François Hollande and Ed Miliband could be political blood brothers. Neither has held down a job outside politics for any serious length of time. Both have been political bag carriers, graduating to apparatchiks. Both have tried to compensate for their essential blandness by adopting radical left-wing policies. Both now pose as socialists, and tout genuinely big (if dangerous) ideas about capital, labour and society. The biggest difference between them is that Hollande won an election, and has been able to put his politics into practice.
So we can look to France to see the kind of future which may await Britain if, as the pollsters and bookmakers believe, Miliband is just over a year away from 10 Downing Street. It is frightening. Hollande’s presidency has been an unalloyed disaster; French unemployment is now over 10 per cent; among the young it is 24 per cent. His war on wealth creators has led to a collapse of foreign investment into the country — it has more than halved in the two years since he came into office. In the same period, it has trebled in Germany. While most countries in the eurozone think the worst is behind them, France fears that the worst is yet to come.
Hollande cannot be faulted for being serious about doctrine. He wanted to impose a 75 per cent rate of tax on the richest, and when the courts struck that down he imposed it on the employers instead. Rather than leading to a flood of revenue, it has put up a ‘keep out’ sign above France for anyone serious about starting a business. Success is penalised. Miliband’s proposed 52 per cent tax would do precisely the same.
Meanwhile, George Osborne is squeezing the richest better than anyone: the best-paid 1 per cent now contribute 30 per cent of all income tax collected, the highest share in history. The Conservative party’s secret? It cut the top rate of tax. France’s minimum wage is far more generous than Britain’s, but this has turned out to be a conspiracy of those in work against those who have never had it. This is why unemployment is so high among youths and immigrants (leading to the kind of despair seen, from time to time, in riots in the Paris banlieues). It has become common, when a French firm thinks of expanding, for the discussion to turn to how they can do so while taking on as few people as possible.
The recent local elections in France were a disaster for Hollande’s socialists, as they lost control 155 towns, including former strongholds such as Limoges and Toulouse. Just like François Mitterrand before him, Hollande is tearing up his left-wing agenda. Just as Mitterrand became a quintessential fiscal conservative, Hollande is veering to the right — having appointed a self-described Blairite, Manuel Valls, as Prime Minister and asked him to form a ‘government of combat’. Hollande has, in other words, been mugged by reality. ‘How can we run a country if entrepreneurs don’t hire?’ he asked recently. ‘And how can we redistribute if there’s no wealth?’
Indeed. Hollande now talks grandly about his ‘responsibility pact’ with French business, whereby he cuts taxes in return for them taking on workers. It is not working. This is what George Osborne has been doing: since entering office, corporation tax has fallen from 28 to 21 per cent. Employment has soared to an all-time high (defying the predictions of Ed Balls, who said hopes of such a jobs surge was a ‘fantasy’). Osborne did not frame this as a ‘pact’ and did not ask businesses to agree to create 1,000 jobs a day. He knew — as all conservatives know — that if you cut taxes, prosperity follows. It’s a formula that works everywhere it’s been tried.
Once, Miliband openly compared himself to Hollande and paid homage to him in Paris. He is less keen to do so now, but not because of any ideological falling out. Rather, Miliband has developed his own Hollande-style agenda and proposes to govern by issuing edicts to companies, telling energy firms what they should charge their customers and threatening similar orders to those he regards as ‘predators’. He has a very advanced and detailed business strategy — but seems to lack the support of a single prominent business leader. They sense the same happening in Britain as in France: a stick shaken at employers followed by a hiring freeze, mass unemployment and a fresh fiscal crisis.
Osborne has positioned himself as Europe’s leading fiscal conservative — which is a bit of a push, given the glacial pace of his own fiscal consolidation. But the tax cuts he has implemented, for businesses and workers, have seen employment figures rise in a way that Hollande can only dream about. Had Osborne made faster progress, the British economy would be doing better still.
Hollande was elected on the slogan ‘another way is possible’. But France has found out the hard way that, as Margaret Thatcher said, there is no alternative. If a government has grown out of all proportion to its usefulness, it must be cut back. No country has ever taxed its way into prosperity.
So the lesson could not be clearer: if Miliband wins the election, and implements his dirigiste agenda, Britain will be plunged into precisely the same crisis which now engulfs France. The stakes at the next election are terrifyingly high.
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