A few weeks ago I participated in the “Economic Ideas Forum” in Nancy, France. It is a fascinating event, organised by the local Chamber of Commerce, in synergy with other organisations, including the Institut Economique Molinari, the French think tank headed by Cecile Philippe. A substantial number of people (around 600) gathered in Nancy, to debate a “new social contract” for France. The organisers advanced some detailed policy proposals, that were inspired by sound principles: they understand that to restore “trust” in investors and entrepreneurs you need fewer, simpler rules; a more dynamic labour market; “peace, easy taxes, and a tolerable administration of justice”. They want to move away from the 35 hour week and reduce the fiscal burden on businesses.
This is not rocket science, nor were these ideas expressed in particularly bold words. However, I was happily surprised to see that – in the France of François Hollande – some kind of consensus is building in that direction, if even former socialist Foreign Affairs Minister Hubert Vedrine (who opened the conference) has more or less endorsed this set of proposals, admitted that introducing the 35 hours week by law was a mistake, and taken a position against the precautionary principle in the Constitution.
However, I was also amazed by two other things that emerged in the debate:
(a) there is a growing cult of Italian prime minister Matteo Renzi, in France. This is in part due to the fact that Renzi is a young and attractive personality, thus very different from Monsieur Hollande, who is by now mostly famous for his gaffes, his 75% tax on top earners, and his love affairs. Renzi is hailed as some kind of reformist boy wonder – in spite of the fact he hasn’t done much, yet. My impression is that the remarkable result of Renzi at the European election, when his party won an amazing 40.8%, is seen as a demonstration that you could rejuvenate “establishment parties” and somehow stop the “populist wave” so apparent in France, with the Front National on the rise.
(b) Monsieur Vedrine has gone as far as to propose a grand coalition to put in place some “fundamental reforms” – so, to share the blame burden for those measures that may upset most voters. I had a sense quite a few people consider this a possible option: an “union sacree”” against the populists. In Italy, however, our experience with grand coalitions wasn’t really positive, and I think there is mixed evidence, to be kind, that broad coalitions are the best political vehicle to support bold reforms. In a way, even the rise of Mr Renzi – who is at the same time prime minister and party leader – is a reaction against the idea “grand coalitions” qua “grand” can produce good policies.
Of course, France may be different: but that the union–albeit temporary–of French major parties, all equally hostile to “ultra-liberalisme”, can produce some even mildly liberalising policies, it is something I need to see to believe it.
READER COMMENTS
R Richard Schweitzer
Jul 29 2014 at 11:50am
An interesting side glance here at the systems of proportional “representation” and their actual effects and political uses.
Coalitions of interests seem to require aggregations of interests and the aggregating results in diminution of the “real” interests through “blending.”
nl7
Jul 29 2014 at 11:53am
It usually helps when the center-left party leads the reform. This happened in New Zealand (Labour & Rogernomics), Germany (SPD & Hartz-Konzept), Canada (Liberals & budget cuts), etc. Even Bill Clinton signed on for a few things like NAFTA, welfare reform, and CG tax cuts. You might also add some of the mild reforms under Jimmy Carter or Tony Blair.
Typically these center-left parties will water down most of their reforms, or mix the legacy with a number of new programs in the ensuing wake of success. So the effect can often be weak or fleeting. And they may often find themselves strategically allying with or caving to the center-right.
The real problem may be that the French Socialists need to develop a left-liberal strain that can head off the unions politically and forge a political consensus to loosen the code du travail and cut taxes. My French political observations are somewhat obsolete, but my sense is that the conditions there are different from many other OECD countries, where market sensibilities are more prominent from the right and the center. Even though Sarkozy talked about market reforms, he didn’t really follow through. Does the French center-right have intellectuals who see promise in market reforms?
Some countries get reforms from center-right administrations like Sweden (Moderate Party), Reagan, and of course Thatcher. But it’s notable how often some of the heavy lifting needs to be done from the center-left, to preempt the sort of opposition and vitriol that plagued Thatcher.
Perversely, the most effective thing to do in France (after raising the academic and intellectual profile of market reforms) may be ambitious, liberalizing politicians coming to power through the Socialist Party.
Miguel Madeira
Jul 29 2014 at 6:26pm
«An interesting side glance here at the systems of proportional “representation” and their actual effects and political uses.»
Afaik, France as a majoritarian electoral system, not a proportional (at least, for the elections that matter)
Mark V Anderson
Jul 29 2014 at 7:57pm
I think Alberto’s last comment was the most applicable — “I need to see to believe it.” If even France is seeing the benefits of the free market, that is a good thing, but I think 600 participants in something sponsored by the Chamber of Commerce is less than convincing.
Plus of course the benefit of France continuing in their highly statist behavior is that they serve as a good bad example. As their economy sinks in the wake of their mis-guided policies, it eventually becomes obvious to all the results of such policies.
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