Finally, the news of the current financial crisis has reached the French president on vacation in New Hampshire. He told his Finance Minister, Christine Lagarde, to cut short her vacation and get her ass back to Paris, although he, like the American President he emulates, will not let a crisis interrupt his holidays.
Yesterday, Sarkozy wrote the German Chancellor, Angela Merkel, also the acting Chair of the G-8, telling her something needs to be done to make the markets more “transparent”.
True, things are not going well for the free-market-Sarkozy and this banking disaster is most unwelcome. Economic growth in France the last quarter was only 0.3%, half of what they had predicted. Merkel rejected Sarkozy’s pre-vacation call to get the European Central bank to lower interest rates to bring the price of the Euro down. Sarkozy said the low dollar was hurting exports. The next day figures came out showing Germany not only remains the world’s leading exporter but that its foreign orders surged nearly 9% in June and 11.9% on the year. Germany’s jobless rate fell. In adjusted figures (which means cheating) unemployment stands at 6.3% as compared to France’s almost 10% So, Merkel says, the problem is not the Euro.
Merkel is likely to say let the markets do their business and insist on the independence of the European Central Bank. It should also be said that labor is less costly in Germany, so are employer social taxes as their welfare system is less encompassing. Germans work longer hours and the retirement age is higher. Not to mention they make better cars. (I just wanted to say that as a cheap dig at Citroen).
Selling America will be harder
“Sarkozy the American” as they call him is discovering that American laisser faire may put his plans for deep changes in France’s welfare system on the back-burner. The French are an irascible lot and tend to take their anger to the streets when things go wrong. A strong social protest movement this Fall is just what Sarkozy wants to avoid.
Sarkozy has been selling the French ‘the American way’. He wants to dismantle the French system which protects all while stifling, he says, the capacities of individuals to be all they can be. His American sound-bite program sounded good do to the French middle classes: “The France which gets up early.” The France which works.” “ Work more to earn more.” “Lower taxes to increase investment.” “Let people have their hard earned money.”
It would seem Sarkozy is still the Doctor Jeckle and Mr. Hyde he has always been, capable of quoting the socialist Jean Jurès and ultra capitalist Alain Minc in the same sentence. His program remains everything for less government. And presto, here he is, calling for politicians to intervene, governments to take control of the markets. He will now have a hard time selling ‘the American way’ which the French once again see as totally bankrupt.
An opportunity for the French Left to come back
This is an excellent opportunity for the splintered left still licking their wounds and trying to gather the stragglers after their defeat in this year’s elections. They will say there are limits to economic freedom. They will point to the contradictions in what the man who “says what he does and does what he says” doing and saying the opposite. They will point out that unbridled competition is anarchy and a recipe for disaster. In other words, the left will be comforted in their traditional role of the Great Criticizer with no viable alternative to offer. It just may work enough to destabilize Sarkozy the populist.