05 September 2007

CITIZEN OF EUROPE: Is Sarkozy a disappointment?

I was pretty enthusiastic when I heard that Sarkozy won elections in France this year. Wow, I said, something is gonna change in this country. After six months of Sarkozy in power, I must admit that my enthusiasm has rather faded and certain skepticism has appeared.

Why am I disappointed by what Sarkozy is doing? Or, it’s better to say: why do I have doubts that he’s gonna make any valuable reforms?

Well, the reasons are multiple.

Firstly, Sarkozy did his very best to remove clauses on “unrestrained competition” from the new European treaty (a bad document in itself, but that’s a topic for a different post…). You could of course say that it’s nothing really important, as the EU Commission competition division is still (hopefully) in existence, but as many experts say the lack of the aforementioned clause make the foundations for antitrust rather fragile (just have a look at the article from FT

The other problem is whether the European Antitrust should be more like the American one, with greater emphasis on the dynamic effects. This is not a topic of this article, but undermining the very fundamentals of antitrust itself is a rather incorrect policy.

Secondly, Sarkozy seems to be in favour of creating national champions. As we can see, with Colbert it is like with Elvis: the guy is dead, but some still believe that he’s alive. And, as to the results of creating national champions, I am personally rather skeptical. Just have a look at the French computer science industry, which still needs protection, Korean chaebols, or obvious mistakes of the Japanese Ministry for Trade and Industry (described here). Going further, the US government didn’t create the Silicon Valley… Of course, car companies like Toyota or Honda are examples to the contrary. Nevertheless, the general picture of the effects of industrial policy is rather unclear.

Thirdly, it seems that Sarkozy still cannot understand what the monetary policy is for… The guy still thinks that you can boost the economy by lowering interest rates below the NAIRU level not harming the long-term sustained growth. Fortunately, we have Germans in Europe and their healthy conservative attitude…

Fourthly, he isn’t too fiscally conservative either. France will not meet its Euro-area budget criteria till 2012. I am afraid (though not absolutely sure – don’t have precise data) that the rest of Europe will have to pay with higher interest rates and less investment.

There is surely some talking about labour reform in France and deregulation too, but what Sarkozy has done so far doesn’t really make me believe that he will implement new policies… But you never know… Politik ist keine exackte Wissenschaft, as Prinz von Bismarck said…

Clearly, Sarkozy is kind of a disappointment, but it is not a time to give verdicts yet…

Remy Piwowarski

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