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After spending several days in the Paris suburbs and filing stories non-stop all day today, a few things struck me.

I have written about the first incident that sparked the riots and today's latest news (more violence already starting tonight and plans by French government to use curfew.)

The underlying feeling I got from the young people in Clichy-sous-Bois - where the troubles began - is total despair with no way out.

Seems there must be CK Prahalad opportunities for these young people to make a fortune - or at least a living - if they are given half a chance.

What ideas for businesses or projects that can bring hope to despairing young people in a high rise ghetto?

Are there successful models of what can be done?

35 Comments

According to the traditional media I see the internet and especially weblogs are crucial in organizing the current protest (as far as you can call them organized). Anything you have noted here?

Tom,
CK Prahalad aint gonna save nobody. That's like opining he could have saved poor white and black folks trapped in NOLA... only if those gun-toting, tobacco-chewing, good ole boys had have gotten off a few bridges that they let TV crews roll down... but I digress.

Looks like the pax-Europa is waking up to the bantustands its being policing. As you know the Paris suburbs are not much different than the same one is almost EVERY Euro-city... from Berlin to Stockholm to Copenhagen and Barcelona and beyond. Heck down in Southern Sweden white-Swedes are moving out as there are just too many "non-looking-white Swedes" (i.e., Turks, Kurds, a few N. Africans, etc.). (See Allan Pred's fascinating, Even in Sweden.)

As you know there are no one-stop plan to save the beleaguered continent, especially no plans boiled in CK's soulless markets magic.

But maybe moves for representation in the various Parliaments. Easier citizenship requirements (i.e., its only been a few years that German born, but non-German-looking could even be citizens). Lessoning ghettoization does not only about a market miracle, but very much about a political and cultural reorganization, that too much of Europe has certainly not even begun to digest.

There are really two layers to this.
1. What to do right now. The answer to that is simple-crush this mob violence completely and quickly, using whatever level of force is apparently necessary to do so. This sends an extremely important message. By being gentle on these hooligans, you will alineate far more people in these communities than you appease. As you do this, however, do your best to avoid shooting any more tear gas into mosques.
2. What to do in the longer run. Continue and accelerate labor market de-regulation. This will help not just the children of immigrants, but the children of the native French. Think about innovative ways to improve access to education in these communities.

This won't end in our lifetimes. The kafir will flee or be subjugated, the rioters don't want jobs they want Europe.

I've been in a number of riots as a crime reporter for a major newspaper. From college sports riots, to drunk idiots, to a real race riot, the one common denominator is the "euphoria" of rioting. Not the joblessness, opression, or anything like that. Just the fact that they CAN do anything is a bit of a high for many rioters.

Rioters draw strength in numbers and in one-up-manship over their fellow hoodlums. It rarely, save for the spark, has much to do with any overriding issue.

Rain will subdue these rioters. Just watch.

Well, it seems the Africans have succeeded in bringing Africa to Paris. And the French were (again?) collaborators in the whole mess.

I guess you just don't know "total despair with no way out" until you voluntarily move to a socialist welfare state with free medical care, ridiculous unemployment benefits, etc., ad nauseam. It must be horrible compared to their native countries down in Africa, where they would certainly lead fulfilling and productive lives without the cruel oppression of occasional police questioning.

I have no sympathy for the muslim terrorists burning a civilized nation, or for the French, who now appear so mired in delusions of socialist utopia and PC garbage that they're afraid to enforce the law.

Trevor does bring up a good point: whatever their feelings about their circumstances in France, the rioters and their supporters obviously are not so aggrieved as to return to their ancestral homelands, nor is the disappointment of those already in France enough to discourage continued migration. This should be kept in perspective and, when looked at that way, these riots really are unacceptable (and counter-productive: if continued long enough crap like this would empower the real right in France and they know exactly how they'd handle immigrant discontent) decentralized pressure tactics to apply in a society like France.

At the same time, it really is dangerous for a liberal democracy like France (not to mention in some sense a failure of their sense of fellowship of man) to allow such a permanently entrenched marginalized underclass to grow up without trying to do something to at least create some sort of realistic hope of escape from those circumstances.

But first, you must re-affirm commitment to enforcing the law. And these kids that are out their commiting these acts, whatever the frustration of their communities, are criminals. I believe that one of America's founding fathers said something along the lines of "when the pot is set to boil, the scum always rises to the top".

As for the French official response thus far, I believe that it was Hayek that said the same (that the scum would always rise to the top) of government.

"It must be horrible compared to their native countries down in Africa, where they would certainly lead fulfilling and productive lives without the cruel oppression of occasional police questioning."

I think this kinda undermines the concept of Africa if this is meant as ironic. I mean a lot of people live there and don't have problems making a small living and paying their own way. On the other hand starting out as an immigrant in France is hard. While Africa certianly isn't all a great place (genocide in some countries, starvation in others) these people probably feel more dissapointed that they've gone from scrapping by in a country with a low cost of living to fucking France with one of the highest costs of living anywhere.

As for the solution, look to the U.S.' welfare reform during Clinton. He halfed the amount of poverty striken people in the u.s.
I might add Spain has occasionally eased the process naturalization for African refugees and done rather well with it. But I actually haven't read much about this issue so I might be wrong in my assumptions.

peace,
A

Andrew: Yes, Spain is an interesting case. They have had huge numbers of immigrants in recent years. Don't know enough about the situation there to compare it to France.

Fons: Yes, Internet and SMS have been important in all this. Am actually working on a story about it today for tomorrow's paper.

As for restoration of order, the violence seems to have abated last night.

"In these 751 zones that the government has designated for special programs, unemployment stands at 19.6 percent - double the national average - and at more than 30 percent among 21- to 29- year-olds, according to official figures. Incomes are 75 percent below the average."

does anyone know what programs France tried to correct this?
Where were they drawing their ideas for housing projects? Most of this sounds archaic compared to american attempts at welfare and housing reform...

"The ugly, often poorly maintained blocks of public housing that have become a nightly battlefield are testament to 40 years of government policy that has concentrated immigrants and their families in well-defined districts away from city centers, as housing there became more expensive."

This is the same as in the U.S.
Housing projects have consistently been proven to be unemployment traps instead of effective ways to get out of it. The most effective program is limited housing. Residents are given 5 years to find a job and those that find jobs sooner get moved to better housing those that don't get stuck or have to move. all that said, China's housing has primarily been government housing until the boom of real estate development in the last 10 years. When people have the choice of where to live you start to get the concentrated and often times segregated communities that build better education networks, job circles, etc. but this... this doesn't distuingish them as individuals, if someone works hard they need more of a reward than just going back to the same shitty apartment with all the other unemployed folks. Maybe they should move to South Korea. The African immigrants here have faired fairly well, but then again english is demand.

-
a

Thomas, do you think there is a 'hidden hand' behind these protests? The Paris suburbs issue is not a new one, it's been hanging over France for years. Why has it all whipped up now?

Antoin, I know it's hard but please don't look for scapegoats. This is not GWB's fault, not Osama's, not even Sarkozy's (even though he's probably 100% a prick with his "scum" comments).

This is everybody's fault, and in a way, just another cycle in history. We had Rome, and Rome was burnt and pillaged before being replaced by other empires and "ignorant, raw, violent" cultures (Istanbul/Costantinopolis, Paris, Berlin, Mecca, Moscow... eventually Washington and soon Beijing or New Delhi).

Andrew, taxpayer-built "project" ghettos are one of the biggest examples of the old adage "the way to hell is paved with good intentions". They are one of the worst legacies of socialist-inspired policies, even though at the time they looked wonderful. Sometimes they even work -- I come from such an area in Bologna, Italy, and it was nice, Socialist ideology kept the place together and it prospered. The problems didn't really start before the Wall came down and people stopped to meet and talk to each other.

Peter: yes, law & order all the way. It worked beautifully in New Orleans and LA before that. Also Genoa, Northern Ireland, Fallujah...

Giacomo,
Your sarcasm is noted. In fact, Northern Ireland and Fallujah are distinct situations: particularly in the latter case there was no real presumption at the time that they were the site of functioning democracies where law and order should prevail and disputes should not be settled through these violent means. So the analogy is misplaced there.


As for Genoa, New Orleans: the whole point is that law and order was not defended in those places. That is simply not an argument for continuing that shameful practice elsewhere.

Andrew Jones,
While I agree with the basic thrust of your argument, something like Clinton's welfare reform is unlikely to work. First, it is not really clear how well the original really worked: it is statistically difficult to disentangle the true effect of the welfare reform from the overall impact of the rather fortuitous macroeconomic era in which it was launched. Second, even if Clinton's welfare reform did have a big, intended impact (far from resolved at this point) it was launched in an entirely different institutional environment. For instance, the US labor market was and is far more flexible and dynamic than that of France. The French need to do something about their comparatively lackluster labor market before any incentives-based reform like this is likely to have any chance of success.

The violence last night abated some, but still appears to have been pretty bad. From cnn.com:
"Rioters burned 1,173 cars in 226 towns nationwide overnight compared to 1,408 the previous night, AP quoted police as saying.

Meanwhile, 330 people were arrested, down from 395 the night before, National Police Chief Michel Gaudin told a news conference. "

Giacomo, re: 11

It's not a matter of looking for scapegoats. It's just that when you have a few weeks of sustained nightly rioting in cold weather conditions across quite a large geographical area, you have to start looking between the lines.

I would like to know why you think these riots are partly my fault.

But to go back to the topic. The only good way of making money in the current situation is to set up selling fire extinguishers and bulletproof vests for cash. You can't set up businesses when there is paramilitary activity and riotous behaviour. It just doesn't work. No investor wants to know you if there is a risk your business could be simply blown up without any good reason at any time.

There may not have been Islamofascist involvement at the outset, but it is unlikely that they will not see this as an opportunity. France may be lucky that this broke out now rather than festering for another five years. They have an opportunity to head it off before it costs them their country. If this precipitates a takeover from the extreme right and/or causes many to flee the country, France as we knew it may be over...

Wikineur is a project I am involved in that hosts the 1,000 Rand Challenge, that is giving 1,000 Rand ($170) to the best 1,000 business plans submitted in South Africa. All of the business plans are going to be posted online on the wiki, and hopefully it will eventually become a full fledged Wikimedia project so it can have non-profit status. Not really applicable for this specific case, but in the future I think this project has the potential to take a serious dent out of poverty in developing economies.

I don't think it is a good idea to 'reward' destructive behaviors. Frankly, I am surprised that France hasn't declared martial law. Once the troublemakers are caught and peace restored, then some talk of hope can start.

"While I agree with the basic thrust of your argument, something like Clinton's welfare reform is unlikely to work. First, it is not really clear how well the original really worked: it is statistically difficult to disentangle the true effect of the welfare reform from the overall impact of the rather fortuitous macroeconomic era in which it was launched. Second, even if Clinton's welfare reform did have a big, intended impact (far from resolved at this point) it was launched in an entirely different institutional environment. For instance, the US labor market was and is far more flexible and dynamic than that of France. The French need to do something about their comparatively lackluster labor market before any incentives-based reform like this is likely to have any chance of success."

It sounds like you know a lot more about this than I do =) bad job market combined with people unwillingly to hire folks from these areas is bad. one small problem with your arguement is that regardless of how well the economy is doing poverty has a tendency to remain constant in terms of percentage of the population. or at least so goes the reasoning behind Welfare's reform's sucess.

peace,
A

While people may complain about a lack of jobs, etc., countries with healthier economies (like the US) are driven more by entrepreneurs than huge mega-corporations. If the economic climate for entrepreneuership is favorable, people will simply create the jobs they "need" by fufilling eachothers' needs and desires.

It's astounding how this blog has become some kind of forum for editors of The Economist :) all this blind faith in US-style deregulated capitalism is really uncalled for... nordsieck's post is so weird: if the US economy is so healthy, how come that US statistics on poverty are so dysmal? And I don't see how taking out welfare from these people will stop them from rioting; I'd say, the other way 'round sounds more logical. But I'm sure people here will illuminate me on the nutritional superiority of cakes compared to bread.


Antoin: is everybody's fault because we willingly ignore these issues until they explode. We let New Orleans rot, then when something happens we seal the borders with guns and dogs and complain about lawlessness and the effects of desperation. We fight tooth-and-chequebooks for houses in nice suburbian "whitey" areas, pushing prices through the roof and basically forcing lower-class people to be marginalized in ghettos, and then we complain when they riot.

Peter: in Genoa, law and order WAS defended. Even too much. The "defence" itself was the point of demonstrating in the first place: why democratically-elected "leaders" have to heavily shield themselves from their own electors? The "defence" worked wonderfully, to the point that the italian police produced commemorative t-shirts to celebrate (I am not joking). Same in New Orleans, where law and order in rich suburbs was very well protected. And in Fallujah law and order was why the army was there in the first place; why are we putting up a trial for Saddam, then?



I am sorry if I sound like trolling, it's just all this talk of "they riot, hence we need to slash their welfare system" is driving me mad.

Giacomo,

Viz New Orleans, you are mis-informed. Some wealthy suburban areas were spared the terrible looting, but only b/c of natural obstacles to the spread of the rioting to those places. I have friends who live in very posh areas in or very near the city, and looting occurred in their immediate neighborhoods. (In fact, in one case looters clearly moved around the first floor of their home tossing it looking for stuff).

OK: I will back off on Genoa, but you should actually learn something about NOLA before you preach about it. NOLA has long been one of our most corrupt and disfunctional political and civic cultures (even when the city was doing comparatively well decades ago). TPerhaps even worse that the corruption, the two main shows in town are tourism and the port, and when jobs at the latter started to dry up (and not b/c of some class consiracy, but b/c the industry evolved) the leaders of NOLA decided to embrace a New America, with a new economy, by trying to simply burrough themselves policywise deeper into the bygone era of the New Deal. And they have never cleaned house viz the corruption. Meanwhile, and at the insistence of NOLA leaders and many others that we pursue certain water management strategies, the city continued to fall below lake and river level, meaning that we would eventually dig our selves a literal and proverbial hole that even America could not get herself out of quickly if a big hurricane came.

Viz Fallujah, it is irrelevant and you are not drawing me into that pal.

Your commentary about fighting "tooth-and-chequebooks for houses in nice suburbian "whitey" areas, pushing prices through the roof and basically forcing lower-class people to be marginalized in ghettos" is about the tenth re-tread on a worn out tire. A vast degree of the new home formation in the US has occurred in the exurbs of the South and West (I live in the former) and this displacement argument is totally silly: most of the development has occurred on un-occupied land. Ghettoization due either to urban gentrification or poor rural folk moving into urban ghettos as rural land prices rise simply is not happening to appreciable degree. And prices are going up mainly b/c of overly loose monetary policy in the US, which is not intnetionally distortionary in the way you suggest b/c:
1. Monetary policy is uniform throughout the economy
2. Such loose policy will eventually cause either inflation or an asset bubble, but it is difficult to predict ahead of time (as in when the point of your policy would be to deliberately hurt poor people in some way or another or help the rich at the expense of the poor) what the balance of the two will be or what sort of asset bubble will emerge.
So the idea, hinted at in your article, that this was purposeful is frankly silly.

As for the rest, about us being Economist types who want to tear down the welfare state, you sound like one of those people who fights public school vouchers tooth and nail: I thought the goal was to help the poor, rather than save the welfare system per se. If the latter was in the way of former, what would you do if you were in charge? It sounds to me like you might have some confused priorities.

I'm sorry if we drive you mad, but you engaged us. Have you ever heard the old joke from Northern Ireland about the guy who drives a hundred miles out of his way just to *receive* an insult?

Andrew:
Poverty rates in the US actually are somewhat counter-cyclical (ie go down when the economy is doing well and vice versa). See, for instance, figure 3 on page 9 at http://www.census.gov/prod/2005pubs/p60-229.pdf
However, there are certainly anomalies and poverty rates can remain very stubborn. Below the macro level, at say the regional level, the situation is even stranger b/c you can draw in poor people when you are experiencing comparatively favorable economic conditions, thus creating an apparent but spurious causal link between economic growth and poverty. But the larger issue is, as you point out, simply that no incentives based reform will succeed if they have little chance of job market success even with the will to try to succeed.

It sounds like the rioting abated somewhat more last night, and has entered the looting phase in earnest.

Peter, where do you find your news? here from a real French with even a relative involved: http://www.dailykos.com/story/2005/11/6/75946/5243

Giacomo,
The NY Times, for instance, has the following:
http://www.nytimes.com/aponline/international/AP-France-Rioting-FR1.html
I posted a reply pretty much addressing everything you said in that longer post, but it has apparently somehow been lost.

Of particular importance, your point about the housing market is simply nonsense, particularly in the contemporary US. The "ghettoization" due to rising prices has not been a very big factor and intentionally non-distortionary monetary policy (as opposed to a purposeful policy direct at helping the rich and ghettoizing the poor) is behind the rising prices for the most part. In any case, it isn't worth revisiting beyond that.

To Andrew Jones:
Poverty rates actually tend to be sort of countercyclical in the US, with some excpetions and anomalies. The relationship between growth and poverty also exists below the national level, and there it is even stranger b/c local growth will draw poor people, creating an apparent spurious relationship between growth and poverty. In any case, we appear to agree on the core issue: without a labor market that can absorb them, incentive based reforms are unlikely to work.

>>without a labor market that can absorb them, incentive based reforms are unlikely to work.

That is exactly right. France is in the same position as a driver going 60 miles an hour who has applied his brakes and then slaps his forehead saying. "doh! I forgot to fix the brakes!"

It is impossible to fix France's economic structure and labor market until the rioting stops and the rioting won't stop until it's fixed. I see bad times ahead for the French--even if the Islamofascists don't interfere, and I suspect they will. France is a better place for an itinerant insurgency than Iraq, actually.

Andi,
Don't worry, the rioting will stop. If nothing else, Robert H. is right: sooner or later it will rain, get cold, the euphoria of the moment will fade, etc. But if nothing is done, certainly France does face the prospect of ongoing flareups over the years.

>>>Don't worry, the rioting will stop. If nothing else, Robert H. is right: sooner or later it will rain, get cold, the euphoria of the moment will fade, etc.

Oh certainly the civil unrest will ebb and flow but the template for it is now cast. You are right there will be ongoing flareups and Al Qaida will be emboldened to try the same trick with French elections as in Spain, 3/11 style. French lefists now have few options that don't appear sympathetic to the rioters--not good for them. Will the French electorate be cowed and vote left or angered and vote right? Not a good choice to make.

Appeasing the rioters will only encorage them.

There are successful models of what can be done. As in Los Angeles, for example.

1) Rule of law must be upheld.
2) Assimilation of incompatible cultures must be fostered.

Ole

Peter I'm sorry I won't give my personal details to the NYT, and I'm not ready to trust a newspaper that, during the last few years, willingly published lies (from Jayson Blair to Judy Chalabi-Miller). Please forgive me.

BTW, your line of thinking of house prices as just another effect of monetary policy is so simplistic that it can only come from an economist. The house market is not a "simple" market, the factors involved are much more than a simple, rational question about which kind of investment will give better returns, because the investment results are often intangible (e.g. a house near "good" schools gives your children a better education and prospects in the long run) and won't react to monetary changes. Case in point UK and other mainland Europe, where the house market kept rising for the last 15 years in spite of different economic cycles and policies. But hey, economists only know how to deal with money...

sorry, read that "won't react" as "won't react _much_", eh :)

Giacomo,
As far as the issue of the housing market,
a. I addressed mainly the US market. My comments are correct and they stand. Obviously there are many factors that drive overall price increaes (there has been some research in the US looking at: long term price increases as a kind of insider-outside problem for example; changing valuation of houses in a variety of respects-which you clumsily allude to (what you refer to actually are tangibles that can and have been measured for the prupose of trying to statistically indentify the determinants of housing prices);etc). (You should actually learn something about economists before you comment on their world view.) But the kind of prices we have seen in the last few years are, in fact, due overwhlemingly to overly loose monetary policy in the US.
b. The European housing market is a slightly tougher egg to crack, b/c it is really several different markets, but there as well the real story is what happened not in the last 15 years, but the last 5. Treating individual European countries has also gotten more complex b/c, within the Euro area, individual countries have almost come to resemble US states in their monetary and fiscal circumstances, and tightness is rarely considered there and more difficult to guage (eg for example trade between US states or Euro area countries is so heavy that any measure of overall tightness that any individual one of these is experiencing has to take into account the tightness of their major trading partners). But overall the basic story is the same.
c. This reasoning also applies to the last big bubble in house prices that the world saw, in Japan.

In all three cases you see all of the classic signs of a bubble in housing prices (eg a divergence between house prices and rents). Whenever you see these signs, any reasonable observer would begin to look for the usual suspects, and monetary policy is one of them.

I think you are swimming a bit too far from the beach.

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