A Tale of Two Economies
France’s economic policies are an advance look into where Obama is taking us.
Government attempts to jumpstart the economy, changes to the way the country creates energy, high unemployment, massive tax increases on the “wealthy” – the headlines in France sound eerily similar to ours. Maybe we should learn the lesson they’re providing across the Pond.
When it comes to exporting goods, both France and the United States are power players in the world. America leads the pack, and France comes in 10th place, according to the CIA World Factbook. Yet both leaders in the world economy play the same heavy-handed economic game inside their borders. For example, the CIA Factbook says France “maintain[s] social equity by means of laws, tax policies, and social spending that mitigate economic inequality.”
Overall, the results of France’s policies were predictable:
Taxes – Last year, France went after the “rich” with a vengeance that would make Robespierre proud. Implementing the 75% “millionaire tax” slammed France’s entrepreneurs supposedly as a way to help shrink the growing budget deficit and boost the economy. The reverse happened. The tax raised about half its expected revenue, and the economy stalled. Even French Prime Minister Manuel Valls admitted, “Too much tax kills tax.” In the U.S., Obama’s massive tax hike on the wealthy is doing the same thing.
Unemployment – While the U.S. headline unemployment stubbornly stays above 6%, France finds itself dealing with 10% unemployment. For some reason, this is good news in the country. But the government there isn’t done yet. Paris wants to spend 500 million Euros, about $681.95 million, to subsidize youth who are “lacking professional qualifications,” a.k.a. unqualified. What happens when the subsidies run out? More subsidies, probably. Meanwhile, high unemployment has brought other problems, like:
Flight into Germany – Some Frenchmen with the language skills commute into Germany, where the unemployment rate is about 4%, because it’s easier to get a job there. Bloomberg reports Germany pulls in French workers because of its labor rules. About 10 years ago, Germany limited unemployment benefits, discouraged people from retiring early and improved the job-search process. In response, Germans filled the workplace.
France, on the other hand, has a 3,200-page labor rulebook that regulates the workplace, chilling the nation’s competitiveness.
Draconian energy agendas – In the U.S. new EPA regulations designed to cut back on greenhouse gas emissions are predicted to cripple the economy. But it’s for the greater good, leftists argue, because it will save the earth from a hot and watery end. In France, they already have an energy source free of greenhouse gases – nuclear power. However, the French government in all its authoritarian wisdom decided the atom was bad and decreed the nation needs to cut back on all that nuclear production, something that will … drumroll, please … cripple the economy.
With the socialist nation and the birthplace of freedom both running parallel tracks economically, it comes as no surprise that both economies have stalled. In the first quarter, America’s economy shrank 1% (blamed on the bad weather of all things) while France’s economy flatlined at 0%.
Both countries should look for a lesson in free market economics from a place the U.S. bought from France: Louisiana.
Bobby Jindal, the Republican governor of Louisiana, wrote an opinion piece in The Daily Signal that showed a different way of running the economy. “But in Louisiana,” Jindal wrote, “we’ve tried to show that there is a better way – one that leads to quality jobs and robust economic growth. While Obama raised federal taxes by more than $1 trillion, we passed the largest income tax cut in state history. As a Democratic Congress rammed through trillions in new spending for ObamaCare, we cut the state budget by 26 percent. And even as the EPA proposes new regulations that could decimate critical portions of our energy sector, we’ve worked to create a more predictable legal environment for energy companies in the state.”
And the results are clear. According to Jindal, Louisiana has the lowest unemployment south of the Mason-Dixon line and an economy growing 50% faster than the national average.
While it may take a new administration for our nation to turn once again to laissez-faire economics, state and local governments can still fight for economic Liberty in their jurisdictions.
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