France does have an economic justice problem: According to Julia Cagé, an economist with the Ecole D'Economie in Paris, the wealthiest 5 percent of French citizens pay taxes at a lower rate than the very poor. Sarkozy cut taxes on the rich, and continues to defend their privileges, thus creating a very large opening for a populist attack (or "class warfare," as we say on this side of the Atlantic). But France also has a competitiveness problem, and Sarkozy at least preaches the virtue of the "German model" of liberalized labor markets as a means of giving the country an economic jolt.
Hollande favors cutting taxes on small business -- a good idea -- and establishing a public investment bank to direct funds to potential growth sectors, a maybe not-so-good idea. But he has advocated partially rolling back increases in the retirement age mandated by Sarkozy, and he has supported the 35-hour work week, the Socialists' poisoned gift to the French economy. And he has rarely spoken about labor market reforms, despite the growing gap between French productivity and that of Germany and other northern countries. I asked several people to explain Hollande's "contract of generations" designed to spur youth employment, but none of them had heard of it, and the language is so fuzzy I couldn't make any sense of it.
Hollande, like Sarkozy, is playing to his base, and probably he's wise to do so. France's allergy to the marketplace really is remarkable. In the last election, Segolene Royale was heard to say something nice about the British economic model, and then had to defend herself from allegations -- certainly unfair -- that she was a convert to "liberalism." As Nicholas Dungan, a senior fellow at the Atlantic Council, puts it, the French generally -- and the Socialists above all -- "don't consider the markets to have any valuable message to convey." Market failure, that is, may trigger calls for more spending and higher taxes, but not for market reform. Dungan takes the view that the deep French commitment to social solidarity, Fraternite, recoils at the creative destruction of capitalism.
It all kind of makes one yearn for Dominique Strauss-Kahn, the former head of the International Monetary Fund and Socialist hero, whose political prospects evaporated after he was accused of raping a hotel maid in New York. Had he run for the presidency, Strauss-Kahn might have been able to convince the French that economic liberalism was not incompatible with social justice, and that the accumulation of wealth was not inimical to broad economic growth. Without him, the Socialists have reverted to their instincts.
And what if Hollande loses? What if, that is, the Socialists can't beat the most hated leader in modern French history at a moment when the economy is failing and the very concept of Europe, itself a great French legacy, is in danger of collapsing? Would that force a shift to the center, as with Tony Blair's Labor Party? (Blair, by the way, is supporting Sarkozy.) That seems unlikely. Martine Aubry, who lost out in the Socialist Party's nominating contest, derided Hollande as a "soft Socialist." Defeat would probably bolster those who argue for a more blunt appeal to French workers, and to French anger at globalization and liberalism.
Defeat, that is, could turn nostalgia for the 20th century, or even for the 19th, into the Socialist's platform. A Sarko victory might also enrage the students and workers who view him as the handmaiden of French plutocracy, and could plunge France into the kind of social unrest which is becoming endemic across Europe. And since France's president only knows one way to deal with disorder, that French solidarity could be put to a very grave test.
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