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Is Hollande another Zapatero?

The French president is accused of not stimulating competitiveness and doing nothing to reduce public spending

The comparison is being made in France: what if François Hollande turns out to be like Zapatero in Spain? Hollande and his team are distant successors to Mitterrand, just as Zapatero and his team were successors to Felipe González, the difference between the generations being that the former were professionals, the latter amateurs. But just now this comparison is unfair to Hollande, the French president having used up only six months of his five-year mandate.

Hollande knew full well that during the first two years he would have the hardest work facing him, but he may not have guessed just how hard. In any case, seldom have we had in France a political and psychological ambience so charged with nervousness. Of course, Hollande is facing up to an inheritance, that of Sarkozy, which is objectively catastrophic: unprecedented foreign deficit, soaring unemployment, violent crime on the rise, runaway debt, etc. However, though crisis measures are partly to blame, this is not the real reason for the discontent. The real reason is the fiscal pressure this government has imposed, in the name of social justice and balanced accounts.

In 2013, an additional 20 billion euros will be collected: 10 billion from companies, 10 billion from individuals. Among the latter, it will be the well-to-do who pay the most. So instead of the landslide of fresh confidence he had predicted, we have a landslide of taxes. It is hard to criticize this approach, since taxes have been shrinking for decades, mainly to the benefit of the rich. But the notion of threshold is important. No one is insensitive to a tax rise. Mitterrand said once that the French feel their taxes are rising, even when they are falling.

François Hollande is at once accused of not stimulating competitiveness, when in February a 20-billion-euro program will begin to that effect; of doing nothing to reduce public spending, when cuts of 60 billion are planned for the next five years; and of not wishing to flexibilize the labor market, when negotiations to do so are already under way.

In my opinion this carping criticism has only one explanation: fiscal pressure, the same which has led the actor Gérard Depardieu to seek fiscal exile across the Belgian border. The actor's move has drawn attention to a quite real hemorrhage of fortunes, either of very rich people who want to escape the wealth tax, or of young businessmen who consider that their climb to wealth is being thwarted. True, the government has made two mistakes: setting up a tax threshold of 75 percent for annual incomes of more than one million euros, which has been perceived as a confiscatory measure; and accompanying its policy with rhetoric and statements that alienate businessmen, who are portrayed as exclusively greedy for profit, when there would be no growth or employment without entrepreneurial activity.

It must be noted that the French are totally contradictory: they demand that wealth be taxed, but do not want entrepreneurs to be penalized; endorse (80 percent) the proposition that the rich be taxed, but also express approval (51 percent) of those who choose fiscal exile.

Meanwhile, Hollande is trapped between two discontents: that of wage-earners, anxious about rising unemployment, the president having announced there will be no recovery before the end of 2013; and that of the businessmen who make the economy work, who feel or claim to feel stigmatized. The result is a slumping presidential approval rating (35 percent), which is a frail shield in times as difficult as these. And the French, like the Spanish, are not alone. Hollande promised that the EU would mobilize to activate growth. And indeed it is now high time for European leaders to mobilize, and move on from words to deeds.

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