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Hollande — hope for the European Left?

Published on July 20, 2012 by: in: Politics

In May, Nicolas Sarkozy lost the presidential elections in France. One can say, he deserved it, as he had implemented many reforms that were either unfair or not well thought-over. He restricted, for instance, civil liberties by implementing, back in 2009, the HADOPI law, which is based on the same principles as ACTA. He unreasonably reduced taxes in spite of the increasing national debt and he used anti-immigrant rhetoric. In the presidential campaign, willing to appeal to the electorate of the radical right-wing candidate of National Front, he even considered leaving the Schengen Area, if Europe did not tighten its borders. But is the program of his successor any better?

picture: DonkeyHotey

Right after his triumph, François Hollande, the winner, declared: I am proud that I restored your hope! (…) I am sure that many people in Europe share your hope – and this way he showed just how modest he really is. But is the new president a true hope for the European Left? In France, we are now after the presidential elections and the parliamentary elections, which gave full power to the left-wing. The government formed by Hollande, before gaining parliamentary majority, had time to rest and rethink the whole situation.

The Left in power: past experience

When Mitterrand came into power in 1981, as the first leftist president in the history of the Fifth Republic, there was an outburst of euphoria in France. People believed that their lives will completely change, that a better world will be created. Announcements were plentiful: a 35-hour workweek, nationalization of enterprises, more social assistance, etc. Some of the promises had been delivered, but the economic problems resulting partially from the implemented changes, forced the socialists to drop the promises. They were even forced to shift into reverse on some matters: the enterprises were privatized again and the system of automatic wage indexation was scrapped. Thus it looked like a triumph of realism.

At last it was Tony Blair and Gerhard Schröder, who understood the challenges that the Left is forced to face in the modern world. In result they held offices for a number of terms and have been able to accomplish long-term reforms, which while respecting the market reality, were as socially fair as possible.

In France, the leftist has never served two terms in a row. In 1986 as well as in 1993 and 2002, voters realized that the promises made by the French Socialist Party were nothing but utopian visions with no chance of realization, and that the growth of etatism did not encourage the growth of economy nor a greater societal happiness. In order to divide fairly there has to be something to divide and this could hardly be done by a stiffly braced French economy.

A president who “dislikes the rich”

Hollande suggests to create a new Personal Income Tax rate of 75%. A good thing is that some helpful experts showed him that this would result in some people paying more than 100% of their income to the Treasury. The president decided to show mercy and narrowed down the total income tax to 85% for the most affluent (adding taxes like VAT or fuel excise tax this level may reach 90%). He did it, even though he stated several times on the TV interviews that he dislikes the rich.

Every time that such high taxes were to be implemented, it ended in failure. It is worth remembering that Laffer’s curve proves lack of effectiveness of taxes above 50%. With such a high tax burden it can be predicted that all the richest people will emigrate after implementation of this fiscal reform. But the new president has a failsafe solution to counter this problem: he wants to persecute the non-patriotic rich who hide in tax heavens (similar to the solution utilized by the US). But even the biggest world’s superpower can be tricked, as in case of Eduardo Saverin, the co-founder of Facebook, who just gave up the American citizenship before his stock exchange debut to escape the American income tax.

The most disturbing fact is that Hollande will perhaps enter into a coalition with Jean-Luc Mélenchon (the Left Party), who promised in his campaign a 100% income tax (!) for income over 30 000 euro. So let the rich tremble, because even the 15%, graciously granted by Hollande remains uncertain.

But let us go back to the cited words of Hollande. It could be imagined that the new French President dislikes the rich, because he is jealous of them, being himself poor. But it is exactly the opposite. Insofar as in Poland the ‘Fakt’ and the ‘Super Express’ dailies complain about the politicians salary being too high, in France the officials are much better off. Yet before he became president, Hollande earned 9 231 euro a month. Mr. François, perhaps it is you yourself who fit with ‘the rich’ and, as a result, you hate yourself? Mr President simply does not attach much significance to earnings, because money is not the only thing worth living for. He does not know himself, how much he earns, because in different pre-election interview, when asked about his income level, he mentioned an amount of 7 000 euro.

That is not, however, the point. Mr Hollande deserves a high salary but he should not pretend, that he dislikes the wealthy and that he knows what it is like to be poor. He grew up in rich Neuilly-sur-Seine, where, by the way, begun the political career of Nicolas Sarkozy. Living there have undoubtedly had little to do with poverty.

Commentators believe, and not without reason, that Sarkozy artificially antagonized the unemployed and the employed, the immigrants and the residents, accusing, in both cases, the weaker group of living off the state’s breast, thanks to hard-working people. Unfortunately, Hollande acts in a similar manner, dividing the society into the bad rich and the oppressed workers.

As a matter of fact, the president has immediately lowered his pay and the salaries of the government members by 30%, but I see it as populism. The government’s aim should not be to save 100 thousand euro a month on own paychecks, but to create a friendly environment for the economy, in which the GDP will increase by few billion euro and to patch a gargantuan budget hole.

Decreasing deficit is not, however, the apple of his eye. All seems to suggest that he even wants to increase the deficit. Because in what other way is he going to finance the creation of 60 000 new jobs for teachers? Education – a noble aim. But in a situation when pupils are from the ‘baby-bust’ generation and their number is not growing, where the world dwells in crisis, it is worth considering if this additional expense is really necessary.

Hollande is already successful on the international arena. His meeting with Obama was trumpeted as a huge victory, because – as it turns out – they both agree that it is wise to pursue the economic growth. Great! Because Sarkozy is of course against the economic growth. He is famous for being supporter of ‘décroissance’.[1] All jokes aside. Everyone wants economic growth, so the question is about “how” and not ‘if’. But in regard to “how”, the President of France is yet to suggest a single thing.

What is the modern left-wing?

The biggest leftist party in Greece wants to leave the Eurozone (or remain in it on highly improbable terms). The Polish Democratic Left Alliance (Polish: SLD) 10 years ago started following the trend of the Third Way of Schröder and Blair by suggesting a flat-rate tax, and now tries to flog the dead horse proposing a 50% tax rate. Palikot, a Polish MP, announces plans to build industrial plants. Europe, do you really want left-wing to look like this?

A modern, leftist program is not about higher tax rates, etatism and stating that budget deficit will not pose a problem. After all, the economic growth, resulting from increased demand thanks to increased redistribution, will patch up the budget hole.

Economic etatism turned out to be ineffective, and what is even worse, anti-social. Why there is no reasonable social policy in Poland, and in France, for example, one can collect the subsistence level benefit for life (Revenu de Solidarité Active, RSA) at 417 euro (which is yet much lower than the unemployment compensation)? Because, in the name of social justice, the would-be ‘socialism’ was implemented in Poland for over 45 years. That system’s low effectiveness led to a situation where excluded persons cannot expect practically any help from the state – as the state is not able to afford it. In France, on the contrary, the growth resulting from market economy, allowed to develop the GDP, part of which may be intended for those in need.

Nevertheless, social welfare must be rational, which the French system fails to achieve. My closest friend, for example, earns 2 000 euro gross (which is a relatively small income in France, for a person with a higher degree) and prays not to have his salary raised by any chance. Why? Because, with earnings so low, he receives substantial benefits from the state for the sake of having two kids and a handicapped wife. With earnings just a bit higher, he would lose the benefits. He would have to earn over 4 000 euro, to make his total income higher than the one he gets now. Isn’t it a paradox?

Indeed, modern leftists should support redistribution, but not of this kind. Redistribution should encourage activity, not passivity. Here, in my opinion, the example for the Left was set by nobody else but Sarkozy, of all people, who suggested that the social minimum should be awarded not only to those unemployed, who have no right for the compensation, but also to those, who earn very little. It is a form of activation, encouragement to take up a job, even when the pay is low.

Nowadays, the leftist outlook in the economic sphere lies more on the side of expenses than incomes. Antony Giddens proves in The Third Way that the history of social-democratic policies consisted in granting welfare benefits to large groups of recipients, what made it diluted and ineffective. Social democracy of the 21st century should strive for very accurate selection of those, who need social security, and limit the number of benefit receivers in this way. Thanks to that, higher benefits could be paid out, and the goals could be reached. The point is not to sustain them financially for the rest of their lives, but to give them an opportunity to get out of the marginalized state. Therefore, we should not limit ourselves to giving them only fish – we also need to give them fishing rods. The unemployed should be provided with effective and comprehensive employment programs, and the homeless with programs allowing them to get out of the utmost poverty.

Furthermore, the goals of the Left should go far beyond economy. The formation should suggest a new social model. In a leftist state, there is no room for discrimination against gender, sexual orientation, religion, nationality or social background. I will go even further. This type of state must create possibilities of meeting people of different nationalities or religions, because only by meeting certain minority groups, people realize how unjustified their stereotypes are.

Parliamentary elections gave left-wing majority. But I would be glad, if the French had shown their disdain for the socialistic solutions of 19th century origin, by forcing him to form a coalition with the centrist Democratic Movement. Unfortunately, considering majority rule voting system, this party, despite its 10% support won’t be in coalition. And if there was a democratic, proportional voting system in France, even though more chaotic, perhaps Holland would have no other coalition partner…

[1] Décroissance or also ‘degrowth’ (in free translation: ‘against increase’) is a radical doctrine, which is contrary to the allegedly absurd economic growth, based on exaggerated consumption and economic system that ignores the fact of the limited nature of natural resources.

Translation: Aleksandra Sobocińska

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About Frederic Schneider

Journalist and translator. He graduated with double MA from Institut d' études politiques de Lille and University of Kent in political science (Europan studies) and Polish philology at the Institut national des langues et civilisations orientales. Currently he is doing his PhD studies at the Warsaw School of Economics.

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