Behind The Yellow Vests: The Great Fear Of Having Less And Less
PARIS — Did they really have to set France on fire for just a few cents? More than eight weeks after it began, the revolt of the "yellow vests' still seems hard to grasp.
For extremists on all sides who happily fanned the flames, it looked like the much-awaited beginning of the great revolution, but that didn't materialize. Others wanted to see it as the rebellion of the wretched of the earth, except that it wasn't the poorest who were rising. Others still consider it a hullabaloo of spoiled children.
But everyone is missing an essential piece of the puzzle: the great fear of having less and less. It is a fear that can be found in all developed countries and that no doubt explains, in large part, the rise of what is often called populism. And in France, that fear is even more acute than elsewhere.
You have to go back in time to understand what is at stake. The 20th century was the century of "always more and more." The standard of living rose faster in that century than ever before in history. Middle classes emerged in America and Europe, becoming the dominant group in society. Men and women in this group were convinced that tomorrow would be better than today, that their children would have it better than they did. And that was the reality throughout the second half of the century.
But two major changes disrupted the situation. First, the exhaustion of productivity gains that fueled higher incomes. Second, the advent of information technologies that favor high-skilled jobs (those who know how to exploit the opportunities of digital technology) and low-skilled jobs (especially those who are "uberized") over medium-skilled ones. This is the "hourglass effect" (or job polarization), amplified by stronger international competition. In all developed economies, middle-income jobs are disappearing in favor of low-income or high-income jobs.
This is where fear begins to appear. Middle classes now fear the future. Especially the least well-trained women and men who had managed to access some level of comfort. They fear for their condition, and even more so for that of their children. Their prospects, their horizon is falling.
Nobody likes to lose.
In the United States, the typical case is that of the industrial worker who loses his job. He finds a new job in the service sector, but it's more precarious, less well paid and, above all, comes with much weaker social protections. He's mad at the entire world and votes Trump.
The situation is different in France. Jobs are better protected by legislation (but this hasn't prevented the industry from conducting massive layoffs). Wages are rather preserved and evolve depending on collective agreements. An employee who finds a new job after having been dismissed benefits from actual social protection, even if there may be gaps in the coverage. The problem doesn't lie with the private sector. Companies were actually largely spared by the "yellow vest" protest movement, which has rarely targeted them.
So where do the "always less' complaints come from? The public sector, mostly. At the beginning of 2019, the best example is undoubtedly that of pensions. Officially, experts say in their jargon that "the trajectory is sustainable" after the many reforms carried out between 1993 and 2010. Except that contributions will increase — again — and pensions will decrease — again! Meaning less money for workers, who pay into the pensions system, and less purchasing power for pensioners, since their pensions will increase at a lower rate than overall prices — not to mention the fact that they already had to pay extra taxes last year.
The "always less' goes far beyond that. Tens of millions of French people are affected. A team of researchers from the French Economic Observatory (OFCE) has shown that the social and fiscal measures adopted between 2008 and 2016 have cut disposable income for households by 14 billion euros, or 1.4%.
This is obviously painful. Nobody likes to lose. Behavioral economists have examined this universal loss aversion (it has even been observed in animals). Basically, the effect of a loss is twice as large as the effect of a gain. In other words, the misfortune of losing one 100-euro note is of the same magnitude as the happiness of finding two.
But it's likely that loss aversion is even stronger for households that find themselves just on the edge, those that struggle to make ends meet each month and are so numerous among the "yellow vests." For them, the reduction of one tax or the increase of one social benefit is taken as a vital but quickly forgotten kiss of life. On the other hand, the raising of one tax or lowering of single allowance is experienced as an intolerable aggression, even if it is, in itself, minimal. The increase in taxes on diesel fuel at the beginning of 2018 was 9 cents per liter (about 10 euros per month for someone living 50 kilometers from work). The decrease in APL (personalized housing benefit) in 2017 was 5 euros per month.
In a country where public finances are both massive and unchecked, the government, and even more so the Ministry of Finance, has the permanent temptation to raise taxes and reduce benefits, which are easier than reforms. Technocrats in the other ministries, meanwhile, have a real talent for constantly inventing new norms, each justified in their own right but whose addition is unbearable for the most modest (recent changes to make vehicle inspections more expensive and demanding are a perfect example). The fear of having always less won't die out anytime soon.