So we are witnessing a quest for the strategist State, with the idea that governments can potentially be more efficient than the market, yet this approach is highly questionable. France took this option at the end of the 1970s and in the 1980s – and we all know the outcome – yet the French government is again going down this route with EDF. Meanwhile in China, Xi Jinping is also taking matters back into his own hands. At the event marking the 40th anniversary of the liberalization reforms favored by Deng Xiaoping, the Chinese president indicated that state guidance was more effective than market signals, and this makes for a powerful move in China. This notion of a strategist State is also the foundation for the Dutch government’s move, as it seeks to safeguard jobs and the economy in the Netherlands, rather than focusing on enhancing efficiency and cooperation within the airline group.
Lastly, this determination to take the driving seat fits with a broader wave of renewed nationalism and populism in Europe. Several countries no longer want to play by the European rules and comply with its institutions, so there really is no reason why they would follow its economic rules. This is underpinned by the belief that each country is better off going it alone, rather than cooperating with others. However, this is a dangerous departure as it leads to fragmentation, as each country tries to make its national champion great again. This new outlook in Europe may be related to Brexit and the UK’s much weaker influence in Brussels, with the rest of Europe now getting back to their individual hobbyhorses.
This uncooperative approach is set to promote the role of the State in companies’ shareholding structures. The reasons I outline above are not going to disappear by themselves: Donald Trump and Xi Jinping will be in power for quite a while longer, and a change in policy does not seem to be on the cards. Looking further down the line, the Democrat candidate Bernie Sanders would not be against this kind of process.
Meanwhile, growth is not going to take off suddenly over the months ahead, so States will continue to want to go it alone and adopt a more strategist stance. In this respect, the European elections in May will be a useful litmus test, revealing the extent to which Europe is shifting towards a more fragmented economy.
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