In mid-March so far, the sprint stage of the French election situation changes. Before the Dutch election was shocking gratifying results, after Le Pang polls support the continuous decline. European populist tide seems to be declining, the market for the French election is also increasingly optimistic. We believe that in the economic, political and historical dimensions, the Dutch and French populist forces are disparate, and the Dutch general election is not a reasonable reference for the French election. On the other hand, due to the existence of the mainstream information error enhancement mechanism, the recent Le Pen support rate is more likely to be the illusion of mainstream polls. The French populist forces did not appear a substantial recession, there is still a high probability of copying the US election “N” type reversal. The current market may have fallen into a blind optimism and systematically underestimated the real possibility of Le Pang wins. With the election approaching, we recommend that investors still need to maintain a high degree of vigilance.
Dutch election is not populist “weathervane”. At present, the market optimism about the French election first from the Dutch general election surprise. With the victory of the Dutch right-wing Liberal Party in the general election on 16 March, European multinational bond yields fell and accompanied by a stronger euro, indicating that market concerns about the spread of European populist forces began to digest. However, we believe that the Dutch general election is not enough to become the benchmark of the European populist forces. Based on the following three dimensions, the differences between the populist forces in the Netherlands and France, the Dutch presidential election to speculate on the upcoming French general election, will seriously underestimate the risk of electoral party victory.
First, the Dutch economy is much better than France. The deterioration of the income and employment problem of the residents is the necessary economic condition for the intensification of social fragmentation and the expansion of populism. For the small country rich in the Netherlands, these two conditions are not mature. From the perspective of income, the relative growth rate, absolute level and fairness of income of Dutch residents are better than the European overall level (see photo). 2014-2016, the Netherlands economic growth average of 1.84%, compared with the euro area, Germany and France were higher than 0.22,0.19 and 0.80 percentage points; the Netherlands per capita GDP than the euro area, Germany and France, respectively, higher than 9326, 2808 and € 7235. 2008-2015, the Dutch Gini coefficient is long lower than the EU, Germany and France. From the unemployment point of view, 2014-2016, the French overall unemployment rate is always around 10%, while the overall unemployment rate in the Netherlands from 7.90% high continued to 6.74%, residents employment has been significantly improved. For the key youth unemployment problem, compared with the EU and France, 2014 to the Netherlands, the average youth unemployment rate was behind 8.64 and 12.89 percentage points, which effectively limit the development of radical groups. Therefore, regardless of the overall European or neighboring France, the Netherlands have to resist the economic advantages of the populist forces, it is difficult to reference the benchmark.
Second, the Dutch and the law bear different geopolitical costs. Britain’s return to Europe shows that geopolitical factors are an important driver of the current wave of populism in Europe. In the perspective of European geopolitics, the role of the Netherlands and France is very different. According to the theory, the EU’s security and stability can be regarded as public goods. As the core of the European Union, Germany and France are the main producers and cost bearers of this public goods, while the rest of the Netherlands and other countries are high-cost, low-cost “Free Rider”. In terms of refugee costs, according to EU quotas, the number of refugees receiving refugees in Germany and France in 2016-2017 accounts for 25% and 19% of the total EU (see photo). This burden is not only much higher than the other members of the EU, more substantial than the total economic output of the two countries in the EU. In terms of safety costs, France and Germany have become the primary targets of the EU, taking on the worst casualties and socio-economic losses. According to our statistics, since 2015, the number of terrorist attacks in France ranked first in the EU, the number of victims more than the sum of other countries, while the Netherlands did not suffer fear (see photo). As a result, with the intensification of geopolitical conflicts in Europe, the French people are increasingly overwhelmed. Compared to the Netherlands, anti-European integration, anti-immigrant populist demands will be more widely and firmly supported in France, and in the general election for the populist party to provide a growing position. The eurozone and the “fortress” of the European Union are more likely to collapse from the core pillar of France, rather than from the Netherlands and other flank countries.
Third, the French populist tradition is deeply rooted. Seemingly diverse, open to France, but in fact the most populist Europe, the most powerful stronghold. On the one hand, France is the birthplace and exporter of contemporary European populist parties. In 1984, the French National Front became the first European populist party to win in a national election. In the 1990s, the party became a model of the European right-wing populist party and actively constructed the European populist network, such as the support of the populist forces in the 1998 Swedish general election. On the other hand, the French populist party has a complete theoretical system, organizational structure, policy program and voter base, to maintain the long-term pressure on the French political arena. In 2002, the French National Front Chairman Lao Lepong had set a record of 16.9% of the history of the vote into the second round of the presidential election. Since 2011, the new chairman, Mary Le Pen, has taken the initiative to uphold the extremist claims of the populist parties, focusing on unemployment and geopolitical conflicts, and striving for workers’ groups, youth groups and the bottom masses. Compared to 2002, this set of “Trump” strategy successfully expanded the French national front of the voter base, to promote Le Pen’s polling support rate was ranked first.
Mainstream information triggers “N” type reversal. Since mid-March, Le Pen’s poll support rate continued to fall, providing an important basis for market optimism. However, according to the British retreat of the European referendum and the experience of the United States, the mainstream information there is an endogenous self-strengthening mechanism, so that systematic errors continue to strengthen. On the eve of the election vote, this strengthening reached its peak, which could lead to the illusion of the populist forces’ “decline” and guide the market to a blind optimism, leading to a “N” reversal of the populist forces.
Mechanism one, the mainstream information to enhance the bias. As we have pointed out in the previous report, since the referendum in Britain in 2016, the mainstream media and authorities have repeatedly failed to judge the populist forces, and the mainstream information has been systematically wrong. The key reason for this phenomenon is that, for populist forces, the mainstream information into an endogenous bias to enhance the mechanism. Ideological level, the mainstream media and authority attached to the elite political model, the exclusion of the “mob” of the potential strength; attention to the total amount of macro interests of the gains and losses, ignoring the structural, micro-distribution imbalance. Therefore, the mainstream information is often misread the bottom of the masses of the appeal direction and intensity. At the tool level, the mainstream media and the authority of the polls there are real errors and turnout bias. Under the weight of the mainstream values, some voters in the polls to hide their own populist tendencies. In voters, voters in the populist camps are often more aggressive and have higher turnout rates. Which led to the mainstream polls to underestimate the true number of votes of the populist party. On the whole, the ideological error of the mainstream information is difficult to get the correctness of the real data, but will support each other with the tool bias, forming a continuous “false closed loop.”
Mechanism two, the populist forces “N” type reversal. Under the above-mentioned mechanism of error enhancement, the closer the election is to the end, the more deviation from the mainstream information and the microscopic reality, the easier it is to form a blind underestimation of the populist forces. Affected by this, the rise of the populist power to follow the “first rise after the fall, the last reversal” and “N” type path. The first step, the early election, unpopular populist political parties sudden emergence, continue to narrow the gap with the traditional political parties, and even to achieve overtake, the market followed by panic. The second step, the mainstream information on the people’s ruling party to judge, “false closed loop” to open. Mainstream errors continue to increase, and reached the peak on the eve of the vote. Therefore, from the mainstream polls, the populist party “by the Sheng turn bad”, the traditional party “victory in the hope”, which led to the market blind optimism. But the strength of the two sides did not substantially reverse the reverse. The third step, the results of the poll announced, micro-reality shattered subjective errors, populist party won the election, the market suffered a major impact. This “N” path is clearly visible in the 2016 British retreat and US general election (see photo). Referendum two weeks before the withdrawal of the European polls began to fall, to the day before the referendum has been 2 percentage points behind, but the final outcome of the referendum to support retreat. The first two weeks of the election, Trump’s polls began to decline, to the day before the election has been significantly behind 4 percentage points, but Trump won the final election.
Our judgment. According to the above analysis, the current market optimism of the two basis are difficult to set up. On the one hand, from the multiple dimensions of view, the French populist power is far better than the Netherlands, the results of the Dutch general election for the French election has no reference value. On the other hand, in the absence of major events in the case of the case, Le Pang recent polls may be lower than the mainstream information bias. The populist forces did not appear a substantial recession, Le Pang Sheng election probability is not really down. Therefore, in the blind optimism of the market sentiment, the French election has a greater probability to repeat the “N” type reversal. We suggest that, on the eve of the election, investors still need to remain vigilant and avoid systematically underestimating the real possibility of the rise of French populism.