Run.
If
you believe the press. Mr Hollande apparently believes the rich are evil and
must be taxed heavily for their obvious sins. He taps effortlessly into that painful
assumption that modern and new-fangled is somehow immoral and cheap (and
probably a nasty import from perfidious Albion) and responsible for the fading
dreams of Gallic grandeur. He would like them all to be living in some
socialist post enlightenment idyll where no one works (well, others somewhere
else must work but let’s not worry about that) and if you are not on holiday,
then you should be retired early. Ok, I’m exaggerating…slightly.
As
one paper put it recently, Mr Hollande has already promised to spend money he
has not yet even been able to borrow. Such is the rock upon which most
socialist dreams flounder. Socialism is a wonderful hypothesis, yet the facts
of history don’t bear it out. Humans by nature are greedy hunter gatherers who have
always sought to accumulate goods and material wealth. Whether we like it or
not, it is Capitalism that syncs most closely with this very fundamental and
consistent aspect of human behaviour.
But,
back to France – it is not in a good place. Its banks resemble a cosmic phenomenon,
most notably in that they have black holes instead of healthy balance sheets
and they are light years from recovering their injudicious loans (notably to
places like Greece and Italy). Many of its best and brightest have semi-grated
to places like London and other northern European capitals where the wish to
work hard (i.e. more than 35 hours a week) is not viewed as a character flaw
and from which they can train-it back home at weekends. As a nation they seem
preoccupied with their seemingly waning international influence as De Gaullism
moves from the sunset into the shadows.
It
has also recently been usurped by a resurgent Germany as the “political mover
and shaker” in the Eurozone. For years
it has worried about the real or imagined loss of its influence, the way its
culture is besieged by a sea of shallow and vacuous Anglo American imports,
with their transient trends, pop fashions and associated vulgarities. Let’s not
even get on to those “illegal foreign wars” or the irresistible tide of the
English language. And to add insult to injury, the Far East now rises like a
burning ultra-competitive sun on France’s horizon generating dark talk of trade
tariffs and protectionism.
So what do
you do when faced with all these problems – it appears you elect a man whose
plan to save your sinking ship of state is to make a few more strategically
placed economic holes in the hull.
Because
they are in such debt but still want to live beyond their means, Mr Hollande
will borrow more money that will grow the bloated public sector a bit more. This
he says will be good for growth, which has the logic of saying that eating more
hamburgers is good for growth, even if not the kind you really want.
He says he
will tax the very rich very heavily. For all that it is largely empty rhetoric,
this has gone down very well indeed. In France no one likes the rich, although
everyone wants the good life cushioned with generous state welfare paid for by
that mythical sector of society known as “someone else”. There is an irony, not
delicious but bitter and cynical, of resenting the rich but wanting the State
to fund a standard of living you can’t afford – a trait by no means limited to
France alone. No such thing as a free lunch, eh?
On the tax
question, Mr Hollande, with all his talk of taxation and spending, risks becoming
preoccupied with wealth distribution, as opposed to wealth creation. Like most
politicians keen on embellishing their credentials with easy hand-outs, he
prefers to ignore the reality that the distribution of wealth without equal
attention to its creation is disastrous. If he is not careful, he will kill off
the “golden goose” leading ultimately to wealth destruction. Just as you can’t
dig your way out of a hole, you cannot tax your way out of a deficit. Over-taxation
is like a bad smell in a small room. Those who are able, head for the door. In
this case, the rich head for the exits (taking their proverbial sacks of wealth
with them of course) and go and live somewhere else more welcoming like London
(which is something like the 7th largest French city now).
He
will also placate the electorate with bland, reassuring speeches – he will apply
a growth policy, as if he thinks this is like applying another layer of make-up.
He will tell Germany that he is going to renegotiate the Eurozone fiscal
stability pact that ensures austerity. What does he think this pact is – some
local arrangement like the window cleaning contract at the Éllysée Palace? He
may find there are a few problems with this. Germany likes its pact (and
everyone else’s austerity). It likes its low inflation. The pact is also already
agreed by France, which is thus at its mercy.
Yet,
Mr Hollande tells the French that nothing is as bad as they say, it’s almost as
if he is telling them that if they bury their heads deep enough in the sand,
then they won’t be able to see it all those dark clouds above their heads and they
can remain safe in the dream of a unique French way of life. Yet that is but a
nostalgic yearning for what is now passed. It is as if Hollande promises them a last
glance over the nation’s hunching shoulders, back to the sunlit, halcyon days
of a youth passed but irresistible in its recall.
So we await
the miracle of socialist economics. Perhaps he also believes that the earth is
flat; confirmation is pending….
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