Stuck in the middle with few: Macron’s parliamentary pasting

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Hello, and welcome to the Intelligence from the Economist. In London, I'm Jason Palmer, and in.

New York, I'm John Fassman. Every weekday we provide a fresh perspective on the events shaping your world.

Usually you think of spying and espionage as things that states do to each other. James Bond, after all, was on Her Majesty's Secret Service, not on Tesco's or Walmart's. Turns out corporate spying is getting more common and more sophisticated.

And compared with other rich countries, America has an unusually high rate of road deaths. Some American states try to scare drivers by reminding them how many people have died. But it turns out that this has an astonishing side effect.

First up, though, As it became clear last night that France's President, Emmanuel Macron was set to lose his parliamentary majority, it was those at the country's political polls who were celebrating. It's less than two months since Mr. Macron's centrist platform convincingly won him a second term. He'd asked voters to deliver him an equally convincing win in elections to the national assembly so that he could push through an ambitious set of reforms. Instead, a brand new coalition on the left called Nupez scooped up enough votes that its convener, Jean Luc Melanchon, called it totally unexpected, a total defeat of the President's party.

C' est une Situation totally presidential. Et alpul majorite le sur.

At the same time, the far right got a shocking boost too. Marine Le Pen, the leader of the National Rally Party, said her goal was to unite the left and the right in opposing Mr. Macron. It all leaves the President stuck in a center that did not hold.

Last night's results was really quite a shock for Emilio Macron.

Sophie Pedder is the Economist's Paris bureau chief.

He lost his parliamentary majority. He lost over 100 seats in parliament, including some of his very key and old time allies. And he is faced now with an unprecedented situation in which he is going to have to try to govern without a majority. And that is going to make it extraordinarily difficult for him going forward. All the promises he made during the presidential campaign are now looking extraordinary, extremely shaky, and we're looking at a turbulent time ahead for France, I think.

So just give us a recap on how this played out. How did people vote?

Well, Emmanuel Macron's party got 245seats. It needs 289 for a majority. So it's far short of that. On the left wing of the political spectrum, it was Jean Luc's Melanchon, who has become now the biggest opposition party. They ended up with 137seats. And on the far right, or the nationalist populist right, Marine Le Pen's party came out with 89 seats. That's 10 times what they had last time. So we are looking at a completely different national assembly with very strong blocs on both the far left and the far right.

And we've spoken a lot over the past year about the French Left, and it was fragmented and, let's say, hopeless. What's changed here?

Well, I think what's very interesting on the left is that it has been plagued for years by fighting squabbling between the different parties. What Melanchon managed to do was only a month ago was to stitch together this coalition that he called nupes, which is made up of parties such as the Communists, the Socialists, the Greens. These are parties that actually don't share an awful lot on some subjects. For example, the Socialists and the Greens are very pro European. Melanchon is not. Melanchon is anti nuclear power. The Communists are in favor of nuclear power in France. So there are a lot of internal divisions which in the past have got in the way. But this time, for once, and it was really unprecedented, they found common ground and decided to settle those differences. And that has put them in a strong position. But it's a Pretty left wing overall position, because Melanchon was clearly the leader of this party. He dictated almost the terms of the agreement and wanted, for example, or wants to bring down the pension age from 62 years to 60. So it is an alliance that shifts the center of gravity considerably to the left.

And what about the other side of the spectrum, the result from the far right?

Well, the biggest surprise, I think, in this election was for Marine Le Pen's party. She has done extraordinarily well. So if you look at the actual numbers, there are a number of things to point out. One of them is that her party is now bigger than the Republicans, the center right, traditional Gaullist party in France, which has supplied many of the presidents under the Fifth Republic. Her party is now bigger than the Republicans. It's also bigger than any of the individual parties that make up Melanchon's coalition. If you take the Socialists or the Greens, her party is bigger than each of those as well. So I think what we've learned from these results is that France really is now divided into three blocks in its political composition. It's got the Centre bloc, which is around Emmanuel Macron. It's got a left wing Allian around Melanchon, and it's got the far right alliance around Marine Le Pen.

And so what will that mean when it comes to actually governing for Mr. Macron?

Well, it's going to be extremely difficult for him. There are really only two things that he can do. One is to try to form a coalition with any other party. Now, that looks extremely difficult. We've already heard from the Republicans last night that they're not interested. They consider themselves to be a party of opposition. They would theoretically be able to supply the number of seats he needs for a majority. But they're not interested. And in any case, even if they were, that would really shift Macron's position to the right. The sort of concessions he'd have to make in that kind of a coalition deal. Now, if he doesn't do that, the more likely outcome is to govern as a minority, and that's going to be hard. It means fighting for votes on every single piece of legislation that goes through Parliament. In the past, France has known this before. Back in the 1980s, Michel Rocart, who was a Socialist prime minister under Mitterrand, he did govern as a minority, but he had available to him a constitutional provision which doesn't exist anymore, and it enables him regularly. In fact, he did. He used this 28 times to bypass Parliament effectively. So Macron won't have that the rules have been changed. It will be difficult. And that's why I think we're looking at a pretty turbulent time for his second term in office.

So why do you think there has been such a surprising result here? What's changed since a presidential election which looked, frankly, much more straightforward by the numbers?

Well, I think one has to remember that the presidential election ended in a runoff between Emmanuel Macron and Marine Le Pen. So we were already very aware of the strength of the extremes in French politics that run off. He won it. He won it fairly convincingly, but nonetheless, both Marine Le Pen, who came in second place, and Jean Luc Melanchon, who came in third and failed to get to that runoff in the presidential election. Their strength in France has been evident for a while. And I think one of the points that the French voters will have been making in this election was that they do want to curb the presidential power. They don't want Macron to have a free reign, to do everything. So, in a sense, there was almost a sort of vote of sanction there against him saying, okay, we've reelected you, but we don't want you to just sort of act as a bulldozer and impose your will on us at all moments going forward. But I think Emmanuel Macron didn't help himself by taking a long time to name a new prime minister. He didn't seem to campaign or give this election much of a sort of impetus. I think that was seen as complacency by many people who felt that he was probably expecting a majority to just be handed to him, and that wasn't the way that, in the end, the French wanted to respond to him.

And so what happens next? What to look out for to get a read on how Mr. Macron will work with the hand he's been dealt?

Well, I think the first question is whether he keeps his prime minister. Elisabeth Bon, she was elected to Parliament for the first time last night in Normandy, so she doesn't have to resign, but he may decide that he needs to do something drastic. And then there will be a number of ministers who are going to have to resign, if they haven't done already any of the ministers who are standing for election or who lost their seats. So we're looking at a change of government, possible change of prime minister, and after that, just an awful lot of talking to all the different potential allies, and there aren't very many of them, to be honest. There could be dissidents on the left, they could be Republicans on the right, but I think we're going to be looking at a lot of discussion without an awful lot of movement in the next coming days and weeks.

Sophie, thanks very much for your time.

It's always a pleasure, Jason. Thank you.

May I introduce myself? Oscar Slagworth.

Many companies, probably most of them, in fact, have secrets they want to keep.

Mr. Wonka is at this moment working on a fantastic convention, just as Willy.

Wonka did in the 1971 film adaptation of Roald Dahl's Charlie and the Chocolate Factory.

So all I want you to do is to get hold of just one everlasting gobstopper and bring it to me so that I can find the secret formula.

But unique candy recipes aren't the only thing companies want to keep to themselves. It could just as well be the critical code behind a piece of software or some sensitive emails. And companies seem to be putting more efforts into into snatching their competitors secrets.

There's a company in Virginia called Appian which is a software company, sells software to businesses, helps them to interact better with customers. It has a competitor called pegasystems, which is another American company based in Massachusetts. These two companies have been quite fierce rivals for some years.

Matthew Valencia is our deputy business affairs editor.

In recent years, Appian accused pegasystems of illegally snooping on it to gain a competitive advantage. And this case went to trial. During the trial, it was revealed that executives from pegasystems had referred to somebody that they had hired to obtain information from Appian as, quote, our spy. They also dubbed the effort to spy on Appian as Project Crush. This was quite spicy stuff. And in fact, earlier this year in May, a jury awarded Appian $2 billion, a huge amount of money in damages in the case. And that sent pegasystem share price plummeting. The company, however, has vowed to appeal against the decision and called it unjust. But it gives you a sense of the kind of things that go on in the world of corporate espionage.

Tell us about that world. How widespread is corporate espionage?

It's very widespread and it's probably getting more so. Once upon a time, snooping of this kind was mostly centered on a few sensitive industries, things like defense, pharmaceuticals and so on. If you look at it today, you have a lot more companies in more industries whose trade secrets and intellectual property are vulnerable. And there's been more of that as more businesses moved online and you've seen the growth of intangible assets which produces all of this intellectual property, or IP as it's commonly known, which is there for the taking. If you know how to get hold of it. So it's become more of a general business risk, I'd say.

What in particular do these spies hope to steal?

Well, I mentioned intellectual property, and that's the big one. That can be patents, it could be trademarks, copyrights, but it can also be trade secrets. For instance, the recipe for Coca Cola, that's a classic trade secret. Another one is the formulation for WD40. But it can be anything really, from lists of clients to algorithms to industrial processes, chemical processes, even marketing plans. All of those things can be trade secrets. And if you look at some of the legal battles that have made it to court in recent years, they've involved not just technology. The Appian case, of course, was about software, but quite mundane things as well, like industrial baking agents and formulas for floor resin and so on. But there's also another way in which digitization is causing problems for companies. There's one marketplace out there at the moment for stolen data called industrial spy. And if you go and take a look at that, you see information being sold in packets of all sorts of sizes and levels of importance, ranging from stuff for sale for just a few dollars to much bigger packets of information which are available for hundreds of thousands or millions of dollars.

So clearly there's a big market for these secrets. Who is directing the efforts to steal and who's, who's buying the secrets?

We've seen a large number of corporate espionage cases over the past couple of decades involving large companies spying on each other. There was a famous case called the chocolate war 20 odd years ago involving Mars and Nestle. Another one involving Procter and Gamble and Unilever, in which PNG ended up paying a settlement over operatives who'd been hired by the company and were diving into dumpsters outside Unilever offices looking for information. But then you have state actors as well. Probably chief among them is China. The Department of Justice in the US a while ago reckoned publicly that something like four out of five economic spying cases brought by the Department involved conduct which was somehow to do with the Chinese state. But it wouldn't quite be fair to say China's alone in this. There are other countries which are, on the face of it, friendlier to the US and to the west, including Israel, which have been known to spy on American and European firms.

I mean, you've described a wide array of activities. I'm curious, why are these things happening now? Why is the threat increasing now?

There are a number of reasons. It's become more difficult in America to secure patents and that makes companies more vulnerable. Then you have the difficulties of developing and safeguarding trade secrets. And you have a lot more actors working online, hackers and so on, who are looking to break into company systems and to steal information that's sensitive, trade secrets and so on. And essentially, more and more companies in more industries have more stuff online, more bits and bytes which are worth stealing.

These are threats coming from a variety of sources and backgrounds. How can companies protect themselves?

While it's not always easy, one source of protection is legislation. So while it's true that when it comes to patents, that protection has been eroded, actually when it comes to trade secrets, it's been strengthened. And there was a new law passed in the United States, for instance, about six years ago, which greatly expanded the type and number of secrets that were covered by federal law. And after that law was passed, we saw quite a large increase in the number of cases filed. The truth is, a lot of companies don't manage their trade secrets very well. The best way forward for many companies is to manage their trade secrets better.

And how can they do that?

They have to be kept confidential, but they also have to be clearly articulated as secrets. And a lot of companies just don't put enough effort into doing that. And we've seen in recent years the emergence of a cottage industry of consultants, lawyers, IP experts, and others who've started working more with companies to improve their management of these things. And we've also seen a number of cases which have exposed poor management of trade secrets. There was one involving an American company called Mallet, which is in the industrial baking sector, in which it went to court and it claimed that a rival had stolen trade secrets. And it went to appeal. And the appeal court ruled that Mallett just hadn't described clearly enough what the secret was. And there've been a number of cases like this. So the consultants who've been moving into this space have been pushing companies to do more, to focus on that and to get down on paper, describe, articulate what their trade secrets are, and then to put more effort into systems and other ways of protecting them.

So do you think that will bear fruit? Do you think companies will actually get better at figuring out how to protect their secrets?

I think they're starting to. Already we're seeing more of a focus on it. It's not going to go away, so they need to get better at it. Bear in mind the current economic environment. Times are very tough. Big economies are in a downturn or moving into recession, and companies and the tactics they use tend to get more desperate in downturns. So we may see more companies looking to, to spy on rivals, to gain an edge or just to keep their heads above water. And then on top of all of that, you've got the geopolitical backdrop, which in recent years has grown quite a bit frostier. And what that's done is to increase incentives for underhand activity by states or by their proxies. And states don't always do this themselves. They often have operatives and proxies working for them. But we're likely to see more of that going forward as well. So all in all, I think we're going to see quite a bit more cloak and dagger activity.

All right, Matthew, thanks so much for joining us today.

Thanks, John. Great to be with you.

Drivers on American highways are accustomed to seeing them big electronic signs hanging over the roadway with sobering statements like, There have been 1,669 deaths on Texas roads this year. It's part of an effort to reduce the number of crashes. But researchers have been questioning the tactic.

In the US last year, more than 43,000 people were killed on the roads, which is the Highest figure for 16 years.

Ainsley Johnston is a data journalist with the Economist.

And people in the US are given a reminder of this. Above the road, there are often signs with the road death statistics. That year so far, in total, around 28 states have had them. But when behavioural economist Joshua Madsen first saw a message like this displayed above the highway, he was confused. He said he didn't know what he was supposed to do was he'd slow down, put his phone down, pull over for the rest. So he decided to look into it.

And how did he go about doing that?

So Mr. Madsen teamed up with one of his colleagues, Jonathan hall, and they decided to take a look at Texas. So Texas leads the nation in yearly traffic deaths. It's a big state with a lot of roads. And they've been displaying these death toll signs since 2012, but their efficacy has never really been studied. So Mr. Madsen and Mr. Hall had a look at the numbers and they found that in Texas, the messages were actually increasing the number of crashes.

That seems like an extraordinary conclusion. How did they figure it out?

So one benefit of looking at Texas was that their death toll information was actually only displayed one week in every four. So this gave them a really good control where they could look at these other weeks where normal traffic information was displayed to try and compare the traffic accidents between these two different conditions. So their paper, which was just been published in the journal Science looked at Texas between 2010 and 2017, and it found that there were more accidents in the weeks where specifically the death counts were displayed on these signs. They found that most of the excess crashes happened in the kilometre immediately after a sign. But actually for several kilometres after the drivers had seen a sign, there was still an elevated risk. Overall, in the 10 kilometres immediately following one of the messages, There was a 4.5% increase in the number of accidents. So to translate that into real numbers, this was around 2,600 extra crashes and 16 additional deaths each year in Texas alone.

Are there any theories as to why this might be the case?

So the authors think that these sombre messages might actually be distracting drivers. So, in sections of the road that required drivers to pay the most attention, perhaps because they were busier or had more lanes or intersections, were the areas that had the biggest proportional increase in crashes when the death toll messages were displayed. And the effect of the signs also depended on how shocking the figures were. So, earlier in the year, when the death toll count was low, there were actually fewer crashes in weeks with messages. But the signs had a much more negative impact later in the year as the deaths clocked up. And that was even accounting for other factors, like the weather on the roads, that might affect crashes, too.

So, given the effects of these signs, do you think they are on their way out, or are we likely to see more of them on American highways?

So the Federal Highway Administration, which is part of America's Department for Transport, sent out a memo in early 2021 saying that displaying death toll information was not an appropriate way to use these highway signs. We don't know that it was because of the paper, but it seems likely that it could be. The study really highlights how seemingly innocuous nudges, which are increasingly used by governments to try and change behavior, can sometimes backfire.

All right, Ainslie, thanks so much for joining us today.

Great. Thank you. Thank you, John.

That's all for this edition of the Intelligence. If you like us, leave us a rating on Apple Podcasts, or you can get in touch@podcastconomist.com and you can subscribe.

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Sam.