Expectations for French Socialist Presidential candidate Ségolène Royal have been high, and not just in France: many around the world looked for the elegant mother of four to propose initiatives that could re-launch France’s—and Europe’s—stalled economic engine. For economic reformers, the unveiling of Royal’s economic program earlier this month was a major disappointment. As it turns out, Royal is taking after her late mentor, François Mitterrand, France’s Socialist President from 1981 to 1995. Like Mitterrand, Royal seems bent on pursuing an economic program completely out of step with contemporary economic trends and globalization, believing it possible to create an alternate economic universe in France where normal rules of economic growth and behavior simply do not apply.

Royal’s proposals lack a “reformist” vision, and would expand the government’s activities into many new areas. She has said that “the jobless should continue to receive 90 percent of their salary for their first year of unemployment,” promised to “build 120,000 units of state-subsidized housing, offer every young person a 10,000 euro ($13,000) loan to get started in life, and offer free birth control for women under 25.” She has proposed to regulate bank fees, a move which has “infuriated the banking federation.” In addition, Royal pledged to raise pensions, increase the minimum wage to about $2,000 a month and guarantee a job or further training to every youth within six months of graduating. Royal’s promises are not tenable, but even if they were, they would hurt the French economy rather than help it.

Royal’s partner and father of her four children, Socialist party Secretary François Hollande, once said in a debate, “I don’t like the rich.” This past January, he proposed a tax hike for those making more than 48,000 Euros per year (about $60,000) after taxes. So far, Royal has refused to follow her partner’s lead, but she may have other ideas on how to obtain the money necessary to finance her proposals.

She has floated the idea of “an exceptional tax on the super-profits of oil companies” to fund public transport. And a report recently prepared for Royal’s camp floated a creative proposal—a “citizen contribution” (read: tax) for all French citizens residing abroad. The “contribution” would be designed to collect revenues from all French people residing abroad, irrespective of their reasons for leaving France: businessmen, families, retired workers, successful artists, etc. would all be affected.

Former finance Minister Dominique Strauss-Kahn laid out the rationale: “It is no longer acceptable that French citizens be able to escape taxes by installing themselves outside of France. We propose to define a citizen contribution that will be paid in accordance with contributive capacities by each Frenchman residing abroad who does not pay taxes in France.” No word yet on what the tax rate would be if the tax were to be instituted—that, no doubt, is la surprise du chef.

Like Mitterrand, Royal seems bent on pursuing an economic program completely out of step with contemporary economic trends and globalization.

The report contains other Socialist gems: it recommends reversing the recent modest tax cuts for the 1% of Frenchmen who are “all the way at the top… [so that Socialists could provide] taxes that are more fair and more efficient, and spending which similarly serves the general interest.”

It was Royal’s mentor François Mitterrand who passionately proclaimed, at the 1971 Socialist Party Congress in épinay sur Seine, that “violent or peaceful, the [Socialist] revolution is first and foremost a rupture. The one who does not accept the rupture, the one who does not consent to the rupture with the established order, with capitalist society, that one cannot be an adherent of the Socialist Party.”  

In the early 1980s, after Mitterrand had become President, his attempts to implement this “rupture” with capitalist society resulted in massive capital flight, stagnant growth, rapidly rising unemployment, and three currency devaluations in 22 months’ time. For the past twenty-five years, Socialist and Conservative politicians alike have struggled to recover from that ill-fated economic experiment; France cannot afford another, and Royal should be careful.

In European politics, of course, left-wing talk often belies right-of-center action, and in recent years, “the left” in countries as varied as France, Germany, the UK, and Italy has garnered an impressive record of reform. French Socialist Prime Minister Lionel Jospin (his far-left rhetoric to the contrary) privatized more than any of his center-right predecessors. Left-of-center German Chancellor Gerhard Schroeder slashed income and corporate tax rates. British Prime Minister Tony Blair, of the Labour Party, has governed as an economic pragmatist who has challenged the “green” agenda of the “conservative” opposition. And it was center-left Prime Minister Romano Prodi of Italy who privatized telecom company STET in 1997: at $17 billion, it was the largest privatization ever outside of Japan.

With any luck, Royal herself may join this club of unlikely free marketers, but at present it seems highly unlikely. If she implements her Socialist rhetoric, like Mitterrand in the early 1980s, financial forces beyond her control will quickly force her to change. For France’s sake, it is a situation she would do well to avoid.

Jurgen Reinhoudt is a Research Assistant at the American Enterprise Institute.

Image credit: Photo by Flick user manuel | MC