OPINION:
President Francois Hollande, buoyed by the euphoria of his election in 2012, when everything good seemed possible and even probable, promised to resign if he failed to turn the struggling economy around. Frenchmen, like the Americans, swallowed whole the empty but clever marketing message of “Hope and Change,” excited that a politician was willing to put his job on the line.
Words have meaning, and, too bad for politicians, so do deeds. The latest unemployment figures suggest that Mr. Hollande might have to write that resignation speech sooner rather than later. Joblessness in France has risen to a record 9.9 percent, climbing close to double last year’s figure.
French governments have been trying to sugarcoat the facts about its failing economy for years, disguising failure with a multitude of make-work programs and foolish labor regulations meant to “spread the work around.” French workers have one of the shortest workweeks in the world, legally capped at 35 hours. Each worker is allowed to work only four hours of overtime a week.
When the tangle of regulations prevent workers from breaking a sweat produce the predictable result, the state attempts to make the economy work with smoke and mirrors. Government spending comprises a staggering 56 percent of the French gross domestic product. With so much money thrown at the country’s unemployment problem, nearly 40 percent of the French with a job work for the government.
The fundamental problem, as always in economies managed by lumbering welfare states, is that someone has to pay for it. French taxpayers have the fifth-highest tax burden in the world, paying in taxes nearly half of every dollar they earn. Millionaires are to pay a tax of an astonishing 75 percent of their income, though this proposal has been challenged and the Constitutional Council, the highest court in France, first ruled it unconstitutional and then that it was constitutional.
The prospect of punishing high-income earners could have unexpected and unpopular consequences. One popular actor even surrendered his French passport and departed for other places where taxes are reasonable, and the professional soccer clubs warned that its players, many of whom are paid well in excess of $1 million a year, would leave for teams in other countries. Who will pacify the French if the French do not?
French companies must pay an uncompetitive 33 percent corporate income tax, and the book of confusing and contradictory regulations continues to swell from 400,000 regulations and accompanying 137,000 labor decrees.
The fundamental problem in France, as in much of Europe, is a wrong-headed, deeply held cultural belief that state coercion can make the economy grow. It’s an article of faith that solutions must include raising taxes on the rich, increasing the minimum wage, enacting more labor laws, implementing mandatory 12-week paid vacations, and increasing government spending on infrastructure and fuzzy green-energy projects. These proposals often sound good in European ears but implementing them usually makes things worse, not better.
It is an ironic fact of history that many of the limited-government, free-market ideas that influenced the Founders of the United States originated in France. Many of America’s 19th century thinkers were students of the French economist Frederic Bastiat, who correctly argued that government spending can never create wealth, but only destroy and divert it to useless nostrums.
France is perpetually an economic backwater, but eager to double down on unworkable policies born of misguided socialism. France can’t escape its economic doldrums until the makers of economic policy jettison their theological beliefs in big government, big taxes and big spending, and liberate the energy, ambition and initiative of free men.
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