Riot-geared: the tensions behind France’s unrest

Hey, Ryan Reynolds here for Mint Mobile. You know one of the perks about having four kids that you know about is actually getting a direct line to the big man up north. And this year he wants you to know the best gift that you can give someone is the gift of Mint Mobile's unlimited wireless for $15 a month. Now, you don't even need to wrap it. Give it a try@mintmobile.com Switch upfront payment.

Of $45 for a three month plan equivalent to $15 per month. Required new customer offer for first three months only. Speed slow after 35 gigabytes if network's busy, taxes and fees extra. See mintmobile.com hey, Ryan Reynolds here wishing.

You a very happy half off holiday because right now Mint Mobile is offering you the gift of 50% off unlimited. To be clear, that's half price, not half the service. Mint is still premium unlimited wireless for a great price. So that means half day.

Yeah.

Give it a try@mintmobile.com Switch upfront payment.

Of $45 for three month plan equivalent to $15 per month. Required new customer offer for first three months only. Speed slow. 135 gigabytes of network busy taxes and fees extra. See mint mobile.com.

Hello, and welcome to the Intelligence from the Economist. I'm your host, Jason Palmer. Every weekday we provide a fresh perspective on the events shaping your world. There are a few things that give economists sleepless nights, like when wages and inflation go up together, threatening a wage price spiral. Our correspondent says not to worry. Those spirals are far scarier in theory than they are in practice. And maybe you want a meaty meal, but maybe you want it to be cruelty free. Researchers are chasing up one way to satisfy both desires. How about making burgers from extinct animals? First up, though, What might have been a routine traffic stop has turned into national riots in France, shining a light on the country's policing and squeezing President Emmanuel Macron from both ends of the political spectrum. Today, Mr. Macron will meet with leaders of both houses of Parliament as he tries to bring an end to the violence. Last Tuesday, a teenager named as Nael M was fatally shot by police in the Paris suburb of Nanterre. What's followed is nightly riots, looting and unease. Over the weekend, Niall's grandmother called for the rioters to stop, But it's not clear whether the unrest will stop. Although things seemed calmer over the weekend, on Saturday, a car was set alight and rammed into the home of the mayor of another Paris suburb. Prosecutors opened an attempted murder investigation. Plenty of People even in the suburban housing estates where the unrest has flared, want an end to the violence. An association of mayors has called for mass public demonstrations today to rally for peace. Yet whatever happens, a fault line has been exposed, putting pressure both on police forces and on President Macron.

So France has now seen six nights of violence, mostly in the banlieue. That's the the high rise housing estates in the suburbs of French cities.

Sophie Petter is the Economist's Paris bureau chief.

This followed the killing of a 17 year old by a policeman last Tuesday. Things were a bit calmer last night. There were 157 arrests made, and that's way down on the 1,300 who were arrested on Friday night. So there is a sense in which this may have peaked, this wave of violence. But it's been, you know, very nasty. It's gone on for a long time and it's posed really the most difficult challenge, I think, for President Macron in recent months.

And I know that you've been out reporting on this. What's the focus of the protests? What's the feeling on the street?

Well, I spent some time in Nanterre where the teenager was shot at the end of last week, and I spoke to a lot of people. People are very angry, obviously, about the shooting. The older generation feel it could have been their own son. The teenagers are feeling, you know, a kind of absolute sense of injustice and tragedy about it. It's interesting that I would say two things. One of them is that there is a feeling among people I spoke to that the police are stopping people in France because of who they are rather than what they're doing. In other words, French people have to carry ID cards. You know, there are traffic rules. Obviously you have to stop when the police ask you to stop. But there is a sense in which the police are checking and harassing people in these suburbs, the banlieue. A lot of them come from an immigrant background, not themselves, but, you know, their sort of second, third generation immigrants from North Africa. And there is a feeling that they are being, you know, more stopped than people in other parts of France. And I think the second thing is that the residents of these housing projects who I spoke to are really angry about the violence as well. So you talk to the older people, the parents, the grandparents, and they are feeling that the violence is being directed against their own facilities, the public services in their areas. So this is things like town halls, buses, libraries, schools even, and therefore that they are the victims of the violence as well.

So it sounds as if this might fit into a wider narrative of racial pressures that we've spoken a lot about on the show before.

Well, it's difficult in France to demonstrate this because the French do not collect ethnic statistics. But you do have quite a lot of social science studies which suggest that people of an immigrant background or an ethnic background of some sort get more stopped than others in France. But there's another issue going on and that's the use of of firearms by the police. And the rules governing the use of firearms were loosened in 2017 and there have subsequently been more fatal killings at traffic checks. In particular, in 2022 last year, there were 13 people killed during traffic checks, which is a record. So there is real concern about lethal use of firearms by police.

And so what's the government's response to all this been so far?

So the first thing is the government's trying to contain the violence, and that's been a question of putting more and more police on the streets. We had 45,000 on the streets in the last couple of nights. That seems to have helped sort of calm things a bit. President Macron has had to cancel a state visit to Germany, which was a pretty difficult decision to take. It was an important visit for him to demonstrate the strength of the Franco German relationship and to pursue his European policy. So it was quite something to have cancelled that. And now he's focused on domestic politics again. So today he's speaking to the heads of the two houses of parliament. He's called in all the mayors of the Banlieue towns that have been affected by violence to speak to them tomorrow. And I think it's really a question of looking at both the kind of the short term response to this that's obviously security driven, but also the long term response. He wants to try and work out why this happened, what's gone wrong and what France needs to change in order to avoid this happening again.

And presumably this is at least partly a political challenge for Mr. Macron.

It really is a difficult one for him because as we've discussed before, he runs a minority government, so he doesn't have a majority in parliament. And he's squeezed between a bloc on the far left and another bloc on the hard right. And both of those have been pretty much seizing the opportunity, as they were, to undermine his presidency. On the left, you hear a lot about how it's a problem of poverty and that the government's been neglecting these areas of France. And on the you hear a lot about how it's the problem of lax policing and Marine Le Pen, the leader on the far right, has even been suggesting it's to do with immigration, which is an interesting line given that Nael, the teenager who was shot, was born, raised in France and is French. But it's very difficult for President Macron because he's precisely caught in the middle and he's trying to sort of tread a line between a form of being in tune with public outrage at the killing. He called the killing initially inexcusable and inexplicable, and also having to take a firm line on the policing of the violence. You know, he's also called that unjustifiable, so he's trying to do both. But it's an extremely difficult and very fine line for him to tread.

But for the moment, he still has a security concern. How do you see him dealing with what's still happening on the streets?

Yes, I mean, really, the question is whether the violence has peaked or not. If you look back at the last time France saw such widespread violence, that was in 2005 in the banlieue. Again, it took a state of emergency to bring that to an end, and it really went on for about three weeks at the moment. What I'm told is that the state of emergency, that that option was an option that they were looking at, but it is not on the table at the moment. They're going to see if they can get away without doing that. And then it's really a question of trying to work out what this rioting was all about, because in previous riots that have taken place during President Macron's term in office, they have had very clear. There was writing back in 2018, that was the Yellowjacket protest, and that time it was about the carbon tax on motor fuel. People didn't want to pay more for fuel at the pump. And in a sense, there was a way in which you can address those issues or not. In the case of pension reform, Macron just went ahead and he's sort of won that battle. This is much more difficult, it's much more intangible. It's partly about policing, it's partly about belonging, it's partly about policy towards the bolio, which, incidentally, the government has spent billions of euros renovating estates and trying to improve the public services that are now being burnt down. So it's a much more intractable problem, I think. And that's what Macron, in the coming days and weeks, is going to have to try and look at.

And do you think that all of this will lead to change, though? Do you have a sense as to whether this is just a fire to be put out or the start of something bigger, some change that would prevent this happening again.

You know, it's very difficult to talk about preventing things happening again. You know, rioting happens. It happens in the us. It happens in other countries too. Britain's known its share of inner city riots. I think that one of the paradoxes is that actually Macron himself, the President, spent three days last week in Marseille, which is one of the biggest cities in France, trying to talk about policy on the high rise states. And he spent two and a half hours one evening talking to residents, answering all of their questions about, you know, problems in the housing, problems with schooling, problems with drug dealing. And it's not as if the government hasn't been looking at this. The one issue I would say where there is a bit of a sort of blind spot is about the policing. And I think that if that, that above all is an issue, that there isn't a real desire, I don't think, to look into the question of policing and work out why it is that people feel that there is a kind of racial profiling thing going on in France, which is something that is difficult to. But the people that I spoke to on the ground feel exists.

Thanks very much for joining us, Sophie.

Thanks, Jason. It's a pleasure to talk to you, as always.

When Jerome Powell, the chairman of America's central Bank, announced a pause in interest rate rises at the bank's last meeting, he noted the resilience of the American labor labor market. A shortage of workers, he argued, is keeping inflation well above the bank's target rate.

I think many, many analysts believe that it will be important, an important part of getting inflation down, especially in the non housing services sector.

Getting wage inflation.

Back to a level that is sustainable.

That is consistent with 2% inflation. We actually have hourly wages shot up about 6% in America last year, the fastest rise in four decades. Crack open an economics textbook and you'll find a warning here. The idea that as wages go up, they drive prices further up in what's called a wage price spiral. But that feedback loop might not be as tight as nervous economists reckon.

It's really the thing of economic nightmares.

Simon Rabinovitch is our U.S. economics editor.

It's the idea that you've got a price shock for whatever reason, it could be a supply side shock like we had during the pandemic, that drives up inflation. Inflation going up leads workers to demand higher wages. Wages going up leads companies to charge higher prices. And pretty soon you have this unstoppable spiral of wages chasing prices, chasing wages, and so on and so forth. So it's a scary thing to happen, but the reality is it doesn't happen all that often.

So is the Fed, is Jerome Powell wrong to link wage inflation and price inflation?

If that's the case, no, he's not wrong. Wages do figure into inflation clearly. And depending on the data series that you look at, it's clear that wages are still rising too strongly. You know, roughly 6% year on year in America, higher than that in the uk. In no world is that consistent with getting inflation down to central bank targets of roughly 2%. You'd really want to see wage growth more like 3%. So fast rising. Wages are a problem. They are an indication that the economy still is out of balance, that demand is exceeding supply. But having said all that, that's quite a bit different from the wage price spiral thesis. The idea there is that wages are driving inflation. Really what's happening now is more of a lagging indicator. In fact, if you look at the last two years, wages did not keep up with general price growth. So part of what's happening right now is that wages are catching up. They're not driving inflation, they're reflecting what's already happened.

This is something different from the nightmare that economists wake up from in a cold sweat. But what does account then for the rise in prices that is in turn driving the rise in wages?

I think it's quite useful to look at what Chairman Powell does, which is kind of breaking it down into three different categories. So, number one, goods inflation. That's really where things started. Because of all the supply chain problems, those have mostly been resolved. Goods are actually getting cheaper in many cases. You then have housing inflation that shows up as rental costs. Those are still rising in most official inflation indexes, but they will begin to come down the last bit. And this actually counts for roughly half of core inflation is things like spending on tourism, going to concerts, getting your house cleaned or fixed or what have you, things that involve labor costs. So wages are obviously a really key part of this. And it's quite evident that demand for these services, and therefore demand for labor, is still exceeding supply. So if you look at America, there's roughly 1.7 job openings now for every one person who counts as unemployed. So to bring inflation down, you really do need to see some cooling of demand. That would also involve some cooling of demand for labor. But the concern that the wages themselves are driving inflation, that's where the thesis Falls flat.

And why is it that we're talking about this right now? Why are you thinking about it?

Well, we've been thinking about it really for the last year. Plus, every time that people have talked about the outlook for inflation, one of the focal points has been dreaded wage price spirals. And lo and behold, where we are right now is that there are some signs that inflation is coming down, but wage growth has not come down. So theoretically, if there was to be a wage price spiral, this would be quite a worrying sign about the future trajectory of inflation.

Okay, so the wage price spiral theory doesn't work for now, but it has happened in the past?

Well, it has with asterisks. So the obvious example, and I think the one that has sort of kept central bankers awake at night over the past couple years, is the 1970s. In the 1970s, much of the world economy, especially America, found itself in stagflation, where growth was stagnant, inflation was high, and it got higher over the course of of the decade. The asterisks though are that when you look at it, there were of course other things going on then as well. There were two big oil price shocks from the OPEC crisis in 1973 and then the Iran revolution in 78, 79. And then at the same time you also had a very different pricing structure for wages. Unions had a lot more power at the time. There was what was known as cost of living adjustments baked into salaries, effectively guaranteeing that whatever inflation hit that wage inflation would match that that was good for workers and good for unions. But the point is that it baked wage price spirals into the system. It's not really proof of the concept. It was more just a feature of the bargaining arrangement at the time.

So is it time to write wage price spirals out of the economic textbooks if they're just not really a thing?

This is going to be a frustrating answer. But as is often fabled about economists, I'm going to give you a two handed answer. So yes and no. Yes. I think there has been too much made of wage price spirals. And the fact is that if you look at it in real terms, workers have actually taken pay cuts over the past two years because nominal inflation has been higher than nominal wage growth. On the other hand, it's not horrible that economists and central bankers especially have been focused on the worst case scenarios, no matter how remote they are. I mean, one of the really important features of the economy of the last two years is that even though inflation has been incredibly high, expectations of future Inflation have been very well anchored. They've not blown through the roof. And one of the big reasons for that is that central banks have a lot of credibility. People have believed that although there were missteps early on, they would eventually grasp the nettle and bring inflation under control. Now, we can't declare victory yet, but if you look at the decline in headline inflation, you look at at the prospects for a decline in core inflation, I think that we are probably headed in the right direction. And I think one of the lessons of the last two years is that thankfully, it's actually not very easy to land the economy in that kind of dreaded wage price spiral. It really would have taken a monumental, long standing series of mistakes in policy. We've had missteps, but we haven't had anything quite so gargantuan as that.

Well, I don't know about you, but I'm going to sleep a little bit better tonight. Thanks a lot, Simon.

Thank you, Jason.

Just a strand of Elvis's hair would be enough.

Caitlyn Talbot, run for the Economist.

All you'd have to do is pluck out his DNA and it could be amplified millions of times using a technique called polymerase chain reaction, or pcr. This was part of a business plan proposed by Kerry Mullis, an eccentric American biologist who helped develop PCR in the 1980s. Starjean, as his company was known, hoped to make money from selling jewelry stuffed with celebrity DNA. If it had worked out then people might be wearing Elvis around their waist or Marilyn Monroe from their ears. On the other hand, a slew of newer firms are coming back to this idea, but they're hoping to mine gold from entire species for burgers.

Hold on a second. Don't tell me they're trying to make Elvis burgers.

No, thank goodness. Paleo is a startup that's creating myoglobin proteins to make artificial meats, vegan meats, taste really realistic. And their CEO is really keen to expand the business into making woolly mammoth burgers. I mean, mammoths are extinct, so what better way to prove that your vegan meat technology works?

But hang on. Woolly mammoths are animals. How is woolly mammoth burger a vegan choice?

Well, by definition, I suppose, mammoths are extinct. So what better way to prove that no animal was harmed in the making of your burger?

Okay, fair enough. How's it done though? How do I turn the extinct woolly mammoth into a meal?

Well, the firm obtained some fragments of DNA from the oldest part of a mammoth that they could find. So they worked with the for Paleogenomics in Sweden and the center for Paleogenomics has some mammoth teeth which were preserved in the Siberian permafrost. So they took the fragments of DNA and when DNA is very old, it's broken down and fragmented. They compared it with Asian and African elephants, which are mammoths nearest living relatives. So the Asian and African elephants filled in the gaps of the mammoth myoglobin gene. Once they had the full sequence, or what they think is the full sequence of a mammoth myoglobin gene, they then used a method called precision fermentation to make mammoth myoglobin from that gene.

And so all you need to make a mammoth burger is mammoth myoglobin?

Well, I mean you're mixing it with the other components that go into kind of vegan meats, which is stabilizers, starches, flavours, that kind of thing. But the myoglobin really gives that mammoth taste.

But if this can be done at all, presumably others want to do this.

Well, yes, in fact there is a seemingly growing market for this kind of thing. Vow, an Australian cultured meat company, says it's made a volleyball sized lump of mammoth meat by injecting mammoth myoglobin cells into lab grown stem cells derived from sheep. So this is a real kind of hunk of sheepy mammoth meat. And Gelta, a startup that has raised more than $100 million, has opted for a different kind of extinct elephantine species. It took sequence mastodon DNA and used it to produce collagen which is a protein found in skin and tendons. The stuff was turned into gelatin for gummy sweets which they made into elephant shapes because they couldn't find mastodon shaped molds.

Dripping volleyball sized pile of engineered meat with mastodon tendon tendencies. Doesn't sound very appealing. Like what is this stuff gonna taste like?

Well, VOW say that humans could not possibly taste mammoth burgers or meatballs because we'd be allergic to it because we haven't had it in so long. Who knows what would happen if we ate that. But paleo disagree because they've tasted it in the lab for months and they say it's really intense, like a really intense beef burger. Geltor used the MAS to show that their products are completely animal free. They use no animal collagens, they're completely engineered kind of collagens. And they've used this to pivot into the human cosmetics industry and they've even created a kind of fake human collagen to make people's skin look really nice and glowing.

Human collagen not entirely animal free, but that does get us closer to the taking a bit of Elvis and turning him into jewelry.

It's funny that you say that, because there was a company called My DNA Fragrance which tried to create perfumes with the exact scent of biology. Bygone celebrities, including Elvis. It didn't take off.

Caitlin, thank you for bringing us to the very frontiers of science for this one.

Thank you, Jason.

That's all for this episode of the Intelligence. If you're not a subscriber to the Economist, you really are missing out. But dive in with the deal. We've got at the Moment, a free 30 day digital subscription. Just go to economist.com intelligenceoffer or click the link in the Show Notes. We'll see you back here tomorrow.