The minister who dreams of a reindustrialized France
The body of Jean-Baptiste Colbert, Louis XIV’s wily finance minister, is encased in a marble tomb in the Church of Saint Eustache in central Paris. But if you believe Arnaud Montebourg, the enfant terrible of French politics, his spirit is still very much alive, 330 years after his death, and about to spark a new, digital-age industrial revolution in France.
Montebourg, 50, an ardent opponent of globalization, has for the past 15 months served as the nation’s “Minister of Productive Renewal,” in charge of industry, a post that — in theory — gives him leeway to implement some of his more radical ideas. He spells them out in a book published on Sept.18, “The Battle for Made in France.” Invoking Colbert’s grandiose interventionist approach, it is a strident call for industry to be protected and nurtured. Among other things, Montebourg insists that the outsourcing trend of the past decade needs to be reversed; he dreams of the day when televisions, textiles and toys will once again be made in France, as the nation recaptures its manufacturing glory.
Montebourg’s political fortunes hit a low point in December 2012 when he threatened to resign after being overruled in a very public clash with the London-based steel magnate Lakshmi Mittal. President François Hollande personally asked him to reconsider, and today, he seems to be back in favor.
On Sept. 12, Montebourg and Hollande stood shoulder to shoulder at the Elysée Palace to announce a new direction for French industrial policy. A video made for the occasion starts with a solemn pledge that “France is reinventing itself.” With Vivaldi music swelling in the background, images of great inventors and inventions of the past give way to more forward-looking activities, such as medical biotechnology and cloud computing. These are some of the 34 sectors Montebourg and his team have singled out, with the help of McKinsey and Co, as the standard bearers of French industry of tomorrow.
He describes the plan as “participatory Colbertism,” a concerted attempt by the state to underwrite the future prosperity of the nation by targeting manufacturing sectors. Where Colbert focused on glass and cloth for tapestry, Montebourg is putting the emphasis on nanotechnology, big data and other digital industries.
France, of course, has a long tradition of state dirigisme embraced by previous presidents, primarily Georges Pompidou. It’s why the nation has a high-speed train network, derives more than 80 percent of its electricity from nuclear power — but also has a big collection of expensive white elephants and commercial flops, from Concorde supersonic planes to Bull computers. This new push for a more interventionist approach is drawing a mixed reaction. Some industrialists including Jean-Louis Beffa, the chairman of Saint-Gobain (a company founded by Colbert), approve of Montebourg’s focus on digital technologies. But there has also been some disbelief about the mismatch of ambition and resources. Eric Le Boucher, a well-known commentator, ridiculed the announcement by pointing out that the government is planning to allocate just $5 billion to these 34 projects.
It’s instructive to take a closer look at Montebourg and his ideas, not just because they are already having an impact on foreign investors and will doubtless continue to do so, but also because they help explain the Hollande administration’s schizophrenic approach to economic policy.
It is an administration that decries European austerity policies even as it races to slash its budget deficit; that veers between chastising business and trying to woo it; that has declared finance to be “the invisible enemy” but has taken minimal steps to rein it in; that officially welcomes international investors even as it gets into fights with them. These zigzags reflect fierce ideological and policy disputes within the government, in which Montebourg is often overruled but by no means isolated.
His vision of the economy, which he spells out in battlefield language in the book, is heavy on autarky. The notion that expanding trade could bring prosperity and jobs is not broached; instead, Montebourg lashes out at the “stupidity” of the European Union in allowing cheap imports from China, accusing the European Commission of being “the idiots of the global village.”
One of his actions at the ministry has been to put in place a network of “commissars” across France whose job is to ride to the rescue of struggling firms. He believes the state must “once again become the big brother of entrepreneurs rather than of speculators,” and describes a France of the future when young inventors, the “sans-culottes of the third industrial revolution,” are financed by state banks rather than private finance.
His inspiration, he claims, comes partly from the U.S., “a nation where protectionism shocks nobody and is congenital, banal and popular.” In particular he evokes the Depression-era activism of Franklin D. Roosevelt, with its use of public funds to create jobs, and wants to see a “Buy French” groundswell equivalent to a “Buy American” one.
As revealing as what Montebourg says is what he leaves out. The word “competitiveness” is conspicuously absent from the book, and he makes no attempt to analyze the reasons why French manufacturing has lost 750,000 jobs in the past decade. He doesn’t mention that French wages and social security levies have risen far more quickly than productivity, putting companies at a clear disadvantage. Nor does he talk about the many French companies, from LVMH to L’Oréal, that have thrived by tapping new markets in Asia and elsewhere as a result of globalization.
The auto industry is a case in point. French manufacturers increased their worldwide production by 4 percent between 2007 and 2011, even as their domestic production dropped 22 percent in the same period. Financially, Renault and especially Peugeot are struggling. Britain makes for an interesting comparison: its national auto industry has undergone a big revival in the past few years, as foreign investors including BMW and India’s Tata Group have bought up brands such as Mini and Land Rover and turned them into thriving businesses. Overall, the British industry’s revenues rose by about 6 percent between 2007 and 2011 despite the world financial crisis.
What would Montebourg say if an Indian or other foreign company tried to buy up Peugeot? The answer would be a swift “non” — swifter even than his veto when Yahoo began talks to acquire the French online video company Dailymotion earlier this year.
Colbert, who imposed a plethora of complicated rules and restrictions on the companies he set up, might well approve of Montebourg’s return to favor. But whether it’s good for France’s struggling economy is at best questionable.
PHOTO: French Minister for Industrial Recovery Arnaud Montebourg (2ndR) and Gregory Trebaol (R), President of Easybike, stand with a prototype Solex electrically-assisted bicycle, during a visit in Le Bourget, near Paris, September 5, 2013. REUTERS/Jacky Naegelen