What prompts me to write today about this always elegant usually rational and sometimes maddening nation is the current race for President of the Fifth Republic. Even by French standards this years’s campaign is shaping up to be a campaign of economic suicide. The first round of the election will be held on April 22 and if as is likely no candidate achieves an outright majority a run-off between the top two candidates will be held on May 6. The two current front runners are the incumbent President Nicholas Sarkozy of the center-right UMP party and the current leader Francois Hollande of the Socialist party.
What I find remarkable about this election is the economic policy upon which Hollande is campaigning. He has promised to reduce the retirement age from 62 to 60; raise the tax rate on high-earners to 75%; renegotiate the recently-agreed European fiscal treaty; and wage war against "le monde de la finance." Now if Europe including most pointedly France were not facing a near-existential financial crisis these sort of campaign promises could be dismissed as harmless populism but the stakes are much higher this election. First Europe is by no means out of the woods despite the breathing spell afforded by Mario Draghi’s decisive action at the ECB. Second Hollande is not just a fringe candidate seeking to motivate his faithful; the polls have him well in front with less than two months to go before the expected run-off election. Third these are not ordinary times – global markets remain on edge – and these are not merely symbolic measures like Lionel Jospin’s mandated 35-hour work week in 2000. Finally responsible governments in Europe are going in the other direction seeking to raise retirement ages not reduce them.
In fairness President Sarkozy has also staked out some economically indefensible positions. Playing to the extreme right Sarkozy has vowed to slash immigration in half which is not only questionable on humanitarian grounds it is bad economics (at least in the longer run) for a country with an aging population and a low birth rate. Otherwise as far as I can tell President Sarkozy has done a decent job in office but when I expressed this opinion recently to a French friend he replied "we just can’t stand to watch his face on TV any longer."
So as things stand now France is likely to elect a new president within the next two months. Perhaps as Hugo Dixon has argued recently in Reuters Breaking Views this is not as dire economically as I make it out above because Hollande’s "reforms" are likely to be heavily caveated and watered-down. However as someone who believes that too many continental governments have been pandering to their citizens and delaying their day of reckoning for much of the post-war period this latest election contest strikes me as one more good crisis wasted. My only worry is that the next one will be worse and the ECB printing press will have run out of paper to print.
My confidence in the next President does not come from a deep trust in political wisdom on which I became increasingly skeptical and sometimes cynical. Nicolas Sarkozy increased France’s public debt by 600 billion Euros (up 55%) while claiming publicly that the Eurozone countries in difficulty should apply austerity. He has refused it for France. Whoever is the next President he or she will inherit a devastated legacy of public finance. The marge de manoeuvre will therefore be narrow. The beginning of wisdom is fear. France should be afraid of the risk to join Italy or Spain. With its 5.4% deficit in 2011 and 90% debt to GDP ratio the country is very close to a serious crisis.
Thanks for your concern as this election might be important not only for this country but for the whole European future as well Nicolas Sarkozy was mostly appreciated in times of big crisis people thought that he more or less did what needed to be done but now they don’t remember that At the moment Greece is supposed to be solved the ECB action made things quieter even if it might be just buying time and stocks markets went up like everything as usual again And his opponent feels free to make unrealistic promises as if no big debt was waiting for us around the corner What people do remember it’s Sarkozy celebrating his election victory at Fouquet’s then going on a vacation on a billionaire friend’s yacht things that were inappropriate in a country where a big portion of the population has socialist inclinations. Plus his narcissistic tendency and his habit of occupying TV much more than necessary He apologized recently about his behavior and his polls ratings improved a little maybe he needs to apologize even more! Anyway he was so much criticized and rejected lately that hopefully at some point people might change their minds start to appreciate his resistance and persistance and support him again Even if today it’s not politically correct to say it at the last minute he could be considered as the safe haven. More than one month to go many things can happen.
Interesting! With the week’s events!
nice post
Too many continental governments have been pandering to their citizens and delaying their day of reckoning for much of the post-war period. Which country has stopped delaying the day of reckoning grappled with its problems and set themselves on the path to sustainable growth?
You are right: France is not alone in facing a “near-existential” financial crisis… and not only financial but a humanitarian one as well. In light of the recent terrorist attacks (on French military personel and Jewish families) France’s weak leadership is quickly steering it toward instablility. I doubt anything will change with the upcoming elections.
Despite a surprising error on the birth rate of France which is one of the highest in Europe which makes France not as comparable as Germany I tend to agree with your views. Not sure yet that France will have a new president though. However it is amazing to see how the media and the polls can exacerbate some of the most weird politicians sayings thinkings or promises and as a consequence influence our own opinions. I read recently that 50% of the persons who have been polled 2 months ago have since changed their mind. It is undeniable that the polls have an influence on us for the less lucid ones at least. Can we imagine similar situation 2 months after May 6? I can believe the current situation in France is laughable to some extent for some foreigners – it is a mark of our elegance!. As a french citizen I am certainly fed up by the bias put by the media not questioning politicians programs objectively tending to wash up our brains and in the end dictating what to do underhand. In a week time we’ll see if we have a smashing first round result as in 2002. I will be interested in the abstention (to some extent) and the blank vote rate which democratically would mean that the political offer is not the right one. As for the “good crisis wasted” I would like to see the media explaining to the mass that it is like a loaded dice game. As ever since 40 years a so-called recurrent crisis is profitable to a lot. But like for any gossip some media keeps indecently relaying the bad side of things. In a market economy some loses some wins. Nothing new. If this model is no longer virtuous let’s change it. History would remind us the consequences beforehand. A bient̫t !
nice post
good 🙂