Bashing the
French in a major article on their lack of business competitiveness, the Economist was the target of la colère en Paris in November 2012.
Just after the magazine’s warning that France could be the next danger-zone for
the euro due to relatively high labor costs and unemployment, Moody’s cut the
state’s rating to Aa1 from Aaa and kept a negative outlook on the rating.
Moody’s cited the state’s economic weakness and the risks to the finances of
the state government “posed by” France’s “persistent structural economic
challenges.” In this way, Moody’s analysis dovetails with that of the Economist. Both pointed to a sort of
impotence in French industrial policy. Moody’s decision excluded factors from
the broader debt crisis in the E.U., focusing instead on the French
government’s continued “reliance on borrowing to finance generous
social-welfare programs” even as businesses in the state were laying-off
employees. In other words, Francois Hollande had not gone far enough in his
policies to make a dent in the state’s deficit as well as the downward
trajectory of French competitiveness in the E.U. Meanwhile, deteriorating economic
conditions in the E.U. were effectively closing the window of opportunity on even
a one-party government being able to enact substantive reform. I contend that
the gap between what the Socialist party could
do, given its absolute majority in the legislature, and what it was actually
doing contributed to the criticism.
The full essay is in Essays on the E.U. Political Economy, available at Amazon.
