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Will Britain ever manage to leave “Hotel California”?

It is now just six months before Britain formally leaves the EU. This article details the economic and political issues, followed by a commentary on the tactics being deployed by all sides.

The Duran

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Authored by Alasdair Macleod via GoldMoney.com:


Last thing I remember, I was
Running for the door
I had to find the passage back to the place where I was before
“Relax” said the night man,
“We are programmed to receive.
You can check out any time you like,
But you can never leave![i]


The Eagles lyric from the 1970s is nearly as old as the United Kingdom’s membership of the EU, but it is an apt description for her predicament. There are so many twists and turns in the EU’s corridors, that it is proving difficult for Britain to “find the passage back to where it was before”. Britain has checked out but cannot seem to leave.

The EU has firmly rejected Mrs May’s Chequers customs proposals, which is not surprising to those paying attention. Their chief negotiator, Michel Barnier, had already made his position clear. Last week, Mrs May sought to take her case to his superiors, effectively asking them to overrule him. It was a tactical error that backfired badly.

Fortunately for her PR machine, the blunt rejection by the EU, particularly the comments of President Macron, deflected the immediate blame of Mrs May’s failure to the EU leaders’ intransigence. Consequently, early signs of electoral opinion have firmed in favour of a no-deal Brexit. Merci, President Macron, for clarifying that point for the British electorate.

It is now just six months before Britain formally leaves the EU. This article details the economic and political issues, followed by a commentary on the tactics being deployed by all sides.

The economic case for Brexit

The economic case for Brexit centres on the law of comparative advantage. This law explains that rather than waste your time making or doing something someone else does better, you should buy it from him instead than wasting time trying to compete. It also explains that even though you might be very skilled at something but can add greater value to society by doing something else, you and the community as a whole are better off if you do that something else.

For example, Winston Churchill built a garden wall at his country home. He turned out to be an excellent brick layer, as visitors to Chartwell can confirm. But there were other competent bricklayers on the Chartwell Estate. Besides building walls as a hobby, it will be clear to everyone that Churchill added considerably greater value to society as a politician and an author and was paid more than he ever would be as a bricklayer.[ii]

What was true for the great man is also true for all of us. It allows us to maximise the potential for a community of producers by buying each other’s output in accordance with the law of comparative advantage. And what holds for a community scales up to nation states. If China can supply us with goods cheaper and better than we can ourselves, we should buy them from China, and not waste our time and resources doing it less effectively. Scarce capital resources, including labour, must be released for more profitable activities.

If China offers steel at a lower price than it can be made in Britain, British manufacturers who incorporate steel in their products would be stupid not to benefit. Meanwhile, British steel manufacturers should get out of the mild steel business, and perhaps produce high quality speciality steels to regain their commercial edge. This is what British Steel has done. The common European response is to protect their industries with import tariffs, and by the end of 2016 there were 12,651 known EU tariffs in force.[iii]

Only free markets, more specifically the consumer and also buyers of intermediate production, can decide where the comparative advantage lies. In free markets, the consumer is king, and the businessman who fails to respond to his customers’ demands should amend his offering.

Businesses try to avoid this truth by lobbying politicians to yield a monopolistic advantage. Business leaders present themselves to the political class as expert representatives for their industries, and they warn politicians of the supposed horrors of free competition. An established business would rather be regulated than face competition, because the regulator will help guarantee profit margins, and licence monopolistic behaviour.

This is crony capitalism, which is not free markets. It is everywhere, but more in some places than others. It is particularly virulent in Brussels, where big business effectively sets product standards to disadvantage smaller competitors. The law of comparative advantage is trampled underfoot.

Lobbying by special interests is not confined to Brussels, being a feature of Westminster life as well. The Cronies target Brussels where the Europe-wide power resides, as well as national governments in coordinated campaigns. The result is an institutionalised crony-based system bound together by a political class that has been bought by special interests.

To a businessman, a good politician is one who once bought, stays bought. On the one side of the Brexit tussle you have protectionism, which has become thoroughly institutionalised, and on the other you have free marketeers. Interestingly, the UK’s Conservatives are meant to be the party of free markets and individualism, yet even their ranks include ardent statists, their true colours exposed by the Brexit debate.

The political case for Brexit

The political case is simply one of democratic accountability. In the UK, parliament has always been sovereign, that is to say the elected members of the lower house form governments and make the laws. There has to be a general election at least every five years, to give the electorate a vote on the government’s competence. Furthermore, if during a government’s term it loses the confidence of a simple majority of MPs, it must call a general election. By these means, the British public exercises its democratic rights.

There is no such accountability in Brussels. Only the unelected executive can propose directives and regulations, and the parliament has an equal say in passing them. In practice, the EU parliament is packed with establishment MEPs and nothing initiated by the executive is rejected. Democratic accountability is a fig-leaf and never gets in the way of the unelected executive.

Very rarely, the electorate is asked for its view on a simple matter of principle by referendum. Referendums are technically advisory, but in practice a parliament that goes against the public’s wishes expressed in a referendum is denying the electorate its democratic mandate. Having called a referendum, if a government then fails to respect the result, what was the point in calling it in the first place?

The first referendum in Britain was held on 5th June 1975, where the question asked was, “Do you think that the United Kingdom should stay in the European Community (the Common Market)?” It was held two years after Britain had actually joined, but it was clearly on a simple matter of principle. There was another nationwide referendum on proportional voting, which was rejected. The 2016 Brexit national referendum was only the third ever held. They are not frequent events, though the device has been used regionally as well (i.e. the Scottish referendum).

At the time of the 1975 referendum, the EC was little more than a trading bloc, whose members traded freely with each other without tariffs, while significant tariffs were imposed on imported goods from non-member states. Communications were such that proximate markets were easier to service than distant ones. These were the important economic arguments for Britain joining at that time.

But since then, the EU has taken democratic accountability away from national parliaments principally through the Maastricht and Lisbon treaties and is on its way to becoming a fully-fledged super-state. Meanwhile, WTO tariffs have gradually declined to single figures, and the internet has made distances between suppliers and consumers far less of a hurdle to trade. With the importance of being in a trading bloc now a growing obstacle to global free trade, there is no valid reason to justify the loss of democracy.

This is the crux of the Brexit debate: the economic benefits have gone along with democracy. The Remainers deliberately avoid the democratic issue and instead deflect the debate into economic unknowns. The statist establishment both outside and inside the UK persists in threatening that Brexit will lead to a large fall in GDP, rise in unemployment, disrupt trade with the EU, threaten medicinal supplies, prevent planes landing, and so on. The list of these supposed negatives is extensive, but it is increasingly clear Remainers are only making up scare stories to avoid debating the democracy issue.

The EU’s position

The establishment in Brussels is rock-solid in its determination to continue on its course of devolving power from national governments to itself. Furthermore, the EU parliament has imposed its red lines as inviolable, the principal ones being:

  • Any transitional deal will be enforced and overseen by the EU’s Court of Justice (ECJ).
  • UK Citizens in the EU and EU citizens in Britain should be guaranteed reciprocal treatment.
  • The UK must adhere to EU environment and anti-tax evasion rules.
  • The UK should pay the EU costs that “arise directly from its withdrawal”.[iv]

As well as these red lines, there are the “four freedoms”, that are also sacrosanct: the free movement of goods, services, capital and persons. In order to satisfy these freedoms, the UK would have to remain in the customs union, or be out of the EU completely. It is that simple.

To ensure that Britain complies with the four freedoms in any half-way house, it would have to accept the jurisdiction of the ECJ, instead of the British courts. The European parliament’s position is less important than the four freedoms, because the parliament is little more than a rubber-stamp applied to pre-agreed policy.

Since the EU parliament’s resolution was passed, there appears to be behind the scenes attempts to persuade the British electorate to reconsider. The first strategy was to simply block all British attempts at achieving a negotiated settlement. This led to the British government offering an alternative compromise, the Chequers plan, which resulted in the resignations of the Brexit ministers, David Davis and Steve Baker, as well as the Foreign Secretary, Boris Johnson. The second strategy has been running concurrently with the first, and that is to undermine the Brexit case, in the hope a second referendum would reverse, or at least neutralise the Brexit referendum.

To this end, Brussels has covertly supported Remainers’ campaigns, a tactic that has worked before in referendums in other EU states when a first referendum rejected treaty proposals.[v] This brings us up to last week, when at an EU leaders’ dinner at Salzburg, Mrs May saw her Chequers plan firmly rejected in bluntly undiplomatic terms.

It seems after all that the EU is now prepared to negotiate a Canada Plus deal, as advocated by dissenting Conservative MPs. As a matter of fact, that has been more or less the EU’s position all along, believing it is far less attractive to the UK than staying in the EU. It was the free market alternative that was rejected by Mrs May in favour of her Chequers plan.

[The Canada trade agreement removes nearly all tariffs on goods but accepts some regulatory barriers to trade. There are limitations imposed on services. It gives the UK total control over immigration, it would be outside the customs union, have its own regulations, being not bound by a common rulebook. A joint committee between the UK and EU would resolve trade issues. This is roughly the agreed position with Canada and South Korea. A Canada plus deal would be an improved one based on this.]

There is probably more to the EU’s offer to discuss a Canada plus deal than meets the eye. It is always helpful to look at a problem from the EU’s point of view, so we can deduce what the thinking in Brussels might be. It is probably as follows. Mrs May wants to have the advantages of a being a member state without being in the customs union. She thinks the Chequers halfway house will appease the Remainers, many of which are her principal advisors. This is the only credible logic behind the Chequers proposal, which is a fudge to give the appearance of not being in the customs union. The Irish border question is a red herring, floated by the Irish Prime Minister and Mr Barnier. Mrs May has either fallen for it or is using it to justify her position to her cabinet.

Therefore, and of this Brussels appears to have convinced itself, the alternative of a WTO deal, or any deal close to it, such as Canada plus, is a bad outcome for Mrs May and her government. It is also undesirable for the EU, particularly Ireland, if Britain did leave the EU entirely. The reason it is important for Ireland is twofold: her main trading partner is the UK, and most of her non-UK European trade transits across the UK to the mainland by ferries and road. Those are the Irish issues that really matter.

The initial plan had been to stop Brexit. By proposing free trade negotiations, the EU might have originally reasoned it will never happen. Remember, the EU has had the international establishment (the IMF, central banks – visibly the Bank of England, big business and various back channels) working to overturn the referendum. The hope is a free trade agreement would not get through the UK parliament, and by assisting the Remainers in the UK who are pushing for a second referendum, it is thought the British public will change its mind. However, the EU’s thinking might have changed in recent weeks on the referendum issue, because it is almost certainly aware its plans are failing.

In conclusion, the EU is losing the battle for British hearts and minds in a second referendum. There can be no halfway house between being in or out of the customs union. If Brussels is to get its promised £39bn settlement, it will now have to embrace a free trade deal.

The British position

The Chequers plan was put together by Mrs May’s permanent staff, led by Olly Robbins. A charitable view is that Robbins’s plan was intended to achieve parliamentary support from a broad parish of Remainers and middle-of-the-roaders and neutralise ardent Brexiteers. She went over the heads of her own and the Brussels negotiating teams. Mrs May met a number of EU leaders on a one-to-one basis, including Angela Merkel, in the weeks before the Chequers plan was sprung on her cabinet, so it was widely assumed she had cleared it with them. Thinking she had a plan acceptable to her fellow EU leaders, she sprung it on her cabinet as a fait accompli. It was May’s way or the highway.

Instead, it has been a disaster because of the outright rejection by the EU leaders in Salzburg, who appear to have backtracked on their private meetings with her. This was hardly surprising, given Mrs May was arrogantly dealing over the EU chief negotiator’s head (Mr Barnier), who also attended the Salzburg dinner, and would have made his authority in the matter clear.

Despite this setback, at the time of writing, she is still clinging on to the Chequers plan. Her latest idea is to threaten the EU with the prospect of Britain lowering corporation tax to make Britain a corporate tax haven. This could be another tactical mistake, because Brussels is likely to read it as desperation to save a plan that is unacceptable.

Mrs May is now under increasing pressure to back down. And quickly, because she faces Conservative Party members at the annual conference next week. Salzburg was clearly a stitch-up that backfired, and she can only be clinging on to the assumption that her earlier more positive meetings with EU leaders are what really matters.

The evidence suggests this is a mistake, from which she must backtrack. It will never get the requisite support from Brexiteers, because it leaves the EU still controlling trade laws and regulations. This contravenes the democracy issue explained above. It is also likely to compromise Britain’s negotiating position with respect to free trade agreements with other countries.

Furthermore, a trade agreement which is far closer to free trade has already been proposed by both Brussels and the Brexiteers, based on the Canadian FTA. While the EU might have offered something that they thought would never be taken up, it is now in play.

That leaves the problem of how to get any trade agreement with the EU through Parliament. It is never certain that a no-deal or even a free trade agreement with the EU would find the necessary parliamentary support, given the strength of the Remainer lobby, and Labour’s insistence on staying in the customs union.

However, the Labour Party is badly divided on Brexit, and it is quite likely that if a vote was held on a Canada plus deal, the government would succeed in getting it passed.

Where to from here?

It is conference season, that time in the UK when the political parties invite their faithful members to come and listen to speeches from leading politicians. The Labour Party had theirs this week, and the Conservatives hold their’s in Birmingham next week. The problem for Mrs May is that apart from some vanishing sympathy over how she was treated by the EU leaders in Salzburg, her Chequers plan is deeply unpopular. If she thinks she can sell it at Conference, she is likely to be disappointed.

It is bound to be a topic in her closing speech next Wednesday. But Boris Johnson is due to speak in a fringe meeting, and he is immensely popular with the constituency members and a good orator to boot. He is also controversial with all shades of media opinion, which means he is box-office. The day of Mrs May’s speech is likely to be swamped with news headlines about Boris. If she is to avoid a PR disaster, she would be well advised to urgently ditch her Chequers plan and embrace the concept of Canada plus.

Whether she does we will find out next week. If she refuses to move, then I expect a leadership challenge by Christmas. Why? Because for the Brexiteers, the first option was to persuade Mrs May to drop Chequers and oversee negotiations on Canada plus. If that fails, then MPs face the next general election with the prospect of losing their seats. It won’t be the Labour Party’s socialist agenda that gets them unelected, but the Conservative’s failure to deliver Brexit.

The key to exiting Hotel California lies increasingly in the freest trade agreement possible, not in the Chequers plan. Mrs May must give up on the Chequers plan or she will be soon gone.

[i] Eagles, their album: Hotel California, 1976.

[ii] I must confess to cribbing this fine example of comparative advantage from Daniel Hannan, Conservative MEP for South-east England.

[iii] Unveiling the cost and extent of the 12,651 EU import tariffs – and why we should repeal them by Dan Lewis of the Economic Policy Centre.

[iv] Resolution passed by EU parliament sitting in Strasbourg, 5 April 2017 516 votes to 133, with 50 abstentions.

[v] An example of covert support for Remainers is reported here: https://www.express.co.uk/news/uk/905714/Brexit-news-Nigel-Farage-Michel-Barnier-EU-UK-European-Union-LBC

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Tom Welsh
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Tom Welsh

“Besides building walls as a hobby, it will be clear to everyone that Churchill added considerably greater value to society as a politician and an author and was paid more than he ever would be as a bricklayer”. And that example neatly demonstrates why economics is such a useless pile of old rubbish. Churchill built walls because he enjoyed doing so, and it relaxed him – thereby possibly enhancing his performance in his “more important” work. But the point is that human beings are not robots programmed to maximize their wealth. We have many instincts and desires, only a few… Read more »

AM Hants
Member
AM Hants

Do you wish to stay in the EU?
EU continues dictating, with full control over your thoughts and actions.

Do you wish to leave the EU?
Self determination and full independence.

Now what is difficult to understand. We were not asked to merge BREXIT, with ‘Remoan’

Hard BREXIT, bank account closed to the EU, using WTO trade tariffs, for deals.

Normski
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Normski

My thoughts exactly – lets just get the hell out of the EU and then deal with the consequences!.

Flying Gabriel
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Flying Gabriel

We are all just prisoners here, of our own device.

Rick Oliver
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Rick Oliver

Britain is good at going to War , just get some backing from your brothers in arms and declare WAR on the EU . Simple , game over !!!

Karl
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Karl

The British government have no intention of taking the UK out of the EU because they want to board the gravy train once they leave UK politics,they only care about themselves not their country!

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French opposition rejects Macron’s concessions to Yellow Vests, some demand ‘citizen revolution’

Mélenchon: “I believe that Act 5 of the citizen revolution in our country will be a moment of great mobilization.”

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Via RT…


Macron’s concessions to the Yellow Vests has failed to appease protesters and opposition politicians, such as Jean-Luc Mélenchon, who called for “citizen’s revolution” to continue until a fair distribution of wealth is achieved.

Immediately after French President Macron declared a “social and economic state of emergency” in response to large-scale protests by members of the Yellow Vest movement, promising a range of concessions to address their grievances, left-wing opposition politician Mélenchon called on the grassroots campaign to continue their revolution next Saturday.

I believe that Act 5 of the citizen revolution in our country will be a moment of great mobilization.

Macron’s promise of a €100 minimum wage increase, tax-free overtime pay and end-of-year bonuses, Mélenchon argued, will not affect any “considerable part” of the French population. Yet the leader of La France Insoumise stressed that the “decision” to rise up rests with “those who are in action.”

“We expect a real redistribution of wealth,” Benoît Hamon, a former presidential candidate and the founder of the Mouvement Génération, told BFM TV, accusing Macron’s package of measures that benefit the rich.

The Socialist Party’s first secretary, Olivier Faure, also slammed Macron’s financial concessions to struggling workers, noting that his general “course has not changed.”

Although welcoming certain tax measures, Marine Le Pen, president of the National Rally (previously National Front), accused the president’s “model” of governance based on “wild globalization, financialization of the economy, unfair competition,” of failing to address the social and cultural consequences of the Yellow Vest movement.

Macron’s speech was a “great comedy,”according to Debout la France chairman, Nicolas Dupont-Aignan, who accused the French President of “hypocrisy.”

Yet many found Melanchon’s calls to rise up against the government unreasonable, accusing the 67-year-old opposition politician of being an “opportunist” and “populist,” who is trying to hijack the social protest movement for his own gain.

Furthermore, some 54 percent of French believe the Yellow Vests achieved their goals and want rallies to stop, OpinionWay survey showed. While half of the survey respondents considered Macron’s anti-crisis measures unconvincing, another 49 percent found the president to be successful in addressing the demands of the protesters. Some 68 percent of those polled following Macron’s speech on Monday especially welcomed the increase in the minimum wage, while 78 percent favored tax cuts.

The Yellow Vest protests against pension cuts and fuel tax hikes last month were organized and kept strong via social media, without help from France’s powerful labor unions or official political parties. Some noted that such a mass mobilization of all levels of society managed to achieve unprecedented concessions from the government, which the unions failed to negotiate over the last three decades.

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Soros Mimics Hitler’s Bankers: Will Burden Europeans With Debt To ‘Save’ Them

George Soros is dissatisfied with the current EU refugee policy because it is still based on quotas.

The Duran

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Via GEFIRA:


After the Second World War, many economists racked their brains to answer the question of how Hitler managed to finance his armament, boost the economy and reduce unemployment.

Today his trick is well known. The economic miracle of Führer’s time became possible thanks to the so-called Mefo promissory notes.

The notes were the idea of the then President of the Reichsbank, Hjalmar Schacht, and served not only to finance the armament of the Wehrmacht for the Second World War, but also to create state jobs, which would otherwise not have been possible through the normal use of the money and capital markets, i.e. the annual increase in savings in Germany.

The Reich thus financed the armaments industry by accepting notes issued by the dummy company Metallurgische Forschungsgesellschaft GmbH (hence the name Mefo) rather than paying them in cash. The creation of money was in full swing from 1934 to 1938 – the total amount of notes issued at that time was 12 billion marks. The Reichsbank declared to the German banks that it was prepared to rediscount the Mefo notes, thus enabling the banks to discount them.

Because of their five-year term, the redemption of notes had to begin in 1939 at the latest. This threatened with enormous inflation. Since Schacht saw this as a threat to the Reichsmark, he expressed his doubts about the Reich Minister of Finance. But it did not help, and Schacht was quickly replaced by Economics Minister Walther Funk, who declared that the Reich would not redeem the Mefo notes, but would give Reich bonds to the Reichsbank in exchange. At the time of Funk, the autonomous Reichsbank statute was abolished, the Reichsbank was nationalized, and inflation exploded in such a way that Mefo notes with a circulation of 60 billion Reichsmark burdened the budget in post-war Germany.

George Soros also proposes such a money flurry in the style of Schacht and Funk.

Soros is dissatisfied with the current EU refugee policy because it is still based on quotas. He calls on the EU heads of state and governments to effectively deal with the migrant crisis through money flooding, which he calls “surge funding”.

“This would help to keep the influx of refugees at a level that Europe can absorb.”

Can absorb? Soros would be satisfied with the reception of 300,000 to 500,000 migrants per year. However, he is aware that the costs of his ethnic exchange plan are not financially feasible. In addition to the already enormous costs caused by migrants already in Europe, such a large number of new arrivals would add billions each year.

Soros calculates it at 30 billion euros a year, but argues that it would be worth it because “there is a real threat that the refugee crisis could cause the collapse of Europe’s Schengen system of open internal borders among twenty-six European states,” which would cost the EU between 47 and 100 billion euros in GDP losses.

Soros thus sees the financing of migrants and also of non-European countries that primarily receive migrants (which he also advocates) as a win-win relationship. He calls for the introduction of a new tax for the refugee crisis in the member states, including a financial transaction tax, an increase in VAT and the establishment of refugee funds. Soros knows, however, that such measures would not be accepted in the EU countries, so he proposes a different solution, which does not require a vote in the sovereign countries.

The new EU debt should be made by the EU taking advantage of its largely unused AAA credit status and issuing long-term bonds, which would boost the European economy. The funds could come from the European Stability Mechanism and the EU balance of payments support institution.

 “Both also have very similar institutional structures, and they are both backed entirely by the EU budget—and therefore do not require national guarantees or national parliamentary approval.“

In this way, the ESM and the BoPA (Balance of Payments Assistance Facility) would become the new Mefo’s that could issue bills of exchange, perhaps even cheques for Turks, Soros NGOs. Soros calculates that both institutions have a credit capacity of 60 billion, which should only increase as Portugal, Ireland and Greece repay each year the loans they received during the euro crisis. According to Soros, the old debts should be used to finance the new ones in such a way that it officially does not burden the budget in any of the EU Member States. The financial institutions that are to carry out this debt fraud must extend (indeed – cancel) their status, as the leader of the refugees expressed such a wish in his speech.

That Soros is striving to replace the indigenous European population with new arrivals from Africa and Asia is clear to anyone who observes its activities in Europe. The question is: what does he want to do this for and who is the real ruler, behind him, the real leader?

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The French People Feel Screwed

For the first time in his presidency, Macron is in trouble and Europe and America are looking on.

The Duran

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Authored by David Brown via The Gatestone Institute:


On December 4, French Prime Minister Édouard Phillipe told deputies of the ruling party, “La République en Marche”, that a proposed fuel tax rise, which had led to the largest protests France has seen in decades, would be suspended.

The protesters, called Gilets-Jaunes — “Yellow Vests,” because of the vests drivers are obliged by the government to carry in their vehicles in the event of a roadside breakdown — say that the fuel tax was the last straw from a president who took office with a promise to help the economically left-behind but instead has favoured the rich.

Even by French standards, the protests of the “Yellow Vests” during the weekend of December 1 were startling. Burning cars and vast plumes of grey smoke seemed to engulf the Arc De Triomphe as if Paris were at war. Comparisons were drawn with the Bread Wars of the 17th Century and the spirit of the Revolution of the 18th Century.

For more than two weeks, the “Yellow Vests” disrupted France. They paralyzed highways and forced roads to close — causing shortages across the country – and blocked fuel stations from Lille in the North to Marseilles in the South.

During protests in France’s capital, Paris, the “Yellow Vests” were soon joined by a more violent element, who began torching cars, smashing windows and looting stores. 133 were injured, 412 were arrested and more than 10,000 tear gas and stun grenades were fired.

One elderly lady was killed when she was struck by a stray grenade as she tried to shutter her windows against the melee.

There was talk of imposing a State of Emergency.

The “Yellow Vests” present the most significant opposition French President Emmanuel Macron has faced since coming to office in May 2017. Unlike previous protests in France, which have divided public opinion, these have widespread support – 72% according to a Harris Interactive Poll published December 1st.

Fuel tax rises — announced in November before being retracted on December — were intended to help bring down France’s carbon emissions by curbing the use of cars. Macron makes no secret of his wish to be seen as a global leader for environmental reform.

He forgets that back at home, among the people who elected him, fuel prices really matter to those outside big cities, where four-fifths of commuters drive to work and a third of them cover more than 30km each week.

The increases have incensed people in smaller communities, where they have already seen speed limits reduced to please the Greens and cuts to the local transport services.

These additional costs-of-living increases come at an extremely bad time for ordinary French people working outside of Paris. Lower-middle class families are not poor enough to receive welfare benefits but have seen their income flat-line whilst cost-of-living and taxes have risen.

An analysis by the Institut des Politiques Publiques think-tank shows that benefits cuts and tax changes in 2018 and 2019 will leave pensioners and the bottom fifth of households worse off, while the abolition of the wealth tax means that by far the biggest gains will go to the top 1%

This is tough to swallow. Macron is seen as being out of touch with ordinary people and is unlikely to escape his new title, “the President of the Rich.”

“People have this feeling that the Paris technocrats are doing complicated things to screw them,” said Charles Wyplosz, an economics professor at the Graduate Institute of International and Development Studies in Geneva.

It is probably not as complex as that. The French people feel screwed.

As employment and growth are slowing, Macron, for the first time in his presidency, is under serious pressure. Unemployment is at 9%; his efforts to reform Europe are stalling, and his approval rating has plummeted to just 23% according to a recent opinion poll by IFOP.

Images of Macron at the Arc De Triomphe daubed in graffiti calling for him to step down, or worse, have done little to bolster his image abroad.

So far, Macron had said he would not bow to street protests. To underline his point, in September 2017, he called protestors against French labour-market reform “slackers”.

The political U-Turn on the fuel tax is a turning point for the Macron presidency. The question is : What next, both for Macron and the “Yellow Vests”?

Macron most likely needs to plough ahead with his reform agenda, and doubtless knows he has the support of a solid majority in the National Assembly to do so. France is crippled by debt (nearly 100% of GDP) and its grossly bloated public sector. There are 5.2 million civil servants in France, and their number has increased by 36% since 1983. These represent 22% of the workforce compared to an OCDE average of 15%.

Tax-expert Jean-Philippe Delsol says France has 1.5 million too many “fonctionnaires [officials]. When you consider that public spending in France now accounts for 57 per cent of gross domestic product. Soon the system will no longer function as there will be less and less people working to support more and more people working less”.

Macron’s mistake, in addition to a seeming inclination for arrogance, is not to have made national economic reform his absolute priority right from his initial grace period after his election. Lower public expenses would have made it possible to lower taxes, hence creating what economists call a virtuous circle. Instead, he waited.

Now, at a time when he is deeply unpopular and social unrest is in full sway he is looking to make further reforms in unemployment benefits, scaling them back by reducing the payments and the length of time beneficiaries can receive the money. The “President of the Rich” strikes again.

There is talk that he may also re-introduce the wealth tax to try to placate the protestors.

Macron’s presidential term lasts until May 13, 2022. Understandably, Macron will be focused on the elections to the European Parliament expected to be held May 23-26, 2019. Headlines have signalled that Marine Le Pen and the National Rally (formally National Front) are ahead in the polls at 20%, compared to Macron’s En Marche at 19%.

The shift is understandable, given the divide between the countryside, where Le Pen has solid support, and the cities, where Macron’s centre-left prevail.

In contrast, the “Yellow Vests” have galvanised support after standing up for the “impotent ordinary”, and seem much buoyed by the solidarity they have been shown by both fire fighters and the police. There are images online of police removing their helmets and firefighters turning their backs on political authority to show their support for the protestors.

Whilst Macron’s political opposition may be fragmented, this new breed of coherent public opposition is something new. Leaderless, unstructured and organised online, the “Yellow Vests” have gained support from the left and right, yet resisted subjugation by either.

Being leaderless makes them difficult to negotiate withor to reason with in private. The “Yellow Vests” seem acutely aware of this strength, given their firm rebuttal of overtures for peace talks from the Macron government.

Enjoying huge support from the public and with reforms to the social welfare system on the horizon, the “Yellow Vests” are not going away.

For the first time in his Presidency, Macron is in trouble and Europe and America are looking on.

After Macron rebuked nationalism during his speech at the armistice ceremony, Trump was quick to remind the French President of his low approval rating and unemployment rate near 10%. A stinging broadside from Trump on twitter suggests that Macron may well be relegated to Trump’s list of global “Losers“:

“Emmanuel Macron suggests building its own army to protect Europe against the U.S., China and Russia. But it was Germany in World Wars One & Two – How did that work out for France? They were starting to learn German in Paris before the U.S. came along. Pay for NATO or not!”

The “impotent ordinary” in the United Kingdom, who might feel betrayed over Brexit, and the nationalists in Germany, who have suffered under Merkel , are no doubt staring in wonder at the “Yellow Vests”, wishing for the same moxie.

The historian Thomas Carlyle, chronicler of the French Revolution, said the French were unrivaled practitioners in the “art of insurrection”, and characterised the French mob as the “liveliest phenomena of our world”.

Mobs in other countries, by comparison, he argued were “dull masses” lacking audacity and inventiveness. The blazing yellow vests of the French protest movement , however, have made Macron appear increasingly dull and weak too.

David Brown is based in the United Kingdom.

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