Canadian Commentary: International

The French are wrong: everyone says so, it must be true

June 1997

A shocking aspect of the coverage of the recent French elections has been the pervasive implication, even in stories that were supposedly factual, that the French were necessarily wrong-headed in electing a socialist government. It is of course normal, if typically unoriginal, for columnists to say so (the worst offender being Marcus Gee claiming that several million French were wrong, and he was right - should we just appoint him Prime Minister of France and spare ourselves future elections?). But this attitude has also worked its way into stories that are supposedly merely factual. They invariably end with a comment about how the French have refused to "take tough measures" or "adapt to the global economy" by "slashing back their government", as if this particular solution to their problems was an unarguable fact rather than merely an opinion.

In fact, an examination of developed economies over the last two decades suggests that this simplistic neo-conservative solution (cutting back dramatically on social spending and government programs, reducing taxation) is not necessarily the only, or the most effective, way to adapt to the global economy. In fact, it has only really been tried in a small number of places, with mixed success. Let us examine various examples:

1) The United States. The US never had much social spending in the first place, and has always had low taxes. This is a function of its governing political culture, and its unique size and wealth. So it has not engaged in any significant restructuring at all. In fact, it continues to perpetrate considerable pork-barelling subsidies to various economic sectors (such as agriculture), uses various forms of protectionism and management in its trade, and pursues an active industrial policy through its military spending. It is hardly a pristine example of a neo-conservative economy. All it demonstrates is that if you are big and rich in the first place, you can get away with low taxation and an inefficient government. This lesson hardly applies to European nations or Japan, which are crowded and low in natural resources. Nor does is demonstrate that massive restructuring is a good thing, since the US hasn't had to suffer through much restructuring.

2) Radical restructuring. New Zealand and Great Britain are the only two nations that have followed an ideal, radical neo-conservative restructuring of the sort that is advocated for France. Both had rather mixed results, which do not appear to have been particularly more successful than other, more moderate approaches. After New Zealand's neo-conservative revolution, it suffered a decade of slow growth and high unemployment. It is starting to come out of this now, but it is merely catching up with other economies. It is not doing significantly better than nations which took a more moderate approach.

As for Great Britain, Thatcher's revolution was largely completed by the mid-80's. Her neo-conservative policies led to a rapid speculative boom, followed by a vicious recession that undid most of the gains acheived earlier in the decade. This is hardly a spectacular success. Much has been made of Britain's current success, which is attributed to Thatcher's policies. In fact, her policies did not guarantee economic success, as was proved by the recession of the early nineties. That recession lasted until 1993. What was the significant change in policy that marked the move from recession to growth? It was Britain dropping out of the European Exchange Rate Mechanism (ERM), devaluing its currency and following a more expansionist monetary policy. This has been supported by steadily increasing budgetary deficits. These are hardly neo-conservative policies - on the contrary, they are policies often advocated by socialists. If Lionel Jospin wants to learn from John Major's policies in Britain, what he should do is abandon the common currency, give up the policy of the franc fort, allow interest rates to drop, and maintain a high budget deficit!

3) Moderate adjustments while maintaining a strong social policy and moderately high taxation. This is the policy that has been pursued by many of the smaller European nations, notably the Netherlands, and also to some extent by Canada in recent years. This has often included corporatist-style agreements between government, business and labour (the kind of cooperation neo-conservatives hate). What has been the result? In the Netherlands, there has been steady, non-inflationary growth and steadily reducing unemployment - almost as low as Britain's (whose statistics are known to be fraudulent in any case). All this without the pain, chaos or severe social problems experienced by nations that have tried the radical neo-conservative route.

The moral of the story? The radical, neo-conservative restructuring advocated by the right-wing press is by no means the only possible solution to France's problems. In fact, it is probably the least advisable solution, as well as being the most impractical and unlikely given France's culture and recent history. To imply in supposedly factual stories that these policies are the only possible solution is a betrayal of journalistic integrity. To imply the same thing in commentary pieces is arrogant, narrow-minded and ignorant. The popularity of this solution has nothing to do with a rational analysis of economies or societies. Rather, it is based on macho posturing and glib pontificating, on pandering to the business sensibilites of the media's advertising targets, and on a herd instinct among journalists.

[For another example of ideologically slanted "reporting", see A tale of two World Banks]

June 23, 1997

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