Sunday, October 28, 2012

What Big Business Wants

Employers of the Association française des entreprises privées, among whom one finds most of France's largest employers, have submitted a plan that they say will help to restore growth. It calls for a 30-billion euro reduction of social charges on the wages of workers earner twice the SMIC or more, to be paid for by an increase in the VAT from 19.6 to 21%. They also want a reduction of the corporate tax to align with the rate paid in other European countries. They also advocate a "pragmatic" approach to the search for shale gas.

This is such a modest and workable program in an age of unprecedented policy proposals that it is hard to see why the government wouldn't grant all the requests, just to be able to say, no matter what happens, "See, we gave you all you asked for." What's more, the proposals make sense.

Of course, Hollande has already dug in his heels against fracking, I think erroneously and prematurely. And he has already indicated a preference for the CSG over the VAT as a replacement for payroll taxes, although it's hard to see any insuperable objection to either, or to a combination of both.

If only such comity existed in the United States. The Socialists, already in trouble with their own electorate, however, may see a trap here and reject the proposal out of sheer political wariness. They shouldn't.