Continental Europe Wins the Sanity Contest

(Bloomberg View) -- I met Las Vegas lawyer Robert Barnes during the 2016 U.S. presidential campaign. Long before everyone else I know, he was betting -- literally, through U.K. bookmakers -- on Brexit and Donald Trump's victory. He made hundreds of thousands of dollars for himself and the clients he advised from these bets. In Sunday's French election, however, he says he merely broke even.

Barnes told me he'd bet on progressive centrist Emmanuel Macron and far-left Jean-Luc Melenchon to make the run-off round. At 20-1, he believed the risk-reward ratio was worth it. And lots of non-polling data were increasingly pointing toward Melenchon, just like they had been toward Brexit and Trump: Facebook, Twitter and YouTube engagement, mentions on the media, Google searches. Then, on Sunday morning, after watching Google search trends, Barnes added a separate bet on Macron to win the first round. That's how he narrowly avoided a loss.

Betting on "black swans" and protest votes can be profitable. But it appears that only the U.K. and the U.S., two countries where elites have long talked condescendingly of continental Europe, have produced unsettling political surprises in the current election cycle. I'm being polite; others would say they made stupid, perhaps disastrous, choices. Sickly old Europe, whose demise has been predicted over and over as the European Union endured years of recession, stagnation, high unemployment, mediocre leadership and pessimism, has consistently resisted the appeal of populist leaders -- both the nationalist kind represented in France by Marine Le Pen and Melenchon's radical leftist kind. Before France, the populists lost in Austria and the Netherlands. After France, they will almost certainly suffer a resounding defeat in Germany. The liberal European project doesn't just live to fight another day, as some pundits have grudgingly conceded; it continues to celebrate what outsiders deride as weakness.

It's pointless to add up Sunday's fringe votes. Le Pen plus Melenchon isn't just a classic case of apples and oranges -- the people who voted for them probably couldn't spend 15 minutes in the same room without throttling each other. The pattern in recent and ongoing European elections is that in the run-up, voters show their disgruntlement by elevating noisy populists in polls, but then they cast ballots responsibly. The first round of a French election is a kind of glorified poll, a chance for people to make extravagant statements. In 2015, Le Pen's National Front did great in the first round of regional elections only to lose everything in the decisive round; the same is about to happen to Le Pen herself this year. She stands to win just a third of the vote to Macron's two thirds, a landslide by any standard.

I say that with reasonable confidence because, unlike in the U.K. and the U.S., but like in the Netherlands, polls in France have turned out to be highly accurate. Going into the weekend, they put Macron two points ahead of Le Pen and Melenchon and conservative candidate Francois Fillon neck-to-neck about two points behind her. That is exactly how the race played out.

Continental Europe Wins the Sanity Contest

There is, therefore, no reason to distrust poll predictions for the second round; barring an unexpected disaster, Macron is about to win comfortably. And a disaster is highly unlikely: If anyone could compromise Macron, they would have done it before the first round, when he was weaker and there were other options for middle-of-the-road voters.

The accuracy of polls is just one way in which continental Europe has been more normal than the English-speaking countries. Both the Dutch and the French campaigns have been hard-fought and unusually dirty, but no one can claim foreign interference or hacking has affected the results. Macron claims there have been numerous attempts to hack his campaign, but if any have been successful, they turned up no damaging material. There was plenty of "fake news" to be found in France too, but it seemed to have played no role in determining the results. 

That persistent normalcy reflects continental Europe's equally persistent divergence from the U.S. and the U.K. The continent has higher government expenditure and lower growth, but also less inequality, higher saving rates and lower household debt. People's lives are less precarious in the core EU than in the English-speaking countries. Voters in the major continental nations may get angry and disappointed -- say, with French President Francois Hollande's feckless leadership or with the recent inflow of refugees from the Middle East -- but they don't get desperate enough to vote in a Donald Trump or to inflict Brexit-style turmoil on their countries.

Core EU countries may lose on certain economic parameters, but they win the sanity competition. That is a major, and underestimated, achievement of the EU: It has fostered a non-radical culture and a non-radical consensus that even powerful turbulence cannot destroy.

What, however, if the populist wave has merely slowed down, and, frustrated with more of the same, Europeans will give the populists a chance to govern in the next election? That's highly unlikely. Centrist leaders will work to consolidate their power and weaken their rivals' arguments. It's likely to mean tougher border policies and more pressure on newcomers to integrate, and certainly more targeted job policies to increase voter security. The EU unemployment rates are already on the way down, and, for better or for worse, there's less of a threat of tech-driven job destruction than in the U.S. because the EU's embrace of the tech revolution has been more cautious. Leaders such as Macron, Mark Rutte in the Netherlands, and Angela Merkel and Martin Schulz in Germany are visibly learning from their interactions with the hard left and far right. If anything, they will be tougher to dislodge in four or five years.

Barnes is smart to be betting on Macron in the second round as well, just as he was smart not to bet on Hillary Clinton. It's time to stop making disparaging comments about the EU and shorting the euro because of political fears. The biggest risks today are in the English-speaking world -- at least until it fully internalizes its populist inoculation.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website

To contact the author of this story: Leonid Bershidsky at

For more columns from Bloomberg View, visit