The CFPB oversees the practices of companies that provide financial products and services, from credit cards and payday loans to mortgages and debt collection.
Every time I have visited London over the past several years, I invariably hear the same story from my taxi driver. As we drive past Hyde Park on the way to or from the airport, he will say, “You see that building?” nodding towards a modern glass tower next to the Mandarin Oriental hotel. “Some of the apartments cost £50 million or more. And no one lives there—it’s always dark.”
London, New York, and Paris are being overtaken over by an invasion of the global super-rich, which one writer described as a shift from mere gentrification to full-on “plutocratization.” According to some, this influx is driving artists from cities, turning them into what musician David Byrne called “pleasure domes for the rich.” For a growing number of musicians and artists, the transformation of our cities is personal and palpable. Yes, there’s a certain irony in the spectacle of highly successful rock stars pining after the good old days of cheap rent, cheap drinks, and creative nirvana, even if we can empathize with their frustration at CBGB’s being turned into an upscale clothing store. But artists’ complaints reflect the increasingly intense competition for urban space. Artists, musicians, and other creatives who helped transform old, neglected urban spaces into studios and workspaces in the 1970s and 1980s are being elbowed out of those same places by investment bankers, business professionals, techies, and even the global super-rich.
There’s little doubt that creative urban ecosystems exist in a precarious balance. Take away the ferment that comes from urban mixing, and the result is a sterile sameness. In SoHo today, luxury shops seem to outnumber performance spaces and studios. But even if rising housing prices are making it harder for a new generation of artists and creatives to get a toehold in SoHo and neighborhoods like it, that doesn’t mean that entire cities have become creative dead zones.
So does this change really threaten the creativity of our most vibrant cities? Despite the influx of wealthy people into the urban core and the transformation of some leading creative neighborhoods, there is little evidence of any substantial diminution of these cities’ overall creative capacities. Cities are big places, after all; creativity can and does move from neighborhood to neighborhood. In time, the ongoing transformation of these cities may truly jeopardize their creative impetus, but that hasn’t happened yet.
Creativity vs. the super-rich
The global super-rich who are snapping up real estate in superstar cities aren’t really buying “homes,” in the conventional sense of that term, to live in and use. They aren’t looking for places to raise their families or to do productive work. Instead, they’re looking for safe places to park their money. If luxury real estate was once the most obvious way to measure and display wealth as “conspicuous consumption,” it has become something more mundane today — a new class of economic asset used to store and grow wealth.
New York and London do in fact have considerable shares of the world’s wealthiest people. New York tops the list with more than 100 billionaires and London is sixth with 50. London leads in “ultra-high net worth” individuals with $30 million or more in assets, with New York in fourth place.
But, do the super-rich really damage great cities? While rarely occupied trophy apartments and lights-out buildings certainly make neighborhoods less vibrant, there are simply not enough super-rich people to deaden an entire city or even significant parts of it. New York City, after all, has more than eight million inhabitants and some three million housing units; its 100-plus billionaires and 3,000 or so ultra-high net worth multi-millionaires wouldn’t fill half the seats in Radio City Music Hall.
Ultimately, it’s not so much a plutocratic incursion of billionaires that is transforming many of the world’s great cities, but the much greater numbers of relatively well-off people who are flocking back to them, including the growing ranks of startup entrepreneurs, venture capitalists, and well-paid techies who are trading in their houses in the suburbs for condos, apartments, and townhouses in the city.
Creativitiy vs. the techies
The movement of urban high-tech startup companies and talent into urban centers is a real sea change. The leading high tech companies of the 1970s, ‘80s, ‘90s and even the early 2000s – like Intel, Apple, and Google – were all housed in corporate campuses in Silicon Valley. Microsoft’s headquarters was in suburban Redmond, Washington. Other high-tech companies clustered along the Route 128 suburbs outside Boston, in the suburbs of Austin, or the office parks of North Carolina’s Research Triangle.
That geography has changed dramatically as venture capital investment and startup companies have become much more urban. Today, dense, urban San Francisco tops suburban Silicon Valley’s as the world’s number one location for venture capital-backed startups. New York City — and in particular a small area of Lower Manhattan — is second. Across the U.S., more than half of venture capital investment and nearly six in ten of U.S. startups are in urban zip codes.
Startups and cities are a natural match. Urban areas provide the diversity, creative energy, cultural richness, vibrant street-life, and openness to new ideas that the talent who launch and work for startups is looking for. Their industrial and warehouse buildings provide flexible and reconfigurable work spaces. While many large, well-established tech companies which require large headquarter sites – like Microsoft, Apple, and Facebook to name a few – remain in the suburbs, the startups that power innovation and growth draw their strength and inspiration from cities.
Cities also help new companies attract talent. Today’s hottest startups concentrate on digital and social media, games, and creative applications, which draw on the deep pools of designers, composers, scenarists, musicians, marketers, and copywriters that can be found in cities.
Still, as technology companies and techies who work for them head back to cities, they are increasingly being blamed for their deepening problems of housing affordability and urban inequality. In spring 2014, protests broke out in Oakland against the private buses that shuttle tech workers from their homes in the city’s gentrifying urban core to their jobs in the corporate campuses of Silicon Valley. In San Francisco’s Mission District, protestors dressed as clowns formed human pyramids, bounced giant exercise balls, and performed the can-can in front of a Google bus.
To what extent are urban startups and the techies who are increasingly settling in cities responsible for rising urban housing prices, inequality, and gentrification? On this, the evidence is actually mixed. There’s no question that the urban tech incursion has put pressure on housing costs, especially in cities like San Francisco, New York, Boston, and Seattle. The connections between economic inequality and urban tech are less clear-cut, however. For instance, the presence of startups and venture capital correlate with some measures of inequality but not others. Moreover, tech companies are huge drivers of innovation, economic growth, jobs, and much-needed tax revenues that cities can use to address and mitigate the problems that come with them.
Are cities becoming more or less creative?
There can be no doubt that the recent influx of the very rich, of tech startups and their employees, and of financial and other professionals into cities is generating real challenges and prompting highly charged conflicts. But has it blunted those cities’ cultural creativity, as some have charged? In a word, no: The creative strengths of superstar cities have actually increased.
The concentration of creative industries and creative jobs in superstar cities like New York and LA remains strong. LA’s concentration of artistic and creative fields across the board is nearly three times the national average, while New York’s is more than double. LA’s concentration of fine artists, painters and sculptors is nearly four times as high as the national average; New York’s is one-and-a-half times as high. New York has nearly three times and LA more than twice the national average for musicians and singers. Both metros have more than three times the national average for writers and authors. And New York’s concentration of fashion designers is ten times higher than the national average, while LA’s is nearly eight times higher.
But, for all of the dire warnings coming from established musicians and artists, these cities are at least as artistically creative as they ever were, and even more technologically innovative. On the whole, their creative economies are considerably stronger than they were back in the 1970s and 1980s. Would anyone really want to trade New York’s or LA’s economies today for their economic situation back in the 1970s or 80s? The answer is obvious. The addition of high tech to these cities’ traditional strengths in artistic creativity, has made their economies stronger.
Put bluntly, some of the noisiest controversies regarding our changing cities spring from the competing factions of a new urban elite. The much bigger problem is the widening gap between this relatively advantaged class and everyone else. It’s the poor and the working classes who are truly being displaced and shunted aside in our thriving cities, and the way to help them is not to turn off the spigot of wealth creation, but to make their flourishing economies more encompassing and inclusive.
This article is adapted from the author’s recent book The New Urban Crisis.
A new report finds the vast majority of global executives remain optimistic for the future.
Elon Musk, Tim Cook and more voice their discontent–and plans for what’s next.
The plan proposes deep cuts to medical research funding, including a $1 billion cut from the National Cancer Institute’s budget.
New research from the bipartisan Committee for a Responsible Federal Budget shows that the economy is more likely to grow at an annual rate of less than 2%.
Few things are stable in economic life. Sixty years ago, Nicholas Kaldor laid down one seemingly immutable fact: The share of the national income taken by labor was constant. In other words, every year workers took home around two-thirds of the economic pie, and the owners of capital took the rest. The stability of this ratio was, as his fellow Cambridge economist Lord Keynes said, “something of a miracle.”
So much for miracles. In America, labor’s share has been on the decline for about three decades, and it has accelerated since the turn of the century. The fall has also occurred in most other countries. In the U.S. the share of income that workers take home each year now hovers around 60%.
There’s a lot of debate over the magnitude of the decline, but there is broad consensus that it has happened and that it’s a big deal. The disagreement is over why labor has been losing out.
Maybe the leading story is “Robocalypse Now.” Rapid technological advance in computers and automation has led to a huge fall in the quality-adjusted price of capital equipment. Firms replace expensive people with cheaper machines, and the fraction of added value going to workers falls — or so the story goes.
The problem with this story is that it assumes firms have the flexibility to switch easily between labor and capital. In wonkish terms, the capital-labor elasticity of substitution must be greater than one for this hypothesis to be true, so that a fall in the price of machines spurs employers to spend more on machines relative to workers. The empirical evidence does not suggest that labor and capital are sufficiently substitutable for this to occur.
The other main explanation for labor’s downfall is that Chinese imports have caused employers to outsource employment to Asia, causing a fall in the labor share domestically, even if labor utilization does not fall globally. But the data shows a fall in labor’s share in nontraded sectors like retail and wholesale, not just in traded sectors like manufacturing. Moreover, China itself is experiencing a sharp decline in labor’s share. Thus it’s unlikely that China is the main cause of the decline in the labor share in the West.
In a recent paper, we put forward a different story based on the rise of superstar firms. More and more industries have become “winner take most” over the last 40 years. Firms with a cost or quality advantage have always enjoyed higher market shares. In the “good old days,” more-productive companies would take a bigger slice of the market, but there would be plenty left over for their rivals. By contrast, the new behemoths of our age capture a much larger fraction — if not all — of their market. Think of Google, Apple, and Amazon in the digital sphere, or Walmart and Goldman Sachs in the offline world.
It’s not that superstar firms pay lower wages; in fact, on average, big firms usually pay more. But wages at superstar firms represent a smaller fraction of sales revenue. Superstar companies make lots of profit per employee, so as they become a bigger and bigger part of the economy, the overall share of GDP going to labor goes down.
Several pieces of data support our superstar theory. First, our theory predicts that markets will become increasingly concentrated, and sure enough that’s what the data shows.
A second implication of the theory is that the labor share in the average firm won’t have changed very much. Our data confirms that this is the case. What’s happened is that the mass of the economy has shifted between firms, toward the superstar companies.
Third, the industries that have become more concentrated are the very same sectors where the labor share has fallen the most. These are the industries where the reallocation toward superstar firms has increased the most.
The rise of superstar firms isn’t simply a reflection of a rigged economy where the incumbents are colluding to rip off consumers and workers. The patterns we document are not confined to the U.S.; they are happening all over the world. That suggests that changes in antitrust law or other policy-specific factors can’t be the primary driver.
If policy isn’t driving rising concentration, what is? One possibility is that the near-frictionless commerce enabled by the internet and globalization enables more efficient firms to be rewarded with higher market shares today than in the past. Indeed, we show that the industries where concentration has risen the most are also those where there has been the fastest growth in productivity and innovation.
Does this mean we should be relaxed about the move to an economy dominated by superstar firms?
No, for at least two reasons.
The declining labor share has been coupled with a slowdown of economic growth, which means declining pay and job opportunities for the average worker. In effect, workers are getting a shrinking slice of a barely expanding pie.
And although superstar firms may have become dominant through competitive means, they may cement their position using methods that are less benign. Large, profitable firms invest heavily in lobbying to protect their advantage, skewing the political system. They may pursue business strategies that make it hard for new challengers to grow and flourish. Microsoft became a near-monopolist in operating systems through innovation and good decisions, but then strove to keep entrants like Netscape out of the market. Even when superstars fail to deter competitors, they can often just buy up the new threat, as Facebook has with Instagram and WhatsApp.
The risk is that the dominance of superstars will eventually contribute to a fall in economic dynamism and productivity that will further entrench their power. Left unattended, this may stoke popular resentment of big business or big government, or both. Arguably, this process is already well under way.
Joe Bower and Lynn Paine “had me at hello” (to quote Jerry Maguire) with their new HBR article, “The Error at the Heart of Corporate Leadership.” Laying out their data, they find that long-term oriented companies create more financial value and more jobs. In fact, if more American companies were focused on the long term, they estimate, investors would have an additional $1 trillion, workers would have an additional 5 million jobs, and the country would have more than an additional $1 trillion in GDP.
I agree with their vision of a future in which more companies focus on the long term and become more productive for the world (their findings accord with my own work on the dangers of short-termism). But I long for actions that go beyond admonitions to managers and boards to do better, that give both parties a better chance to stand up to capital markets players, like activist hedge funds, pressuring them to become too short-term focused. While no one thing can or will drive the transformation, there is one change that I think is doable and would make a real difference: holding-period-based voting rights.
My basic premise is that corporations need to make capital investments that take years — not months, weeks, days, minutes or seconds — to pay out. Hence they need capital that is with them for longer rather than shorter periods. One capital form is debt: a bond. Bonds give the debtor certainty over its ability to use the capital for a fixed period of time (unless there is a call provision written into them). Common equity is supposed to be even longer term – once it is given to the company, it notionally has the capital forever.
However, unlike a bond, common equity is not long-term/forever on predetermined, immutable terms. Because anybody can buy that equity on a stock market without permission of the company, buyers can fundamentally change the terms of that equity investment. An activist hedge fund, for example, can exert massive pressure to change the strategy and/or investment approach of the company based on its ownership of a sufficient share of the company’s equity.
For the creation and deployment of strategy, long-term capital is more valuable than short-term capital, plain and simple. If you give me $100 but say that you have the right to take it back or change the pattern of its usage with 24 hours notice, it isn’t nearly as valuable to me as if you say I can use it for 10 years for the purpose for which we agree it is intended before I am allowed to assist on any change in purpose or to ask for it back.
While not fully analogous, if Singapore sovereign wealth fund Temasek holds its equities for, say, 8 years on average while quantitative arbitrage hedge fund Renaissance Technologies holds them for milliseconds at a time, the Temasek capital is more valuable than Renaissance’s. And arguably, the capital of Renaissance is more valuable than “activist hedge funds” Triac or Pershing Square who will jerk around your strategy with one thing in mind – short-term trading gains.
The fundamental difference in value to the company notwithstanding, those equity dollars invested are given exactly the same rights.
Instead, we should adopt holding-period based voting rights. Each common share should give its holder one vote per day that holder has owned the share – up to 3,650 days or 10 years. So if you hold 100 shares for 10 years, you get to vote 365,000 shares. If you sell your shares to an activist hedge fund (or anybody else), they get 100 votes the day they buy the shares. If its intention is to become a long-term holder, eventually it will get 365,000 votes. If it is Pershing Square, the interests of the investors who have provided the company with more valuable capital will swamp its influence — appropriately.
The adoption of holding-period based voting rights would provide long-term shareholders with the reward they deserve for providing the most valuable kind of capital. And it would make it extremely hard for the Pershing Square’s of the world to take over effective control of companies because the minute they acquire a share, its voting rights get reduced to a single vote. This would frustrate the “arbs” (arbitrageurs) who make their returns by buying up shares and hoping to sell to the acquirer at the time of their successful takeover bid.
Critics of this idea argue that it would simply ensconce bad management. No, it wouldn’t change investors’ incentives one iota. Currently investors sell their economic ownership of a share along with one voting right to the arbs or the activists if they are unhappy with management. Under holding-period based voting rights, they sell their economic ownership of a share along with one voting right to the arb/activist if they are unhappy with management. There is no difference whatsoever.
However, if a lot of shareholders are happy with management and the activist wants to make a quick buck by gaining enough voting control to force the company to sell assets, cut R&D investment, or anything else bad for its future, this will reduce the ability of the activist to collect enough voting rights to force management to make short-term decisions.
There is no cost to anybody other than the investors in hedge funds. For everybody else in the system, it is an improvement.
Some questions have what I like to call a catalytic quality. That is, they do for creative problem-solving what catalysts do in chemical processes: they dissolve barriers and accelerate progress down more productive pathways. Take the question that has lately been put on the political table because of the prosperity bind facing so many mature economies. Innovation abounds (especially in technology) and new value is being created hand over fist — yet the resulting wealth gains go to the few, while the many wind up financially worse off. Case in point, even if everyone benefits from the freer flow of information allowed by the internet, information alone can’t pay your heating bill or buy a new transmission for your car. As the costs of things like phone calls and televisions have dropped, the cost for basic necessities like food and housing has soared.
This vexing global challenge causes me to wonder, “What if the world’s innovators turned their sights on solving this problem? Could we make growth more inclusive?” That’s a huge question, and I hope it’s a catalytic one.
This article is one in a series related to the 9th Global Peter Drucker Forum, taking place in November 2017 in Vienna, Austria.
Many people are already trying to answer it. There’s Zeynep Ton’s path-breaking work on “why ‘good jobs’ are good for business.” There are people in the business community launching initiatives like I4J, a group that challenges the Silicon Valley tech community to “innovate for jobs.” Scholarly publications like the Journal of Management Studies put out calls for new research that could inspire enterprise-level change. Perhaps my favorite example is the MIT Inclusive Innovation Challenge. Now in its second year, it distributes cash prizes to inspiring organizations who “are using technology to reinvent work and create economic opportunity for people below the top rung of the economic ladder.”
A top prizewinner for 2016 was a company not too far from MIT geographically — but in an industry that seems 100 years distant. It’s an apparel manufacturer called 99Degrees Custom. In a wonderful bit of symbolism, it is located in the historic Everett Mill in Lawrence, Mass., which the company does not exaggerate in calling “the birthplace of the U.S. Industrial Revolution.” In the midst of a new, twenty-first-century technological revolution, no workers are being made redundant by machines. Instead, by using robotics, lean processes, and agile systems, 99Degrees Custom is allowing new jobs to be created using “sew free and wearable technologies, on-demand manufacturing, and fastest-turn development and production cycles.” Company founder Brenna Schneider told The Boston Globe: “You hear a lot of fear about machines replacing our jobs and excitement about robots… But I see there is an incredible sweet spot between the machine and human side.”
I’ve always been a believer in the principle of celebrating what you want to see more of. This prize competition does that. But there is something more that a well-constructed “challenge” gets right. Whether it’s Open IDEO’s ongoing challenges, or Elon Musk’s Hyperloop Challenge, or any of Peter Diamandis’s amazing, annual XPRIZE competitions (to name just a few), their power lies in posing a provocative question, and then flinging the doors wide to whoever can respond to it. The creative energy unleashed not only produces one winner — it engages a whole spectrum of people in a quest, and galvanizes the collective conviction that a solution must be found.
Peter Drucker, long before me, championed the power of questions as the critical fuel behind high-impact challenges. “The most serious mistakes are not being made as a result of wrong answers,” he once observed. “The true dangerous thing is asking the wrong question.” (And since the lion’s share of my work is with corporate clients, this one also resonates: “My greatest strength as a consultant is to be ignorant and ask a few questions.”) I think that if Drucker were alive today, he would see this question—how can we ensure that we not only have growth, but that growth is inclusive?—as the right one for our times. It’s the kind of question that anyone can engage with, and one that may well require everyone’s engagement to solve and at the core, inquisitive leadership is ultimately inclusive leadership. Wouldn’t it be fitting, if our society’s biggest question about inclusion could only be answered through inclusion?
This post is one in a series leading up to the 2017 Global Drucker Forum in Vienna, Austria — the theme of which is Growth and Inclusive Prosperity.
On Sunday, April 23, French voters will go to the polls to choose from 11 candidates in the first round of an extraordinary presidential election. The candidates from the two chief political parties have been trailing political newcomers and fringe party candidates. The top two vote-getters are expected to face each other in a runoff election on May 7.
For insight into this unusual race and to what extent it reflects a larger shift toward economic and political populism, I spoke with Vincent Pons, an assistant professor at Harvard Business School. He cofounded a startup involved in electoral campaigns in France, and he’s completing a case study about the rise of populism in France. Our conversation has been edited for length and clarity.
HBR: It appears probable that each of the two political parties that have governed France for decades won’t advance their candidates to the runoff election. How surprised are you?
Pons: Very. It’s a very new situation. The candidate of the incumbent Socialist Party, Benoit Hamon, has a very, very low vote share in the polls, less than 10%. Overall, there’s a major reaction against traditional politicians and parties that have held power in the past. This profits, of course, the National Front party and its candidate, Marine Le Pen, but also Emmanuel Macron, who is a very new face in French politics.
Do you consider Macron a populist candidate?
I don’t. He has taken some populist stances, but at one point or another all the candidates in this election have criticized what they call “the system.” This is clearly a populist argument, this idea that there’s a political elite that is serving its own interests and hurting the people.
Another ingredient of populism is pitting people against a foreign threat, for instance, immigrants or rich American companies. Le Pen is pushing against immigrants, against Europe, against globalization. But not Macron. He has been advocating for globalization, for Europe, for an open society.
After populist victories in the British Brexit vote and the U.S. presidential election, do you think Le Pen will win?
If you look at the polls, she doesn’t have any chance to win in the second round [the runoff election]. But she may win in the future. She’s very young. She’s 48. Unless the situation improves in France, as time passes, her arguments could become stronger and stronger.
To what extent is populism in France paralleling the populism in Great Britain or in the United States?
It looks like all these things are happening at the same time in totally different countries, so there must be some common causes. But at the same time, all these countries have very different political systems, electoral systems, and economic situations. The narrative in the U.S. is that globalization is creating winners and losers, and that the losers have to bring someone to power who will defend their interests better. There are some issues with that narrative in France. The French social welfare system is much more generous than in the U.S., which means that whoever loses their job, for instance, gets a lot of protection.
How are economics driving the rise of populism in France?
The segments of the population in which Le Pen is very strong today are in regions in east and northeast France that have been hit by deindustrialization. In other countries, it’s older voters who are very reactionary. In France, it’s the young voters who vote massively for Le Pen, voters under the age of 25. They face a 25% unemployment rate. The overall unemployment rate is 10%.
She’s also very strong among midlevel employees and blue-collar workers, who previously tended to vote on the left. When you’ve had around 10% unemployment since 2007, at some point people lose trust in politics. So people who are unemployed or people who fear for their job or the job of their kids turn to the National Front in search of protection.
That’s new for the party. Le Pen’s father [party founder Jean-Marie] tended to be very far right not only on cultural issues — he was even far right economically, very neoliberal. And for that reason he was in favor of Europe and the European Common Market. His daughter is very different. The version of populism that is offered by [Marine] Le Pen, the combination of left-wing and of right-wing ideas, is quite interesting and novel and is contributing to her appeal. For instance, she is advocating for lowering the retirement age, for increased protection by the state of the French poor. She advocates targeting social benefits and state health to French citizens, and taking away benefits and state money from immigrants who don’t have citizenship.
What are the other key economic issues of the presidential campaign?
Another important economic question is what to do with the French national debt. Some candidates, like Jean-Luc Mélenchon, propose a major fiscal stimulus to improve the sluggish economy, but at the cost of further increasing the debt. Other candidates, such as Macron and François Fillon, favor fiscal discipline and cutting public expenditures, because the cost of servicing the debt is a large share of the budget.
Another major economic issue is whether to stay in the euro zone or leave the euro [currency]. The candidates in the center or traditional moderate left and right all are in favor of staying in the European Union and the euro zone, whereas Le Pen has announced the first thing she would do is hold a referendum on exiting the euro. Mélenchon has said that he would try to renegotiate a number of European treaties with Germany, to get a better deal for France, and that if the negotiation failed he would consider leaving the euro.
To what extent are globalization and international trade issues in the race, as they were in the Brexit and the U.S. presidential votes?
It’s similar, but globalization can be a bit vague. The National Front has equated globalization with Europe. It’s presented as the loss of control over French borders, over who enters France, and so it’s a critique of the influx of refugees in the sense that they take the jobs and the social benefits away from the French.
It’s also presented as unfair competition from other countries. Namely, they don’t pay the same wages. They don’t have the same protection of their workers, and so it’s easier for them to sell at a lower price. These are a major aspect of the discourse of the National Front, and also to some extent of the far-left Mélenchon.
What’s the biggest misconception about the French presidential election you’ve been seeing in international media coverage?
There’s the tendency to equate what happened in the UK and the U.S. with Le Pen’s possible victory. The populism of Le Pen has, of course, commonalities, but these are specific. One innovation of the National Front is the combination of these far-right cultural stances with leftist platforms. It’s very different from the U.S., where the Tea Party would fight against more government intervention.
Another difference is that, unlike in the U.S., where Trump was a candidate of one of the two major parties, Le Pen remains a candidate of a marginal party that has never really been in power. At the end of the day, many voters voted for Trump simply because they were Republican voters, and he was the Republican candidate.
This is serving Le Pen to the extent that voters dislike the traditional parties, but it’s also disserving her in the sense that some people are skeptical that she would be able to run the country.
In Europe, there have been two recent votes, in Austria and the Netherlands, where voters have rejected populist candidates.
Who wins the election is one thing. Another thing is the vote share. And in Austria and the Netherlands, there is no question that populist parties have made a lot of progress, and this is not stopping for now.
Is this unusual roster of politicians a sign that something else is at stake?
France and other countries may be at the verge of a major political recomposition. The two candidates that have dominated the polls for the entire campaign are Marine Le Pen and this centrist candidate, Emmanuel Macron. This fact perhaps announces a new order, which is no longer organized along the divide between left-wing and right-wing parties, but rather along a divide between forces in favor of a society open to immigration, globalization, and Europe on the one hand, and forces in favor of a society that closes its borders to these different influences on the other hand.
The reason that populism and the far right have risen in France has a lot to do with the convergence between the political platforms of the moderate right and the moderate left. When the Socialist Party’s François Mitterrand was elected in 1981, the left came to power for the first time in decades. The right was struck with panic. The French franc fell, and the stock market was in free-fall. There were stories of the bourgeois leaving Paris with their cars filled with gold to make sure that their money would not be confiscated by the state. People feared that this new candidate would implement radically new policies.
Now there’s a sense that the policies and the platforms of the left and the right have very much converged. They’re very much the same. One example is the agreement of the moderate left and right in favor of Europe, when many French voters feel the European Union is responsible for their economic difficulties. This creates a boulevard for new forces like the far right that say, look, we have the young alternative and a different vision. That’s a very powerful message.