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AMERICAN.COM

A Magazine of Ideas

How Sarko Can Rebound

Tuesday, April 1, 2008

Though his party fared poorly in recent elections, Nicolas Sarkozy’s reform agenda is still relatively popular.

French President Nicolas Sarkozy’s recent state visit to the United Kingdom was, by most indications, a success. At home, however, Sarkozy faces looming problems. In 2007 he won an important battle with France’s unions over pension reform, but other labor-market reforms have remained elusive. On a political level, his center-right party fared poorly in municipal and regional elections last month.

These elections were not a rebuke to Sarkozy’s pragmatic economic reforms. Rather, French voters seem disenchanted with his incessant globetrotting, romantic dalliances, and luxurious personal life. Indeed, Sarkozy often gives the impression of being a glitzy politico who is rather detached from France’s pressing structural problems. In the wake of his party’s electoral rebuke, he appears to have realized this and is working to adjust his style.

What the French want in their president at the moment is not ideological purity or glamour. Instead, they are looking for a technocratic reformer who implements pragmatic policies in order to boost the French economy. The public’s hardening attitude toward unions in last year’s standoff over pension reform is illustrative of a broader trend: an increasing number of Frenchmen believe the economic status quo is unsustainable.

This is evident even in debates over the retirement age. Sarkozy’s government wishes to increase the retirement age, while labor unions are demanding that he first increase the employment rate of those aged 55 and over. Currently, that rate is 38.1 percent in France, compared with a European Union average of 43.6 percent. “An improvement in the employment rate of seniors is a condition before we can think of lengthening the contribution period,” French union leader Jean-Louis Malys told Reuters. Of course, the only way to increase employment among the elderly is to reform France’s labor market, so the country stands to benefit either way.

What the French want in their president is not ideological purity or glamour. They want a technocratic reformer who implements pragmatic policies to boost the French economy.

But what should we make of spats over truly minor (though highly symbolic) reforms, such as efforts to liberalize the Parisian taxi market? As Le Monde editorial writer Daniel Cohen recently wrote, there are fewer taxis in Paris today (15,000) than in 1925 (25,000). No Parisian, writes Cohen, “can hope to get out of his apartment and hail a cab to take him to the airport or for a meeting downtown.”

Indeed, prices for rides are high, supply is low, and, as Sarkozy himself has noted, Paris is one of few major cities in the world where hailing a cab is exceedingly difficult. Attempts to open up this market have run into significant opposition from cab drivers who paid between 150,000 and 200,000 euros for a taxi permit. They do not want new entrants to break into the market on the cheap when they paid so much. One obvious solution is to provide the cab drivers with compensation and then massively increase the supply of new permits in a bid to bring down prices. This is difficult at a time of tight budgets, however.

Moreover, given the sluggish state of the French economy, there are many such groups who must be bought off in order to pave the way for real structural reforms. But buying them off is preferable to maintaining the status quo.

Luckily for Sarkozy, the French public at least tacitly approves of his reform agenda. If he can tone down his ostentatious personal life and govern more like a technocrat, the prospects for structural reform in France look good indeed. Liberalizing the Parisian taxi market, though, may have to wait.

Jurgen Reinhoudt is a research assistant at the American Enterprise Institute.

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