France is instructive these days. The Wall Street Journal reports: “French President François Hollande on Sunday sought to brace the nation for its toughest budgetary effort of the past six decades, as he outlined a raft of austerity measures—including a controversial tax on the rich—to shore up public finances. “ Hmm, so much for rejecting austerity.
The irony (or hypocrisy) of a socialist president, who ran against austerity, implementing very austere measures shouldn’t be lost. As the report notes, “The painful measures are necessary to fulfill pledges to lower the country’s budget deficit to 3% of gross domestic product next year from 4.5% in 2012 and reassure investors, who have been more lenient with France than with other highly indebted euro-zone countries such as Italy and Spain.” When you don’t plan ahead and take meaningful steps early enough, compound interest catches up with you and the debt crisis becomes an emergency requiring exacting real pain.
There are several take aways from this. First, Hollande has raised taxes on the rich, but — surprise, surprise — “the French economy has stalled—it has failed to expand for three straight quarters—and unemployment, at more than 10% of the population and rising, has returned to levels last seen 13 years ago.” It might please his left-wing base, but a soak-the-rich plan does great harm to efforts to pump up growth, generate revenue and thereby lessen France’s debt crisis (“the moves haven’t been without controversy, with French companies warning that the country’s high tax structure is hampering their ability to recruit and potentially sparking an exodus of the country’s rich”).
Second, Hollande’s socialists were of course full participants in the creation and expansion of a social welfare state that is now strangling the French economy. Bigger government and more government spending than the United States has traditionally had don’t make a country richer; they make it poorer.
And finally, failure and procrastination aren’t popular.:
Just four months into his mandate, Mr. Hollande’s popularity is sliding, as more French people question whether he is doing enough to fix the economy. A survey conducted by BVA and published Sunday in French newspaper Le Parisien showed 60% of people interviewed were dissatisfied with his performance.
“Over the summer, the French were under the impression the government was absent,” said Jean Chiche, a political-science professor at Paris Sciences-Po university. “Mr. Hollande needed to reassure his own electorate.”
Hmm. Lots of debt. Big spending. Class warfare. Lack of leadership. It’s really not a formula for success, is it?