On the Socialist Francois Hollande’s victory over incumbent Nicolas Sarkozy in Sunday’s French presidential election:
I think the general interpretation is correct: This is a revolt of the people in Europe — who don’t have a lot of say, when the EU is doing business — against austerity, which has been decreed by the German and the French leadership in response to the crisis in Greece and elsewhere.
The problem is this: It [austerity] did bring down… governments in Portugal, in Italy, in Ireland, in Spain, and in Greece. But you can vote to change the leadership on austerity, but you can’t vote against mathematics.
Hollande is a socialist. He says he wants no austerity, he wants growth. That’s a way of saying tax and spend. He wants to reduce the number of cuts in spending, he wants to tax the rich, those who make over a million eruo a year, at a rate of 75 percent. I guarantee you that the treasury in Paris will get less net revenue as the rich leave. The rich are able to move a lot easier than the poor.
The problem is, in the end, if he does all that he says he going to do – increase taxes and not do the cuts – the markets will squeeze the French the way they squeezed the Greeks and the Spaniards and the Portuguese….
What is remarkable [is that] the austerity in France has not actually happened. There’s been some change in the weekly work hours. No real cuts. And when they raised the retirement age — this was a big deal in France — from 60 to 62, there were riots in the streets—students, who have no job and who would not be affected for 40 years, to have two extra years of work, were rioting and smashing windows in the streets of Paris over this. It tells you how subjugated and coddled the population is. Imposing austerity on a population used to cradle-to-grave government is going to be extremely hard.
That’s why the Socialists won. But in the end, you can’t repeal economics.