Pity the poor French voters yesterday. They had to choose between a known incompetent, President Nicolas Sarkozy and an unknown socialist, Francois Hollande, who has never been elected to public office.
They choose the socialist 51.6% to 48.4%, with 55% of the socialist’s votes being anti-Sarkozy votes. Sarkozy won 5 years ago by promising dramatic reforms to energize the French economy. He failed. He did raise the retirement age to 62 from 60, but did not cut or rein in the bureaucracy, or state spending. 55% of the country’s gross domestic product is an unsustainable public spending. It’s the highest in the Euro Zone, exceeding even Greece. The national debt is now 90% of the GDP, with a budget deficit of 5.2%. Sarkozy did raise taxes though.
In short, Sarkozy’s record is similar to that of Governor Schwarzenegger in California.
Sarkozy’s personal/public life was shocking, even for the open minded French.
President Hollande inherits other structural problems that Sarkozy could not solve. French labor costs are among the highest in the Euro Zone, as French industry becomes increasingly uncompetitive in the global economy. One reason for the high labor costs is the 35 hour work week. The French unemployment rate has reached 10%.
Hollande’s campaign promises are scary: 1) raise taxes on income over $1.3 million to 75%; 2) tax bank profits by an additional 15%; 3) hire 60,000 more teachers over the next 5 years; 4) lower the retirement age for some workers to 60; and 5) raise the minimum wage.
The socialists have been out of office for 19 years. They are hungry for action.
Yet, he wants to balance the budget by 2017.
Watch French capital flee to England, as it has so many times in the past.
Voters in Franc had a bad choice, but they acted in accordance with two well established, but often contradictory political realities.
First, voters will vote out politicians who do not solve their economic problems. Sarkozy had his chance and failed. Thus, it was time for someone knew. Elections yesterday in Greece, Serbia, and Germany sent a similar message.
Second, voters dependent upon the state for their income will vote for the statist party.
These are important lessons for America.