The new president of France has an apt first name but for my present purposes a somewhat awkward last name. Some people might think that my purpose would be to boycott the president but this is not the case. (Yet.) Nevertheless, come to think of it, there is a good argument that the wrong person got elected. If voters for Sarkozy had Bayrou in second place and voters for Hollande had Bayrou in second place too, then Bayrou likely would be a Borda Fixed Point choice, and thus a superior winner. I already discussed this mechanism for the past elections with Sarkozy and Royal, see In a democracy, Bayrou would have won. It is also dubious that president and parliament have different electoral mandates. If the upcoming parliamentary elections in June fail to support Hollande then France and Europe fall victim to a wrong system of democracy, like we also see in the USA with a Democratic president and a Republican Congress. There is also an argument that Hollande did not present his full agenda out of fear that realism would drive away voters. Perhaps he can keep up the show till after the June elections but perhaps Angela Merkel and events in Southern Europe will not allow so, and then he indeed could lose support in parliament. If the democratic structure isn’t sound then the economy will suffer.
The situation in Greece brings Papandreou’s referendum into mind. Sarkozy and Merkel were furious about that proposal but the Greek leader had a better understanding of his compatriots than the foreigners. Papandreou could have defended the European deals and he could now still be in stable government. Instead, a half year has been lost and Greece moves towards second elections without a strong leader to defend the European deals. A Greek exit from the eurozone would not be the disaster for the rest of Europe that it would have been a half year ago but it still would be rather disastrous for the Greek themselves. For jobs and foreign investments it would be better to keep Greece in the euro, see my Economic Plan for Europe (September 2011).
Remember the political process as seen in Angela Merkel’s mind or shoes: She needed to impose budget discipline on the other Europeans. The 2011 average of 83% Debt / GDP is too high, and Italy with 120% is unsound. To spend money in order to grow could have destroyed the polical pressure for budget discipline. Merkel’s only tool were the markets. The rising rates of interest forced countries to surrender some souveignty to Brussels. Now that some mechanisms are in place there is scope to discuss growth and employment. These topics are already on the agenda for the EU heads of state and government in June. Now Hollande and Greece argue for that growth agenda but it was already planned. Surprisingly, Sarkozy did not benefit from those plans.
I am not convinced that this was the only conceivable process. It is not unlikely that a growth agenda like in my Economic Plan could have been combined with more austerity. But I am not in elected position so perhaps I speak from whimsical luxury. Nevertheless, a growth agenda is not formulated easily either, see that Economic Plan. For me it seems that Hollande and Greece are whimsical in being vague about their ideas for environmentally sustainable growth and employment.
NRC-Handelsblad today has an interview with Elio di Rupo, prime minister of Belgium. He correctly states that the funds for the stability funds could be found so that this should not be impossible for investments for growth and employment. With Hollande he doesn’t feel alone any more. Yet Belgium has a debt / GDP ratio of about 100% and if Belgium could find those investments funds, why wait for Europe ? Di Rupo doesn’t seem to understand that there is a need for national investment banks that attract funds by generating profitable venues.
Hollande will meet with some opposition from Holland. The fear will again be that funds will be squandered in France and Southern Europe instead of invested wisely. Holland also censors science. Perhaps Di Rupo can help his friends Hollande and Holland. There is now a new book in Dutch Democratie & Staathuishoudkunde (“Democracy & Political Economy”). Those who can read Dutch like Belgians can check again why it is wise to boycott Holland till the censorship of science is lifted.