Only a few years after getting back into power, French Socialists got strong feedback about their policies during Sunday’s second round of local elections. And it turns out the French people don’t like them or their policies very much. The Economist writes:
A CRUSHING defeat at French local elections has intensified pressure on François Hollande to reshuffle his government. At a second round of voting on March 30th, Mr Hollande’s Socialist Party lost over 150 towns, most of them to the opposition centre-right. This morning, the French president was holed up at the Elysée, the presidential palace, consulting close advisers over reshuffle plans, which could be announced as early as today.
The Socialist losses were devastating. Although, as expected, the party hung on to Paris, where Anne Hidalgo becomes the capital’s first female mayor, the rest of the country snubbed the ruling party. Among the more dramatic losses were Toulouse, a city in the south-west that it had thought was safe, Roubaix and Tourcoing, two industrial cities in the north with a deep left-wing heritage, and a string of other cities, including Amiens, Caen, Tours, Reims and Limoges, held by the left since 1912. Even some towns in the Paris region, which had been governed by Communist Party since the second world war, such as Villejuif, swung to the right.
My parents live in Caen and the election of a right-wing mayor there is a big deal, they say. I have no idea what the new guy will be like, but I do hope for my parents’ sake and everyone in Caen that he doesn’t just continue in the steps of his predecessor (it wouldn’t be crazy to assume he may, in light of my observation of past French politicians’ behaviors). So I’m not holding my breath. In fact, as I have said before, both French parties bear the responsibility for the economic and fiscal mess the country faces today. In a recent column for Reason, I summed up the situation:
France spends more of its GDP on government-57 percent-than any other country in the Eurozone. The country’s unemployment rate is at a 16-year high of 11 percent, and a startling number of richer and younger French people are leaving for more hospitable economic environments abroad.
It has gotten so bad that France’s crisis-wracked neighbors might be catching up: A November 2013 Organization for Economic Co-operation and Development report warned that Paris is “falling behind southern European countries that have cut labor costs and become leaner and meaner.”
The data is even more striking when compared to Germany. With an unemployment rate of 5 percent and a private savings rate of 12.1 percent, Germany has been growing at 1 percent annually while France sputters along at 0 percent.
It is tempting to blame this on the 2007 recession, but the reality is that France hasn’t been doing well in years. Since the creation of the Eurozone in 1999, France has only managed a 0.8 percent annual growth rate. Germany, by contrast, has grown three times faster over those 15 years.
In addition, while François Hollande and his irresponsible and backward socialist policies and rhetoric have accelerated France’s economic demise, in addition to several waves of brain drain, right-wing presidents Sarkozy and Chirac pursued many of the same policies when they were in power. Under Sarkozy, spending on everything from special interests to social welfare went up, while French people were subjected to over 200 new tax increases. While he made some gestures toward increasing the retirement age, he didn’t do much to free the labor market from regulatory asphyxiation.
You may remember that on the campaign trail President Hollande promised that he would not trim France’s social-welfare spending (the highest of all developed economies) and instead would chip away at the country’s huge deficit by raising taxes. Well, now that France’s debt is close to 100 percent of GDP and economic growth is worse than it was when he got in power, we know how well that worked. So this anti-austerity president has been forced to go back on his word and embrace public-sector austerity and pay lip service to the idea of cutting some spending. The Economist concludes:
The new government will not only face fresh electoral difficulty at European polls in May. Before that, in mid-April, France must submit its spending plans to the European Commission, and it has promised to spell out €50 billion ($69 billion) of public-spending savings in 2015-2017, including an extra €10 billion or so in a payroll-tax cut to companies as part of a job-creating “responsibility pact”. Whatever Mr Hollande’s choice of government, its greatest challenge will be to explain to the left wing why its response to electoral defeat will be tax cuts for business and austerity.
My Reason piece, which tries to end on an optimistic note, is here.