French Politics

Hollande vs. Juppé

2012-01-27T08:39:00.001-05:00

I didn't see it, but Thierry Desjardins, anti-Sarkozyste de droite, gives Hollande a TKO against a Juppé "vieux et usé," to borrow a phrase. Please post your opinions in comments.

Germany Looks at Hollande

2012-01-26T15:07:00.001-05:00

The subhead in Die Zeit reads: "Einst wurde er Langweiler verspottet, nun soll der Sozialist Hollande Frankreichs neuer Präsident werden" (Once mocked as a bore, the Socialist Hollande is now supposed to become France's new president."

Sarkozy au Petit Écran--à tous les petits écrans

2012-01-26T15:00:00.000-05:00

Nicolas Sarkozy will appear simultaneously on 6 French TV networks this Sunday. And maybe the Sunday after that he can do the halftime show at the Superbowl for an encore ...

Hollande Quotes (the Wrong) Shakespeare

2012-01-26T12:59:00.002-05:00

When a French presidential candidate reaches for the high rhetorical register, he usually goes for la langue de Racine rather than la langue de Shakespeare. But François Hollande decided to go with Shakespeare. It seems, however, that the Shakespeare he chose was not William but Nicholas, novelist and book reviewer for The Telegraph. Worse, as Sarah Crown reports,

The quote is lifted from his 1989 novel The Vision of Elena Silves, in which it's spoken by a member of a guerrilla group which operates under the motto "Marxism–Leninism will open the shining path to revolution". While Hollande is standing as the Socialist party candidate, odds are his advisers wouldn't recommend him positioning himself as far left as that.

The quote in question was: "They failed because they did not start with a dream."

Ah, well. Perhaps next time Hollande will stick to Molière: "Le chemin est long du projet à la chose" (Tartuffe). Will this be Hollande's bravitude moment? On verra. As Molière also wrote, "Contre la médisance il n'est point de rempart." (h/t KirkMc)

The Cautious Candidate

2012-01-26T08:38:00.000-05:00

François Hollande is the frontrunner, and conventional wisdom has it that frontrunners play it safe. François Hollande is playing it safe. The UMP wants to portray him as a profligate spender, so he will minutely calibrate every proposal. To finance the return to a legal retirement age of 60 for those who begin work early enough to have accumulated the necessary number of quarters by then, he will raise the CSG by 0.1 percentage points in each year of his quinquennat. He has baked in a growth estimate of only 0.5% in the first year. He will inscribe laïcité in the Constitution, but only within the terms of the existing 1905 law and without altering the existing exceptions of Alsace and Lorraine.

It's a program to make an accountant smile, but it isn't going to get anyone's pulse racing. And that's just the way Hollande wants it. Pulses are already racing, he figures, at the prospect of dumping Sarkozy, and that will be all it takes. He may be right, but such a program will make for the dullest of campaigns, and it will be hard to pivot to anything more exciting should his poll numbers begin to fall. But the pressure of a campaign strips candidates to their innate character, and caution seems to be the essence of François Hollande. There are worse qualities for a president, I suppose, at least in many historical circumstances. I wonder about the present circumstances, though, and I wonder about Hollande.

Who Is Unemployed?:

2012-01-25T15:33:00.000-05:00

Workers over 50 have been particularly hard-hit.

The Campaign Without a Center

2012-01-25T15:30:00.000-05:00

Julien Vaulpré, who was Sarkozy's polling expert in 2007, says that this year's campaign has no center because, in contrast to 1995, 2002, and 2007, the crisis is too multifarious to be encapsulated in a single, memorable campaign theme.

Quelle est, selon vous, la controverse principale de la campagne actuelle ?
Eh bien, c'est justement tout le problème, selon moi. A ce stade, on a le sentiment qu'il n'y en a pas.
Certes, il y a une question majeure, qui plane au-dessus de l'élection : la crise. Mais elle est tellement écrasante, tellement générale, et tellement difficile à appréhender qu'elle n'a pas véritablement été problématisée à travers une offre politique réussissant à la fois à poser une analyse et une solution. Par ailleurs, c'est la première fois que plane à ce point, sur une campagne présidentielle, un événement qui est en cours, dont l'issue est inconnue.

Roger Cohen, Unrepentant Sarkozist

2012-01-24T09:45:00.001-05:00

Arun Kapil dismisses Cohen's latest paean to the French president. Kapil is right that Cohen's column is fatuous. I'm not so sure that the election is a foregone conclusion, however. This race will tighten, in my view, and mistakes and surprises are always possible. Just ask Mitt Romney.

The Times' Take

2012-01-23T08:52:00.005-05:00

Steven Erlanger of the NY Times describes Hollande's speech of yesterday thus:

Mr. Hollande tried on Sunday to answer his critics with an impassioned if wandering speech about his conception of the presidency, shouting himself hoarse as he talked about resuscitating “the French dream” of a better life built on equality, justice and secularism.
“The French dream is confidence in the future, in democracy,” he said. He emphasized better education, and said that if he were to be judged on one thing, he would want it to be whether the lives of French youth were better in 2017, at the end of the next presidential term.

I have now watched enough of Hollande's presentation to agree by and large with Erlanger's account: the speech was a valiant if meandering effort, the candidate shouted himself hoarse, all the Socialist elephants were lined up in support, and the crowd was more than enthusiastic. For a rather different take, self-avowedly "subjective," by an Hollande supporter, see Romain Pigenel's blog:

Un meeting réussi, c’est quand le bruit de la foule – les hourras, les cris, les « François Président », les « tous ensemble », toute cette liturgie de meeting – finit par devenir tellement continu, et tellement fort, qu’il couvre des passages entiers du discours du candidat, et que finalement personne ne s’en plaint, et qu’un sourire béat, un peu bête, illumine tous les visages, saisis par l’émotion magnétique du moment.

The reaction of the French press, meanwhile, seems generally positive, along the lines of Gérard Courtois's column:

Trois défis attendaient M. Hollande au Bourget : séduire, rassembler, convaincre. Autant le dire simplement : il les a relevés. Evidemment, un tel rassemblement militant – 20 000 personnes autour de leur champion – est, presque par définition, enthousiaste et fervent. Donc aisément trompeur.

It is tempting to provide a phenomenological commentary on the self-willed transformation of what Sartre would have called "the serio-practical inert" into "the group-in-fusion," but I will resist the temptation. I have on occasion been caught up in this kind of collective enthusiasm. It's a heady feeling while it lasts, but it frequently ends in disappointment. In this case disappointment may come either before or after the election, but the apparent elation of yesterday's crowd will soon have to face the reality of campaigning and perhaps governing in a worsening economic climate with few ideas of how to reverse the decline evident among any of the candidates. including Hollande.

Two more positive reactions, from the left and the right. And a negative from the right. And more from the left. And still more. This last post suggests that Hollande appealed successfully to those to the left of him by making his "real enemy" the "world of finance." This sort of rhetoric leaves me cold, but evidently it's not without effect.

Hollande Relaunches

2012-01-22T11:11:00.002-05:00

François Hollande kicked off phase two of his campaign with a vast meeting at Le Bourget. He struck at several of the Right's pet campaign themes, distinguishing, for instance, between l'assistanat and la solidarité and pledging to allow immigrants to vote in local elections. At the same time, he promised to inscribe the 1905 separation law in the Constitution. I'm not sure what this move is supposed to accomplish legally that the law itself doesn't already accomplish, but it gives Hollande some défense de la laïcité cred against Marine Le Pen and Jean-Luc Mélenchon. Does it also dilute the outreach to immigrants in the local right to vote measure? No doubt. But all of this is symbolic posturing at best, and voters will read the symbols as they please, based I suspect on a more general evaluation of the candidate's instincts on these gut issues.

More concrete is the promise to end le cumul des mandats for deputies, which will have a long-run effect on the structure of parties and the relation of local to central government. He will also cut the salaries of the president and ministers by 30%--more eyewash. He says that his "real enemy is the world of finance" and promises to separate investment and credit activities and establish an EU-level public ratings agency and a public investment bank--modest gestures that don't really get to the heart of financial regulation.

On retirement, he emphasizes the 60-yr legal retirement age, but only for those "who began work early"--in sum, not very different from the Sarkozy-Fillon measure, though rhetorically shrouded in "defense of the working-man" verbiage. Nevertheless, state finances will be returned to "equilibrium" by the end of his five-year term--he does not specify how.

There are to be controls on "excessive" rents--a promise with a lot of built-in wiggle room.

The policy of not replacing 1 in 2 retiring civil servants will be suspended.

On crime, "priority security zones" will be created where "delinquency" is high, but he did not say how those zones would be policed.

There was this personal jab at Sarkozy: "Je revendique une simplicité qui n'est pas une retenue mais la marque de l'authentique autorité--mon secret, que j'ai gardé depuis longtemps : j'aime les gens quand d'autres sont fascinés par l'argent." This was coupled with language directed against the "personalization" of the presidency. I suppose that, given widespread dislike of the "bling-bling omnipresident," these tropes were inevitable, but I find them rather cheap.

There will be "a new treaty with Germany" to replace the de Gaulle-Adenauer treaty. It would be nice to know what the candidate thinks can be accomplished in this area.

Those were the high points. I didn't hear the speech, so I can't say how effectively it was delivered, but on paper, to my eye, it seems rather lackluster and predictable.

Mélenchon, Feisty as Ever

2012-01-21T09:59:00.000-05:00

A feisty Jean-Luc Mélenchon offers his views on the election. Among other things, he claims that the working class has deserted the UMP almost entirely and is now making up its mind between him and Marine Le Pen:

Vous avez lancé une charge assez violente contre Marine Le Pen, la qualifiant de "semi-démente". C'est la bonne méthode ?
La gauche que je veux entraîner n'a pas d'avenir si elle ne reprend pas le terrain dans le peuple. En milieu populaire, il y a le FN et nous. La droite a elle-même levé la digue et tout ce qu'elle avait sur le terrain ouvrier est parti au FN. Mais il y a aussi une responsabilité du PS qui a abandonné consciemment le terrain parce qu'il se figurait que les classes moyennes urbaines suffiraient à porter un projet socialiste devenu consensuel et non conflictuel.
Je défie Marine Le Pen et ses névroses xénophobes. Mme Le Pen est un poulet d'élevage du Front national. Elle récite des fiches. Il faut la sortir de sa coquille. Je le fais en provoquant la compétition avec elle.

And whatever else you can say about JLM, his language is farther from la langue de bois than any other candidate:

Pour moi, la référence reste le "oui" et le "non" lors du référendum sur le traité constitutionnel européen [en mai 2005]. Toute la question de l'austérité, c'est le retour du débat du oui et du non. Il y a les trois partisans du oui. Ils disent la même chose différemment : "Il faudra payer la dette."Et puis, il y a une quatrième, Marine Le Pen, qui dit : "Si vous ne voulez pas du système, votez pour moi." Mme Le Pen prône un non qui est auto-disqualifié. Personne ne peut avoir envie d'en faire l'expérience. Ce n'est pas un match à quatre, c'est un garrot. C'est une camisole de force, ces quatre-là.

The NY Prosecutor and DSK

2012-01-20T05:45:00.000-05:00

Le Monde has a long article about the decisions made by the New York prosecution team in the DSK affair. Apparently there were dissensions within the team about how to proceed--not surprising in such a high-profile case. Marion Van Renterghem also relays insinuations from DSK's lawyers and publicists that a "highly placed" French authority intervened in the case by informing the NYC prosecutor of previous misbehavior by DSK, "perhaps" the Banon or Carlton affairs. None of this adds to our understanding of what happened at the Sofitel, though it does suggest that, had the prosecution been handled differently, the case might have taken a different course.

France Suspends Action in Afghanistan, May Withdraw Early

2012-01-20T05:21:00.002-05:00

Nicolas Sarkozy has announced a suspension of training and combat operations by French troops in Afghanistan and is considering an early withdrawal. This decision comes after the deaths of four French troops last week, and also after criticism of François Hollande for saying that he would withdraw French troops if elected. The war is very unpopular in France, but this is the first sign that Sarkozy is wavering in his commitment, and I must say, it has a look of desperation about it. On the other hand, if you read the report below, it seems possible that Sarkozy is simply drawing the conclusion that foreign forces have no further business in Afghanistan and can do no good by staying.

Background here.

“Lethal altercations are clearly not rare or isolated; they reflect a rapidly growing systemic homicide threat (a magnitude of which may be unprecedented between ‘allies’ in modern military history),” it said. Official NATO pronouncements to the contrary “seem disingenuous, if not profoundly intellectually dishonest,” said the report, and it played down the role of Taliban infiltrators in the killings.

Afghanistan : Nicolas Sarkozy envisage la possibilité d'un retour anticipé des troupes françaises

Après l'annonce vendredi de la mort de quatre soldats français, le président de la République estime que la question d'un retour anticipé des troupes françaises est posée. Les opérations de formation et d'aide au combat de l'armée française sont d'ores et déjà suspendues. (AFP.)

Critique of French Higher Education Policy

2012-01-19T14:29:00.000-05:00

Christophe Charle and Charles Soulié offer a blistering critique of the reform of French higher education carried out by the right over the past ten years. Rather too blistering, I think, since it omits the defects of the old system and exaggerates those of the new. Still, there are many good points, such as:

La seconde menace tient aux évolutions contrastées entre les filières et les disciplines. Le déclin des disciplines anciennes ou les plus académiques au profit des nouveaux domaines ou de filières à vocation professionnelle ou axées sur des emplois supposés d'avenir s'est déjà manifesté depuis quelques années. Là encore, les écarts se creusent entre établissements. Les universités dominées par les sciences humaines et sociales, certaines universités scientifiques les moins bien situées dans les hiérarchies académiques sont très affectées par ces baisses et les changements d'option des nouvelles générations étudiantes.

...

Jusqu'ici, le gouvernement a mis en place surtout un processus darwinien de sélection des plus forts à travers les diverses compétitions lancées ces deux dernières années autour des trophées du grand emprunt : plan Campus, EquipEx, LabEx, IdEx, etc. Dans un deuxième temps, il pourra utiliser les procédures d'évaluation mises en place pour répartir inégalement les sacrifices entre les établissements les plus fragiles au nom d'une rigueur qui ne doit pas pénaliser ceux qui réussissent, concurrence internationale oblige.

Bayrou Worries Hollande

2012-01-19T08:26:00.000-05:00

François Hollande can read the polls as well as we do, and Bayrou's rise has him worried. So he has ordered his troops not to go easy on the centrist:

Il n'a pas échappé aux socialistes que depuis deux mois, les intentions de vote en faveur du président du MoDem sont en hausse dans les enquêtes d'opinion. Quand 6 % à 7 % des sondés se disaient prêts à voter pour le centriste au premier tour en novembre dernier, ils sont aujourd'hui de 11 % à 15 %. Depuis son entrée en campagne le 7 décembre, sa progression l'a même fait atteindre un niveau d'intentions de vote légèrement supérieur à celui qu'il avait en 2007.
Si ceux qui se déclarent prêts à voter pour lui se disent encore peu sûrs de leur choix, le président du MoDem a reconquis, en un peu plus d'un mois, une partie de ses électeurs de 2007. Or, ceux-ci l'avaient principalement quitté au profit de François Hollande, a notamment montré le dernier baromètre Ipsos-Logica Business Consulting pour Le Monde, France Télévisions et Radio France, réalisé le 13 et 14 janvier.

Indeed, the whole scenario is reminiscent of 2007. And this is not good news for Hollande, who has yet to "establish his brand" with swing voters. The manifest disorganization of the Socialist campaign organization is one factor. But even more important, I think, is Hollande's frustrating cautiousness. He has yet to define a clear program. He has given signs of following Sarkozy's line of reducing the size of government and accepting austerity as a solution to Europe's crisis. He has failed to challenge the parameters of the deal with Germany in any concrete way but has only said that if he is elected, he will ask for a "renotiation." Worse still, L'Express has reported (perhaps inaccurately) that in a private meeting with CEOs, Hollande allegedly indicated that he would carry austerity even farther than Sarkozy has done, cutting back on occupational training and housing assistance--both of which would be huge errors.

As for the other side ...

2012-01-18T12:20:00.001-05:00

Lest my comments on the, shall we say, confused campaign of the PS mislead anyone into thinking that I am developing a tenderness for the other side, I hasten to post this link to Gérard Longuet's stupidly offensive comparison of Hollande to the captain of the Costa Concordia. For some eloquently righteous indignation, see Bernard Girard, who apprises me of something I did not know: that Longuet is married to the sister of Vincent Bolloré, the purveyor of the yacht on which Sarkozy meditated upon his weighty responsibilities before assuming the presidency.

More Signs of PS Chaos

2012-01-18T11:57:00.000-05:00

On the cultural front:

"C'est encore un peu le bordel", explique un insider. "Il y a beaucoup de tensions entre beaucoup de conseillers, les rapports de force ne sont pas encore tout à fait établis", commente un bon connaisseur de la "machine Ségur" (la direction de la campagne Hollande est installée au 59 avenue de Ségur à Paris). (h/t F. Martel)

Le PS, Encore le PS, Toujours le PS

2012-01-18T08:12:00.001-05:00

Pierre Moscovici may be convinced that the Socialists cannot lose this election, but the party is doing its best to repeat the tactical errors of the 2007 campaign. The confusion around the promise to hire 60,000 new teachers is a good example. After the promise was ridiculed for its expense and, given the shortage of teachers in training, impossibility, a definitive statement was issued:

L’affaire est simple. Lundi soir sur France 2, le député Jérôme Cahuzac, chargé des finances au sein de l'équipe de François Hollande, avait affirmé qu'« il n'y (aurait) pas de postes supplémentaires créés dans la fonction publique d'Etat, pour une raison assez simple, c'est que la France n'en a tout simplement pas les moyens ». Dont acte. Le "monsieur finances" avait parlé.

So there would be no new teachers. Or would there?

Le candidat socialiste à la présidentielle, François Hollande, a précisé au Monde,mercredi 18 janvier au matin, qu’il y avait chaque année « 60 000 départs à la retraite dans la fonction publique d’état. 30 000 ne sont pas remplacés aujourd’hui. C’est sur cette enveloppe que nous prendrons les 12 000 postes ».

So, there would be 12,000 new teachers per year in each of the 5 years of the quinquennat, and they would be paid for by the money saved in canning public-sector workers in other areas--hospitals, police, etc.--which presumably can get on just fine with fewer employees. The left wing of the party was not happy with this "interpretation" of the party's promise, however:

Offensive à la gauche du PS. Mardi midi, le trio Benoit Hamon, Henri Emmanuelli et Marie-Noëlle lieneman se déclaraient dans un communiqué « surpris de l’interprétation faite par Jérôme Cahuzac, de la proposition ambitieuse de François Hollande de créer 60 000 postes d’enseignants dans l’Education nationale ». Et d’ajouter : « Si les 60 000 créations de postes annoncées par François Hollande ne devaient l’être que par redéploiement, cela reviendrait à réduire le service public de la santé ou de l’emploi pour consolider les moyens de l’Education Nationale. Cela n’aurait aucun sens. » Evidemment, le trouble était jeté. La question de la faisabilité de la mesure revenait dans le débat politique.

Interesting. And these were the folks who laughed up their sleeves at Ségolène Royal for her "incoherent" campaign. Encore un effort, les camarades. Peuvent faire mieux.

UPDATE: Hollande scolds his troops for the gaffes:

"François Hollande a fait une sévère mise au point en disant qu'il fallait savoir si on voulait gagner", a affirmé un participant. Selon un autre participant au conseil politique, le candidat du Parti socialiste a déclaré : "On a tout pour gagner. Si on ne gagne pas, on ne le devra qu'à nous-mêmes, vous n'êtes pas obligés de vouscommenter les uns et les autres et de m'obliger à corriger les uns et les autres."

Still More Europessimism: Elmbrant Sees a "European Tea Party"

2012-01-17T09:55:00.000-05:00

Here:

This uncertainty indicates that Europe today is barely political. What we are seeing is not the formation of a European super state, as the eurosceptics warned of not long ago, but an increasingly unsteady and weak union. "The atmosphere in Europe is one of total demoralization", according to José Ignacio Torreblanca of the European Council on Foreign Relations. The euro crisis makes this obvious: a steady stream of new solutions, retracted after a few days and replaced by new, billion-euro improvisations that contravene treaties, regulations and previous announcements.
...
That is why I believe that the euro system will collapse, as a consequence of a popular revolt by a European kind of Tea Party movement consisting of well-off Germans, Dutch and Finns unwilling to pay for the countries in debt. But also by the fact that Greeks, Irish and Portuguese won't accept being forced into a straightjacket of poverty by their patronizing guardians in the north. Unfortunately this might be a long and painful process, since a great deal of political prestige has been invested the monetary union. But the tensions between North and South, elite and popular currents, are too strong to just go back to business as usual.

"Club of May 6" Proposals for the Presidential Campaign

2012-01-17T09:27:00.000-05:00

The Club of May 6, headed by historian Patrick Weil, has published a list of 80 propositions for the presidential campaign. You can read Patrick's commentary here and the whole list here.

The Technocrat Strikes Back

2012-01-17T07:32:00.003-05:00

My current read on the euro crisis has been scattered over a number of posts, so let me sum it up here: the ECB's LTRO (a promise to accept longer-dated troubled sovereign debt as collateral in 3-yr repurchase agreements) has calmed the bond markets for the time being and created the appearance that the PIIGS might muddle through. But the ECB's condition for this arrangement--drastic and binding budgetary restrictions across Europe--holds the potential for triggering political unrest, as even conservative Martin Feldstein warned yesterday in a post linked to below.

Now, Mario Monti, the technocrat who replaced Berlusconi in Italy, has also issued a plea to Berlin based on the same fear--that the political center cannot hold. There will be "a powerful backlash" in the European periphery, he warns. He calls upon Germany to recognize its own "enlightened self-interest" and argues that Germany "has reaped huge benefits ... perhaps more than others" from the euro.

This is about as blunt as it gets in central banker-speak. Although Berlin shows no signs of receiving the message, I think that in fact there is quiet panic both there and in Frankfurt. My hunch is that the current consensus is highly unstable and will come apart at the first sign of trouble, which could come soon, either in the wake of an outright Greek default, which is imminent, or with signs of political tension in Italy or Spain. And then the question will be how the ECB manages its capitulation. The problem is that as long as the consensus holds, pressure to reform European institutions toward a more sustainable solution diminishes. So nothing is happening on that front, although the French downgrade led Die Zeit to say yesterday that the "end of Merkozy" had arrived. Sarkozy and Merkel used to look each other in the eye, the paper wrote, but now the Frenchman's stature has been diminished by S&P (though, truth to be told, I think he was always looking up to Merkel, figuratively as well as literally). And in May, Sarko will either be re-elected or not, at which point French policy will probably shift toward a more aggressive line on EU institutional reform.

"No Backbone"

2012-01-16T16:24:00.000-05:00

Frédéric Martel interviews Emmanuelle Mignon, President Sarkozy's erstwhile "idea person," who fed him ideas for the 2007 campaign. He comes up with a scoop:

Il ne faut pas compter sur elle pour trahir, ni pour dire du mal. J’ai l’impression qu’elle garde pour Nicolas Sarkozy une grande affection et du respect.

Plus tard, en 2011, lors de plusieurs rendez-vous et déjeuners en tête à tête avec elle près d’EuropaCorp, le studio de cinéma qu’elle a rejoint, elle me fera un jour une confidence, une seule. Sachant qu’elle trahit un secret d’État bien gardé, elle parlera de ses difficultés à travailler avec un homme imprévisible qui n’a pas « la suite dans les idées », et qui, sans consistante idéologique, est souvent velléitaire et versatile : « Sarkozy n’a pas de colonne vertébrale. Si je suis partie, c’est pour ça. Il n’a aucune colonne vertébrale. »

Feldstein Warns Europe

2012-01-16T16:12:00.000-05:00

A blunt warning from a conservative economist that Europe is headed for disaster with its belief in "expansionary austerity":

The most frightening recent development is a formal complaint by the European Central Bank that the proposed rules are not tough enough. Jorg Asmussen, a key member of the ECB’s executive board, wrote to the negotiators that countries should be allowed to exceed the 0.5%-of-GDP limit for deficits only in times of “natural catastrophes and serious emergency situations” outside the control of governments.
If this language were adopted, it would eliminate automatic cyclical fiscal adjustments, which could easily lead to a downward spiral of demand and a serious depression. If, for example, conditions in the rest of the world caused a decline in demand for French exports, output and employment in France would fall. That would reduce tax revenue and increase transfer payments, easily pushing the fiscal deficit over 0.5% of GDP.
If France must remove that cyclical deficit, it would have to raise taxes and cut spending. That would reduce demand even more, causing a further fall in revenue and a further increase in transfers – and thus a bigger fiscal deficit and calls for further fiscal tightening. It is not clear what would end this downward spiral of fiscal tightening and falling activity.
If implemented, this proposal could produce very high unemployment rates and no route to recovery – in short, a depression. In practice, the policy might be violated, just as the old Stability and Growth Pact was abandoned when France and Germany defied its rules and faced no penalties.
It would be much smarter to focus on the difference between cyclical and structural deficits, and to allow deficits that result from automatic stabilizers. The ECB should be the arbiter of that distinction, publishing estimates of cyclical and structural deficits. That analysis should also recognize the distinction between real (inflation-adjusted) deficits and the nominal deficit increase that would result if higher inflation caused sovereign borrowing costs to rise.
Italy, Spain, and France all have deficits that exceed 3% of GDP. But these are not structural deficits, and financial markets would be better informed and reassured if the ECB indicated the size of the real structural deficits and showed that they are now declining. For investors, that is the essential feature of fiscal solvency.

Degradation

2012-01-16T09:10:00.000-05:00

A few moments ago, a French friend posted on Facebook this query in English: "So, how does it feel to be a degraded country?" And I pointed out that it is unfortunate that the French translation of "downgraded" is "dégradé," which takes us from the language of bond traders to that of honor, as though France had been derelict in its duty and had its sword broken over its commander's knee.

This amusing anecdote unfortunately illustrates a larger truth: the tendency to moralize economic matters and to think in terms of dereliction and sin rather than better and worse choices among competing economic alternatives. The economic problem is difficult enough. Let's not compound it with an unnecessary overlay of virtue and vice.

As for France's "degradation," bond traders don't find it particularly humiliating. The price of French 10-yr bonds has barely flickered since the downgrading.

Camille Landais on the Proposed Reform of "le Quotient Familial"

2012-01-16T08:07:00.000-05:00

The reform proposed by the PS is reasonable, Landais argues, and the reaction of the UMP has obfuscated the issue:

Ce qui mine la progressivité de l'impôt sur le revenu, c'est surtout qu'on a sorti du barème quasiment tous les revenus du capital. Et le fait qu'un tas de revenus du capital échappent littéralement à l'administration fiscale.
Le quotient familial, en revanche, fait partie des choses qui minent le consentement à l'impôt. Car personne ne sait exactement comment il marche et quels sont ses effets sur la redistribution. Ce que vous recevez pour un enfant dépend à la fois de votre revenu (plus il est haut, plus le gain est fort) et du rang de cet enfant dans sa fratrie... Les gens perdent de vue que le quotient familial profite bien plus aux gens aisés qu'aux autres.

Landais also has interesting comments on the social VAT and the Tobin tax.