BLOG POST #15 - Austerity

     This year France held its presidential elections. The two front runners were incumbent Nicholas Sarkozy and challenger Francois Hollande. These two candidates represent the two main parties in French government being The Union for a Popular Movement and The Socialist Party respectively. The UMP being politically centre-right and the Socialist Party being centre-left. Sarkozy lost out on serving a second term in office by a very small margin of approximately 51% to 49% of the popular vote in the second round of the election between just the two candidates. 

     This puts France in a very interesting position both politically and economically. First of all any decision made by France is extremely important to the entire Eurozone, especially countries like Greece and Portugal who are suffering economically. This is because France and Germany are the two largest economies in the Eurozone and are the two front running countries in trying to solve Europe’s debt crisis. This new government will create a very interesting contrast as Germany is advocating austerity measures while Hollande and France’s new government opposes it. Being slightly to the political left, the Socialist Party is all for decreasing disparity and the continuance of government programs. They intend to do this by increased taxation of the rich and corporations while simultaneously creating thousands of government sponsored jobs. This is different from what Germany is currently doing, which is cutting government spending on social programs to lower the debt. 

     Though France’s economy is comparatively strong and large, it still has massive foreign debt. I believe that France should continue with measures of austerity to lower the debt before they worry about the expansion of social government programs. There is much skepticism that Hollande will be able to keep many of the promises made in his campaign. How when France has massive foreign debt will the government be able to increase spending on social programs, is the main question. This leads me to believe that his anti-austerity platform is merely a political scheme to get him elected to office. While austerity measures are largely unpopular to the general public, they are necessary to pull the Eurozone out of its debt. Hollande has capitalized on the public’s dislike of austerity to get himself elected to office. I believe over the next couple of months we will see Hollande go back on many of the promises made in his campaign. 

     Greece also held presidential elections where we saw an anti-austerity government elected. This only furthers my belief that it is merely a political scam, because austerity measures are even more unpopular in Greece then they are in France.