President Francois Hollande has put in place a new French government led by Prime Minister Manuel Valls. This maneuver has all the hallmarks of shuffling the deck chairs on the Titanic. Yes, one has the chilling feeling that accidents are waiting to happen.
President Hollande’s new lineup is loaded with contradictions. That's not a good sign.
Just take Prime Minister Valls’ assertion that, when it comes to economics, he is a clone of Bill Clinton. For anyone familiar with the facts, this claim is bizarre, if not delusional.
When it comes to France’s fiscal stance, the Valls’ government is fighting austerity tooth and nail. Indeed, the Socialist government is seeking greater leeway from the European Commission (read: Germany) over targets for reducing France’s stubborn budget deficit. With French government expenditures accounting for a whopping 56.6 percent of GDP, it’s truly astounding that the government is reluctant to engage in a bit of belt tightening.
This brings us back to Valls’ self-promotion – namely, to compare himself to Bill Clinton. For a reality check, a review of the fiscal records of U.S. presidents is most edifying. Let’s take a look at Clinton:
The Clinton presidency was marked by the most dramatic decline in the federal government’s share of the U.S. economy since 1952, Harry Truman’s last full year in office. The Clinton administration reduced the relative size of government by 3.9 percentage points. Since 1952, no other president has even come close. At the end of his second term, President Clinton’s big squeeze left the size of government, as a percent of GDP, at 18.2 percent.
What is noteworthy is that the squeeze was not only in defense spending, but also in non-defense expenditures. Indeed, the non-defense squeeze accounted for 2.2 percentage points of Clinton’s total 3.9 percentage point reduction in the relative size of the federal government. Since 1952, the only other president who has been able to reduce non-defense expenditures was Ronald Reagan.
During his presidency, Clinton squeezed and squeezed hard, and his rhetoric matched his actions. Recall that in his 1996 State of the Union address, he declared that “the era of big government is over.”
When it comes to fiscal rhetoric and record, it’s hard to imagine that Manuel Valls – even in his wildest dreams – will be able to match Bill Clinton, the king of the fiscal squeeze.
According to the New York Times, French Socialist president François Hollande demanded and received the dismissal of the editor of Le Figaro, the country's leading conservative newspaper. If that sounds impossibly high-handed, consider the background, as reported in the Times:
The publisher, Serge Dassault, is a senator from [ousted President Nicolas] Sarkozy’s political party [and thus opposed to Hollande]. But Mr. Dassault also heads a major military contractor, and there was widespread speculation that [Figaro editor Étienne] Mougeotte’s ouster was meant to put the Dassault group in good stead with the new president.
[Since-convicted Illinois Gov. Rod] Blagojevich, Harris and others are also alleged [in the federal indictment] to have withheld state assistance to the Tribune Company in connection with the sale of Wrigley Field. The statement says this was done to induce the firing of Chicago Tribune editorial board members who were critical of Blagojevich.
And in 1987, at the secret behest of the late Sen. Edward Kennedy (D-MA), Sen. Ernest Hollings (D-SC) inserted a legislative rider aimed at preventing Rupert Murdoch from simultaneously owning broadcast and newspaper properties in Boston and New York. The idea was to force him to sell the Boston Herald, the most persistent editorial voice criticizing Kennedy in his home state. Kennedy's and Hollings's actions drew criticism in places like the Harvard Crimson and from syndicated columnist R. Emmett Tyrrell, but no national furor developed.
One moral is that we cannot expect our First Amendment to do the whole job of protecting freedom of the press. Yes, it repels some kinds of incursions against press liberty, but it does not by its nature ward off the danger of entanglement between publishers and closely regulated industries, stadium operators, and others dependent on state sufferance. That's one reason there's such a difference in practice between a relatively free economy, where most lines of business do not require cultivating the good will of the state, and an economy deeply penetrated by government direction, in which nearly everyone is subject to (often implicit) pressure from the authorities. France has been unable to avoid the perils of the latter sort of economy. Can we?
Let’s say that you are a newly-elected French president and you have a lot on your plate. The unemployment rate is 10.2 percent and youth unemployment hovers around 23 percent. The budget deficit is 4.5 percent of the GDP and the explicit national debt 90 percent of the GDP. Your economy is at a standstill and your currency is on the verge of collapse. Many of your most productive people wonder if they should pack up and leave, because you have just asked them to fork over 75 percent of their earnings to the taxman. Your popularity is shrinking faster than you can say sacre bleu! So, what do you do?
Easy. You switch the subject and start talking about something completely different … even if it is, well, a little crazy.
Thus, “French President François Hollande has said he will end homework as part of a series of reforms to overhaul the country’s education system. He doesn’t think it is fair that some kids get help from their parents at home while children who come from disadvantaged families don’t.”
Better that all children suffer, so long as they suffer equally. Equality of misery—that pretty much sums up socialist mentality everywhere.
May 23, the permanent five members of the UN Security Council, plus Germany (P5+1) will enter into talks with the Iranian leadership about the latter’s nuclear program. The Baghdad talks come on the heels of talks last month in Istanbul. A number of observers have raised expectations for the talks in Baghdad. The latest hopeful development is IAEA chief Yukiya Amano’s declaration, on the heels of his visit to Tehran, that he expects a structured agreement for inspections to be signed “quite soon.” Any progress toward a diplomatic solution would be preferable to backsliding or a collapse. Unfortunately, the talks are unlikely to live up to the high expectations.
Beyond Amano’s visit to Tehran, the big change since last month’s talks is French President Nicolas Sarkozy’s loss to the socialist, François Hollande, who appears less truculent on Iran than was Sarkozy. Previously, Sarkozy was the hardest-driving member of the P5+1, so Hollande’s victory is likely to bring the P5+1 into closer harmony. More broadly, the considerable anxiety over the prospect of an outright collapse of the Euro is likely to diminish European interest in focusing too much attention overseas.
Despite these changes, however, one wonders how the underlying calculus of negotiations has changed. The United States is still threatening to bomb Iran in order to prevent it from developing a nuclear deterrent. Israeli Prime Minister Binyamin Netanyahu is continuing to define “success” in a way such that it cannot realistically be achieved, and warning that anything less than total Iranian capitulation is failure. Like-minded U.S. legislators, such as Senator Lindsey Graham (R-SC), agree that the only acceptable Iranian move is immediate surrender. And high-ranking Iranian military officials are declaring that Iran is “standing for its cause that is the full annihilation of Israel.”
Given these two sets of developments, the question remains: Have sanctions by the United States and its partners caused enough pain and fear of instability in Iran that its leadership will forego a nuclear program that it likely feels is vital for its legitimacy and security? Most skeptics, this writer included, would like to be proved wrong, but they still appear to have the better of the argument.
Cross-posted from the Skeptics at the National Interest.
My French is rusty, but I'm pretty sure the Fresh Prince just flipped out at the idea of a 75-percent marginal tax rate like that advocated by France's new socialist president.
Francois Hollande is a man on a mission—to increase the top rate of tax on income to 75 percent. The Socialist candidate, who is poised to beat Nicolas Sarkozy in the French presidential election, said, “Above 1m euros [£847,000; $1.3m], the tax rate should be 75% because it's not possible to have that level of income.”
Hollande’s “unassailable” logic aside, the measure would remind those who are too young to remember the 1970s of what happens when the rapacious state makes work really unprofitable. I can just see the Whitehall mandarins wring their hands with joy as thousands of French high-earners, from actors to businessmen, pour across the English Channel to London. If anything, the disastrous effect of the French tax will be greater than four decades ago—the world, after all, has become even more competitive and the cost of relocation has fallen appreciably. Karl Marx is supposed to have said that “history repeats itself, first as tragedy, second as farce.” Hollande may well prove him right.