Thursday, August 21, 2014

Accelerating Into the Wall

John Maynard Keynes was once asked about a change in his position. "When the facts change, sir, I change my mind. What do you do?" In this as in other respects François Hollande is evidently not a Keynesian. In an interview with Le Monde, he said:

je réponds que toute godille ou tout zigzag rendrait incompréhensible notre politique et ne produirait pas de résultats
Heaven forbid that he should tack or zigzag, because that "would make our policy incomprehensible." As things are, of course, that policy is a model of limpid clarity. The fact that it is not producing any results to be proud of does not preclude the possibility that it will produce results tomorrow. The fact that the government has already tacked and zigzagged on a hundred points, most recently after the Constitutional Council struck down a key component of its Responsibility Pact, must not be confused with the kinds of tacks and zigzags proposed by its critics, which would only confuse matters by moving in a different direction. And that would be a disaster, because the remedy for all the government's failures to date is to "accelerate the reform." When a wall looms in the path of an onrushing vehicle, acceleration may not be the best strategy, but Hollande le Mou has evidently been advised by his media counselors to emphasize his firmness, and, by golly, he has mastered the art of repeating ad nauseam "I will not change course."



Swedish said...

This is a bit unfair to what he said. Hollande acknowledged a severe and growing demand problem but said this cannot be tackled efficiently at the national level, only at the EU level. Meanwhile, he can only engage in supply-side reforms which, by the way, will effectively increase the public deficit (tax cuts being quicker than "structural" spending cuts).

It'd be more interesting to discuss why Hollande cannot manage to convince its peers that a coordinated spending boost is more than welcome in the EU. Maybe he is too unwilling to abandon political power to the EU (as Piketty would say), maybe the Northern European countries are just plain selfish. Either way, the impact of Hollande's character is really secondary here, contrary to what the tone of your post suggests.

Craig Willy said...

But what can he do? It's not like he's in charge of his country's monetary and fiscal policy (that would be a mix of Brussels, Frankfurt and Berlin).

The only thing he can do within EMU constraints is increase competitiveness - which some say means lowering social charges and making it easier to fire people - but that's not exactly popular with nervously de-electable Socialist pols or their voters.

If he sticks to the euro-regime, he seems trapped to me.