Liberal vs populist economic policies in France 2017

20 December 2016

Renee Buhr  - Department of Political Science, University of Saint Thomas

Whoever is elected as President in April is set to introduce a break from business as usual in French economic policy

On November 20 and 27 2016, Les Républicains – a collection of parties of the right and centre – held open primary elections to determine their candidate for the French presidential elections scheduled for 23 April 2017.   The results of these primaries were surprising on at least two counts.  First, polls leading up to the primaries put Alain Juppé and Nicolas Sarkozy in the lead among the seven candidates.  However, François Fillon gained the largest share of the vote in the first round, sending him into the second round alongside Juppé, the long-presumed front-runner, and pushing Sarkozy out of the running.  In the second round Fillon won by a large margin (66.5% to 33.2%).  As with the polls leading up to the Brexit vote and the American presidential elections, the polls appear to have failed to accurately capture electoral attitudes and the opinions of those voters most likely to turn out.  As noted in Robert Zaretsky’s recent article in Foreign Policy, ‘France’s zombie Catholics have risen – and they’re voting‘; turnout in France was high in traditionally Catholic areas that favoured the avowedly Catholic Fillon and low in the urban and southern areas most likely to vote for the centrist Juppé.

Second, it appears that the French presidential candidates on the right will now engage in the tug of war between liberal and populist economic models in ways witnessed in recent elections elsewhere.  Fillon is often characterized as liberal in his approach.  Marine Le Pen, his likely opponent in the second round run-off, meanwhile has moved the economic policy platform of her father’s Front National (FN) party from a strict neoliberal approach to a populist one, meant to appeal to disaffected leftist, working class and unemployed voters who have been largely left behind in the process of globalisation.

Fillon’s reputation for liberalism is one he disputes, claiming that his opponents and critics are using the term as a pejorative and that he is simply a ‘pragmatist.’  His plans for increasing aid to families can be cited as a counter to this narrative, so sweeping references to Fillon as an ultra-liberal or even ‘Thatcherite’ thinker should be taken with a grain of salt.  That said, he frequently refers to his economic plan as the most ‘radical,’ and claims that the conditions in the French economy require a significant break with past practices.  His policy proposals largely indicate a small government, low taxation and free market approach to economic policy, while his campaign rhetoric takes aim at the usual ‘boogeymen’ cited by liberal politicians – government regulations, public expenditures, high taxes and public sector institutions and employees.

‘Let us work! Have confidence in us! Free us from useless rules, exorbitant charges, excessive taxes, from absurd regulations! Free us from the RSI, URSSAF, the ARS [organizations that manage the social safety net and health care systems]’  This rhetoric is common in Fillon’s speeches.  He has referred to government regulations as ‘vampiric,’ sucking the will out of employees and enterprises, and criticised the purported arrogance of public servants.

Decreases in government expenditures and tax breaks are a key element of his programme: these include a €100 billion decrease in public spending over five years, a €40 billion decrease in business and employment expenses, €10 billion in new tax breaks for households, and an end to the ISF, a tax based on personal/household wealth.  He argues for eliminating the 35-hour working week, for allowing firms and employees to determine working hours in the private sector, and calls for more working hours in the public sector (from 35 to 39) along with a gradual decrease in total public sector employment of up to 10 per cent of the current workforce.  All of these initiatives are put forward as a means to spur investment and deal with France’s relatively high rate of unemployment (which Fillon typically compares to Germany and the United Kingdom).  Likewise, he proposes cuts to unemployment insurance, with automatic decreases in unemployment benefits over time.  He also cites a number of free market and private funding initiatives in other policy areas, including health care, culture, and education.

Such a free market/small government approach poses risks for Fillon in the current volatile political climate.  On the one hand, we could view electoral support for Fillon in the primaries as a dismissal of the usual economic policies traditionally proposed by mainstream right and left parties, which retain a strong role for the government in directing the economy and maintaining the social safety net.  However on the other hand, Le Pen and her FN party have been riding a wave of anti-globalisation sentiment that provided them with their greatest electoral successes yet in the 2014 European Parliament elections.  Were it not for the tendency for the French mainstream parties and electorate to run and vote strategically against the FN, it is likely they would have secured regional governments as well in 2015.

In a 2015 special issue of French Politics dedicated to examining the rise of the FN, Gabriel Goodliffe noted how the party has benefited from Euroscepticism and anti-globalisation sentiment that has been on in the increase in France since 1992 and particularly since the global recession.  The European Union, with its open trade and austerity policies, became a scapegoat for the persistently high unemployment rate, the whittling away of the welfare state, and the pain of austerity measures.  Seeing an opportunity, the FN adopted economic policy proposals that Gilles Ivaldi refers to as ‘economic egalitarianist’ – promises to raise wages, bring jobs back to France, and decrease income inequality – and ‘economic nationalist’ – protecting French economic interests against external threats such as immigration and EU policies.

Marine Le Pen and the FN will not post their updated policy programmes until February.  However, a review of their recent press releases and the previous party programme illustrate the policies that have gained the FN a reputation for populism.  Policy proposals include raising wages and retirement benefits, progressive VAT taxes, providing wider access to public services (especially in rural areas), ‘reindustrialising’ the country, and increasing aid to families, particularly those with two or more children.   The FN also has policies they place under the umbrella of ‘economic patriotism.’  These include ‘intelligent protectionism,’ a ‘buy French’ campaign, regaining control of the currency by exiting the Euro, and requiring national preference in employment, housing and benefits.  Many of these proposed policies are intended to address unemployment and to regain economic sovereignty from the EU and international capital.

At this point in the race, many assume that candidates on the left have no chance of winning, citing Parti Socialiste President François Hollande’s low popularity levels and the party’s poor performance in the 2015 regional elections.  However, if there is one thing recent elections have taught us, it is that projections such as these may be entirely wrong.  For this reason, I have focused on the right wing candidates and presumed front runners in this blog, but will post an additional blog on the left and centre candidates after the Socialist primary is held in January 2017.

What is clear at the moment is that the general election is likely to feature intense discussions of the appropriate economic model to carry France into the future.  Both Le Pen’s populist model and Fillon’s liberal model would constitute a break from ‘business as usual’ in French economic policy, and we can reasonably expect at least one of these models, if not both, to hold centre stage in general election debates.

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