German economics minister “austerity policies have failed”

There was a report in the papers this morning about a horrific beating in one of the poorest migrant areas north of Paris. The article – Roma teen attacked: the images that will shock France was really a repeat of a story in the UK Telegraph. I don’t want to go into the details because I don’t know them. But what is apparent in modern day Europe is the increasing breakdown of social stability and an emerging law of the jungle driven by unemployment, poverty and the inevitable social exclusion. I do not accept that migrants have to poor just because they start with nothing and cannot speak the local language with proficiency if at all. What is clear is that austerity is undermining the social fabric of Europe and this shocking incident is just one of many manifestations of that. And it will get worse.

France has been hit particularly hard by fiscal austerity. The difficult times that it has created have then led to the inevitable divisions appearing within the population and the call for scapegoats. Typically migrants become the easy targets for the wrath felt by an increasingly unemployed population.

As the Telegraph article reports:

France’s prime minister, Manuel Valls, came under stinging criticism late last year when, as interior minister, he said most Roma in France had no intention of integrating and should be sent back to their countries of origin.

The European elections in May clearly demonstrated the success of Marine le Pen’s Front National was concentrated in areas of France with very high unemployment. The right-wing political parties exploit the hardship in the same way that the Nazis did in Depression-ridden Germany in the early 1930s.

The point is that the blind obsession with keeping the euro and the EMU is actually undermining the broader (and much more important) European Project, which is seeking political and legal cooperation. The European Union is a great construct because it can be the vehicle for spreading the rule of law throughout Europe, which is one of the basic elements of a sophisticated and tolerant society.

But the EMU has failed to deliver another essential element to that task – high employment rates, stable and growing real incomes and the capacity for the disadvantaged to enjoy social mobility. Exactly the opposite has happened and the consequences of that are now undermining the basic adherence to code of law.

The Table shows the official unemployment rate for the NUTS2 regions (the bold are the NUTS1 and the indented are the NUTS2 sub-regions in each where there are such disaggregations), denoted UR, the youth (15-24) unemployment rate, and the Proportion of total unemployed in each region that have been continuously unemployed for more than 52 weeks (PLTU) – that is, the long-term unemployment proportion.

The following map shows the distribution of unemployment rates at the NUTS1 level. The Table that follows provides detail for each of these regions at the NUTS2 level of regional disaggregation.

The next map from INSEE via Le Monde, shows more detail for the third-quarter 2013 (Source)

You can see concentrations (known as ‘hot spots’ in spatial statistics) of unemployment above 12.5 per cent and the red are above 15 per cent. The teenage rates are much higher than this.

There is a close correspondence between the areas of high unemployment and the rising popularity of the Front National. The France 24 news service reported that:

A new geographical survey of supporters of the far-right party led by Marine Le Pen shows its electorate is located in two key regions in northern and south-eastern France.

That was so in 2009, but the NI popularity spread more widely in the 2014 European Parliament elections. The fact remains though that this sort of political popularity can only really prosper when people are in despair.

The specific incident of violence against the Roma teenager that is now attracting world headlines occurred in the town of – Pierrefitte-sur-Seine – which is is extremely disadvantaged. It is one of 9 municipalities in the Communauté d’agglomération Plaine Commune, which is one of the most disadvantaged areas in France.

In 2013, GDP per capita was the lowest in France and around 1/2 the Paris-average. 31 per cent of the households were under the poverty line and 46 per cent lived in social household. The unemployment rate was 17 per cent.

Urban planners have reported that the air quality in the Seine-Saint-Denis area is very poor and the Plaine Commune lies within the intersection of several major freeways that run across and around Paris.

It has long been a target for social interventions to reduce social exclusion arising from lack of work, poverty and lack of French language skills.

The URBACT programme is a Europe-wide initiative, which aims to promote sustainable urban development via learning. It works with cities to sort out the major issues. It operates under the aegis of the European Commission and receives around 78.6 per cent of its funding from the European Regional Development Fund and the rest is made up of national government contributions (7.6 per cent) and local contributions (13.8 per cent). It has a number of projects, one of which is the social inclusion with specific target groups including the Roma population (Roma-Net I and II projects).

The Roma population is Europe’s largest minority (there are around 12 million) and generally endure (Source):

… high levels of social exclusion from employment, education, health and social services; high rates of illiteracy; and poor school attendance. Many Roma people live in segregated, isolated districts where overcrowding and a lack of basic facilities contribute to poor health.

The data shows that unemployment rates within this group are around 70 per cent

Between 2002-2006, URBACT “studied integrated mediation policies within the framework of urban safety – an extremely wide subject encompassing numerous fields of application (the family, education, justice, violence, etc.)”. The aim was to improve safety within cities and develop cooperation between school, police and others.

One of the target cities was Pierrefitte-sur-Seine. The resulting report – Pierrefitte-sur-Seine, mediation to resolve day-to-day conflicts – noted that:

As the poorest city in one of France’s most highly stigmatised departments, Seine Saint-Denis, Pierrefitte has more than its fair share of human, social and economic problems.

Austerity makes all these statistics worse but ruins the the prospects of people who lie behind the data.

The EU observer reported this week that German minister calls for EU budget rules to be loosened.

The Minister for Economics, Sigmar Gabriel and has meetings earlier this week with his French counterpart and said afterwards that:

Countries that are embarking on reforms must have more time to cut their deficits, but it has to be binding – a binding chance to reform in return for more time

Gabriel is the “leader of the Social Democratic Party, the junior coalition party of Angela Merkel.”

He now plans to put a joint proposal with the French to lesson the emphasis on austerity. The French will sign up because the European Commission has now warned them under the Excessive Deficit Procedure and it would require a major cut in government spending to reach the 3 per cent Stability and Growth Pact limits any time soon.

The estimates are that France will run a 3.8 per cent of GDP this year and might get it down to 3.4 per cent next year. Even that feat will cause unemployment to rise further.

The Italians are also said to be willing to support a change to EU policy on deficits.

Sigmar Gabriel was reported as saying the “austerity policies have failed”. He was quoted as saying:

Anyone who doubts that austerity has failed should look at the election result of the right-wing parties.


The sort of violence that was reported in the papers today is going on all the time in European suburbs where disadvantage is high and being exacerbated by the austerity ideology.

Perhaps the pictures are not as graphic but the social dislocation that is behind such attacks and the vilification of minorities are directly related to the failed economic policies that have been pursued by European elites.

It is a long way back for Europe from where they have moved. It is better to start now than to leave it any longer though.

The long-terms costs are already massive but they could easily become catastrophic with total social meltdown the result.

All strength to Herr Gabriel, even though he isn’t the full deal at least he is willing to say that austerity has failed.

That is enough for today!

(c) Copyright 2014 Bill Mitchell. All Rights Reserved.

This Post Has 17 Comments

  1. Humans are,by their nature,tribal. Many nations are essentially just a big tribe. Tribesmen and women are naturally suspicious about the outsider,the other,sometimes with good reason. It is more about culture rather than race although race is often a pointer to culture.

    This part of human nature is not going to change soon,if ever. Attempts by the hierarchy and their supporters to force change,for whatever misguided reason,beyond the level of tolerance of the native population, will result in retribution,sometimes violent.

    This forcing of cultural change has been happening for many years in Europe with the predictable result of a rise in extreme nationalist political parties and violent incidents. Australia has and is following suit, just on a smaller scale.
    There is increasing self inflicted ghettoisation of cultural outsiders who are unwilling to assimilate. Parts of Western Sydney are examples.

    Whatever the motives of the hierarchy and their fellow travellers,economic and/or ideological, their actions are not in the interests of the nation as a whole.

  2. ” The Roma population is Europe’s largest minority (there are around 12 million) and generally endure (Source): … high levels of social exclusion from employment, education, health and social services; high rates of illiteracy; and poor school attendance. ”
    Bill, while I accept that no minority should be mis-treated, I’m not entirely certain the Roma wish to integrate into the broader European society. The Roma have been around in Europe a long time and from what family and friends who have lived and continue to live there have told me, these are a group of people who have their own customs and traditions; and part of that is to live amongst other nationalities but not integrate, i.e. work, school, etc. So I guess the moral of the story is that you can “lead a horse to water, but you can’t make him drink it”. Even when economic conditions in Europe have been much better than now, these are people who largely chosen to live on the fringe. Having said that I accept that worsening economic and social conditions as a result of austerity, are bringing out the right-wing extremist nuts who are looking for any minority to blame their woes.

  3. Podargus, I can’t think of any form of cultural assimilation better than giving minorities jobs. Australia has done well, historically, because most of the cultures came in the early 20th century before unemployment was a policy tool. Now when unemployment, particularly youth unemployment, is so high the youths literally have nothing better to do.

    Anthony, that’s a statement framed in an ‘I’m not racist, but…’ way. The Chinese have their own customs and traditions – in many parts of the world Chinatown is not associated with a ghetto but a certain cultural center of whichever city it is in and we have taken many aspects of Chinese culture into Western culture. Why? It would take a thesis but I hypothesise is that there were jobs for the Chinese.

    In more recent times it was the Greeks and Italians emigrating, and they could have jobs, because there were jobs to spare – successful integration! Now the Eastern European countries are emigrating, where are the jobs?

    Workmates become friends, their children then grow up together, suddenly within a generation going back to the old way is (for the majority) unthinkable.

    Just a thought.

  4. Matthew B,it appears that you are part of the problem,not the solution.

  5. Care to elaborate, Podargus, how being pro-integration is part of the problem?

  6. Mathew B,try to put aside your ideological blinkers for a moment and read my original comment and that of Anthony Zappia again.Both comments refer to the lack of desire to integrate and assimilate of many immigrant cultures.

    You may simply be one of the Off With The Pixies people who are invariably quite noisy in regard to a number of crucial issues we have in Australia,always to the detriment of realistic thinking. On the other hand you could be one of the hierarchy or one of their fellow travellers who have a dog in the fight aka self interest.

    I don’t bother arguing with or trying to educate either of the above cohorts.It is a waste of time.

  7. So I’m either one straw man or the other, and neither is worthy of your precious insight? Woe is me.

    The many success stories of integration in Australia disprove your notion, Podargus. Immigrant Greeks, Italians, Chinese, Vietnamese, Indians, Maoris etc have all kept their culture intact AS WELL AS picked up Australian culture.

  8. The messages of the elites of NUTS2 to their ordinary people is NUTS2U.

  9. I agree that bigotry does come naturally for some people. It is part of their self-identity.

  10. Thanks for this post and the interesting observations about France. Unfortunately, I don’t think Gabriel’s statement will prove much if a bellwether of change. He wants to make relaxation of budget targets highly conditional on policies that are often misguided, and in any event he’s talking only about slowing down austerity rather than reversing it. I wrote more about this on my blog.

  11. Matthew B.
    Australians have not exactly welcomed Lebanese immigrants into the country with welcome arms.
    So it’s not all smooth sailing.

  12. Alan Dunn,
    I would refer you back to my first post, which I put forward the idea that integration was dependant on jobs being available. The Lebanese came in significant numbers after the civil war in the 70’s and the following unrest in Lebanon – almost precisely when full employment was being abandoned and, as Bill has pointed out so well, youth unemployment in particular has gotten a lot worse.

  13. Matthew B, you appear to be intimitating some hidden racism in my comments. I merely stated what other people have observed and reported to me that the Roma have tended to not take up job opportunities or education and generally chosen to remain apart from other communities. However if you know otherwise – perhaps your experience with the Roma is better than everyone else’s on this forum – that’s fine. Let’s hear what you know of this community. IMHO your comparison of the Roma to other communities such as the Chinese is not valid. Perhaps someone on the forum has some stats or research on this.

  14. It has been observed and reported to me that all Americans are rude, all English whinge, all Asians are good at math, all youth are lazy, all Australians are racist and all theories regarding MMT are a fantasy. Amongst others. You see my point? Apologies if it came off that I was implying you were racist personally.

  15. Don’t ask me, I’m an Australian, so of course I’ll say yes 😉

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