Sarkozy and I have one thing in common: neither of us will be elected President of France in April. The difference is that I don’t mind this in the least, and he does (his own unelectability, that is, not mine). That’s why Sarko has gone for the last throw of the dice, and he doesn’t even notice that the dice have rolled off the table of elementary common sense.
First, he announced a 1.6 percent increase in France’s VAT, a measure he claims will solve most of the country’s economic ills without increasing the price of goods. I must be a bit daft because I don’t get it.
As someone who spends a great deal of time in France, I buy quite a few things there. Until Sarko’s announcement I paid a 19.6 percent VAT on those things. Now I’ll be paying 21.2 percent, which to me looks like a higher number, though admittedly arithmetic never was my choice of school subjects.
Sarkozy bases his counterintuitive calculation on the example of Germany, where the same measure had the effect he expects to duplicate in France. Alas, he misses the point, the salient difference between Germany and France.
In the former they know how to reduce unit costs by increasing productivity; in the latter they don’t. Britain doesn’t either, not any longer, which is why, according to Sarko, she ‘has no industry’. If he compared the proportion of manufacturing in Britain’s and France’s GDP, he wouldn’t be as hasty to throw stones out of his own glass house, but — I know this from experience — when a Frenchman gets on his high horse about the ‘Anglo-Saxons’, nothing will make him dismount. Anyway, he has a point in absolute, if not in comparative, terms.
That brings me to the next bit of news: France’s decision to introduce the ‘Tobin’ tax unilaterally, which means that from next August every financial transaction in France will be taxed at 0.1%. That doesn’t sound like much, but when you’re talking billions this fraction of one percent may add up to serious money.
If the first bit of news affects me as an occasional resident of France, the second, I fear, may affect me as a subject of Her Majesty, coming as it does on the eve of yet another Save-the-Euro telethon. Dave Cameron’s much-vaunted fortitude to resist the ‘Tobin’ tax at the previous such event will now be severely tested, and — call me a sceptic or a cynic, your choice — I doubt he’ll pass the test.
On the surface of it, Sarko’s decision sounds downright crazy, the cutting off of his proverbial nose to spite his proverbial (and increasingly shifty-looking) face. After all, if France goes it alone, it’s a safe bet that, whenever possible, people will now transact their business elsewhere, making the Bourse (France’s stock exchange) even more marginalised than it is already. That would have detrimental, possibly catastrophic, consequences for the French economy, and even Sarko must realise this. He may be in his political death throes, but he isn’t quite brain-dead yet.
‘We want to set an example for all of Europe to follow,’ he claims, and I have that stinking feeling he means what he says. The ‘Tobin’ tax would hurt every European country, but it wouldn’t penalise France more than the others only if the others followed suit. Sarko must be confident that he and his morganatic wife Angela will be able to browbeat every EU member, including Britain who stands to lose the most, into bending over and submitting to this destructive tax.
I do hope Sarko’s confidence is misplaced; I fear it may not be. One way or the other, the plot sickens.
What upsets me no end is when he is called a conservative. First, there is no such thing in France — their political spectrum goes from what we’d describe as centrist to what we’d describe as lunatic left. The former finds its mouthpiece in Le Figaro; the latter in La Liberation and a raft of lesser Trotskyist sheets. His rhetoric aside, Sarko falls somewhere between the two, and, as his grasp of economics shows, he is certainly at odds with Figaro readers. Here is a typical letter to the editor (28 January):
‘As head of my own company, I always observe these simple rules: don’t spend more than you earn; borrow only to invest, not to cover current expenses or, even worse, service existing debts; look out for your employees’s benefits before your own. If only our governments could understand such simple principles!’
Yes, if only. That Sarko doesn’t share this philosophy follows from what he does, if not always from what he says. That no other European government, emphatically including ours, doesn’t follow it either is also clear. The question remains: will Dave now go further out on the euro-limb? Hold your breath.