicians, reluctant to be seen bailing out Russian oligarchs who are believed to be major creditors of Cypriot banks.

“The negotiations on Cyprus are being conducted by the familiar troika of the European Union, the ECB and the International Monetary Fund. If the IMF gets its way this time, the Cypriot bank creditors will see haircuts upfront, possibly sizeable ones. That would shine the spotlight again on the bank-sovereign doom-loop and would undermine the latest position taken by the European Commission.

“There are two drawbacks. The first is that European policymakers are under no obligation to be consistent and could require haircuts for bank creditors in Cyprus having resisted them, against the advice of the IMF, in Ireland. Crack squads of top-notch spin doctors could be engaged to explain that there is no inconsistency.”

http://www.independent.ie/opinion/analysis/eu-approach-to-solving-state-solvency-problems-is-baffling-and-inconsistent-3357882.html

@ DOCM

In countries such as Sweden and Finland, it would be a huge scandal if a job had to be created for a senior politician’s partner on the same terms as an abolished position, irrespective of the responsibilities of the new make work position. She or he would have to apply for new position in an transparent system.

Is that fair and apart from self-interest, what is the rationale for retaining a British Empire system dating from the 1850s?

Lifetime employment no longer exists for most public sector employees in Sweden and Finland.

In Sweden, public workers are now governed by rules that are practically identical to those that govern the private sector. Pay is connected to individual employment rather than the post.

Despite the sense of grievance about the former colonial power, the inherited systems from the UK remain largely intact.

The De Valera Government which was generally happy with the UK Children Act of 1908, introduced the Children Bill in 1940 to provide for additional restrictions. Both Deputy James Dillon and Deputy Alfie Byrne, a former Lord Mayor, sought to have a provision for a medical and psychological examination of children before their committal to the industrial and reformatory school system. When positive examples of the way children were provided for in Glasgow and a number of American cities were referred to, Thomas Derrig, minister of education, found the comparisons objectionable:

“It is really painful to hear the case made here that there is some psychological disease or other in the City of Dublin, just because clinics have been established in Chicago or Detroit, or some other city. Where is the comparison between conditions in the Catholic City of Dublin and in the City of Chicago? There is no comparison.”

”
A solution to the eurozone crisis that relies on Germany has always been politically uncertain. It may soon become economically untenable” [A. Moody]

+1 The German Ideology is flawed.

Yet Hollande has to pick up the pieces following Sarkozy’s arming of the ‘dodgy’ characters in the Magreb and Sahel (via free arms dumps in Libya) in Mali – rather than taking on Dr. Merkel’s flawed approach to the EZ Financial Crisis, changing the remit of the ECB, and bringing some pragmatic Keynesianism back into the EZ equation.

Read more at http://www.project-syndicate.org/commentary/the-eurozone-s-struggling-core-economies-by-ashoka-mody#7PYkLt8Q4Z4ezw8l.99

@ Gavin Kostick/Eureka

I believe that in the US there are signs in china shops which read “You break it, you own it”. That is the guiding principle with regard to bank bailouts in the EU. Ireland had the biggest relative banking bust – until Cyprus that is – and now has the biggest relative bill in GNP terms. The article in the Telegraph is complete bunkum and the author is probably well aware of this. The risks banks take cannot be divided up by where the latter happen to be located. The same holds true for Irish banks with operations in the UK.

For countries within a banking union, however, the situation is evidently quite different and should have been planned for from the beginning. Painful retro-fitting is now taking place. It seems clear that Ireland will recover something from the collectivity under this heading. How and how much remains unclear.

@ Michael Hennigan

As what you outline is what I have been banging on about since I joined this blog, I cannot but agree wholeheartedly. I have no expectation that we will “do a Scandinavia”. The only realistic goal is to move the debate onto the plane where it belongs i.e. a dispassionate consideration of the financial, economic and political facts that either hold the country together or will drive it apart. In the area of public service reform, this has not happened. Indeed, there appears to exist a self-willed obscurantism which I can only attribute to an unspoken alliance of various interests to retain the status quo (and their existing privileges). However, the continuation of the present approach is self-destructive and will remove all sense of worth and motivation from public employees if it is persisted with.

@ Gavin Kostick

With regard to Cyprus, this Alphaville link is informative and gives a more rounded picture and IMHO a better indication of what is likely to happen than the article by CMcC.

http://ftalphaville.ft.com/2013/01/17/1341892/will-cyprus-be-bailed-out-by-gas/?

Now, if we could only find a gas well off Dalkey!

However, the continuation of the present approach is self-destructive and will remove all sense of worth and motivation from public employees if it is persisted with.

I do have to confess admiration for free-market, anti-state ideologues who can with a straight face claim that destroying the conditions of employment of workers will ‘liberate’ them (in the Libertarian sense as understood by acne-plagued college students, white middle-aged self-employed cranks and wingnut welfare recipients, I guess).

The revolving door of private-public senior staff caused infamous levels of corruption in the centuries before the modern civil service regime was introduced. The fraying at the edges of this system – serving only one master, the State your employer – can be seen in the increasing scandalous nepotism and dubious awarding of contracts seen in the UK and here.

The court case should be interesting but what about this:

“The State shall, in particular, by its laws protect as best it may from unjust attack and, in the case of injustice done, vindicate the life, person, good name, and property rights of every citizen.”

Someone else will have to help here but when we cede our money to the government in taxes it is just because it is for the common good. When we give our money to pay off the debts of Seanie Fitz it is unjust because those debts were incurred by a combination of incompetence and imprudence on all sides.

A long shot….

@EWI

Incidentally, bonus marks for trying to wrap a nationalist Tricolour around your desired evisceration of worker’s’ rights.

Mr Hennigan displays symptoms of chronic schizo-conservatism but the most amazing thing is how perfectly sensible people let themselves get distracted by the storm of anecdotes.

The thread was about how the EU is badly served by the current flavour of EMU and how collective austerity is failing (the Mody piece). Despite this people still entertain the Irish Tories/bank schill faction and the thread becomes a conversation about how we need to cut public sector pay and continue bleeding the state to pay for the banks in order to satisfy the conditions of EMU and implement collective austerity.

Doctor: Your idiotic diet is killing you.
Patient: You do not understand doctor, this diet is paramount to my future well being. How can I change human physiology to survive on the diet?
Doctor: You can not – this has been well known since 1958.
Patient: Your American medicine goes against common sense, I am going to consult my Austrian Homeopath.

@DOCM

Tired left-right sloganeering provides no real answers.

Are you sure you are the man to lead the assault on cliche?

From standard neoliberal sloganeering…

The only real consensus is on the second question i.e. the loss of competitiveness not only in Europe but in the rest of the pampered developed West.

to essentially meaningless buzz words…

as Sweden, by way of example…. because the country has grasped the nettle of fundamental structural reform.

to actively dishonest sloganeering about Irish responsibility for the European component of the global financial crisis…

I believe that in the US there are signs in china shops which read “You break it, you own it”.

This is just on this thread.

It is like reading “There is no alternative” over and over again expressed in increasingly roundabout ways, and always with the subtext that the international financial sector (blameless widows and pensioners, international partners) needed to be protected from those greedy and irresponsible little people who borrowed money for personal self aggrandizement.

The camels have difficulty seeing their own humps.

So the tack is to demonise inconvenient views by tarring them with the label of an extremist ideology that is the opposite their own but similar in some ways . The wealthy do it in the US in the red states by getting relatively poor people to vote against their economic interests by appealing to their racial, anti-gay and anti-women rights prejudices.

So Sweden where the mixed economy/social democracy model developed, they’re anti worker rights by providing the same advanced rights to all workers. What a crime!

However, they are not fools to believe that job guarantees for everyone would work.

How many socialist nirvanas are now left where everyone has a job for life?

Deng Xiaoping (1904-1997) who began the modernisation of China once said: “Whether a cat is black or white makes no difference. As long as it catches mice, it is a good cat.”

That of course was anathema to the useful idiots in the West – – some of whom were not surprisingly living well in the capitalist system.

It’s laughable that the corruption argument would be used today to justify systems that were put in place more than a century ago, when most workers were effectively serfs.

@ DOCM

This briefing has references to various reports:

http://www.iedm.org/files/note1312_en.pdf

@ DOCM

This OECD report compares the systems in several countries. Ireland did not supply some information but it’s not an state secret.

http://www.oecd.org/gov/pem/hrpractices.htm

@ MH

Thanks for the links!

From the Swedish contribution;

“Employment legislation in Sweden is very similar for the public and private sectors, with additional provisions regarding the misuse of public power, and similar issues, applying to the public sector. Less than one percent of public employment is on a statutory basis. Fixed-term contracts can be from a few months to several years and conditions do not vary from those of open-term contracts. In addition, there is little use of ranking and grading, with almost no formal career groups in the civil service.”

In short, an output oriented structure rather than an input oriented one. It is probably Utopian to imagine any such approach in Ireland. The cost of failing to adopt it is enormous both in terms of wasted resources and stultifying career paths.

@Shay

I think it is a bit of a distraction too, but only a bit. On the other side of the equation is what I said earlier about the monumental PR task for the Keynesian side. In the public (outside the periphery) perception, they are hardly making any impression, less in core EZ than in the US for example.

Their sales job is made all the more difficult by the fact that too many espousing Keynesian solutions have decided to drag that particular dead horse up the hill while doing so. To sound-bite receptive ordinary voters (every politician’s lunch ticket), the insistence on not addressing obvious absurdities simply cuts the ground from beneath the Keynesian argument.

Many intellectuals do think the public are rather stupid, but when too many of the public are forced to conclude of them ” either he’s stupid., or he must think I am”, then they just stop listening, or never even start.

It may be distasteful, but Keynesians have to engage in the PR competition. They will not succeed without looking like they have some common sense to go with their highbrow ideas. It might not be true, but if the man in the street who reads Bild or the Sun perceives proponents of Keynesian policies as protecting what he sees as amazingly cushy numbers for those proponents or their pals, then thats ALL he will see – game over.

DOCM DOCM citing Stiglitz – akin to Hayek citing Marx

… ta for the link BTW have you noted the dispersion on inequality in Sweden recently?

@grumpy

Yes – the PR from the pragmatic keynesian/marxian/social democratic is very poor in the EZ as politico after politico [including supposed social dems] spout the phrases of ordoLiberalism as if it were revealed gospel; as the Thread above notes: the prob remains DEBT, especially financial system debt loaded on sovereigns …. and the most important tool of any CB is prohibited in the remit of the EC_Bundesbanke ..

This is one (Cumul) of three issues that Hollande is going to deal with in his five year mandate. The three are Social reform, homosexual marriage and the end of cumul. (cumul= politicians holding more than one official position such as councillor, mayor and so on. I do not have a handle on how prevalent these practices are in Ireland.

“Cumul des Mandats” in Contemporary French Politics. An Empirical Study of the XIIe législature of the Assemblée Nationale

Julien Dewoghélaëre, CERVL – IEP Bordeaux
Raul Magni Berton, CERVL – IEP Bordeaux
Julien Navarro, CERVL – IEP Bordeaux

Email: dewoghelaere.julien@caramail.com
r.magniberton@sciencespobordeaux.fr
j.navarro@sciencespobordeaux.fr

Abstract:
It has often been noted that French politicians frequently hold local and national offices concurrently. Traditionally, this phenomenon is explained by the political culture (a patriarchal conception of authority), the territorial centralization and the weakness of party organizations that characterize France. In order to test the latter two hypotheses, we propose analysing the practise of the cumul des mandats at the level of individual parliamentarians. In this way we circumvent the classic n=1 problem without engaging in a comparison with other countries. Based on a logit analysis with the dependent variable equal to the number of local offices held by the members of the National Assembly under the present term (XIIe législature), the study partially confirms our hypotheses. Other variables, such as age and gender, are also considered.

Keywords: Cumul des mandats; Elective mandates; France; Parliament.

Introduction

An oft noted specificity of French politics is the accumulation of mandates and offices held concurrently by most politicians (Knapp, 2004) . This practice, known in French as “cumul des mandats”, is an enduring phenomenon – it has indeed even gained momentum – though laws were passed with a view to limiting it. The general public also tends to reject it, as illustrated by opinion polls which suggest that more than 60% of the electorate would approve of laws prohibiting any form of cumul .
Cumul des mandats has thus become a much debated issue in political and academic milieus. Most observers point out that this phenomenon is quite specific to France. In other countries, holding several mandates simultaneously is either restricted by law as in Germany, Greece or Italy, or alien to the political culture of the country, as in the US and the UK (Mabileau, 1991: 17). A comparative approach to cumul des mandats across Europe based on the number of local offices held by Members of the European Parliament (MEPs) shows that French MEPs are by far the most numerous group to hold both a local office and a European mandate. As opposed to France (43.7%) and Luxembourg (33.3%), a mere 16.8% of all the MEPs hold local offices, and the gap between France and Luxembourg is significantly more than 10 points (see appendix I).
There are in fact several types of cumul in which French politicians engage when they combine mandates and offices. Since there is no limitation to the number of mandates that a politician may hold in his or her lifetime, political careers are frequently very long as incumbents are often re-elected several times until they retire at an advanced age. However, the concept of cumul des mandats usually refers to the multiple mandates held simultaneously by political actors who have responsibilities outside the world of politics proper – in trade unions or professional organizations, for instance –, work in the public or private sector, or hold national or local non-elected executive positions (CREAM, 1998). But the most controversial dimension of cumul is the simultaneous accumulation of local elected offices held by national representatives, i.e. members of the National Assembly (MPs). Indeed it is not uncommon, that the mayors of the principle municipalities of a circonscription (constituency) successively occupy the same seat in parliament. This is especially the case in the 16th circonscription of Bouches-du-Rhône where three mayors were elected in the last three legislatures: the mayor of Tarascon (the gaullist Thérèse Aillaud 1993-1997), of Arles (the socialist Michel Vauzelle 1997-2002) and of Saintes-Maries-de-la-Mer (the UMP Roland Chassain since 2002). In the present study, we will focus on why MPs from the XIIe législature (starting in 2002) engage in a cumul des mandats at the local and regional levels (municipalities, départements and regions), a political practice that has become widespread in the Fifth Republic.
In the last two decades, several attempts were made to limit the scope of cumul des mandats. Two laws were voted in 1985 with a view to preventing representatives from holding concurrently more than one of the following mandates – Member of the European Parliament, regional councillor (conseiller régional), county councillor (conseiller général), mayor of a town of more than 20,000 inhabitants, député-maire (MP and mayor) of a town of more than 100,000 inhabitants . The unexpected consequence of such regulations was an increase in single cumul – i.e. a national office plus a single local function. As Y. Mény puts it, “while the cumul was limited in terms of the number of mandates, it nevertheless became more widespread” (Mény, 1992: 82; see also Mabileau, 1991). The relative failure of the first set of regulations led to the adoption of more constraining rules. Indeed new laws were passed in 2000 and amended in 2003 .
In concrete terms, it is impossible today in France for an elected representative to be both a member of the Assemblée Nationale and of the Sénat. MPs and Senators may not be MEPs either. They may not hold more than one of the following mandates – regional councillor, county councillor, councillor in the Corsican Assembly, councillor of a town of more than 3,500 inhabitants, or councillor in Paris. But an MP can still have local executive functions and be a regional or county assembly president, the president of the Corsican Assembly, or a mayor. In theory he or she may also combine mandates as MP, county council president and mayor of a town of less than 3,500 inhabitants, although, in reality, this configuration does not exist today. Nevertheless certain individuals such as Augustin Bonrepaux are presidents of a conseil général (Ariège as it happens) and adjoint au maire (deputy mayor) (Ax-les-Thermes), others, like Françoise de Panafieu or Jean Tiberi are mayors (17th and 5th arrondissements of Paris respectively) and members of the conseil général.
In the literature, three opposite but non-exclusive interpretations of cumul des mandats prevail. According to Y. Mény, this phenomenon is the expression of a patriarchal conception of power in a country still dominated by the traditional image of the monarch: despite the French Revolution, “the traditional conception of authority tends to concentrate power in the hands of one alone” (Mény, 1992: 62; see also Mény, 1997). But this explanation seems to be partly contradicted by opinion polls (Olivier, 1998). Other specialists contend that the accumulation of mandates and offices is linked to the territorial organization of France, characterized by a strong central state (Knapp, 1991), and reflecting the dominant cursus honorum of politicians (Sadran, 2000). According to this theory, local mandates are often less an end in themselves than the point of departure necessary to a political career. Because of centralization, they offer only a limited perimeter of action and prestige. On the other hand, as they do not demand a particularly large investment for politicians elected to parliament, the latter have an interest in preserving the economic advantages, the insurance in the case that they are not re-elected at the national level and the proximity to their electorate. This, however, does not suffice to explain this French specificity: other centralized states exist in Europe where there is not this widespread cumul. According to the third explanation, it is the weakness of parties that is at the origin of the widespread existence of cumul des mandats: this is due to the fact that in France it is those who are elected several times who make the party and not the inverse (Knapp, 2004; Mény, 1992).
In this article, we propose to analyze cumul des mandats with respect to the last two explanations. It must be noted that these hypotheses – a highly centralized state and weak party organization – have never really been tested. This is due to the difficulty of comparing the French situation to those of other countries while addressing all the other contextual variables. In order to get around this difficulty (the classic n=1 problem), we have changed the unit of analysis to individual parliamentarians, thus gaining some variance while controlling for the cultural context.
To sum up, the aim of this paper is twofold. We will first describe the scope and nature of cumul des mandats as practiced by the members of the National Assembly following the 2000 and 2003 laws. We will then try and explain what factors may be instrumental in the persistence of such a practice.

An empirical study

The present study focuses on cumul des mandats as practiced by the 577 members of XIIe législature of the National Assembly in office at the time of writing (March 2006), that is MPs elected during the 2002 general election plus a few MPs elected more recently during by-elections. Our sample does not include the members of the higher chamber of Parliament, the Sénat. Indeed the raison d’être of the Sénat is partially to represent subnational territorial entities: senators are elected by grands électeurs (local elected representatives) and almost all senators hold another local mandate.
The Right won the 2002 general legislative elections. The Assembly is thus composed of a majority of representatives who belong to the conservative UMP (a newly formed alliance between RPR and some UDF members) with 368 MPs (63.78% of the Assembly) and the centre-right UDF (30 MPs, 5.2%). The left wing representatives from the Socialist (PS) and Communist (PC) groups are respectively 149 (25.82%) and 21 (3.64%). The other 11 MPs, who do not belong to any parliamentary group (NI: non-inscrits), are members of the environmentalist party (Les Verts) (3 MPs), the centre-left PRG (2 MPs), the nationalist MPF (1 MP) and the right-wing liberal party (Démocratie Libérale) (1 MP). Out of the remaining 4 non-inscrits MPs, two co-operate with the majority UMP – they are thus considered as UMP members in our study – and the other two MPs who come from the overseas territory of La Martinique are truly non-inscrits representatives.
It is interesting to notice that, as is the case in most parliaments in Europe, the Assembly remains rather gerontocratic. In 2006, MPs are 57 years old on average (the youngest MP is 30 and the oldest one, 84). There are no significant differences between the various parties, except for the Communist MPs who are 11 years older (63) than the younger UDF representatives (52). Women MPs are slightly younger (56) than their male counterparts.
To go deeper into gender considerations, the legislature remains strongly male-dominated: there are only 75 women who sit in Parliament. The Left is somewhat more feminized: 25 Socialist MPs out of 149 (16%), 4 Communists out of 21 (19%) and 1 Green representative out 3 (33%) are women. As for the Right, 43 MPs are women: 42 UMP (11.4%) and 1 UDF (3.33%).
These disparities have no significant impact upon cumul statistics. 89.25% of all MPs hold one or more additional elective offices . Only 62 members of the National Assembly (10.75%) do not have any other mandate. There are strong similarities between women and men in matters of cumul (87% and 90% respectively), or between the UMP and the Socialist Party (90% against 89%). Overall, the local position most favoured by MPs is that of mayor (49%), followed by county councillor (13.7%) and regional councillor (9%). Finally, 14.9% of the MPs hold two local elective mandates simultaneously. Figure 1 shows the percentage of MPs who hold local offices according to the type of office held and to the left-right divide (absolute figures are in brackets).

[Figure 1]

As illustrated in Figure 1, there is no significant difference between left-wing and right-wing parties in matters of cumul. We should nevertheless point out the fact that left-wing MPs tend to hold fewer local elective offices than their right-wing counterparts – on average, 1.01 against 1.05.
It is also noteworthy that, out of a total of 577 MPs, 531 are directly elected representatives and 46 (7.97%) are suppléants (deputy MPs). According to the French Constitution, deputy MPs (not to be confused with MPs elected on the occasion of by-elections) are elected on the same ticket as the main candidates, whom they replace if the latter are called to other, higher positions (to become Cabinet members, in most cases). Deputy MPs are slightly younger (55 years of age on average). Among the 46 deputy MPs in the National Assembly, 34 (73.9%) are men. 42 deputy MPs (92.8%) hold one or more additional elective offices and 11 (24%) accumulate more than one supplementary mandate. These indicators show that the profile of deputy MPs is rather similar to that of “ordinary” MPs. Although these figures are only relevant to those deputy MPs who have successfully replaced incumbents and although UMP is over-represented in the sample (42 deputy MPs, 92.8% of the sample), it should be noted that deputy MPs cannot be regarded as mere “artefacts” used by parties to improve their brand image or promote minor or junior members.

Theory and Hypotheses

As noted before, some specialists contend that weak political parties and a highly centralized state are the two main factors that may explain why elective offices are so often combined in France (Knapp, 1991). From an institutional point of view, France is indeed one of the most centralized countries in the EU (Colomer, 2002). Political parties, with their lack of resources and organizational autonomy, tend to be weak in the sense that they have a limited influence on the choices of individual politicians (Knapp, 2004). The combination of the two factors thus offers politicians opportunities to multiply electoral mandates at a sustainable political cost.
Before developing the two hypotheses – a highly centralized state and weak party organizations – it is necessary to briefly present the reasons that may explain why MPs engage in a cumul des mandats. According to A. François, cumul may reduce risks stemming from the precariousness of political careers (François, 2002); it can increase politicians’ income and power, and provide the necessary financial resources for future electoral campaigns (François, 2006). It may also help incumbents be re-elected (Nevers, 1991; Foucault, 2006). But there are at least two major constraints. First, responsibilities are higher and the work load significantly heavier. Cumul des mandats is time consuming. It is certainly not an easy task to hold several elective offices at the same time. Secondly, political parties are theoretically opposed to cumul des mandats, for two reasons. Multiple office-holders have less time to devote to parliamentary activities (questions to the government, amendments) and they ask more from Parliament (state subsidies for the towns or regions they represent, special attention to local issues) (Mény, 1992). Moreover the general public does not approve of cumul des mandats (Olivier 1998). In all logic, there is a definite risk that parties could thus lose votes if they endorsed “cumul candidates”. We therefore make the assumption that, ceteris paribus, even if a politician decides to run for several elections concurrently, he will meet strong resistance and opposition from his or her own party.
However, the constraints and political cost attached to holding several elective offices simultaneously are weaker in France than in any other country. Highly centralized institutions imply less work and responsibilities at the local level. As local authorities largely depend on decisions made by central institutions, a representative will have more room for manoeuvre in his daily political activities in a département or municipality if he or she seats in Parliament and thus has access to the higher decision-making body. Besides, the generally weak internal organization of parties means that individual parliamentarians can more easily influence the choice of their party’s candidate in a given constituency. French parties can be qualified as weak insofar as they do not possess true organisational autonomy, which is however, one of the fundamental characteristics of any political party (Seiler, 2000). To be precise, the internal division of power between the elected officials and the rest of the party apparatus (party members and administration) is particularly favourable to the former. The material and financial resources belonging to the party are limited: there are very few party members, there is a cap on donations from individuals and those from private enterprises are prohibited by the law and party organizations are not backed by powerful structures on the periphery (unions or foundations) as is often the case elsewhere in Europe . Faced with this lack of resources in party organizations, elected officials enjoy a margin of manoeuvre to the extent that the public financing of parties is linked to the results of legislative elections and locally elected representatives have resources associated with the exercise of a local mandate (i.e. financial compensation, and in the case of a mayor his staff, municipal offices and communication services). Neither the local party authorities (consisting of a few members or clients), nor the national authorities (lacking resources and the ability to sanction) are then able to dissuade a local elected official from running for office in a legislative election: there are so little inclined to do so that they themselves belong to the club of elected representatives.
For lack of a comparison with other European countries, our demonstration concentrates on the variability of the individual situations of French parliamentarians. Indeed the overall picture drawn up does not prevent the distribution of power and modes of organization unique to each party. To a certain extent, one can argue that not all territorial collectivities have the same degree of dependence on the center. In other words, our hypotheses can be tested if we relate the political cost of holding multiple mandates to three factors which vary at the individual level – party strength, various types of local offices and the different responsibilities attached to the positions held. We can formulate four hypotheses relating to the relationship between party and individual politicians and two hypotheses relative to the material cost of cumul.
First, the likelihood that an MP may hold several mandates depends on his or her party organization. Though French political parties are weak as a rule, some are weaker than others. We will hypothesize that the politicians of the weakest parties (that is to say those that have a minimal organizational autonomy) enjoy a larger margin of individual manoeuvre and thus tend to have more mandates.
Secondly, a politician is more likely to hold several offices if he or she is firmly established in a region. This relates to the issue of local power. In his or her dealings with the party, a well-established politician, who is known to the militants and has a good grasp of the local environment, can more easily be a multiple office candidate. Strictly speaking, we should distinguish here between different types of political trajectory or cursus honorum (Sellier, 1984). According to this idea, the practice of cumul does not have the same logic depending on whether it is practised in an ascending or a descending manner: an MP who previously held a local mandate has neither the same difficulties to be elected nor the same political goals as an MP who obtained a local mandate after his national one. The most striking difference is the influence of the party on the career of the politicians. The party will a priori have a greater influence in the first case. Nevertheless, the large majority of MPs have an ascending cumul: 83% of them have one or more local mandates before being elected as an MP. Following the careers of actual MPs, we establish that 86% of cumulating MPs (“cumulards”) have an ascending cursus honorum and that individuals who were mayors before becoming MPs, like the highly visible mayor-MP of Bègles, Noël Mamère, are three times more numerous than those who were first parliamentarians.
Thirdly, members of party executive committees tend to hold more offices. As for any party member, there is a conflict of interest between the official positions defended by the party and the defense of their personal interests. But contrary to the rank and file members, party leaders are in a stronger position to defend their own positions: they possess the resources, information and the notoriety associated with their position in the party. They are therefore less likely to meet internal opposition when they choose to be candidates more than one time.
Fourthly, a single member type of election favours cumul more than a list system. The choice of a candidate is, by definition, very important in matters of cumul, because it is the moment when the party decides whether or not it will support a candidate who already holds an elected mandate. Once again, the issue hinges on the balance between the party as an institution and the politician as an individual, which partly depends on the electoral system. Arguably, in a list system, voting is much more about ideological or partisan considerations than about the candidates’ supposed personal qualities: individual candidates are diluted in a list system. The role of the party is much more significant in the case of a list system than in a single member election. If the party proves to be too authoritarian, there is a definite risk that a well-established incumbent might run as an independent candidate and win against the party’s official nominee. Conversely, the bargaining power of an individual candidate is much weaker in the case of a list system, because he or she may find it difficult to put up a competing list.
These four hypotheses illustrate the relationship between parties and individual politicians, which obviously influences the choice of the candidates.
We should also address the problem of the costs attached to the responsibilities and tasks assumed. We therefore propose two other hypotheses.
First, parliamentarians from more independent regions tend not to hold local offices. As explained before, it is generally easier to hold several elected offices in France than anywhere else because institutional centralization decreases the responsibilities of local office-holders. But some MPs come from more independent and distant constituencies and regions. We contend that, in these regions, local mandates demand more direct involvement from the persons in charge. In such regions politicians tend to relinquish their local mandates when they are elected to Parliament.
Secondly, politicians tend to hold more mandates in less populated constituencies. The work load and responsibilities implied in the political management of a densely populated urban area are more significant than in low density rural areas. Parliamentarians are thus more likely to keep their local mandates in rural areas.
We have thus tentatively shown that party weakness and territorial centralization may account for the prevalence of cumul des mandats in France. In the next part, we propose to test these explanations according to the six specific hypotheses mentioned above. We also take into account two demographic variables: age and sex.

Data and variables

To test our hypotheses, we have used two sets of indicators – indicators related to our dependent variable (the different possibilities of cumul offered to MPs) and indicators that make up our independent variables (socio-political indicators about parliamentarians, party organization and the characteristic features of the constituencies).

Dependent Variable: types of cumul

There are many elective functions that French parliamentarians can hold. We shall analyse here the three most important ones not only in quantitative terms but also their significance: municipal mandates (maires and conseillers municipaux), county council members (conseiller général) and regional council members (conseiller regional).
Using official information available on the National Assembly website, our database consists of information regarding whether or not the MPs have a local mandate, and the number of mandates held simultaneously (two or three). There are in fact two dependent variables. The first (cumul) is a dummy variable that equals 1 if an MP holds a local elective office and 0 if he or she does not. The second (cumul type) is a nominal variable scored 0 if an MP has no local office, 1 in the case of a municipal office, 2 if he or she is a general councillor, 3 if he or she is a regional councillor and 4 if he or she holds at least two local elective offices.

Independent variables and associated indicators

 Party organization
The first independent variable (Party organization) establishes a classification of parties in terms of their degree of organizational autonomy: it aims to test the hypothesis according to which the weaker a party is in terms of its organizational resources the more its MPs have a tendency to cumulate. The extent to which central committee membership is controlled by the members of the “party in office” as opposed to the party rank and file members is particularly relevant to the question of party organization. The dichotomy originally established by Duverger (1951) between “mass party” and “cadre party” has lost some of its accuracy following the deep changes that have affected political life in Western Europe. Katz and Mair (1995) suggest that the cartel party has become the dominant model in contemporary politics, which is a relevant description of most French political parties, especially the UMP and PS, (Seiler, 2003). However, there are some differences in terms of party strength, membership and numbers of elected politicians.
Using several indicators relative to party organization (see appendix II) as well as data from specialized studies, we propose a typology of party organization based on the degree of control exerted by the “party in office” over party leadership. In the case of the centre-right parties, Haegel (2002) points out that the respective role of in-office politicians and militants was a very sensitive issue when a new political alliance was concluded between right-wing parties in 2002: the centre-right UDF members who joined the alliance strongly opposed giving militants a dominant position whereas the conservative RPR leaders adopted a more open attitude towards the rank and file members. This resulted in a compromise in the drafting of the new UMP alliance party statutes. Conversely, two other parties, namely the part of the UDF party which remained an independent parliamentary group, and the centre-left PRG party – traditionally considered as “cadre parties” – have kept a structure which is much more favourably oriented towards in-office leaders. The parliamentary group leaders are given an ex-officio status (in the National Assembly, Senate and European Parliament) in their respective central committees and there are very few non-elected members in their executive committees .
The French Communist Party (PCF), considered as an ideal-type mass party during the 1950s, has typically retained some of its original characteristics: there are very few elected politicians among the party leaders and the party machinery has kept a significant role. The Green party sticks to its internal rule of not allowing any member to hold several mandates simultaneously: the leading committee of the party is only made up of non-office-holding politicians.
The typology of party organization appears as an ordinal indicator, which differentiates between three types of political parties, according to the institutional constraints imposed on their elected members. The weakest parties in terms of internal organization are in the first group (UDF, PRG, MPF, DL and the non-inscrits representatives), then comes the group comprising UMP and PS, and finally the third group is made up of parties in which grass-root members and militants are the most influential (French Communist Party, Greens) . We propose to assess the influence of these data on the propensity of politicians to accumulate elective mandates.

 Local strongholds
The second independent variable pertains to the local ties that may exist between a well-established MP and his or her constituency. The hypothesis is the following one: a long-standing parliamentarian is bound to be well-known to the electorate and thus highly likely to be re-elected, independently of his or her party’s support. Likewise, the more local mandates he or she may have held, the more legitimate he or she is to run for new elections. Political experience and reputation, acquired through consecutive terms of office, lessen risks of local political competition. Cumul across time facilitates vertical cumul. In order to assess how well-established MPs may be, we have computed the number of elective mandates (data from the National Assembly website), held in the same local areas as their constituencies before they were elected for the first time in Parliament.

 Party leadership
To assess the impact of party leadership positions upon cumul, a dichotomous variable differentiates between MPs who are party leaders (as stated on the official website of each party) from those who have no specific position in their party. In the UMP party, the central committee is made up of the president, deputy-presidents, the treasurer, the president’s own political advisers, spokespersons, executive councillors, national secretaries for political affairs and administrative national secretaries. The leading body of the Socialist Party is composed of the National Secretariat and of the Project Committee. Leadership in the UDF party is entrusted to the president and vice-presidents, the spokesperson, the treasurer and the executive committee. The Greens have an executive committee of 13 members who were elected on the occasion of the 2005 Congress. The PRG central committee gathers together the president, the general delegate, the secretary general, the treasurer, the spokesperson and deputy-presidents. The PCF president collaborates with the National Council and the Executive College.
As this stage, it should already be noted that 97 members of the National Assembly (17%) have a leading position in their party. There are significant differences between the parties: the proportion is 63% for the UDF, 14% for the UMP, and 18% for the PS. Of all the MPs who hold directional responsibilities in their parties, 94% (91 out of 97) also hold a local elected office and 9% (9 out of 97) hold two elected offices.

 Devolution, Decentralization
To test our hypothesis relative to the degree of autonomy of the various constituencies, we have constructed a dummy variable, which differentiates between metropolitan regions and the few “territories” that are endowed with a specific status. Despite the high degree of centralization of the French state, special rights have been granted to some regional entities – overseas regions in their vast majority – (Corsica, French Polynesia, Guadeloupe, Martinique, French Guyana, New Caledonia and La Réunion island). Corsica was a “region” but became an autonomous “territorial community” in 1991 (the law on 13 May 1991). The autonomous status was extended after a new law was voted on 22 January 2002. Following the revision of the Constitution on 28 March 2003, each over-seas community was granted a specific status. While being more autonomous than the standard metropolitan regions, they can adapt legislative provisions and merge regional and county councils into a single assembly. The overseas territories thus offer an interesting opportunity to test whether local MPs tend to practice cumul des mandats on the model of metropolitan MPs. It should be noted, however, that the devolution indicator is strongly correlated to the geographical distance of the constituencies from the capital, which could be another intervening variable .

 Density
We have also constructed a variable indicating the characteristics of the local environment, namely the population density in each département as measured by the French National Institute of Statistics (INSEE). The totality of the French territory has been taken into account, i.e. 100 départements, plus several overseas local authorities. Our objective is to assess the political cost attached to multiple office-holding according to the density of the local population concerned .

 Gender and age
We have introduced the two most important control variables: gender and age. This is a dummy variable labelled 1 for men and 0 for women. The age variable corresponds to the age of each parliamentarian in early 2006.

Empirical Results

In this section, we propose to analyse empirically to what extent the degree of centralization and the organisational weakness of the parties in France may be the main factors that account for cumul des mandats. Our hypotheses are tested through a Logit analysis with robust standard errors.
In Table 1, the dependent variable is a dummy indicator of the accumulation of local elective offices (cumul). Only 62 members of the National Assembly (11%) do not hold additional local offices. The impact of the seven independent variables on the choice to engage in cumul is evaluated independently of the type of local office held. The first three independent variables relate to the negotiation between politicians and parties (party organization, local strongholds, and party leadership). The next two variables refer to the political cost of cumul (devolution and density), and the two last ones are gender and age.

[Table 1]

Starting with the indicators relative to the assumption about the conflict of interest between parties and individual politicians, the first result is that the stronger an individual politician is locally (several local offices held in a row) the more he or she practices cumul – the coefficient is significant. The coefficient for the “party organization” variable, though less significant, confirms our findings: the stronger party organization is, the less likely a politician is to hold local offices. Finally, the impact of the “party leadership” variable is not statistically significant, but is in keeping with the initial hypothesis: party leaders are more often multiple office-holders than other MPs.
In terms of political cost, only the second variable gives a statistically significant result: in the constituencies with high population density, parliamentarians tend to hold fewer offices. MPs elected in more “autonomous” territories practice cumul slightly less than in the other metropolitan regions, but the coefficient is not significant at all. This result suggests that the degree of centralization is not a cause of cumul des mandats.
Finally, gender has no significant impact, contrary to the age variable. The older politicians tend to hold fewer offices than the others: the average age of office-holders is 56.3 years compared to 59.6 for non-office-holders. Actually, the rate of non-cumul for MPs aged 70 and over is much higher (43%) than in the rest of the sample (11%). We may thus propose a simple explanation: some older politicians are probably on their way to retirement, which explains why they decide to relinquish one local office.
In general terms, the first results suggest that, although the indicators relative to party organization and to the positions held within the party are hardly significant from a statistical perspective, the stronger a politician is as an individual and the weaker his or her party is as an organized group, the more cumul there is. These findings also corroborate the fact that the political cost of cumul is globally an important factor in a politician’s decision to hold several electoral offices: parliamentarians elected in constituencies where the cost of cumul is higher (that is, where the population is more concentrated) are less likely to hold two or three mandates simultaneously. On the other hand, there is no evidence indicating a link between centralization and cumul des mandats.
After analysing the various factors, we should now differentiate between four types of cumul – the combination of a parliamentary mandate with only one municipal, county, or regional mandate. The fourth category includes parliamentarians who hold at least two of the previously-mentioned local offices. These mandates depend on the specificities of local elections. In municipal elections the mayor and his councillors are directly elected in each town and commune. It is a two-round list system vote with a strong advantage given to the majority in terms of seats. The election of county councillors is based on the same system, but each councillor is elected in a single-member district. Regional councillors are elected according to a proportional list system. Through the different electoral systems we can thus indirectly test our fourth hypothesis according to which a single-member electoral system tends to favour cumul, whereas the list system does not. Moreover, this analysis aims at determining the respective influence of each of our six independent variables according to the type of local mandate held.
If we turn to the question of the impact of the electoral rule, our hypothesis is confirmed by the under-representation of regional councillors among MPs. 11% of parliamentarians are regional councillors, compared with 25% who are county councillors and 66% who are mayors or municipal councillors. The last figure can be explained by the fact that municipal offices are the most numerous in France. However the fact that MPs should hold offices at the county level more than at the regional level cannot be attributed to the greater number of county councillors compared to regional councillors (4038 and 1878 respectively). Only 3.5% of the regional councillors are MPs compared to 3.6% of the county councillors who are also MPs. Such a figure means that there is no real preference for county mandates. This result is all the more interesting since only 8% of MPs who are also county councillors are women, compared to 29% of MPs in regional councils. In Table 2, the gender variable is significant only in the case of MPs who are concurrently regional councillors, and it is favourable to women. Considering the fact that laws on gender parity were passed in France, the greater number of women in regional councils confirms our hypothesis that political parties play a more important role in the choice of candidates at the regional level.
This last hypothesis is all the more reinforced if one establishes a distinction between a “descending cumul” and an “ascending cumul”. The MPs who practice a descending cumul, and who have even more need of support from their party in order to accumulate, are most common in the regional councils (21% compared to 9% in the county councils and 15% in municipal councils). These figures suggest that, in the regional councils where there is a list system, the parties tend to place their own MPs, who usually have a descending trajectory and are often either women or national leaders . On the contrary in the county councils where the ballot is uninominal, the trajectories are ascending and very masculine. The model that we have proposed, based on the conflict between party and candidate, functions much better in the case of ascending cumul, as is shown in Table 2.
After analysing the direct impact of the electoral system on cumul des mandats, we propose, in Table 2, to assess the impact of our seven independent variables on different types of cumul, through a multinomial logistic regression.

[Table 2]

Among the first three variables, it is interesting to differentiate between the variables that reveal a conflict of interest between parties and politicians (party organization and local strongholds) and those that show cooperation (party leadership). The first two variables assess the respective strength of parties and politicians. Together, they show the balance of power at work in the choice of candidates. The “cooperative variable” points to the cases in which parties and politicians are represented by the very same persons.
Table 1 highlights the fact that the “conflict variables” are more predictive of cumul than the “cooperative variables”. Table 2 shows that the conflict variables influence county councillors’ election, especially in the case of two local elective offices, whereas the cooperative variable only influences the election of regional councillors.
Since county elections are the only elections based on single-member districts, the decision of an individual politician to stand in the election is arguably easier, without or against his or her party’s support. There can only be one candidate for each party, and it is more difficult to find some form of compromise. In this configuration, the balance of power is a more decisive factor. When candidates run for two local elections, we suppose that parties are more opposed to nominating their representatives for local offices.
In the list system (at the regional level and, to a lesser extent, at the municipal level), the selection of candidates is more the result of a compromise between local politicians and parties. It is indeed possible to find some form of consensus on who should be on the list. For that reason, it is not surprising that the co-operative variable should be more significant. The findings are less clear in the case of municipal elections.
The findings for the two “cost-of-cumul” variables only partially confirm the impact of political cost in matters of cumul: they point to the expected direction for all types of local offices, but they are significant only with regard to population density. They also reveal a cleavage between MPs who hold one local office and those who hold two. As far as the demographic situation of the départements is concerned, the results are statistically significant for MPs who hold one local office. This confirms that the choice to hold several functions depends on the density of the local population because local offices are difficult to hold on to in the more densely populated areas. MPs who hold two local offices do not seem to be influenced by this factor; we do not have any explanation for such a difference.
If we turn to the socio-demographic variables, the age factor is an incentive to run for several offices and gender is only significant in the case of regional elections – it is favourable to women, as we explained above. In the other cases, there is a bias for men, but it is not a significant one.
In short, our findings confirm the relationship that exists between the weakness of political parties and the cumul des mandats. The various types of party organization and the candidates’ reputation and firm establishment at the local level have a clear impact on cumul. This impact is stronger than the influence of the positions held within the parties. These variables are more significant when the electoral system is based on a list system. Finally, as expected, population density have a negative impact on cumul. On the other hand, surprisingly, the degree of centralization does not seem to influence the decisions of politicians.

Conclusion

The practice of cumul des mandats in France is massive though laws were passed with a view to limiting it. Nearly 90% of the members of the National Assembly hold local offices. As in our hypotheses, there are some obvious incentives for politicians to hold several electoral functions, but there are also some differentiated costs and opportunities. Generally speaking, the benefits outweigh the costs.
If we consider the political costs, our analysis reveals that the age factor is a significant constraint for ageing parliamentarians who tend to hold fewer functions. More importantly, the hypotheses relative to the territorial structure of the country are not fully confirmed. The demographic factor plays a significant role: the political cost is lower in sparsely populated areas; politicians thus have more opportunities to hold several offices. But, contrary to our expectations, the lack of local autonomy does not lessen the cost of holding a local office for a parliamentarian. The absence of a statistic link between the territorial organization and cumul seems to contradict the existing literature. It must be recognized, however, that as the degree of centralization only slightly varies in France, our study – based on an analysis at the individual level – only allows for an imperfect test of this hypothesis.
Our general hypothesis based on a supposed conflict of interest between individual politicians who want to hold several offices, and political parties which prefer to limit the practice of cumul by their members is strongly confirmed. As the parties’ own resources are weak, politicians tend to have more power. We should also highlight the fact that this factor is more important at the local level, in the case of a single member voting system than in a list system. In the first case, each politician with a strong local position has much more power than his or her party. In actual fact, cumul is just as commonly practiced in a list system, but we should rather speak of some form of “abnormal” cumul because the multiple office-holders are surprisingly not those politicians who are well-established in a region, but understandably the party leaders or women candidates. In a list system, parties use their clout in the balance of power to promote gender candidates and favour their leaders.
Ultimately, our study brings not only an empirical demonstration to the traditional thesis according to which the weakness of parties favour cumul des mandats in France. It also demonstrates that there are two distinct types of cumul according to which the direction is ascending or descending: the weakness of parties offers further explanation for the first case. It would be particularly interesting to apply this analytic model to other countries: this would pinpoint the effect weak parties have on cumul des mandats. It would also be an opportunity to verify if the absence of the impact of territorial centralization can be explained by the insufficiencies of our indicator or if this hypothesis ought to be definitively avoided.

References
Colomer, J. M. (ed.) (2002) Political Institutions in Europe, London and New York: Routledge.
C.R.E.A.M., (1998) Le cumul des mandats et des fonctions. Une réforme au cœur de la modernisation de la vie politique, Paris: La Documentation française.
Duverger, M. (1964) Political Parties: Their Organization and Activity in the Modern State, New York: Wiley.
Foucault, M. (2006) ‘How much is the « cumul des mandats » useful to win elections? Empirical evidence from the French legislative elections of 1997’, forthcoming.
François, A. (2003) Economie politique des ressources affectées aux campagnes électorales. Analyse théorique et empirique, PhD. thesis, University of Paris I.
François, A. (2006) ‘The “baobab strategy”. Is the « cumul des mandats » a way to obtain more electoral resources and to prevent the electoral competition?’, forthcoming.
Haegel, F. (2002) ‘Faire l’union. La refondation des partis de droite après les élections de 2002’, Revue Française de Science Politique 52(5-6): 561-576.
Hanley, D. (1999) ‘Compromise, party management and fair shares. The case of the French UDF’, Party Politics 5(2): 171-189.
Hermet, G., Hottinger J. T. and Seiler, D.-L. (eds.) (1998) Les Partis Politiques en Europe de l’Ouest, Paris: Economica.
Hoffmann-Martinot, V. (1998) ‘Urban Political Parties: Role and Transformation’, in T. N. Clark and V. Hoffmann-Martinot (eds.) The New Political Culture, Boulder: WestviewPress, pp.195-217.
Knapp, A. (1991) ‘The cumul des mandats, local power and political parties in France’, West European Politics 14(1): 18-40.
Knapp, A. (2004) Parties and the party system in France: a disconnected democracy? Houndmills, Basingstoke, Hampshire; New York: Palgrave Macmillan.
Halman, L. (2001) The European Values Study: A Third Wave. Source Book on the 1999/2000 European Values Study Survey, Tilburg: EVS, WORC, Tilburg University.
Mabileau, A. (1991) ‘Le cumul des mandats’, Regards sur l’actualité 169(1): 17-29.
Mair, P. and Katz, R. (1995) ‘Changing models of party organization and party democracy: the emergence of the cartel party’, Party Politics 1(1): 5-26.
Mény, Y. (1992) La corruption de la république, Paris: Fayard.
Mény, Y. (1997) ‘Le cumul républicain : la démocratie réduite aux acquêts ?’, Revue Politique et Parlementaire 991: 5-10.
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Olivier, L. (1998) ‘La perception du cumul des mandats. Restrictions contextuelles et politiques à un apparent consensus’, Revue Française de Science Politique 6(48): 756-771
Sadran, P. (2000) ‘Le maire dans le cursus politique: note sur une singularité française’, Pouvoirs 95: 87-102.
Seiler, D.-L. (2000) Les partis politiques, Paris: A. Colin.
Seiler, D.-L. (2003) Les partis politiques en Occident. Sociologie historique du phénomène partisan, Paris: Ellipses.
Sellier, M. (1983) ‘La mairie dans le cursus politique’, Pouvoirs 24: 81-91.
Fig 1. Percentage and number of MPs who are multiple office-holders according to their political affiliation

Source: own calculus from data provided by the official website of the Assemblée nationale (accessed on 26 February 2006)

Table 1 Factors of cumul des mandats in general (whatever the local office)

Logit estimates with robust standard errors

| Robust
| Coef. Std. Err. z

Party organization | -.769* (.457) -1.68
Local strongholds | .260*** (.070) 3.70
Party leadership | .636 (.461) 1.35
Devolution | -.489 (.620) -0.72
Density | -.055** (.026) -2.11
Age | -.052*** (.018) -2.91
Gender | .235 (.393) 0.60
Constant | 5.031*** (1.14) 4.40
***p<.01, **p<.05, *p chi2 = 0.0000
Pseudo R2 = 0.0927
Correctly classified = 89%

Table 2 Which local elective office is preferred

Multinomial logistic regression

| Municipal County Regional Two local
councillors councillors councillors offices

Party organization | -.355 -1.426** -.796 -1.361**
(.476) (.584) (.667) (.575)
Local strongholds | .230*** .363*** .074 .371***
(.073) (.085) (.100) (.084)
Party leadership | .661 .538 1.562*** -.088
(.491) (.577) (.567) (.575)
Devolution | -.517 -.473 -.043 -1.088
(.702) (.839) (.883) (.978)
Density | -.099*** -.126* -.307** .047
(.033) (.065) (.146) (.030)
Gender | .278 .695 -1.026** .831
(.415) (.577) (.491) (.559)
Age | -.049*** -.061** -.055* -.056**
(.018) (.023) (.025) (.022)
Constant | 4.016*** 3.563** 4.324*** 3.026***
(1.187) (1.468) (1.564) (1.448)
***p<.01, **p<.05, *p chi2 = 0.0000
Pseudo R2 = 0.0816

Appendix I. Local offices held by Members of the European Parliament in 2003

Country No local office One or more local office N
France 49 (56.3%) 38 (43.7%) 87
Luxembourg 4 (66.7%) 2 (33.3%) 6
Belgium 20 (80%) 5 (20%) 25
Ireland 12 (80%) 3 (20%) 15
Italy 70 (80.5%) 17 (19.5%) 87
Austria 17 (80.9%) 4 (19.1%) 21
Finland 13 (81.3%) 3 (18.7%) 16
Sweden 18 (81.8%) 4 (18.2%) 22
Germany 85 (85.9%) 14 (14.1%) 99
Portugal 22 (88%) 3 (12%) 25
Greece 23 (92%) 2 (8%) 25
Netherlands 29 (93.5%) 2 (6.5%) 31
Spain 60 (93.8%) 4 (6.2%) 64
United Kingdom 83 (95.4%) 4 (4.6%) 87
Denmark 16 (100%) 0 (0%) 16
All 521 (83.2%) 105 (16.8%) 626

Source: own calculus based on data provided by the European Parliament (Vade Mecum of the European Parliament, Luxembourg, European Parliament, 2003)

Appendix II. Indicators and data used to establish the typology of French parties according to their organization

Parliamentarians (MPs, senators, MEPs) in party leadership % of unelected politicians in party leadership Office holders have a specific representation in the party leadership Candidate selection for legislative elections according to party status Membership/score at 1999 European election
UDF 81% (N = 48) 4% Yes By party leadership 4,838

UMP 73% (N = 86) 6% Yes By party leadership 11,718

PS 65% (N = 54) 13% No By party members 5,454

PCF 9% (N = 55) 55% No By party committee 22,058

Verts 0% (N = 13) 100% No By party committee 360

Source : official websites of the political parties (accessed on 21 February 2006), Hermet et al. (1998) for membership data and Ministère de l’Intérieur website for the 1999 European election results.

@DOCM

Thanks for Stiglitz link. Very interesting article.
http://opinionator.blogs.nytimes.com/2013/01/19/inequality-is-holding-back-the-recovery/

“Instead of pouring money into the banks, we could have tried rebuilding the economy from the bottom up.”

Amen to that!

In medieval France, a feudal lord benefited from droit de seigneur, the right to get jiggy with newlywed brides before their hapless swains. The benefits for peasants were doubtful, but it must have been jolly for naughty noblemen. One can imagine their impassioned defence of this proprietorial perk when it faced extinction.

I was strongly reminded of droit de seigneur when I read the rallying call John Ritblat, chairman of British Land, made last week for upward-only rent reviews on commercial leases. Property types campaigning to preserve this bugbear of business – an inevitable feature of most long leases – are rarely quite so unguarded. But Mr Ritblat said: “The government should leave it alone. The property investment world has been built up over 1,000 years, dating from the feudal system, and it works extremely well.”

The comment was unconsciously apt. There is something richly feudal about the rental ratchet. It benefits the landlord at the expense of the tenant, making humiliatingly clear who has the whip hand. When rents are rising all around a property, the landlord gets more money too. If they are falling, the tenant finds himself shelling out above the market rate.

The Office of the Deputy Prime Minister, obedient to twitches on its strings from Gordon Brown, the government’s pro-productivity puppeteer, is moving towards banning upward-only rent reviews. A trio of business organisations – I cannot help imagining them waving hoes and pitchforks – is cheering on the reform, which took a step forward last week when a consultation period ended.

The leading abolitionist is the British Retail Consortium, members of which let off steam to me. First, Anthony Brown, who operates two restaurants in London: “Upward-only reviews are ludicrous when the local economy where I operate is not doing well.”

Cary Gordon, proprietor of Kitchen Kapers, a chain of kitchen shops, weighed in next: “Landlords claim they need a safety net, but no one else gets one in modern business.” And finally, Martin Meech, who oversees 1,100 properties for Dixons, the electrical retailer, said the rental ratchet showed that “the property businesses see investors, not tenants, as their real customers”.

The rearguard action from the property lobby has included one powerful sally. It is that governments muck up markets when they dictate too narrowly the terms on which business should be conducted. Banning the ratchet would reduce choice. David Hunter, managing director of Arlington Property Investors, which advises on properties worth £5.4bn, says: “No serious property owner would be unwilling to forgo upward-only reviews in return for higher rent. But occupiers do not want that.”

Ian Fletcher, director of the British Property Federation, believes that a guarantee of flat or rising rents “is key to regeneration projects – you could not have built the [new] BullRing or Canary Wharf on leases with flexible rent review terms”. Good, but no Cohiba. Where there is opportunity, there will generally be capital.

Moreover, Mr Fletcher’s argument shades in to that of the National Association of Pension Funds, which I have filed under “Meddle, and Fluffy the Kitten May Die!” Last week, the NAPF warned that “removing this security [of the ratchet] would undermine the asset class [of property] and be yet another attack on pension funds”. This wrongly suggests that business tenants have a moral obligation to prop up NAPF members’ finances. Digging itself in deeper, the body added that “any change would have unforeseeable and detrimental consequences”. Congratulations to the NAPF on its logic-defying capacity to know that unknowable outcomes will be negative.

I strongly doubt that banning the rent ratchet from commercial leases will cause any catastrophes. As the Forum of Private Business notes, property bodies predicted a few years ago that chaos would follow the abolition of “privity of contract”, under which landlords held previous tenants liable for the debts of incumbents. No meltdown in property values ensued. Even Mr Hunter’s more persuasive free-market argument does not trouble David Storey, professor of small business at Warwick University. He reminds us that a market functions imperfectly, forcing the government to intervene, “when information is imperfectly distributed or one party has a strong advantage over another”. Those conditions exist in property, especially in the poor access of small businesses to information. They contract new leases only every few years, but big landlords may do so every day.

Moreover, any property enjoys a mini-monopoly on the benefits of its location, a phenomenon especially marked in retailing. As Mr Meech puts it: “The junction of Bond Street and Oxford Street, which is an excellent site, only has two corners.” The damage to trading faced by a business unhappy with its tenancy is another factor that gives a landlord far more power than a conventional supplier. Wicked rentier that I myself am – though more Rigsby than Ritblat – I know the sitting tenants in my small London house would struggle to squeeze a rent cut from me in a falling market, because moving would be costly and bothersome.

Finally, it is hard to object to banning upward-only rent reviews following Mr Ritblat’s over-candid justification of it by feudal precedent. In my mind, the great property baron has become inextricably identified with Bad Sir Brian Botany, the comic invention of AA Milne, who “had a battleaxe with great big knobs on”, and who “went among the villagers and blipped them on the head”.

You may recall that one day, to the delight of the villagers, Sir Brian lost his battleaxe. As a result: “Sir Brian went on a journey, and he found a lot of duckweed. They pulled him out and dried him, and they blipped him on the head.” Chastened, Sir Brian “is quite a different person now he hasn’t got his spurs on”. Commercial landlords, I feel, need similar re-education.

@John Corcoran

The Financial System has the “droit de seigneur” on the Irish Citizenry – who are being roightly screwed right, left and centre – past, present and future!

@David O’Donnell
Cyprus is an interesting case. The British needed it to protect the northern approaches to the Suez Canal in the same way that the Americans used to need Puerto Rico to protect the approaches to the Panama Canal. Russia is keenly interested in Cyprus and has already made substantial loans to Cyprus. This will not have gone unnoticed by NATO.

Cyprus will be rescued by ECB/IMF, failing that Russia will become a major influence on Cyprus. My bet would be on ECB/IMF becoming quite generous provide Cyprus plays a strong hand.