Home > Uncategorized > Let them pump biodiesel… Or: the French yellow vests are right about prices.

Let them pump biodiesel… Or: the French yellow vests are right about prices.


There is a lot of ado about the French yellow vests who, somewhat violently and in a tenacious way protest the french government and battle the french police. The protests erupted when the Macron government increased gasoline and diesel prices.  Was this the proverbial drop which made the bucket overflow (”la goutte d’eau qui fait deborder la vase” or, to comply with Anglosaxon culture and to connect with the new nationalism in Anglosaxonia (not to be confused with Niedersachsen)): “the straw which broke the camels back”)? Yes, it was. The statisticians of Eurostat measure consumer price inflation for the Eurozone as a whole but also for the seperate countries. A distinct category is ‘administered prices inflation’. Administered prices are prices which are set (directly or indirectly) by the government. In France, administered prices inflation has been higher than consumer price inflation for quite some time (graph). This is not just the responsibility of the government. Prices of consumer products like clothes, shoes and electronics are still dropping because of low price imports from China (electronics, textiles, soon to be followed by planes), Turkey (textiles), Jordan and Bangla Desh (clothes) and cheap tourism services (Turkey, Egypt), which are part of the consumer price index too. But: the French government is totally responsible for the tax cuts for the 1%.. French people  understood. Extremely smart guy macron didn’t. He will have to roll back those taxes even if this means chasing his friends out the country. Above, I made a bit of a mockery of the national nature of the protests. The rise of administered prices is not just a french phenomenon and highly related to EU austerity policies which tend to directly tax consumption (VAT increases!) and therewith to erode purchasing power. Bad. As long as we have the Euro, we will need EU policies guaranteeing the purchasing power of hard working people but also of pensioners and whatever. Increasing relative prices of polluting products can be part of those policies – but only if this leads to direct decreases in VAT or lower prices of other products. Administered prices have increased too much, already. My take: a much lower VAT on hours of labor.

Note: VAT is of course not a part of labor costs. But in the EU people do have to pay 18 to 23% VAT when, for instance, a garage bills hours of labor used to repair a car. Lower this.

  1. Steve McGiffen
    February 8, 2019 at 10:19 am

    Don’t believe the French media, which focus on what in the overall picture are quite isolated acts of violence, many in response to police violence. The vast majority of GJs are non-violent protesters, many are old, there is a large proportion of women, and one has the impression of ‘ordinary’ people who have simply had enough of Emmanuel I’s reign. The GJ movement is also helping to break down barriers of isolation which capitalism inflicts on people, especially retired people. It’s still not clear which was the movement will jump, but all of its demands up to now could have been taken from a progressive social democratic programme. The fascists are sniffing around, bit there is more than a smattering of people of colour involved in the actions.

  2. patrick newman
    February 8, 2019 at 11:12 am

    Raising taxes on CO2 emitting fuel is necessary for the measures on combatting climate change but it should be balanced by reducing other taxes and VAT would be a good case as it is largely a regressive tax, especially compared with income tax. In most cases raising the price of public services (cost of a passport) is a de facto regressive tax.

  3. February 8, 2019 at 12:13 pm

    The yellow vests have rediscovered distributed intelligence and call it collective intelligence. This is an important step to understand for economists who have a somewhat vague and clouded idea of free markets being dependent on accurate information.

    As a sociologist witness of saturday vigil for peace meetings on my town common, I have personally witnessed the idea of multiple human brains purposefully communicating with each other once per week and then going home to communicate for six days with family and friends.

    The french are building autonomous democracy and are wise enough to know it is too soon to decipher what everyone is absorbing and synthesizing. I have tossed my hat into the ring as a placeholder independent green ecological socialist willing to campaign against a fully accepted democrat who marches for hunger yet at the same time says President Maduro is thuggish and we have to stand up for restoring democracy in Venezuela

    Candidates in the united states traditionally begin their campaigns with a book release. I have a new picture book with the first chapter completed and my local greens are not laughing at me, Here is chapter one, it’s short with paintings and my personal underlying economics of the information age;


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