As expected France lurched to the left yesterday and elected François Hollande as its president, the first Socialist since François Mitterand in 1988.
Hollande beat the colourful incumbent Nicolas Sarkozy comfortably in the end by about 52% to 48%. This followed an indecisive first round a fortnight ago when Hollande managed 28.6% and Sarkozy just 27.2% against eight other candidates.
Sarkozy is the first serving president to be denied a second term since Valéry Giscard d’Estaing in 1981.
Significance for Europe is profound. Recent European Union economic policy has been largely driven by the strong accord between Sarkozy and Germany’s chancellor Angela Merkel, both from the right.
How president-elect Hollande and Merkel — leaders of Europe’s two largest economies — will work together remains to be seen. But the differences in their philosophy are too great for anyone to expect affaires comme d’habitude.
Hollande has been proudly Socialist throughout his career. He has not backed off during this hard-fought campaign. His policies include:
- Fiscal intervention to encourage production and jobs
- A new 45% tax bracket on incomes above 450,000 euros per annum
- Taxing incomes above one million euros at 75%
- Increasing capital gains taxes on banks
- Renegotiating treaties with Switzerland, Luxembourg and other nations to target wealthy tax exiles
- Outlawing stock options and management bonuses
- Restoring the retirement age to 60 for workers of more than 41 years
- Reducing the share of nuclear power for electricity from 75% to 50% in favour of renewable energy
- Renegotiating the European Union fiscal pact to include the creation of eurobonds to fund infrastructure projects, a financial transactions tax and using the European Investment Bank to back small businesses.
Exactly how many of these Hollande manages to implement of course also remains to be seen. But Europe will not be the same again.
What Hollande’s ascension means for Australia is probably very little. He is not expected to shift France’s foreign policy significantly. His only major commitment was to withdraw French troops from Afghanistan by this year’s end.
So the two nations will continue to collaborate at the UN, the OECD and the science academies and compete at le Tour de France and the world’s wine shows.
Where primary interest lies for Australia and other free enterprise economies is in France’s economic fortunes under Hollande’s Socialist program.
Although Australia is seldom mentioned specifically, the fiscal interventions Hollande supports are like those implemented Down Under in 2008-09. They are the high impact packages which Professor Joseph Stiglitz and others believe saved Australia alone in the Western world from the global financial crisis.
Australia remains the leading OECD country on nearly all economic indicators, certainly well ahead of France and Germany. Australia’s growth for the last four quarters has been 2.3% compared with 1.41% for France and 1.5% for Germany. Australia’s jobless rate is currently 5.2% compared with 9.8% and 7.4% respectively.
Debt to GDP, which seems to be a fixation for Australians hostile to the current government, is only 22.3% in Australia compared with France’s 85.5% and Germany’s 81.2%.
If Hollande’s program succeeds, this will tend to confirm that Australia’s experience was no fluke. Nor attributable to trade with China or other factors as often postulated without empirical evidence. It may then provide the pattern for other countries in Europe and elsewhere.
But for a while, the Champagne will flow in reformist arrondisements.
One bizarre sidebar to yesterday’s elections is the phenomenon of voters turning out to post a “vote blanc” or informal vote. Where voting is not compulsory, why bother?
In yet another quirk of Gallic democracy, this is a right taken very seriously indeed. In the village near Nîmes where I watched the sacred ceremony of the formal count — along with 10% of the village’s population — the votes blancs were 11% of all votes cast. What message does this send? And to whom?
“It is a message to whoever wins,” explained one citoyen. “We are not happy with you, nor with your opponent. But we are still voting, and we will vote again next time.”