It Doesn’t Seem Possible, but France Is Going from Bad to Worse

Remember when Paul Krugman warned that there was a plot against France? He asserted that critics wanted to undermine the great success of France’s social model.

I agreed with Krugman, at least in the limited sense that there is a plot against France. But I explained that the conspiracy to hurt the nation was being led by French politicians.

Simply stated, my view has been that the French political elite have been taxing the nation into stagnation and decline and there is every reason to think that the nation is heading toward a severe self-inflicted fiscal crisis.

But it turns out I may have been too optimistic. Let’s look at some updates from Krugmantopia.

We’ll start with a report from the Financial Times, which captures the nation’s sense of despair.

…if the country’s embattled socialist president was hoping for some respite from what has been a testing year, he can probably think again. … the French economy barely expanded during the second quarter of this year after stagnating in the first. …the result will make it all but impossible to achieve the government’s growth forecast for 2014 of 1 per cent… Bruno Cavalier, chief economist at Oddo & Cie, the Paris-based bank, says one reason is the huge constraint on disposable income posed by France’s tax burden, which has risen from 41 per cent of GDP in 2009 to 45.7 per cent last year – one of the highest in the eurozone.

Crisis in the Sahara

Over the past few weeks, with the Second Inauguration of Barack Obama as a backdrop, a mostly-ignored crisis has been unfolding in North Africa.  As President Obama declared at his inauguration that “a decade of warfare is ending,” the United States began aiding France with their bombing campaign in Mali, to little fanfare, fulfilling President Obama’s actual foreign policy goal: to maintain an American global presence, with little accountability here or abroad.

Meanwhile, over the inaugural weekend, to the north of Mali in neighboring Algeria, a hostage crisis at a British Petroleum natural gas plant ended violently; at the time of this writing, 37 hostages were killed, 3 of which were American.  Details are still unclear, and the situation is sensitive, but the mind recalls another inaugural hostage crisis 32 years ago with a happier ending.

The events in Algeria and Mali are intrinsically linked, not just by the actors therein, but by the actions which spurred them.  To properly confront the crisis at hand, we must also confront our contributions to the crisis, for as Albert Einstein said, “We cannot solve our problems with the same thinking we used when we created them.”

Gerard Depardieu Goes John Galt

Written by Marian Tupy, a policy analyst, Center for the Global Liberty and Prosperity at the Cato Institute. Posted with permission from Cato @ Liberty.

Few Frenchmen are more recognizable at home and abroad than the movie star Gerard Depardieu. Last week, Depardieu caused a great controversy in his native land by moving to Belgium – partly to avoid the 75 percent income tax on the wealthy that was introduced by the socialist President of France, Francois Hollande. Depardieu’s move was condemned by the French political establishment, including the Prime Minister Jean-Marc Ayrault who called the actor’s action “pathetic.”

Depardieu shot back and, in an open letter to Monsieur Ayrault, wrote, “I’m leaving because you think success, creation, talent and anything different should be punished. I am sending you back my passport and social security, which I have never used.” The French actor claims to have “paid 85 percent taxes on his revenues this year [2012] and estimated that he had paid €145m ($189m) in total since he started work as a printer at the age of 14.”

Euro-zone falls back into recession

Austerity protest

Plagued by seemingly perpetual debt problems due to large welfare states, the Euro-zone, the 17 countries that make up the European Union, has fallen into a recession for the second time since 2009:

The euro zone debt crisis dragged the bloc into its second recession since 2009 in the third quarter despite modest growth in Germany and France, data showed on Thursday.

The French and German economies both managed 0.2 percent growth in the July-to-September period but their resilience could not save the 17-nation bloc from contraction as the likes of The Netherlands, Spain, Italy and Austria shrank.

Economic output in the euro zone fell 0.1 percent in the quarter, following a 0.2 percent drop in the second quarter.

Those two quarters of contraction put the euro zone’s 9.4 trillion euro ($12 trillion) economy back into recession, although Italy and Spain have been contracting for a year already and Greece is suffering an outright depression.

A rebound in Europe is still far off. The debt crisis that began in Greece in late 2009 is still reverberating around the globe and holding back a lasting recovery.

Analysts said even the euro zone’s top two economies were likely to succumb in the final three months of the year.

Regulatory Compliance Costs Don’t Always Have a Dollar Figure Attached

Cross-posted from Friction Tape.

Francois Hollande

Recently elected socialist French president François Hollande.

While I’m not sure I always buy whole-hog the amorphous concept of “regulatory uncertainty,” brought on by the administrative state, as a catch-all explanation for everything wrong with the private sector and our nation’s current unemployment crisis, a fascinating Bloomberg Businessweek Global Economics feature from May 2012 looks at French labor policy (emphasis mine):

[France] has 2.4 times as many companies with 49 employees as with 50. What difference does one employee make? Plenty, according to the French labor code. Once a company has at least 50 employees inside France, management must create three worker councils, introduce profit sharing, and submit restructuring plans to the councils if the company decides to fire workers for economic reasons.

French businesspeople often skirt these restraints by creating new companies rather than expanding existing ones.

International Data on Living Standards Show that the United States Should Not Become More Like Europe

Written by Daniel J. Mitchell, a senior fellow at the Cato Institute. Posted with permission from Cato @ Liberty.

I’m not a big fan on international bureaucracies, particularly the Paris-based Organization for Economic Cooperation and Development. The OECD, funded by American tax dollars, has become infamous for its support of statist pro-Obama policies.

No, Barack Obama, the United States should not be more like France

President Barack Obama has an idea, you guys. In his latest pivot on the economy, because everything else his administration is doing failing so spectacularly, he said the United States should offer the same sort of benefits that France requires businesses to offer their workers:

Extolling the business virtues of helping workers balance family and employment demands, including providing paid time off for the birth of a child, Obama said that if France can provide the benefits, so can the United States.

“Other countries know how to do this,” Obama said. “If France can figure this out, we can figure it out.”
Obama made the comment at the first White House summit for working families, which sought to amplify issues like paid maternity leave and the ability to take paid leave to take care of elderly loved ones.

“Many women can’t even get a paid day off to give birth,” Obama said. “There is only one developed country in the world that does not offer paid maternity leave, and that is us. And that is not a list you want to be on, by your lonesome.”

The White House hosted the summit jointly with the Center for American Progress, a liberal think tank, and it served in part as a campaign pep rally focused on turning women voters out in November.

Today in Liberty: Obama ‘extremely troubled’ by VA report, economy contracted in 1Q, Snowden speaks about NSA power

“Every once in a while, somebody has to get the bureaucracy by the neck and shake it loose and say ‘stop doing what you’re doing.’” — Ronald Reagan

Today in Liberty: North and South Korea trade fire, Obama’s NSA reforms face big hurdles

“I think the impressionable libertarian kids are going to save our nation. The impressionable libertarian kids are saying, wait a second, benevolence is fleeting, and when benevolence is gone, you’re at the mercy of an all-powerful government and it’s too late.”Igor Birman

— North and South Korea exchange fire: North Korea decided to test fire some artillery into the ocean because Kim Jong-un wanted some attention. That led to a response from South Korea, though neither side fired any artillery on land or military installations, according to the AP. “North Korea routinely test-fires artillery and missiles into the ocean but rarely discloses those plans in advance. The announcement was seen as an expression of Pyongyang’s frustration at making little progress in its recent push to win outside aid,” the AP reported this morning. “No shells from either side were fired at any land or military installations, but Kim called the North’s artillery firing a provocation aimed at testing Seoul’s security posture. There was no immediate comment from North Korea.”

U.S. sends troops to Niger


President Barack Obama came a step closer to engaging in military action in Mali. The Associated Press reports this morning that the White House has notified Congress that 100 military personnel have been sent to Niger, which borders Mali to the east:

In a letter to Congress, Obama says the forces will focus on “intelligence sharing” with French troops fighting Islamist militants in neighboring Mali. He says the American forces have been deployed with weapons, quote, “for the purpose of providing their own force protection and security.”

The U.S. and Niger signed agreement last month spelling out legal protections and obligations of Americans who might operate from the African nation. But U.S. officials declined at the time to discuss specific plans for a military presence in Niger.

The French military has been battling Islamic militants in Mali, but they’re expected to begin a troop withdrawal in the next month, turning over operations to African military forces. This withdrawal comes despite new skirmishes with radicals.

Even though the presence of American troops in the region is small, we’re involved in yet another conflict with against a forces who don’t represent any real threat to us. Not to mention that it’s another undeclared war, as Ron Paul recently explained, with a good risk of escalating.

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