François Fillon is a Big, Fat Mistake
by Benjamin Studebaker
France’s center-right Republican Party has chosen to nominate François Fillon for the presidency. This is a big, fat mistake. Fillon is a relic from the 2000’s–he was Former President Nicolas Sarkozy’s Prime Minister from 2007 to 2012, and he calls for a slate of policies that would cut public services, increase economic disparities, and shred France’s economy. He is a massive risk not just to France but to Europe as a whole, both in the short-term and the long-term. Here’s why.
Fillon is a risk for two reasons:
- The immediate threat he poses to French labor risks driving the unions into the arms of Le Pen, allowing her to break up the European Union.
- In the long-term, a Fillon victory will create conditions that will strengthen National Front, eventually helping Le Pen to break up the European Union.
Let’s look at Fillon’s policies:
- He wants to cut half a million public sector jobs, which is 8.8% of France’s public sector workforce.
- He wants to raise VAT by 2%. VAT is a tax on consumption and discourages economic activity.
- He wants to repeal Hollande’s wealth tax.
- He wants to raise the retirement age by 3 years.
- He wants to limit access to unemployment benefit.
- He wants to phase out the 35 hour workweek.
- He wants to cut public spending by 5% of GDP over 5 years (average a 1% cut per year).
- He wants to transfer the costs of the healthcare system onto the private citizens by forcing French citizens to purchase supplementary private health insurance.
Think about how these policies fit together. When you raise the retirement age and increase worker hours, you reduce the need to hire people. Older workers box out young people and shifts are longer, eliminating the need for relief workers. On top of this, you lay off half a million people and reduce their ability to access unemployment benefit, so your pool of unemployed workers is now very large and very desperate. Then you also cut state spending and dump the costs of the healthcare system back on private citizens without cutting their taxes (you’re only cutting taxes for the rich people subject to the wealth tax)–this reduces the amount of money flowing through the economy and forces French citizens to divert their disposable incomes to replace the healthcare spending the state is no longer covering, reducing total consumption. Then there’s the cherry on top–the 2% VAT increase–which directly discourages them from spending what’s left.
The public spending cuts alone will reduce French economic growth by between 1% and 1.7% per year, depending on the size of the fiscal multiplier. This is not a country that’s been growing at breakneck speed as it stands:
The popular press often assumes that France is uniquely sluggish and in need of “structural reform”, but France has not done substantively worse than most other rich European countries, all of which have struggled. Indeed, France took a relatively small hit in 2008 and has needed less growth to recover, yet it has still routinely kept pace:
The IMF has increasingly been recommending stimulus for countries in these positions. In a recent staff note, some of its economists claim that France still has considerable fiscal space, and could increase its current debt load by more than 100% of GDP without trouble:
Even if France had half the fiscal space the IMF economists think it has, there would be no need for France to do what Fillon is proposing. Indeed, even if it were necessary, there are much more effective ways to reduce the public debt–inflation and economic growth can rapidly reduce the size of the debt in real terms. Austerity reduces economic growth and thereby reduces tax revenue, forcing even larger cuts which damage the economy still further, producing a vicious cycle of pain that imposes a great deal of unnecessary suffering and can even make debt problems worse than before. Fillon’s platform is the modern economic equivalent of the flagellants’ response to the plague–painful, and worsening the problem it’s meant to solve:
Current polling projects that Fillon and Le Pen are likely to be the finalists in the French presidential election. If France’s workers figure out the threat Fillon poses to them and Le Pen offers them succor, we could see large portions of the French left’s voting base defect to the far right. If they do not and Fillon prevails, his brutal economic agenda will only worsen conditions in France and strengthen the far right’s hand going forward.
The French left must organize to meet this grave threat. The current President, François Hollande, is deeply unpopular. But in spite of this, the left wing parties in France still poll competitively if you combine their numbers. The Socialist Party must abandon Hollande and his failed centrist agenda. There needs to be a sit down with the Left Party and the Greens in which a unity candidate is agreed upon. Some neoliberals within the Socialist Party will defect to Emmanuel Macron’s centrist movement. If the Socialist Party splits down the middle, Macron will be boosted to around 20% and the left’s unity candidate will run near 20% as well. This would at least give these movements a chance of beating Fillon and Le Pen, though the chance is slim if Le Pen’s supporters predominately back Fillon in the second round or vice versa. Le Pen’s supporters must be convinced of the threat Fillon poses to their job security, and Fillon backers must be convinced of the threat Le Pen poses to the EU and to liberalism. At the same time, the left needs to present a compelling alternative vision for France, one which revitalizes the French state instead of euthanizing it.
If this doesn’t happen–and because the left is so factionalist, the chances are very doubtful–a Fillon/Le Pen contest will deliver France and Europe into the hands of the far right sooner or later, with devastating consequences for the European project. We are watching a car crash in slow motion.