Contemporary France is a paradox. In no other E.U. nation is there such desire to be a great power. Yet few other nations cling so tightly to policies that ensure long-term economic decline. This week’s elections are the latest chapter in this ongoing saga.
The elections were at the level of France’s 22 regions. The presidency and seats in the national parliament were not on the ballot. But the strong swing of support to leftist parties and the weak showing of President Chirac’s UMP were a blow to him and to his prime minister, Jean-Pierre Raffarin.
The outcome is widely interpreted as a sign of voter discontent with economic policy. Unemployment remains high. Cost-cutting in public pensions, health care and education is unpopular. Changes in France’s obsolete labor laws are hated.
The French managed to antagonize most other E.U. members by busting the 3 percent limit on annual budget deficits. Such deficit spending has not produced strong growth, however. As in Argentina, voters opted for some “hair of the dog that bit them” and voted strongly to keep economic policies that strangle growth.
The vote comes precisely when the government is openly returning to neo-mercantilism in extorting a buy-out of drug and chemical producer Aventis by a French group, Sanofi. There is no reason for this merger other than to ensure that one of the world’s largest drug firms is French. It would never occur without French government threats and manipulation.
The desire that France be a global power in economic, political and cultural terms spans the political spectrum. Left and right alike support policies intended to secure French predominance within the European Union and prominence outside it. Chirac follows a long line of French leaders back through Mitterrand, De Gaulle and Bonaparte all the way to Jean-Baptiste Colbert, Louis XIV’s finance minister, in using state power to engineer a powerful economy.
The enterprise is doomed to failure. Centralized indicative planning, subsidies to national champions and large government-owned industries are a prescription for economic stagnation in this century as they were in the last one.
Presidents Mitterrand and Chirac did much in the 1990s to rid their nation of the most suffocating aspects of this neo-mercantilism. The central bank got autonomy, and public accounts were sanitized in the run-up to the euro. State-owned firms were privatized.
But now the pendulum is swinging the other way. Voters will get what they want. Reform of the demographic time bomb ticking within the government pension system will slow. Labor market reforms will halt. Government deficits will climb, further fracturing an already fragile E.U. governance structure.
In the long run, all these choices will weaken rather than strengthen France. It will not fall back into poverty as Argentina in pursuing similar policies. French incomes probably will not decline in absolute terms. They will, however, compared to the rest of the world. Twenty-five years from now, France will be of substantially less importance in European and world affairs because of decisions made this month.
© 2004 Edward Lotterman
Chanarambie Consulting, Inc.