The Austerity Illusion


Pages: 1 2

France inaugurates a new president next Tuesday. A change in leaders belies a continuity in policies. Just don’t say that to incoming president Francois Hollande—or the politician he vanquished this weekend past.

Echoing a victory speech of his soon-to-be counterpart in the United States, Hollande cast his election as momentous event igniting hope around the planet. “May 6 should be a great date for our country, a new start for Europe, a new hope for the world,” the victorious French presidential candidate announced to supporters at the Bastille. “I’m sure in a lot of European countries there is relief, hope that at last austerity is no longer inevitable.”

Can something so avoided really appear so inevitable?

The word “austerity” is oft spoken in Europe but little applied. This is especially true in France. Hollande promised change from these last lean years. But without exception government spending increased annually during Nicolas Sarkozy’s five-year presidency. Real change would mean implementing austerity, not jettisoning the mere suggestion of it. Sarkozy’s tenure experienced austerity among citizens. But the government economy consistently expanded even as the private economy occasionally contracted.

Could the contrasting trajectories of the public-private fortunes be correlated?

Just 17 of the world’s 210 governments grab more in taxes from their people than Sarkozy’s government grabs in France. Reasons abound for the draconian taxation. France under Sarkozy doles out more in social spending than each of the 27 European Union member states save Denmark and Finland. Though Air France had been partially privatized by the time Sarkozy took office in 2007, state-owned ventures persist in the series of France Télévisions stations, the Paris Opera, the French Rail Network, and the utility giant Electricity of France. The state generously funds higher education and health insurance, making the price of tuition and doctor visits nominal.

Free has proved expensive. Taxation absorbs 49 percent of the French gross domestic product. France’s debt-to-GDP ratio, which approaches 90 percent, has made the cost of borrowing more costly as Fitch and Standard & Poor’s have recently downgraded the nation’s credit rating. The nation’s deficit has decreased over the last year. But this has more to do with increased receipts than with decreased disbursements. France’s economy is in worse shape than America’s. Stagnation in both instances has coincided with a spike rather than a slash in spending.

Pages: 1 2

  • Reno

    Just for the record, Libya has never been a French colony but an Italian colony.

  • H&R_ Barack

    .
    Q: How can you identify a French Conservative?
    A: Sunburned armpits.

  • H&R_ Barack

    "France has neither winter nor summer nor morals. Apart from these drawbacks it is a fine country. France has usually been governed by prostitutes." ~ Mark Twain

  • pagegl

    I wish people like Krugman and Jackson would give me the secret of spending my way out of debt. There are some things I would like to buy but I've been putting them off until I get my current debt level down.

  • Patrick Henry

    I've long wondered how so many people are duped by the propaganda and cannot see reality (e.g., cuts never enacted, unsustainable debt, inflation as taxation) to save their lives.
    Recently I read an article from goldsilver.com (my apology to the author whose name escapes me) who explained his theory that power may or may not corrupt everyone who attains it, but it most certainly attracts corrupt people. There are a small percentage of people called Alphas who seek power for the sake of controlling others. The vast majority of people are Betas and simply wish to know what the rules are so they can follow them. These are the "sheeple" or lemmings who follow the leader and pay the price for their complacency and inability to see the forest from the trees.

  • Patrick Henry

    There remains a very small group of people called Gammas. They are fiercely independent, principled-centered to a fault, and will exit an organization once its dominated by Alphas. Among the Alphas are a select group known as sociopaths. They come to dominate any organization whose Gammas have been forced out through office politics, endemic corruption or worse. If you ever wonder why history is sometimes referred to as a record of the folly of mankind, it may be because most people are sheeple led by sociapaths devoid of principle and remorse.

  • Amused

    Yup , and Morgan Stanley just proved another age-old axiom about "never learning your lesson " just reported a $ 2 Billion dollar loss due to " sloppy work " ?? Really …it wouldn't be those " derivatives " again .? YOU BETCHA ! credit card related derivitives ….those same strange wall street products that brought about the recession …and they're at it again …..just as I had stated and predicted on these threads ….and Morgan says it's not over …..there ,may be another Billion to go . Wall Street Casino strikes again .

    • Amused

      Correction it;s now JP Morgan Chase . Allegedly one of the "better runned " finacial institutions .

  • Amused

    man not this game again !

  • Amused

    OWS , may be comprised mainly of jerks but they certainly got THE NAME RIGHT ——WALL STREET . a.k.a. Big Money , is what is destroying America's Economy . And do not be so naive as to think it is politics ….it is GREED . Which some of you here think "is a good thing " .

    • WilliamJamesWard

      Hey quit kicking my greed around it disturbs my aquisitonal concentration for more and a little
      more and maybe just a tad more of, well everything……………..I had a dream of walking down
      a Brooklyn Street pushing side by side shopping carts and next to me was Donald Trump,
      he had a few bags in the cart and a tattered and disheveled look, and yes the tag along dog.
      If it was a premonition it was unpleasant but I was surprised to see my cart had hubcaps, each
      with shiny glaring ingravings…………………..'Amused'……………………………..William

  • http://www.americarepublicspring.com Marvin E. Fox

    So France dumped its right wing left winger, and elected its left wing left winger, the left wing left winger, Francois Hollande, says change is coming. He may have had a chance to study obamanomics,or make a rousing speech. I feel sorry for the poor French people. They are trying to cure France's past socialism with the plans of a man who is more socialistic than the socialism that got them in trouble. France's cure is probably the same as the entire Eurozone. Get European factories out of China, Pur you factories back in your own countries. Put your socialists out to pasture. Hire some capatilists to run the factories and all of your other businesses. Get real and Get a life.
    Marvin E. Fox

  • WilliamJamesWard

    AuVoir France, down the hole following the rabibit, better for a while to live in denial and the
    fantasy you are going to make everything so fine and wonderful. This should be the last stage
    of Socialis idiocy before real depression and societal failure emerges to choke the life out
    of you Charlie. I lisened to a fellow the other day blame the activity of the Sun for what
    he calls mass insanity on a global scale, neurons are banging around to and energy
    discordance that has almost everyone going (clinically) nuts. Looks like the squirrils get
    top billing. Maybe it is true becuse it is easier to believe this than that mankind has burned
    out on paralyzing irresponsibility and the criminal malfeasance of those in positions of trust.
    My fathers generation was one mostly of men and women of responsibility and honest
    character who loved and lived but lost out to tollerance which crept in slowly and as a
    vast cloud of poison reduced millions to the stupidity of Hollywood and personal devaluation.
    Will History repeat itself as the cards fall and another World War will take on the
    reordering of life, may be so……………………………..William

  • Amused

    LOL….the Donald ! Don't worry , the Don ald will never be broke ….Bankrupt a coupl of dozen gtimes ….but never broke ….he' too gooda slick B.S. artist .
    What many do not realize , is that the "swap -derivitive " chickens have not all yet come home to roost . Morgan /Chase has not learned and will no doubt add a few more , destroying the wealth of the small investor and the economy of America .
    LOL….The Spirit of Jupiter Pierpoint Morgan lives on !!

    • WilliamJamesWard

      How do we get to live on?…………………William

  • Amused

    Easy lose 2 Billion in one week , and call it a " miscalculation " ..lol…..not to worry , the suckers [ 99%] will lick their wounds [ shattered 401's] and come back with more money to " invest in America " .

  • Amused

    The great irony here being , the CEO , was one of biggest critics of Regulation , which would have prevented this . But hey , he's getting $23 mill a year and the money lost wasn't his .