May 092012

The trouble with the French is that they are sick and tired of austerity, and they won’t take it any more. Oh, and by the way, they want it all.

Big government, check. The French public sector accounts for more than half of the economy.

Early retirement, check. Voters threw Nicolas Sarkozy out of office Sunday at least in part because he pushed through a gradual increase in the retirement age from 60 to 62. Quelle horror!

Make the rich pay, check.¬†Francois Hollande was elected in part on a promise to hit the high earners with a marginal tax rate of 75%. Hollande also assured voters that he hates finance. (So do we all. By their behavior, bankers — and we’re talking about the titans of Wall Street and the City of London, not the bankers at your community branch — have made themselves easy targets.)

Now before you go looking askance at the French, consider that in many respects they are not so different from us Yankees.

I know, I know, in theory we don’t favor big government. We want government small, efficient, non-intrusive. In theory.

But don’t cut my Social Security or Medicare benefits. I want good roads, a strong defense, libraries open seven days a week, excellent schools with low tuition, secure prisons, and on and on. Oh, and low taxes, too.

The problem — the eternal verity, if you will — is that in the absence of a perpetual-motion machine, the French — and we — can have jam today or jam tomorrow, but not both. We are living longer. The fiscal squeeze that everyone knew would hit rich countries eventually was pulled forward by the 2008 financial panic and subsequent Great Recession.

David Leonhardt of the New York Times neatly summarized the problem last fall. To paraphrase, almost all rich countries have made promises that they cannot afford to keep at current growth rates. To quote directly: “On the most basic level, affluent countries are facing sharply increasing claims on their resources even as those resources are growing less quickly than they once were.” (New York Times Page 1, November 6.)

Mr. Hollande, the first Socialist leader of France in 18 years, will get a honeymoon. But it likely will be short.

As Max Hastings observed in the Financial Times last summer, leaders of all western rich countries have the unenviable task of informing electorates that they have been living beyond their means. “Haircuts for all” fits neatly on a bumper sticker. It doesn’t make much of a political slogan.


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