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January 16, 2014

'France by the Numbers'

Paul Krugman:
France by the Numbers: “You shall not crucify mankind upon a croissant d’or.” That was Alan Taylor’s response (in correspondence) to François Hollande’s embrace of Say’s law — he literally said that “supply actually creates demand” — together with a shift to, again in his own words, supply-side policies. Kevin O’Rourke also weighs in, as did Ambrose Evans-Pritchard . ...
The amazing thing to me, aside from Hollande’s haplessness, is the extreme pessimism that has evidently enveloped French elite opinion. You’d think that France was a disaster area. Yet the numbers, while not good, just aren’t that dramatic. ... [presents evidence]...
Again, things aren’t good. But you do have to wonder why the French elite is so easily intimidated into making a hard right turn while the elites of much worse cases like Finland and the Netherlands remain steadfast in their notion that the worse things get, the more committed they have to be to inflicting further pain.
Update: Dean Baker:
The Austerians Take Over the NYT's News Pages: The Case of France: The New York Times news section praised the decision by French President François Hollande to cut social welfare spending and taxes in the same way that sports reporters trumpet the performance of the local team's quarterback. The article described the plan as moving in "a centrist direction" and said that "economic experts" were "gratified that Mr. Hollande finally seemed willing to wrestle with France’s intractable unemployment."
Really? Cutting spending when France's economy is still far below full employment is considered a pro-employment move by economic experts? Do these experts have any evidence to contradict the now vast literature, much of it produced by the International Monetary Fund, that shows such spending cuts will reduce growth and raise unemployment? (Paul Krugman does a nice job summarizing the case this morning...)
The point here is that the NYT is acting as a mouthpiece for the agenda of the right-wing in Europe. It is presenting a position that has been decisively defeated in the economic debates of the last five years as the consensus within the economics profession. If anything, the consensus view within the economics profession is that Hollande's program will slow growth and raise unemployment. France's economy needs more demand, not spending cuts.

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