By Lucy O’Carroll, Chief Economist, Aberdeen Solutions
It is hard to overstate the expectations resting on French President Emmanuel Macron’s shoulders. He has only just been elected, and already he is being heralded as Europe’s savior.
But high expectations can easily drift into unrealistic ones. A little circumspection would better serve us all.
Macron’s ascent is certainly remarkable. His party didn’t even exist 18 months ago. But he faces a Herculean task to meet the expectations that have been piled on him.
The French economy may now be firmly in recovery mode, but it is still suffering from a legacy of failed attempts at reform. Job creation remains a major challenge. Macron has moved swiftly to unveil his labor-market proposals, including changes to workers’ councils and the rules governing redundancy. His parliamentary majority should ease the task, but he faces challenges. Critics argue that the reforms fall short of the “revolution” he promised during the campaign. At the same time, the country’s powerful unions have already called a day of protest against the bill.
Macron is not the first politician to have faced stratospheric expectations in recent years. Alexis Tsipras, Prime Minister of Greece, promised to stand up to the country’s creditors following his election in 2015. He railed against the vested interests which he blamed for the country’s ills. But the sheer weight of Greece’s economic woes put a stop to his ambitions. The latest debt deal may have enabled Tsipras to promise “a definite end to the crisis,” but austerity has continued to weigh on growth and far-reaching debt relief remains a distant dream.
Matteo Renzi, former prime minister of Italy, was supposed to bring about the structural reforms his country has needed for so long. Yet he made the reckless decision to stake his position on a constitutional reform referendum, which he lost. Mr. Renzi may yet have his day – he is hoping to make a comeback as Italy prepares for elections within the next nine months – but on current polling he faces a more skeptical country than the one that first elected him to the highest office in 2014.
Few office holders can have had as high a burden of expectations placed upon them as Barack Obama. He was, after all, awarded the Nobel Peace Prize within a year of taking office in 2008. In his farewell speech earlier this year, Obama renewed the mantra that accompanied his first presidential campaign: “yes we can, yes we did, yes we can.” But legislative gridlock during his presidency and a new Republican administration bent on tearing up key parts of the Obama legacy have left a feeling of a promise unfulfilled.
Vesting strong hopes in individuals promising seemingly simple solutions may be inevitable – particularly during challenging times. After all, this is what we do when faced with choices in other areas of our lives. It may seem a leap from electing a president to eating a hamburger but, as Nobel-winning economist George Akerlof has observed, we tend to gravitate towards powerful brands when faced with uncertainty. Consumers without in-depth knowledge of the local hamburger scene, for example, frequent branded establishments on the grounds that they are likely to eat a better meal than in the average “unbranded” local restaurant.
Voters arguably gravitate towards politicians in a similar way. Electorates back simple slogans that seem to resonate, in preference to cool-headed, nuanced analysis that promises less – even if ultimately offering more. “Make America Great Again” may not have provided optimal, detailed solutions to the country’s ills, but it seemed to sum up something that voters wanted or felt at the time.
But if the individuals we elect to office have no history of bringing about constructive change, we shouldn’t assume that they suddenly have this remarkable power. Politicians will always make claims that they don’t keep in office. We have a choice about how much stock we put into those claims. Expectations should be reasonable if they are to stand a chance of being achieved.
Just like restaurants, leaders have to work at their brands; otherwise, they can become tarnished. Politicians turn out to be human after all. Change turns out to be really hard work, and sometimes doesn’t happen. Disappointment follows.
Investors have a pretty poor track record of judging political events. This is partly because, like voters or burger-restaurant patrons, they tend to look for clear-cut signals and make definitive predictions. But the truth is that it is almost impossible to extrapolate what a politician might achieve at the dawn of their time in office. Investors would do better to look through the soaring rhetoric that builds unrealistic expectations. They should ignore the noise and question the assumptions on which political promises rest. I don’t expect Macron to achieve as much as he’s predicted to in some quarters. And that’s fine.
A version of this article was published in City A.M. on July 4, 2017.