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| Hi guys! You won't believe what great idea I had… |
You
can't keep a good énarque down. Faced with an economy that is no longer merely circling the
drain but gurgling down it at great speed, Francois Hollande has discovered
what Europe needs to fix its ailments.
Perhaps
not surprisingly, his epiphany, revealed to the press after his first 150 days in
office, consisted of the recognition that what the EU urgently needs is yet
another layer of centralized bureaucracy, complete with its own taxing power
and 'harmonized' taxes (this is the codeword for 'everybody's taxes should be
as high as those in France, i.e., the highest possible') across the continent.
That
will fix things. For sure.
“French President Francois Hollande called on Thursday for an economic government for the euro zone with its own budget, the right to borrow, a harmonized tax system and a full-time president.
At a 150-minute news conference marking his first year in office, a day after economic data showed France had slipped into recession, the Socialist leader defended his record on economic reform and budget discipline and told the French people they would have to work "a bit longer" for a full pension in future. Rebutting criticism that France has lost its leadership role in Europe because of its dwindling economic competitiveness, Hollande said he wanted to create a fully-fledged political European Union within two years.
"It is my responsibility as the leader of a founder member of the European Union… to pull Europe out of this torpor that has gripped it, and to reduce people's disenchantment with it," Hollande said. "If Europe stays in the state it is now, it could be the end of the project."
He acknowledged he could face resistance from Germany, Europe's dominant power, which opposes mutualising debt among member states. Berlin is also reluctant to give the euro zone its own secretariat for fear of deepening division in the EU, between the 17 members of the single currency and the 10 others. Non-euro Britain's government already faces growing domestic pressure to hold a referendum on leaving the bloc.
Hollande said he wanted Britain to stay in the EU but added: "I can understand that others don't want to join (the single currency). But they cannot stop the euro zone from advancing."
Speaking in Berlin before the French leader announced his initiative, German Chancellor Angela Merkel said her relations with Hollande were good, and she was "very optimistic" France would strike a balance between growth and budgetary rigor.
Hollande said a future euro zone economic government would debate the main political and economic decisions to be taken by member states, harmonize national fiscal and welfare policies, and launch a battle against tax fraud.
He proposed bringing forward planned EU spending to combat record youth unemployment, pushing for an EU-wide transition to renewable energy sources, and envisaged "a budget capacity that would be granted to the euro zone along with the gradual possibility of raising debt".
He also called for a 10-year public investment plan in the digital sector, the promised energy transition, public health and in big transport infrastructure projects. (emphasis added)
Saints
preserve us. As far as we're concerned, the only good idea Hollande mentioned
was the possible 'end of the project'. If indeed tax and welfare
policies were 'harmonized' – which is to say, brought to French levels, we can
imagine that this wouldn't be possible without a concurrent 'battle against tax
fraud', because people would be forced to evade taxes merely to survive. None
of this can possibly lead to a revival of economic growth or make people like
the EU better.
'EU
spending to combat youth unemployment' is quite possibly among the most inane
ideas ever. High unemployment cannot be 'fixed' by government spending. It can
only be reliably reduced if one implements the exact opposite of the policies
Hollande has enacted in France. Increased labor market flexibility and a
rescission of minimum wage rates would be useful first steps. Remember: there
can be no institutional unemployment in an unhampered market economy. This is
so because labor remains a scarce resource. Institutional unemployment is a
direct result of government's meddling with the labor market. In France this
means that the rate of unemployment at the height of economic booms doesn't go
below approximately 7.5% – a rate that sends someone like Fed chief Ben
Bernanke into uncontrolled paroxysms of money printing.
We're
not in the least surprised Hollande proposes wasting funds on the 'renewable
energy resources' boondoggle as well. If these energy resources made any
economic sense, the market would develop them on its own. The fact that
Hollande believes the sector requires his intervention is already proof
positive that it represents nothing but a waste of scarce capital.
Granting
the EU a 'budget capacity' and the power to 'raise debt' means in translation:
there will be even more taxes, even more senseless waste of money, an even
bigger mountain of public debt and an even bigger unaccountable
bureaucracy to 'administer' all of it.
The
'public investment plan', regardless what its aims ostensibly are, can only
mean even more waste and corruption all around. Bureaucracies cannot gauge the
opportunity costs of their investment spending, since they are not forced to
produce profits. The resources that would be tied up in such a '10 year plan'
(which by the way reminds us suspiciously of the infamous five year plans of the
happily expired Soviet Union's GOSPLAN agency) would be sorely missed
elsewhere. Such a plan is practically guaranteed to lower nearly everyone's
standard of living. Profits would be transferred from those who wish to best
serve consumers to those with the best political connections.
Conclusion:
The
leopard is of course not likely to change its spots. Hollande was, is and
always will remain a socialist and bureaucrat – 'the welfare state incarnate'
indeed. Where did they find this guy? How can one be so utterly clueless about
economics? As Reuters points out (after contrasting Mariano Rajoy's somewhat
different ideas with those of Hollande):
“Hollande, whose approval rating has fallen further than any French president in his first year, sought to reassure left-wing voters that he remained true to his Socialist colors.”
No such
proof was required. His 'socialist colors' are precisely the problem.
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