Reflections on the (latest) revolution in France

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The French word of the month is "chienlit," a centuries-old term literally meaning to soil the bed; it's used today to describe the havoc in the streets.

Famously deployed in the days of Charles de Gaulle during the 1968 student riots, it's back in fashion after days on end of strikes triggered by President Emmanuel Macron's hike in the minimum retirement age from 62 to 64.

The expression is French, as are the recent images of uncollected garbage being set on fire and clashes against riot police, but the root problem goes beyond France. We are in the grip of what Charles Goodhart and Manoj Pradhan in 2020 dubbed "The Great Demographic Reversal": an end to several decades of benign economic trends in inflation, interest rates and inequality.

Worryingly, while climate denialism is being rolled back, demographic denialism is on the rise.

The numbers bear repeating: The European continent is growing grayer as the postwar baby boom begins to disappear. The share of over-65s reached 21.1% in the European Union last year, up from 18% a decade ago. In a region where the median age is 44 and fertility rates have been declining, legal retirement ages are being eclipsed by reality. In a recent Bloomberg survey of life expectancy vs. effective retirement age, European countries dominated the top 20, led by France and Luxembourg, where the average man has 18 healthy years in retirement.

France's pay-as-you-go system will have only 1.2 workers for every retiree by 2070. Today's anti-Macron high-schoolers setting fire to garbage are effectively defending a status quo that's unfair to them in particular. Governments are rarely willing to penalize pensioners as they're the ones most likely to vote.

Inequality and inflation are also set to worsen as a result, according to Goodhart and Pradhan. Growth in the ranks of old-age dependents means more consumers adding to inflationary pressures, and an improvement in the bargaining power of a shrinking workforce asking for better pay.

Income inequality and wealth inequality have gotten worse in many economies — German inequality has risen, while going into the pandemic French retirees had a higher standard of living than workers. Central banks hiking interest rates are stoking a backlash from states.

The reaction to all this has been something approaching denial, or at least myopia. Striking unions and Macron's political opponents suggest more redistribution is enough, even in one of the highest-taxed countries in the rich world — leading to puzzled reactions in Spain, where unions have taken a more open approach to negotiations with employers' organizations.

Pension reforms are always unpopular, but even the French center-right, which should have been a natural ally of Macron's reform, couldn't agree on whether to support it. The CEO class has been "useless" on this issue, one top Paris bank executive tells me, rarely sticking its head above the parapet. Geoffroy Roux de Bezieux, chairman of the Medef business lobby, on Monday called pension reform necessary but criticized state measures to encourage hiring of older workers.

Blocking the Louvre and burning the Bordeaux town hall don't point to an understanding of the need to save more for retirement. Unlike the "great stink" in 1850s London that came with the smell of opportunity of improving sewage systems after a doubling of the city's population, this all seems symptomatic of demographic and urban decline.

This is all music to the ears of populists like Marine Le Pen, leader of the French right who once campaigned for a retirement age of 60.

This should be the catalyst for Macron to try to detoxify the pensions issue — something none of his predecessors could ever do — by offering more authority to new organizations including employers and staff unions. If even that isn't possible, he should consider doing what de Gaulle did in 1968: Call early parliamentary elections and potentially put his own retirement on the line. Stopping the chienlit and getting back onto a reforming track is worth the risk.