The most historic element of president François Hollande’s press conference on Tuesday was almost lost in the flood of verbiage and the fascination with his love life. Hollande has completed his ideological metamorphosis, his “coming out” as a social democrat.
At his previous press conference last May, Hollande refused to call himself a social democrat. “I’m a socialist. Do I need to say social democrat? Would that be better?” he asked defensively.
Only in France, where the legacy of Marxism still clings to socialism, does the nuance matter. "I'd said I remained a socialist," Hollande recalled on Tuesday. "I was elected with the support of the socialist party, of the left. I became president while remaining faithful to my convictions. Am I a social democrat? Yes. I haven't been won over to liberalism; on the contrary. It is the state that is taking the initiatives."
Right turn
But if Hollande is not a liberal, the methods he now advocates to right the French economy – €35 billion in business tax cuts and €50 billion in cuts in government spending – certainly resemble liberalism.
Hollande’s endorsement of supply-side economics was more stunning than his timid acceptance of the social democratic label. Without attribution, he vaunted the ideas of the 19th century French liberal economist Jean-Baptiste Say: “The time has come to solve the main problem of France: production. Yes, I said production. We have to produce more. We have to produce better. So it is on supply that we must act. On supply! It is not contradictory with demand. Supply creates demand.”
Hollande lamented that French companies’ profit margins are at record lows, and stressed the importance of cutting production costs to spur employment, ideas more akin to Reaganomics than the Socialist Party’s traditional Keynesianism.
"In the history of the left in power, no one had ever affirmed clearly that one must begin by creating wealth," Matthieu Croissandeau commented in Le Parisien newspaper.
Reality forced the previous four French presidents to change economic policy about two years into office. Hollande's shift is deemed as important as the abandonment of the "relaunch of popular consumption" by François Mitterrand, his socialist predecessor, and its replacement with the "tournant (turning point) de la rigueur" in 1983.
By stealing policies the conservative UMP preaches but never enacted, Hollande has sown confusion on the right. Former prime minister Jean-Pierre Raffarin welcomed Hollande’s announcements. “When I hear talk about supply-side policy, support for business, simplification, I’m ready to say, ‘Yes. That’s the right direction for France’,” he said.
But UMP leader Jean-François Copé earlier warned business management group Medef against accepting the “plate of lentils” represented by Hollande’s offer of cuts in social charges. “What is the credibility of François Hollande, who hasn’t stopped doing the opposite . . . since he became president?” he asked. “He has increased charges on labour and investment as never before in our history.”
Measures praised
The fact that Medef and the European Commission yesterday praised the measures announced by Hollande strengthened the conviction on the far left that Hollande has betrayed them. Hollande's new policy represents "the dynamiting of the French republican social model," said Pierre Laurent, head of the Communist Party.
Hollande, as usual, sent mixed signals. He justified his business-friendly policies on the grounds that wealth must be created before it can be redistributed. He repeatedly called his own economic policy “progressive” and described his 2012 speech at Le Bourget, in which he called finance “the adversary” his “reference”.
Business good; finance bad, was the message conveyed. “Finance is in no way affected” by the breaks he’s giving business, he said, enumerating measures taken against finance.
Hollande’s transformation is believed to have been motivated by the realisation France was about to miss out on the global recovery. It’s not clear how much is genuine conversion and how much it represents views he long held in private. Hollande’s reputation for vagueness is well established.
“About vagueness, yes, I’ve heard it a lot,” he admitted. “And not only for the last 18 months. But I see the constancy that is mine since the beginning, including in the social democratic vein, that some hadn’t noticed.”
