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February 13, 2007
The Economist's Friend
Russell Roberts
Segolene Royal, the Socialist Party's candidate for president of France has issued a major set of policy prescriptions. Economists everywhere should root for her success in hopes of seeing a major social experiment. The International Herald Tribune reports:
In a two-hour speech to about 10,000 supporters north of Paris, she laid out a 100-proposal platform, pledging to raise pensions, to increase the minimum wage to €1,500, or about $2,000, a month and to guarantee a job or further training for every youth within six months of graduating from university.
Only 100 proposals? Of course just these three would be interesting enough. But there's more:
She also said that randomly selected citizens' juries would watch over government policy and that juvenile delinquents could be placed in educational camps run by the military.
Those camps are going to be awfully popular. I guess they'll have to limit them to juvenile delinquents.
What are her goals for immigrants? She goes out on a limb here:
Cheered by supporters and frequently interrupted by applause, she spoke with more ease than usual. When she talked about France's volatile suburbs, where riots erupted in November 2005 and high unemployment rates continue to curb the opportunities of second-generation immigrants, the emotion was evident on her face and in her voice.
"I want for the children in these suburbs what I want for my own children," she said, clenching a fist before her bright-red blazer and prompting the crowd to erupt into a two-minute standing ovation.
Imagine that. What bravery. And what will she do for the children?
A former schools minister, she vowed that she would tackle the social exclusion in the suburbs by reducing the number of students in classes. She also promised free tutoring for students that have difficulties keeping up, and workshops for parents to teach them how to discipline their children.
And for the non-children? She has plenty to offer:
Indeed, she seemed to have something to offer to most groups in society without saying how much the combined measures would cost: Under her presidency, she said, young women would get free contraception, all young people would get access to a €10,000 interest- free loan and the handicapped would see their benefits rise.
Evidently she missed the chance to guarantee all citizens a better than average standard of living. Or to outlaw death. But other than those missed opportunities, she seems to have promised as many free lunches as she possibly could.
For our French readers looking for an alternative, here is Bastiat in the original.
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She also may have missed out on the proposal by Wisconsin Governor Jim Doyle (D):
http://www.jsonline.com/story/index.aspx?id=564370
"Gov. Jim Doyle will unveil a tax on oil companies on Tuesday but will bar the firms from passing it on to consumers.
Oil company officials would face up to six months in jail if they passed the tax on to consumers. The state Department of Revenue would audit the firms to ensure they do not."
Posted by: John Thacker | Feb 13, 2007 6:07:31 PM
John,
I actually have to give Doyle some credit for understanding that the tax probably will be passed on to consumers. While he doesn't seem to understand that this is inevitable no matter what action the state takes, he's at least beginning to grasp the seen and the unseen. Maybe the understanding will spread from him to his compatriots.
Posted by: Randy | Feb 13, 2007 7:59:56 PM
How is Royal going to pay for all this? By taxing businesses and citizens without any impact on the economy?
Posted by: Joe Grossberg | Feb 13, 2007 8:33:09 PM
As scary as it is sad. ;-(
Posted by: Chris Meisenzahl | Feb 13, 2007 9:44:23 PM
When oil companies reduce output (or halt expansion when they otherwise would have expanded) in response to this idiotic measure, the doomsday eco-nuts will work themselves into a frenzy about "peak oil". So predictable, so pathetic.
Posted by: Ryan Fuller | Feb 13, 2007 10:20:28 PM
If that oil legislation part passes, I'm sure the oil companies will be more than happy to sell their oil to Europe and China until such a point that it is beneficial to sell to the U.S. (the point where Europe and China's markets are flooded).
Posted by: Stephen Reed | Feb 13, 2007 10:49:32 PM
But won't all those people getting more money be able to spend more and thus make the economy zoom? I keep hearing from liberal economists and politicians how an increase in the minimum wage will give the poor more money to spend so it must be true.
The scary thing is that under most parliamentary systems the majority party or coalition can get their programs passed. Of course I think even most French voters know that her programs would be an economic disaster. Then again....
Posted by: Don Zeiter | Feb 13, 2007 10:51:26 PM
Russ, You have become very very cold. I wish her all the success. If she were the CEO of Wal-mart, she would promise higher wages to all, higher profits to shareholders and lower prices to customers- oops, someone already does that.
Posted by: Anshu Sharma | Feb 14, 2007 12:33:43 AM
Anshu, business leaders are able to keep those promises because they actually increase productivity. Socialist (and politicians in general) don't produce anything, they just take from others and redistribute the loot, happily skipping along feeling good about themselves while leaving a trail of destruction behind them.
Comparing the promises of government to those of the private sector is ridiculous. The private sector produces the means by which their promises are fulfilled. The government is just a broker in pillage.
Posted by: Ryan Fuller | Feb 14, 2007 12:49:09 AM
Ryan,
I'd also add that when Royal does not deliver on these promises, she'll blame greedy businesses or some other capitalist ploy for messing it up - and face little to no consequence for doing it. If Lee Todd renegs on his promises, the business will not succeed and face economic consequences. Of course, teh CEO himself these days is protected from making bad decisions, but that is because board members wish to incentivize them to make productive decisions that might be risky.
Posted by: Mike | Feb 14, 2007 8:24:38 AM
The French socialists will of course have to, and intend to, increase the tax burden upon the "rich" in order to pay for this socialist utopia. Yet, as many observers have pointed out, the threat of increased taxes has meant that many of France's wealthiest citizens are already leaving the country in droves.
No fear, the socialists have come up with a plan to get around this little problem,
http://www.lefigaro.fr/election-presidentielle-2007/20070209.WWW000000424_dsk_propose_a_royal_de_taxer_les_francais_a_letranger.html
« Il n’est plus acceptable que des citoyens français parviennent à échapper à l’impôt en s’installant hors de France. Nous proposons de définir une contribution citoyenne qui sera payée en fonction de ses capacités contributives par tout Français établi à l’étranger et ne payant pas d’impôt en France ».
In short, its no longer acceptable to escape the French tax system by moving abroad. We intend to tax every Frenchman living abroad who does not pay French taxes.
Posted by: The Cowboy Capitalist | Feb 14, 2007 8:31:37 AM
John,
Apparently Jim Doyle is following in the footsteps of Pennsylvania Governor Ed Rendell (D), who announced a similar windfall profits tax on oil companies in Pennsylvania. When Rendell was badgered about how he was going to prevent the oil companies from passing along the costs, he had no answer.
Of course this governor has a grand record of trustworthiness when it comes to tax issues. After his first election, he raised state income taxes while promising to cut property taxes as an offset...the tax cut never came. Now after re-election, he's playing the same shell game by trying to raise state sales taxes while promising to again cut property taxes as an offset.
As to the French election, The Economist has been covering it a little in the last month. I found it surprising that after taking a lead in the polls, the center-right candidate (Sarkozy?) decided to campaign to French nationals living in London. A very strange move given the antipathy that the two countries seem to have for each other.
Posted by: tw | Feb 14, 2007 9:04:27 AM
The beauty of the Royals, Chavez' and Castros (along with those US governors) is we can geographically limit the damage of the programs to see whether our expectations are borne. Naturally, the proponents will find some excuses that affected the good expectations. And sadly, the citizens pay the ultimate price for giving up their freedoms.
Posted by: ettubloge | Feb 14, 2007 9:58:55 AM
The beauty of the Royals, Chavez' and Castros (along with those US governors) is we can geographically limit the damage of the programs to see whether our expectations are borne. Naturally, the proponents will find some excuses that affected the good expectations. And sadly, the citizens pay the ultimate price for giving up their freedoms.
Posted by: ettubloge | Feb 14, 2007 10:00:06 AM
Russ-
I'm not sure that it becomes you wishing for this in order to provide economists a real world laboratory for analyzing policy. Royal's platform will deliver tangible pain to actual people. Why wish this on people. I guess a scholar could rejoice that Zimbabwe has given us more material in which to study the causes of hyperinflation, but Zimbabwe now has the world's lowest life expectacy. If such pain happens despite what one would wish and we can study it an learn from it, I guess we've made the best of tragic circumstances. But why would we ever wish this on people?
Best,
Posted by: Don | Feb 14, 2007 10:08:00 AM
"How is Royal going to pay for all this? By taxing businesses and citizens..."
Mon dieu, non non! She says she has no plans to raise taxes:
http://www.kansascity.com/mld/kansascity/news/world/16694527.htm
"The couple crossed wires when Hollande promised that a Socialist victory would mean more taxes on the rich. Royal promptly contradicted him, saying she had no plans to raise taxes."
Posted by: Morgan | Feb 14, 2007 10:48:09 AM
When oil companies reduce output (or halt expansion when they otherwise would have expanded) in response to this idiotic measure, the doomsday eco-nuts will work themselves into a frenzy about "peak oil".
You act as if that's a bug. It's a feature: remember that the "tax big oil" and "peak oil" people are the same people. Creating artificial "peak oil" conditions allows them to further their anti-automobile, anti-capitalism agenda.
Posted by: Bob Smith | Feb 14, 2007 12:31:34 PM
"The couple crossed wires when Hollande promised that a Socialist victory would mean more taxes on the rich. Royal promptly contradicted him, saying she had no plans to raise taxes."
Amazing! Gov. Doyle said the exact same thing before he was elected.
Posted by: Adrian | Feb 14, 2007 6:15:51 PM
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