New School Politics

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This past summer I wrote about the great hope I had in Nicolas Sarkozy to restore capitalism to France and by doing so, save its lagging economy. I had read transcripts of his translated speeches, saw him on television multiple times and read enough articles about him to feel that he was somebody who could truly enact change in that once great nation which is slowly being marginalized in the global arena. I stand here today disappointed that this man who had such great rhetoric on the campaign trail failed to live up to his promises.

Sarkozy has proven to be a protectionist in his trade policies and just as socialist, in most other policies, as the machinery he claimed he would tear down. His popularity in France has dropped 13% and, instead of sticking to his convictions, he has simply given in. This past Monday he spoke to steelworkers and declared he would save their plant from being shutdown, on Wednesday he promised bonuses to low-income pensioners and, in response to a slow down by taxi drivers, the same day ended plans to deregulate that service. All of these are far cries from his campaign days where he gained widespread support for wanting to significantly reduce government regulation and handouts, and create a more privatized economy. Obviously this is not the man the French people thought they would be getting when they overwhelmingly voted for him and gave his party a considerable majority in the National Assembly.

The biggest disappointment, however, has been his handling of the Societe General (SocGen) situation. SocGen is a major French bank that has recently experienced tremendous losses. Sarkozy has been adamant that only another French company may bid for the bank. This ignorant protectionist view will do more harm than good for SocGen and the French economy as a whole. SocGen will not get the best price if foreign companies are not allowed to bid on it, so the shareholders will be injured. The French economy will take a blow as investors who may have believed in Sarkozy’s rhetoric about opening France to globalism will realize that he is no different than previous French protectionist politicians, and invest their money elsewhere.

Popularity: 38% [?]

Sarkozy seems to be having a rough week. It was discovered that his son is secretly involved in the French rap world - the very world that Sarkozy inflamed both as Interior Minister and President. The rapper that Pierre Sarkozy (Nicolas Sarkozy’s son) works with previously wrote a song calling for people to vote against Sarkozy in the election. On top of this newest drama, there is the older news of Sarkozy’s highly publicized relationship with Carla Bruni, a model turned singer. The opposition to what the French see as frivolous media-pandering in a time when the French economy is looking grim has been reflected in the recent drop in Sarkozy’s approval rating. Apparently many French feel that Sarkozy is spending too much time enjoying himself, and not enough time doing his job. (Ironic?) His approval rating currently stands at 48%, a sharp drop from the 65% approval rating he had in July, and his stock looks to continue dropping, courtesy of an economic announcement that he made today.

It seems that Sarkozy has gotten it into his head to tax the internet and mobile phones in France. This is clearly a bold move, considering that policy experts note that Internet access drives a country’s growth-clearly the fact that France’s economic growth is projected to lag behind that of the other Euro countries for the 3rd year in a row doesn’t faze Mr. Sarkozy. Sarkozy is proposing what he calls and “infinitesimal” tax on internet and mobile “telephony” in order to cover his other proposal: the removal of commercials from public television broadcasting. This measure is an attempt to save the television and other mass media industries that are quickly being outpaced by the internet.

France currently has cheaper internet access and a higher percentage of homes with high speed connections than the average for the OECD (Organisation for Economic Co-Operation and Development). Sarkozy was widely welcomed in the US when he was elected last year because he was seen as having the financial skills to reverse what have been lackluster years for the French economy. However, he’s proven to do anything but this. His Internet Tax proposal would place undue burdens on the growth of an already struggling country. If the television industry is no longer able to provide and compete, consumers should not be forced to carry its carcass on their shoulders. But, as Sarkozy’s affair with Bruni has shown, he’s really just looking out for himself, not his country - a great idea for an investor, but not the leader of a country.

On one last note, Sarkozy announced also today that the 35-hour work-week must be abolished. He actually acknowledged that the severely restricted hours might be hurting France in the global market! Good job Sarkozy- and good luck!

Popularity: 30% [?]

France, which has for a long time been the most leftist of the modern industrial nations, is finally embracing the free market. The new president, Nicolas Sarkozy, has vowed to disassemble the 35-hour working week, cut taxes, weaken the unions and guarantee minimum service on public transport during strikes. All of these have been key features of France’s socialist state. On Sunday, June 10, in the first round of the parliamentary elections Sarkozy received a clear mandate to carry out his reforms. His party, the Union for a Popular Movement (UMP), won 42% of the vote, while the next closest, the Socialist Party, only won 28%. It is believed that the UMP will end up with anywhere between 381-505 of the 577 seats in France’s national assembly. With such a majority Sarkozy will be able to free France’s economy from the shackles of socialism.

Sunday’s election also dismantled the entire left of France. The major leftist party, the Socialist Party, is in complete disarray after humiliating losses in the presidential elections and now the parliamentary elections. Also, the Communist Party, which at one time was a serious force in French politics, won only 4.3% of the vote, and the Green Party, which was expected to make a strong showing, only managed to garner 3.3%. The leftists now are in a very difficult position because if they stick to their beliefs they will continue to shrink to insignificance in French politics. Their only option at this point is to accept some free market reforms, as the major leftist parties in the UK, Germany, and other nations have.

While France still has a long way to go, it appears as if they are on their way to eliminating the socialist state which has caused economic stagnation for many years. Sarkozy has received his mandate from the people, it is now up to him to transform France into a free market economy.

Popularity: 50% [?]

France was once the country of change, of revolution, of new ideas.  It hasn’t been so in a while now, but with the first round of Presidential elections coming up on May 6th, things could change in France for the first time in decades.

France has a semi-presidential government, with both an elected President and a selected Prime Minister.  The defining characteristic of this government, however, is the concept of dirigisme.  Dirigisme involves a high level of government involvement in the economy, and the French government has historically been very involved in the transportation and infrastructure sectors in France.  Although the French government has been loosening its grip since the early 90’s, Socialist tendencies still abound in the French marketplace.  For instance, there is a 35-hour workweek and employers have a very hard time firing employees. (Until recently, there was a fine for businesses who fired elderly workers.)

All these Socialistic restraints are slowing down the French economy. The GDP growth this past year was 2%, below the EU averager of 2.8%, and is expected to fall even further to 1.9% next year.  The unemployment rate has been hovering just below 10%, which is high even for EU standards.  Taxes are also far above the average EU values and certainly above anything one might expect to see in a laissez-faire economy.  While dirigisme may have originally been an appropriate response to the massive stresses WWII placed on France, its population, and its economy, it is now outmoded and a serious threat to the continued growth of the French economy.

So where do the elections come in?   Lire le reste de cet article »

Popularity: 52% [?]