Saturday, June 18, 2011

The National Front's economic policies

I had some fun doing the last post, and it got me through some documents of the Front National's program for the presidential election. The entire program is here, and I have to say, the site looks nice.

Now, the last post was quite long, and there were some things I did not mention.

First, on other policies that are not related to mondialization or protectionism, the justice part is quite striking if you think that France prides itself in being the source of human rights:

  • Réhabiliter la notion de peine prompte et incompressible
  • Rétablir la peine de mort pour les crimes les plus graves
  • abaissement de la majorité pénale, renforcement de la justice des mineurs
  • Expulser les ressortissants étrangers condamnés qui purgeront leur peine dans leur pays d’origine. 

Anyway. I want to go back to the economic program and argue against several things that are said in the FN program

Apparently, Germany is using competitive deflation, i.e. maintaining low wages artificially, and that is bad for France. Germany is doing this because they know we cannot devalue because of the Euro.  That is obviously clear from the fact that wages have grown at the same rate in the past 4 years. And if you look in the past, the numbers are actually against Germany, see the study over 1996-2000 here, table 1.


L’euro ne nous a pas protégés non plus dans la crise. Au contraire : récession ici plus forte et rapide qu’ailleurs (2009 : –4% de récession contre –2,6% aux Etats-Unis). La croissance repart dès 2010 et fortement au Royaume-Uni, pas ici.

That is not clear on unemployment for instance. Given the graph below, from NPR, who did worse in, say, jobs performance?

And as for the comparison with the United Kingdom, well, you don't really want to be there.
Retail sales plunged 3.5 percent in March, the sharpest monthly downturn in Britain in 15 years. And a new report by the Center for Economic and Business Research, an independent research group based here, forecasts that real household income will fall by 2 percent this year. That would make Britain’s income squeeze the worst for two consecutive years since the 1930s. 

As for inflation: this is France
This is Great Britain
Hint: look at the right scale. Note that in another paragraph, we are told that France will not do any austerity program. So where's the comparison with Great Britain? Should we do like them or not? I am lost. Oh, on Great Britain, one awesome sentence:

le Royaume-Uni a dévalué sa monnaie de 20%. Y-a-t-il une hausse de 20% des prix dans ce pays ?

Yeah! Sounds logical, doesn't it? Well, there's no reason at all for the prices to actually move is the UK was in autarky. Now, the UK is not completely in autarky. I don't know where this 20% comes from, but then, if that is true, you can't use it as an argument that prices have not increased in the UK, given the graphs above...


Retrouver la liberté monétaire nous permettra d’utiliser l’arme monétaire face à la crise, comme 95% des pays du monde le font.

Because interest rates at 1.25% are too high for France? What would be the policy of the French Central bank? But monetary policy is a magic wand, because if France exists the Euro and devalues, all other things will be equal:

l’utilisation de l’arme monétaire nous permettra de ré-oxygéner une économie aujourd’hui asphyxiée par l’euro : relance des exportations, de l’investissement, choc de confi ance, relance de la croissance, de l’emploi et donc baisse des défi cits et de la dette.

Apparently, the government's economic policy has reduced France's market share in the world from 5% to 3.5%. This is not due at all to the catch-up growth of emerging markets. Say, the fact that China surpassed Germany as the world's lead exporter in 2010?

The National Front wants a return to the Gold Standard. I gave you a couple of links in the last post. I forgot tu put this graph on:

Before returning to the gold standard, of course, we must exit the Euro. And this will be easy, since the exit of the European Monetary System in the early nineties went smoothly! Thank you Natixis, for an interesting report from last year:

For the “strong” countries (Germany, etc.), the cost of an appreciation of the exchange rate today would be even more dramatic than in 1992; for the weak countries (Spain, Greece, etc.), the cost combined with the rise in interest rates would outweigh the advantage of a devaluation.

For instance, there was large freedom for a fall in interest rate at the time, compared to today:

Note that after the return to the gold standard, good luck with decreasing the interest rate in times of depression.

Baaaah. That's a bad set of pdf that you have there, National Front

1 comment:

  1. She is wrong about everything. About a goldsandard, that is fine, as long as it is the market issuing it in a system of competing currencies.