Monday, November 12, 2012

Hollande's Moment of Truth

Tomorrow François Hollande will attempt to explain to the country where he is headed. I am eager to find out the answer. In anticipation, I can imagine two possibilities. First, Hollande might announced that he has had a conversion experience on the road to Damascus, that he now believes, as David Cameron does, in expansionary austerity. This seems unlikely, since it is not a doctrine widely embraced by the left, he didn't believe in it before, and no evidence that has emerged in the last six months is likely to have changed his mind--on the contrary. Or, second, Hollande may say that although he would like to stimulate the economy with deficit spending, his hands are tied with several strands of rope: the lack of confidence of the markets, the intransigence of Germany, and the difficulty of crafting a stimulus that will not allow additional government spending to leak out beyond France's borders to stimulate her neighbors rather than create employment at home.

Of course, he's unlikely to take this second position either, because it is a confession of weakness, which is the last thing he can afford right now, with his "presidential image" being questioned right and left. Indeed, he had vowed not to have news conference at the Elysée, but France2 last night reported that his PR advisors had recommended using the palace in order to demonstrate his physical occupation of the seat of power. The hope is that the majesty of the surroundings will magnify and solidify the quavering Flanby.

So what I expect is an onslaught of equivocation, a series of announcements of new initiatives in R&D, worker retraining, etc. There will also be, I expect, a moving paean to solidarity as a way of justifying both tax increases on the wealthy and the shift of the financing of social security to broader-based taxes (both CSG and VAT). There are some fine rhetorical opportunities here to disguise what is essentially a bitter pill that the left's base will be forced to swallow.

In any case, the occasion will be a moment of truth for Hollande, who has the unenviable role of leading the country in a time of profound retrenchment.

2 comments:

Mitch Guthman said...

@ Art,

However unenviable, Hollande chose to be president, just as he has apparently chosen the path of retrenchment as being the right direction for France. The factors you mention are all potentially significant restraints on his freedom of action as president nevertheless I have seen nothing to suggest that he ever contemplated struggling to loosen those restraints before submitting.

Similarly, if it’s true that he has decided to allow the depression to run its course, then he will have seriously discredited the left by squandering its precious credibility and political capital implementing the discredited theories of the right under the pretense that they are the theories of the left, too. France (and the left) are worse off now than if Sarkozy had been reelected. The left would not be discredited by its implementation of counterproductive and stupid austerity measures in the middle of a depression. And if it should come to a knock down political fight to break free of Germany and the ECB, I suspect France and the world would be far better served by Sarko than by M. Flanby.

I still say that Hollande needs to take bold action. Hollande needs to gather the other European leaders around him and make it clear that if Germany does not relent, Hollande will lead France and as much of Western Europe out of the European Union and out of the common currency. He needs to implement the kind of measures that Wolfgang Munchau discusses but also the stimulus measures advocated by Paul Krugman and many others so that the European economy can begin to at least get moving.

Where is Charles De Gaulle where you need him? (Words I could not imagine myself every writing before this crisis).

Anonymous said...

If he challenges Germany now and prominently notes that Germany will soon too feel the force of a continent-wide recession, then he might set up the conditions for leverage down the road. Germany will dig in its feet now, but 3 months from now, Hollande might come off looking prescient and he'll have positioned himself to form the coalition with Italy and Spain. And by then European financial markets will also be panicking about the economy, not preoccupied with Hollande's domestic agenda.