The French are fried…

So I’m not a huge fan of France and I’ve definitely been laughing my ass off since they voted in Hollande. Well as things are starting to develop over there I found two articles that speak to the deep fry logic they are embroiled in. Now if you think “Fuck it,it’s France” I beg you to pay attention. For as it is in Paris it soon may well be in D.C. and that should concern any American.

First tell me if some of these items sound familiar to American ears.

“…most important effort made for 30 years”

…two thirds of the savings are to come from tax increases, and only one third from spending cuts.

…spares the middle-classes and the less well-off: the only ones who lose out, he said, are the richest 10%.

…know full well that other measures in the budget hit everybody, including increases in taxes on cigarettes and beer

…namely to allow certain tax exemptions on companies that hired young workers from [areas] with high unemployment.

…discourages them from taking on new workers. This must be because the cost of their labor is, thanks to the taxes, higher than its economic value. Only by lowering the taxes can their labor be made economically worthwhile for an employer.

Lines 1-4 come from The Economist

Numbers 5&6 come from a  City Journal article by Dalrymple

I highly recommend both and I DO believe the words resonate with what’s happening in the USA. We are not experiencing the riots and more tumultuous protest marches seen in Europe,at least nothing tied to the economic policies of our nation anyway. Undoubtedly some city somewhere in America will burn a little soon enough secondary to a baseball championship game.The fact remains though that the economic policies being touted here in the States do indeed mirror a level of Euro-fryness and that isn’t good for anyone.

I’d love to expand on this post but I am quite simply too pressed for time in the real world. Please enjoy this sampler and feel free to offer comments. Alfie



  1. Rutherford says:

    I don’t have the time right now to peruse the articles that back up your post but I guess the obvious question is … has austerity worked anywhere? Not that I’ve heard.

  2. Alfie says:

    Well the easiest and most pointed piece is the City Journal one.
    As for your question just to name a few…
    The USA in the early 1920’s under Harding
    Latvia (although that one has some harsh critics re unemployment #’s esp.)

  3. Rutherford says:

    Mmmmm, the early 20’s? Austerity? I thought it was called “the Roaring 20’s” due to wild economic growth, not austerity … and then we see what that led to in ’29.

    I do recall Harding and some “return to normalcy” and an isolationist foreign policy (no doubt as an over-correction for involvement in WWI) but I don’t recall Harding and austerity ever being in the same sentence. I’ll have to do some research.

  4. Alfie says:

    He was facing a recession and cut spending. Much of the spending can probably be linked to winding down defence spending but the looming recession could also be linked to it as well. its one of those great paradoxes Keynesians don’t like,or any other economist I imagine.
    the isolationist policy and his ham fisted in the dark stuff re Teapot Dome are his headlines. Fact is harding is a pretty good read if you can find balanced stuff and keep a context attuned mind.

  5. Rutherford says:

    I’ve read that Harding got unfairly smeared in Teapot Dome. BTW, Alfie … let’s not forget that Harding really was our first black President. 😉

  6. The trick, or method if you will, historically has involved surgical tax cuts, surgical tax increases, as well as a general reduction in spending. Thus, increasing productivity, which increases overall taxes collected. Trickle up theory to use an analogy tossed around for a while now. The reverse also being true causes an increase in the living standards for all those within the econometric zone of influence.

  7. Raji says:

    Re: your statement: The EU has reached the magic number of 11 (they needed only 9) to potentially introduce a transactions tax on their stock markets.

    Apparently France already passed the tax:
    “France’s parliament passed President Francois Hollande’s revised 2012 budget, including a 0.2 percent transaction tax on share purchases….
    The transaction tax, aimed at curbing market speculation, will be paid on the purchase of 109 French stocks with market values of more than 1 billion euros”

    That tax should eventually effect ADRs (America Depository Receipts). I can visualize the effect of curbing market speculation but am sure the financial industry will find a way to work around it. Also the tax will heavily hit the average day trader which in itself might not be a bad thing. The stockholder will bear the brunt of the tax not the brokers.

  8. Alfie says:

    Sweden did it and lost all their trading to the London Exchange,they repealed the law.

  9. Raji says:

    Good Point. It will be interesting to see what follows. Where would the EU move trading to if not the London Exchange?

  10. Alfie says:

    Big reason why the UK hates the idea of the tax. London is trying to be an even bigger hub than it is in the financial set.

  11. Rutherford says:

    I thought “trading taxes” were being considered in the US also. As I wrote in the comments section of my blog a few weeks ago, I agree with Raji that this will hurt day traders and that might not be such a bad thing.

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