There is noting quite like the Financial Times’ Editors political/economic romance with Emmanuel Macron! Even in the face of the platitudinous, or is it high drama?, collapse of Neo-Liberalism, precipitated by The Pandemic: the notion that the Keynesian approach, adopted by the Germans, won’t work in France. It is a foregone conclusion of the Editors, ignoring all that might render such an approach valuable, in an utterly transformed set of imperatives and demands? In sum, workers in France are the beneficiaries of State Coddling, as it is!
Abandoning ordoliberal orthodoxy, Germany cut value added tax and made direct payments to households to boost demand and consumption, the kind of Keynesian approach France tried for decades with little enduring benefit.
The ‘wisdom’ of Macon’s approach is narrated as not a Keynesian approach, as it might be practiced, but its expression is of a Keynesianism applied to Capital, a 20 billion tax cut for French companies.
This time Paris has steered away from stimulating consumption directly, arguing that incomes have barely shrunk during the crisis thanks to generous job subsidies and ample household savings. Instead, Mr Macron is pursuing a structural reform agenda under the guise of stimulus. The centrepiece of his plan is a €20bn tax cut for French companies which, almost alone in Europe, have to pay hefty levies according to the value added in their production on top of heavy social charges and corporation tax. Mr Macron has long wanted to ease the tax burden on French companies in the hope of boosting investment and job creation. Now he has the fiscal space to do so.
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Finally, €35bn is being earmarked for social and regional cohesion, the lion’s share going to job protection, vocational training, apprenticeships and hiring subsidies. France is maintaining its furlough scheme for two years, but limiting it to sectors still badly affected by social distancing requirements and restricting it to part-time subsidies, which might help avoid a problem of “zombie” jobs.
The ‘furlough scheme’ is a guaranteed income, for those who have lost their jobs?
By focusing on competitiveness, the green transition and human capital the French plan is coherent with the EU’s €750bn recovery fund agreed in July. Paris is counting on an EU contribution of €40bn to its stimulus. And Mr Macron is keen to show that Europe is now a help rather than a constraint.
‘Competitiveness’ is a key concept of Capitalist apologetics, it is inherent in the very nature of the human being?
‘He remains commendably committed to liberal reforms to boost competitiveness and growth.’ Its as if the idea of human and economic development, advocated by Manfred Max Neef , rather than an impossible model of ‘growth’ wedded to ‘profit’ is sustainable within a ‘green transition’ !
With 21 months to the presidential election, this stimulus plan is helping to define Mr Macron’s pitch for a second term. He remains commendably committed to liberal reforms to boost competitiveness and growth. But his plans will also appeal to green voters and those yearning for a more Nordic-style welfare state. He is counting on €100bn to relaunch the French economy and to revive his political fortunes.
Not to forget the gilets jaunes, gilets femmes & gilets noirs are still active political participants in France!