French austerity ‘takiye’

During the Lisbon NATO summit president Sarkozy solemnly declared that “we in France like to call a cat a cat,” when he should have qualified this metaphorical statement. When it comes to budgetary “rigueur” (austerity), French politicians are rarely inclined to tell it like it is. The gap between the hyperboles describing the latest plan and its content reveals the élite’s mastery at “takiye” (hypocrisy).

 One by one the governments of the European “welfare” Union are falling to their sovereign-debt illness. The French government, whose management of public finances has not been much better than its southern neighbor, is next in line for trouble. It is scrambling to avoid contagion and reassure the markets.

 To serious observers, the first August plan (11 billion euros) was but a caricature of austerity with mostly tax increases. In the wake of the Cannes G-20 summit and with the European Commission breathing down its neck, the credibility of the government’s commitment to sovereign-debt reduction is being tested. The November plan (7 billion euros) announced by Prime Minister Fillon is a step in the right direction, but in the light of a total debt of 1,700 billion euros, it is “timid” to say the least.

 Trumpeted as the mother of all austerity plans, it is another exercise in “takiye à la française” because it skirts the fundamental problem of unsustainable big government. Freezing the salaries of the president and ministers is, at best, cosmetic. There is no plan to cut the bloated civil service on a light “labor” diet (35-hour-week).

 Commenting on the new measures, former president of the taxpayers’ association (Contribuables Associés) Alain Dumait laments that in the mind of the élite “budget cuts” always translate into taxation hikes on just about anything. The plan’s new levies, he argues, can only be described as “anti-economic, anti-growth and anti-job creation.” Once again the state is lying to the people by neither implementing drastic cuts in public spending nor proposing any serious structural reforms.

 In an analysis entitled “A dysfunctional French democracy” (Wall Street Journal, 01 Nov. 2011), Emmanuel Martin hits the nail of the austerity-reform sclerosis. “The National Assembly needs to debate structural reforms, not a new soda tax. Any attempted reforms in that direction have always stumbled first on the country’s biggest lobby: its five million civil servants.”

 Nicolas Sarkozy was elected to reform the state, but his failure to deliver once in office could cost France its AAA-credit rating, not to mention its credibility on the international scene.

 In 2009 the Court of Accounts highlighted the unreasonable growth in the number of civil servants (36% from 1980 to 2008) representing twice the rate of job growth in the rest of the economy. The parliament ignores recommendations because the Left and the Right are united in an unholy anti-state downsizing alliance. The Socialist Party may be critical of the plan but it is probably relieved that its clientèle, the untouchable class of public sector employees, has escaped the “austerity guillotine”.

 Austerity could have started in Cannes. Another missed opportunity. The controversy over the price of the presidential suite (35,000 euros says The Sun, 3,500 euros retorts the Elysée Palace) should not obscure the point. The brunt of the austerity (tax increases) will again be born by the people and the companies upon which recovery depends, not by the fat French cat called l’Etat.

Sophie Quintin Adalı is an analyst for www.unmondelibre.org , the Francophone project of the Atlas Economic Research Foundation.