April 08, 2022
The New York Times has routinely exaggerated the problems faced by France and other European countries with generous welfare states. Given this history, it should not be surprising that it effectively endorsed French President Emmanual Macron for reelection in a news article.
The piece implied that Macron’s presidency, which involved rolling back the welfare state in many areas, has been a great economic success. While it tells stories about start-ups booming, the only piece of economic data it shares is that France’s current 7.4 percent unemployment rate is the lowest in a decade.
This is not evidence of great success. France still had not gotten its unemployment rate down to its pre-recession lows. In the United States, which had a slow recovery from the Great Recession, the unemployment rate had fallen below its pre-recession low by the middle of 2017.
The weakness of France’s recovery can be seen even more clearly by looking at the employment rate for prime age workers (ages 25 to 54). It peaked at 83.2 percent in 2008. It’s currently at 82.4 percent. While there are many factors other than a president’s policies that effect growth and employment, this is not evidence of a strong economic performance by France.
The piece also caricatures François Hollande, Macron’s Socialist Party predecessor. He presents an apparently famous quote from Hollande: “My enemy is the world of finance.” The piece implies that Hollande didn’t appreciate the need for a financial sector.
Hollande surely recognized the need for a financial sector to allow businesses to get the capital they need to grow. He also recognized that the financial industry can also become bloated and corrupt and is a major source of inequality in the economy. An efficient financial sector is a small financial sector, with as few resources as necessary going to allocate capital.
The problems of the financial sector are widely recognized by economists and people who lived through the collapse of the housing bubble in 2007-2009 and the resulting financial crisis. This is the reason that Congress passed the Dodd-Frank financial reform bill. All the proponents of this bill understood the need for a financial industry, as did Mr. Hollande. It is absurd to imply that he somehow did not understand its role in the economy.