Can President Macron Save France?

Back in April, I looked at the candidates running for the French presidency and half-jokingly wondered which one would win the right to preside over the country’s decline.

But once the field was winnowed to two candidates, Emmanuel Macron and Marine Le Pen, I wrote that voters should pick the socialist over the socialist. My title was sarcastic, but I was making a serious point that Marine Le Pen had a very statist platform, whereas I cited evidence that Macron had some sensible proposals.

Mr. Macron aims to rebalance the economy by cutting 120,000 public sector jobs, streamlining the pension system and dropping state spending back to 52 percent of G.D.P. Mr. Macron leads an emerging centrist consensus that recognizes that…the main obstacle retarding France’s economy is its attachment to a welfare state culture of…generous benefits. …Mr. Macron…once said that stifling taxes threaten to turn France into “Cuba without the sun”.

Indeed, in addition to the reforms listed in the Macron has proposed to lower France’s corporate tax rate to 25 percent, and he also want to liberalize labor markets.

All of which seems rather surreal. After all, Macron was a minister in the failed socialist government of Francois Hollande, so who would have thought that we would be the one to lead an effort to shrink the burden of government?

Yet consider the fiscal agenda President Macron is pushing.

France’s 2018 budget will focus on cutting taxes to boost economic activity as the government seeks to cement its support among the business community, Prime Minister Edouard Philippe said. …Philippe told RTL Radio on Wednesday he wants to lower levies that “hurt the competitiveness of our country.” Government ministries this week received letters setting out their spending limits for 2018. President Emmanuel Macron is seeking cuts of 20 billion euros ($23 billion) and tax reductions of 11 billion euros next year… “We have to get out of the spiral of public spending,” government spokesman Christophe Castaner said in a separate interview on France Inter. “France has been addicted to ever increasing spending, paid for by taxes.”

Wow. I wish the Republicans in Washington were as sensible as these French socialists (actually, since they created a new party, it would be more accurate to say they are former socialists).

But there is precedent for this kind of surprise. It was the left-wing parties that started the process of pro-market reforms in Australia and New Zealand. And it was a Social Democrat government in Germany that enacted the labor-market reforms that have been so beneficial for that nation.

That’s the good news.

The bad news is that French voters may have buyer’s regret.

The Wall Street Journal recently opined on this topic.

…the question isn’t whether Emmanuel Macron can save France. The question is whether France can save itself. Voters have the best chance in a generation to revive an economy in decline, yet they seem to quail at the critical moment. …voters are having second thoughts about economic reform. Mr. Macron’s approval started falling in July after he announced plans to cut housing benefits—by €5 a month for each recipient. Feminists are in arms over his plan to reduce the government’s women’s-rights budget to €20 million ($23.6 million) from €30 million. That’s before he gets to the labor reforms that will dominate the autumn.

Shifting from the editorial page, the WSJ has a report on the growing opposition to reform.

As Emmanuel Macron sets out to shake up France’s rigid labor market, the young president is losing the public support he may need to weather protests by the country’s powerful unions. …Mr. Macron will have to tread carefully in rolling out his labor reforms in September. For months, the 39-year-old president has been in talks with powerful labor unions in a bid to contain planned street protests. Now the prospect is growing that the ranks of those demonstrations could swell with students, retirees and other segments of French society… Mr. Macron’s government wants to make it easier for French firms to hire and fire workers. …The hard-left General Confederation of Labor, France’s most militant union, is already calling for strikes and demonstrations.

It’s not surprising, of course, to see opposition from those seeking to protect their privileges.

Though it theoretically shouldn’t matter since Macron’s party has a huge majority in the French Assembly.

That being said, politicians do have a habit of buckling when faced with voter unrest.

And Macron is committing some unforced errors, as reported by the U.K.-based Telegraph.

Emmanuel Macron spent €26,000 (£24,000) on makeup during his first three months as president of France, it has emerged. …Le Point reported that his personal makeup artist – referred to only as Natacha M – put in two bills, one for €10,000 and another for €16,000.The Elysee Palace defended the high fee saying: “We called in a contracter as a matter of urgency”. The same makeup artist also applied foundation to Mr Macron during his presidential campaign. Aides said that spending on makeup would be “significantly reduced”. …Le Point put the overall figure for Mr Hollande’s makeup at €30,000 per quarter. Nicolas Sarkozy, meanwhile, paid a whopping €8,000 per month for his, according to Vanity Fair.

Since it appears that these costs are borne by taxpayers, this is all rather depressing.

Macron, however, at least can claim that he’s not the most frivolous with other people’s money. Monsieur Hollande won the prize for waste when you add his hairdresser to the equation.

…all these sums pale into comparison with the £99,000 Mr Hollande paid his personal barber. The huge amount sparked accusations of “shampoo Socialism”. …The hairdresser, Olivier Benhamou, was hired to work at the Elysée Palace in 2012 for the duration of Mr Hollande’s five-year term.  Mr Benhamou also reportedly enjoyed a housing allowance and family benefits.

As I wrote about this last year and suggested that this narcissistic waste made Hollande eligible to win the “Politician of the Year” contest.

But let’s shift back to the serious issue of economic liberalization.

To be blunt, France’s economy is suffocating from statism. I’m not even sure what’s the biggest problem.

• Is it bloated public sector that consumes more than half of the economy’s output?
• Is it a tax system that is so onerous that households sometimes pay more than 100 percent of their income to government?
• Is it cossetted bureaucrats, symbolized by the functionary with a car and driver who nonetheless still racked up giant taxi expenses?
• Is it class-warfare policies that target the rich but wind up hurting the middle class?

The answer is “all of the above,” with is why France desperately needs pro-market reform.

We’ll learn later this year whether Macron can save his country.

P.S. The story that tells you everything you need to know about France was the poll last decade revealing that more than half the population would flee to America if they had the opportunity.

P.P.S. If it wasn’t for France, we never would have had the opportunity to enjoy this very clever and amusing Scott Stantis cartoon.

P.P.P.S. Or watch this rather revealing Will Smith interview about French taxation.