Monday, 19 June 2017

The Legacy of Hollande

In 2011, after the election of Hollande, I published a post with a table depicting 13 OECD social and economic indicators on which I would judge his presidency. I also made a bet that 77% of them (10 out of the 13) would get worse. Meanwhile, the OECD abandoned some of the indicators and changed others. So, for consistency, I publish below a new table with the existing indicators before and after Holland to evaluate his mandate.



Out of the initial 13 indicators, the OECD now publishes only 8 but I added the debt/GDP ratio which is equivalent to the previous indicator to end up with 9 indicators to compare the pre and the post Hollande.

First, I lost my bet. Hollande was bad, but not as bad I had forecasted. Only 55% (or 67% if I count the current account evolution as negative) of the indicators worsened during his mandate.

Actually, the breakdown of the indicators to see where there was improvement and deterioration is more interesting.

The French economy did not do too bad under Holland, with the productivity gap in relation to the USA substantially reduced, the current account deficit kept at a low level and inflation substantially reduced.

In terms of public finances, Holland continued the socialist tradition of increased public spending. Its rise of 2.6 percentage points, to reach 57.9% of GDP, was partially financed by a higher tax revenue. However, it was not enough to prevent a 20% increase in public debt, which rose from 100% to 120% of GDP.

What is more significant is that in relation to social policies, which the left traditionally claims to be its priority, Hollande’s score was quite negative. With the exception of youth unemployment which fell from 20 to 18 per cent, the other social indicators worsened. Employment declined slightly to 63.8% of the working age population, while unemployment rose significantly from 8.3 to 10.3%.

Overall, one may say that Hollande’s zigzagging between traditional socialist policies and some forms of timid liberalization offsetted each other so that his legacy was not as dire as I had anticipated.

Let me comment briefly on his political legacy.

At the international level, Hollande’s performance was reasonable and aligned with the promotion of traditional western values.

The same cannot be said at the national political level. Apart from his matrimonial adventures and other minor internal affairs which may had weighted on his presidency ending with the lowest approval ratings of any previous president, his legacy will certainly be remembered by the eclipse of the socialist party and the emergence of Macron’s new centrist party.

To be fair, Hollande made some modest contribution to the victory of the new President.

So, his final political balance will depend on the failure or success of his successor to stop France from falling into left (Melechon) and right wing (Le Pen) anti-European extremisms.

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