Thursday, October 23, 2008

France, Inc.

Sarkozy has announced the creation of a French investment fund with a capital of $200 billion. He is also temporarily introducing a limited suspension of the taxe professionnelle (thanks for the correction, Kirk).

Call it an investment fund or sovereign wealth fund. Call Sarkozy a socialist in wolf's clothing (as one MEP did the other day). Mock his inconsistency or praise his political versatility. In fact he's merely doing what leaders of all the advanced industrial countries will be doing shortly, if they are not doing it already: trying to minimize the damage of the recession by turning on massive government investment. This can do a lot of good, especially if it is seen not solely as countercyclical spending but as a chance to do something about decaying infrastructure and make foundational changes with a chance for long-term impact. In France it's hardly unprecedented for major capital spending to be directed by the state, whether under the Commissariat au Plan, through state-controlled or -influenced enterprises, or directly by the Ministry of Finance. Sarkozy always danced nimbly between the neoliberal and state-capitalist camps. If the last two decades were the neoliberal decades, the coming two are likely to consecrate the hegemony of state capitalism. Sarkozy has been quicker than most to draw that conclusion and try to get ahead of the tsunami. Let's see what happens next.


kirkmc said...

Suspending the taxe professionelle? For everyone???

Wow, that'd be the first time that I got anything out of all these so-called tax cuts...


kirkmc said...

Oh, no, I think you over-simplified. Here's what I found:

""A partir d'aujourd'hui, tout investissement nouveau réalisé par les entreprises en France sera exonéré à 100% des taxes professionnelles jusqu'au 1er janvier 2010", a dit le chef de l'Etat lors d'un déplacement en Haute-Savoie.
"Ces investissements n'entreront tout simplement pas dans l'assiette de l'impôt", a précisé le chef de l'Etat, qui a promis que "l'Etat compenser(ait) aux collectivités locales le manque à gagner"."


OscottLocal said...

I would argue that Sarkozy is acting in the finest tradition of a French president. To a Brit French Presidents seem to display almost total pragmatism, this can appear cynical but in fact it is an essential requirement of the job.