French Lesson?

An egocentric and xenophobic mainstream of thought in the United States these days seems reluctant to believe that anything of value can be learned from any other country or culture. History tells us otherwise and that an intelligent person seeks out the experience and wisdom of many ideas and systems of logic to inform sound judgment. The United States, in early states of the national political race for control of the White House and both houses of Congress, is embroiled in a divisive struggle over solutions to the crippling recession brought on by unwise and inept policies of the prior Bush Administration. These wealth shifting strategies of lowering tax revenue, increasing subsidies to the wealthy, deregulation of banking and finance industries and at the same time involving the nation in costly foreign military adventures in Iraq and Afghanistan resulted in economic collapse and the worst recession since the Great Depression of the early twentieth century. As the nation and the economy struggles to recover from that setback, debate centers upon whether to employ a strategy of austerity and frugality or to embark on a strategy of targeted economic stimulus spending to jumpstart the economic recovery. The presidential election in France currently under way involves a very similar debate. The current president Sarkozy has aligned with German leader Merkel to develop a Eurozone plan that is based upon restraint on government spending and deficit reduction. Rather tight control measures are demanded of all members of the European Union as a precondition to international banking and economic reserves. Contender, and current favorite in French polls, Hollande is labeled a “Socialist” and advances a strategy of government stimulus spending to promote job growth and economic activity as a response to France’s current economic doldrums. The approach of Sarkozy and Merkel was in a limited way successful when applied to the Greek economy, which has adopted painful austerity measures, but has succeeded in raising its national credit rating. It is one thing to propose such draconian measures for a desperate country that really had no alternative if it was to survive as a member of the European community. It is far different to extend that same strategy to one’s own country, which is at risk but not to the degree that Greece was. The Greek culture is a bit different as well. There is a deep seated custom of not paying individual taxes and even evasion of taxes by small business. Therefore, the national social program expenditures were built upon a model that created expectation by the public of jobs and services while there was no corresponding ethic of members of the public having to sacrifice for the government largesse by paying their share of taxes. Under those conditions, the refusal of the European Union reserve funds to extend financial help without drastic measures to provide assurances of reform seems logical. The same conditions do not exist to that degree in France. Accordingly, such austerity measures advanced by Sarkozy as prophylactic measures are more closely aligned with a strategy of retaining wealth among an elite group. In contrast, Hollande looks to history that suggests that virtually every successful recovery from a deep economic recession has come from one of two sources: war or stimulus spending. War imposes discipline and increases productivity through huge government spending on war materiale and support. This is a form of government stimulus spending, but it is typically unchallenged because it is cloaked in a patriotic mantle to which even those conservatives who champion austerity cleave. Absent war, other economic recoveries have come through government stimulus spending on public projects that infuse money into the economy and create jobs to produce those public interest and infrastructure projects. The multiplier effect stimulates economic expansion and growth which results in subsequent tax revenue increases that reduce the deficits generated to provide the stimulus. It is a risk based strategy, but a risk based upon belief in a future of the national economy. A strategy that is based upon greater emphasis toward the international economy than upon the nation itself as a participant in that economy is a salient distinction. Leaders like Sarkozy and Romney are in control of enormous wealth and realize that they will not really suffer if the economy of their own nation stagnates. Their personal wealth may not increase as rapidly, but it will not be seriously threatened because they can move that wealth to anywhere in the world where they see economic activity and growth. Only a global recession troubles their strategy. But they advocate measures that look to favor international interests and multinational corporate wealth over national economy and local prosperity or poverty. The current backlash in France suggests that Hollande has greater support of the populace because his strategy is more concerned with the local interests of the French people. They are aware of and concerned about the Eurozone, but believe that if France starves while aspiring to an ideal of a stable European union; it will be of no real consequence. They believe that reasonable and targeted aggressive public spending to stimulate a French economy will ultimately create a more robust participant in that European community.