Sunday, April 15, 2007

French Presidential elections - Sarkozy please...

France’s Presidential elections are important for the world and for New Zealand. France is the 7th biggest economy in the world (on a PPP basis), and it is one of Europe’s dominant powers, a nuclear power (both militarily and in electricity generation, with over 70% of its needs met by nuclear power), and without doubt the most important roadblock to achieving substantial liberalisation in agricultural trade, with perhaps the important exception of Japan.
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France inspires romance, and has an arrogance than in many ways can be understood. It is little coincidence that the term “joie de vivre” seems to mean more in French than its English translation. Examples of French prowess continue to impress, such as its recent achievement in rail engineering (who can fail to be impressed by a rail speed record of 575 kph– albeit at a cost the French media tends to ignore. France’s relative wealth has been static for some time, it simply has a state and an economy that is not conducive to new business, tends to ossify large state owned infrastructure companies, shielding them from competition. This economic stagnation is not yet fully reflected in its social services. Healthcare continues to be the envy of many in Europe, but growth last year was the 2nd lowest of any EU member state.
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France’s malaise can be seen in how it has slipped in per capita GDP (PPP basis) to between 17th and 23rd depending on measurement, leaving it rivalling Italy for being bottom of all western European states besides Spain and Portugal. 25 years ago France was 7th, a parallel somewhat akin to the slide New Zealand suffered from being 1st or 2nd in the 1950s to being 22nd by the 1980s.
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Unemployment remains high at 9%, exacerbated by labour laws that make it difficult to fire, that keep the working week at an underproductive 35 hours by law, while the fiscal situation has bled red ink for some time. Public debt at 66% of GDP is costing more and more of the high tax take. The rejection of the EU constitution was the delivery of two messages, one was the curious hard left anti-globalisation message that rings strong in France and which is about hanging onto what France has. The other was a rejection of the status quo, fed up with the Chirac years of saying much but doing little.
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So for many in France this time the Presidential elections are about the decisive question about what happens about the French economy. The 2002 election saw the socialist candidate Lionel Jospin fail to oust racist old fool Jean Marie Le Pen from the runoff, so that the runoff election was a case of Chirac being the lesser of two evils. This time Le Pen is still promoting his filth. However there are three other serious candidates.
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The poll leader is Nicolas Sarkozy, who is touted as the Thatcher of France, but frankly if he proves to be as liberal as Blair it will be a surprise. He plans to liberalise labour laws, lower taxes, cut public debt and give universities more autonomy. He clearly is the only candidate interested in serious reform, and the fact he remains ahead in the polls indicates a substantial French acceptance of the need. He wants a new slimmer EU constitution, which is clearly welcome.
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Closely behind is Segolene Royal, the socialist candidate who has consistently been behind. She, by and large, represents the past, including increasing the minimum wage, pensions, abolishing flexible employment contracts for small firms and create half a million subsidised jobs. She wants a big socialist EU, though her weirdest comment has been “Chinese courts are more efficient than French ones”. Her plans are expensive, she wants new public housing, a big spend up on education, on other words she is promising much with no way to pay for it.
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The possible dark horse is Francois Bayrou, a centrist candidate who embraces some modest reform, he wants fiscal prudence, mild tax cut, but would also renationalise gas and electricity utilities, and is a huge fan of agricultural subsidies. He polls closely behind Ms Royal.
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So next weekend the question will be, who will be in the runoff. Most likely it is Sarkozy vs Royal, in which case Sarkozy will probably win. If it is Sarkozy vs Bayrou, Bayrou may win.
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However, from a libertarian point of view there is little to be cheerful for, but to hope that for the sake of the French economy, the EU and international trade, that Sarkozy wins. As the man least enamoured about subsidies and a big EU, he is likely to be most conducive towards moving on trade in agricultural commodities in coming years, and to reject the big bureaucratic centralised EU that is the dream of many European socialists, keen to snuff out diversity across the 27 member states.
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Sarkozy is far from perfect, he still embraces microeconomic meddling, he engages in negative rhetoric about immigrants and is far too hostile to Turkish membership of the EU - which while problematic, should not be rejected outright.
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So my greatest hope is at least that Sarkozy gets through to the second round (the French Presidential elections demand a runoff between the two top polling candidates if none gets 50% in the first round), and that Le Pen does not. The former is necessary to save France from those who look backward, and the latter is necessary to save France's reputation.

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