Sarkozy out in France

The “conservative” era is officially drawing to a close in France, following Sarkozy’s loss yesterday to the Socialist candidate Francois Hollande in a run-off election. Here’s a glimpse at what the people of France voted for, via the Daily Mail:

The uncharismatic Mr Hollande, who has never held any ministerial office and is the first socialist to win the French presidency since Francois Mitterrand in 1988, has been an outspoken advocate of rewriting the plans to save the [Euro].

He wants a new ‘preamble’ written into the new European fiscal pact signed by 25 EU nations to water down calls for austerity measures.

He is demanding a change to strict rules which dictate how much member states can spend, without which most observers believe a new European economic crisis is inevitable.

After his victory he said that one of his priorities was to ‘preserve our social model’ – a reference to France’s generous welfare state.

The new president has pledged to spend an extra 20 billion euros in the years ahead to kickstart the economy and wants to slap a 75 per cent tax rate on those earning more than one million euros a year, or around £850,000.

Hollande’s victory is being framed as a vote to end austerity in France, and clearly reducing the deficit will not be Hollande’s top priority. But based on exit polling, and with the other conservative candidates in the general election refusing to endorse Sarkozy, the election seems to have been more a referendum on Sarkozy’s leadership than anything else. GDP growth in France has languished between 1-2% since the last official recession ended at the end of 2009, and their unemployment rate is the highest among G8 nations by a fairly wide margin.

So although I doubt a presidential election in France has ever foreshadowed an election outcome here in the U.S., there are obviously some parallels between Sarkozy’s situation and the electoral climate President Obama faces this year. While faring slightly better than France, GDP and employment growth have languished in the U.S. as well and unless the economy turns around dramatically, Obama is likely to confront the same sort of broad-based, voter discontent which was clearly a factor in Sarkozy’s defeat.

But the contrasts are interesting too with a far-left candidate in France riding a wave of voter discontent, and promising “change” in the form of increased government spending and higher taxes, in order to displace the more conservative Sarkozy. This sounds more like our election in 2008 but here we are 4 years later and President Obama’s policies have failed to effect any lasting economic growth. (Hollande can only dream of spending even a fraction of what Obama oversaw with the stimulus act.) With President Obama seemingly moving forward in the 2012 campaign with the same progressive ideas he’s been touting since 2007, Mitt Romney seems well-positioned to capitalize as the candidate of real change in this race, with a conservative framework for ramping up economic growth and ratcheting down the federal deficit. But just like in France, it remains unclear what sort of impact class resentment may have on the race. If Romney can neutralize this line of attack from Democrats (a tall order), and convince more voters that he has the best economic plan (an easier task), and barring any surprises, he should win in November. Easier said than done.