Friday, October 27, 2006

What France Needs....

The European edition of The Economist has a very provocative cover this week :

My initial reaction was one of horror. France cannot be in such a bad shape that it needs an Iron Lady of its own. As much as I am in favor of reforms for France, I do not think an electro-shock is necessary. Of course, the point of this cover may be simply to be thought provoking.

Their editorial has some good points:

France is a country of contradictions. Its economy may be sluggish, but its workers are among the world's most productive. Its people are famously leery of globalisation and economic liberalism, yet France boasts some of the world's most successful multinational companies. Its public sector may be bloated and its tax burden excessive, yet the quality of its public officials is widely admired. Its mass-education universities come deservedly low in the world rankings, yet Paris's famous grandes écoles are among the best in the world. In short, France is a place in which, for almost every weakness, it is possible to find a matching strength.

The question is whether France can now build on these strengths by bringing in pro-competitive reforms—to its labour market, to its protected utilities and public monopolies, to its social model, to its public services and to its stifling regulatory system. There are reasons to be optimistic. Many of France's impressive businessmen are demanding change. The country's demographic outlook is healthier than its neighbours. Because it is less dependent on manufacturing than Germany, Italy and Spain, France has less to fear from low-cost Asian competition. It will always be hard to get reforms past the gauntlet of France's street protesters. But at least the government is not hobbled by the scratchy coalition politics that bedevils all attempts at reform in Germany and Italy.

The Economist suggests that France is indeed reformable but that it needs strong leadership, a “Madame Thatcher who has the courage to take on vested interests.”. That much I agree with. France does need strong leadership which it hasn’t had since Chirac came to power, 11 years ago! However, times have changed and France is not Britain. It will accomplish reforms in a different way and there are signs that most people in France are aware of the need for reforms even if there is resistance by a minority.

Even The Economist does recognize that "France's dame or homme de fer does not need to be quite as ironclad as the former British prime minister."

They have doubts about the current candidates for the presidency but one must remain cautious in reading too much into the current discourse of a pre-campaign period where competition is tough. A lot of people say a lot of things.... to get some attention or some votes.

In any case, what France needs is a strong leader but NOT a "Dame / Homme de Fer".

Let’s finish on a positive note:

In Britain, where the private sector was much weaker, it took nearly two decades to turn around the economy. If the next French president can push through the reforms needed to restore the country's competitiveness, France could rebound far more quickly than the déclinologues assert.

I have yet to read their 14 page analysis... and I may post something on it later if it turns out to be interesting.

NOTE: Personally, my favorite socialist candidate is the more moderate Dominique Strauss-Kahn who is more of a social-democrat (also referred to as "The Third Way") than an old-syle socialist, even if he signed the old-style socialist programme (but it's not like he had a choice either).


At 11:46, Anonymous Anonymous said...

Very interesting issue.

I think France needs an iron lady (or an iron man) to break the too strong resistance of communist unions against reforms.

No one succeeded in it before.

Neither Juppé, who was not an iron man, neither Raffarin, who proclamed himself as a reformist.

So, what about Strauss-Kahn ? Could he succeed in SNCF or La Poste reform, as socialists did with Air France ?

Just hope so, if a socialist is elected next year !



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