The Question for Europe


 The shrinking outlook on Europe with its high unemployment especially in the younger graduates cannot be sustained forever. 

Sorman raises optimism for its recovery, but much remains to be proven.  The sovereign debt keeps rising and after many bailouts Greece is hanging by a thread.


Guy Sorman: Why Europe Will Rise Again      Link

France's foremost free-market economist says that Europe's leaders won't let the euro fail, and the EU will save France from the French.


Mr. Sorman's case for the EU boils down to something you hear often from an Italian, or a Belgian and other citizens of ill-governed EU states and almost never from, say, a Dane or an Englishman. "Only Europe can protect the French from the French," he says. "If we weren't part of Europe, imagine our electricity bill or our phone bill. We might not even have the Internet."


"For me," he adds, "Mr. Hollande is quite the conservative bourgeois type of provincial France—the people who hate money, who hate capitalism, who hate business. They think all these ideas are quite foreign to French culture and French genius." Much of the French right has also stayed faithful to what's called "a certain idea of France." From Charles de Gaulle on, presidents have glorified the small shopkeeper and kept their distance from more cosmopolitan CEOs of multinationals.


As with Europe, Mr. Sorman takes a longer view. Upon coming to power in 1981, France's first and last Socialist president, François Mitterrand, nationalized industry and banking, thrice devalued the franc and threatened to pull France out of the European common market. Two years later, he reversed course. The current crop of Socialists "are not extremists anymore," says Mr. Sorman. "The big difference today with the 1980s is that nobody believes in socialist solutions. This alternative has disappeared. The only alternative is status quo—or a return to traditions of French entrepreneurship."


Mr. Sorman offers two hopeful scenarios. In the first, the new president uses a fresh electoral mandate to liberalize rigid French labor markets, streamline the entitlement state and improve conditions for doing business. His support from public unions can shield against a backlash. Gerhard Schröder, the center-left German chancellor, pulled off this Nixon-to-China trick a decade ago and laid the foundations for Germany's economic renaissance.


The early signs in France aren't encouraging for the small band of free marketers. In addition to various planned tax increases, the new government has proposed to protect industry and resisted spending cuts.


Yet Mr. Hollande's promise to bring the budget deficit to 3% next year from 4.5% to meet the euro-zone fiscal rules shows that the government knows it has to keep financial markets happy. His falling poll numbers reflect growing economic anxiety that might force his hand. The economy is spiraling down so fast, says Mr. Sorman, that France will be forced "to revert to free-market solutions." This is his other optimistic scenario.


"It's very rare that a nation chooses decline," he continues. "I don't think the French will choose decline. It's a young nation with many young people who want to find work."


De Gaulle had a famous line about the impossibility of governing a country with "246 different kinds of cheese." Mr. Sorman sees it differently. "The problem," he says, "is not the number of cheeses. The problem is the false consensus propagated by the chattering classes that the ruling government elite knows best what is good for the country, that the genius of France is to be ruled from above by a clairvoyant state bureaucracy, that the free market does not belong to French history—and if you are against this you are a traitor."


Before French audiences, Mr. Sorman often invokes the names of Frédéric Bastiat, Alexis de Tocqueville and Jean-Baptiste Say to show that liberal economic ideas aren't alien to French soil. "I tend to feel lonely," he says.



Will Europe overcome its ills?