The indigestible French recipe against inflation

To pass it on to ultra-liberalism when the share of public spending has increased to nearly 60% of GDP, like Emmanuel Macron’s cross. He hasn’t finished wearing it. The Covid pandemic in 2020 nationalized the economy from which France has not yet returned. Inflation pushes managerial logic a step further. For it does not take much for the state to succumb to its natural tendency, i.e., perpetual expansion.

In the name of protecting the French, he uses and abuses three old recipes. First, automatic irrigation: inflation checks, or reassessment of basic allowances or pensions, that is, several tens of billions of expenditures that, since the start of the 2021 school year, have belied the promise to halt any costs.

After that, some form of price control feedback. Gas, electricity, transportation and water, as well as banking or insurance tariffs, the scope of managed prices, de jure or de facto, is expanding. In a well-organized choreography, bankers and insurance companies are called to Percy to think of ways to conserve purchasing power. There is no doubt that in a few weeks, they will allow the minister to triumphantly announce a compromise on unpaid fees or auto policies. That would be the lesser evil for the only industry that had to accept an annual price freeze during the yellow vest crisis. Funding will always be questionable, when it yields profits, to steal from the people.

State influence

Hence the third prescription, the taxation of “excess profits”, already adopted in Italy and the United Kingdom. The government rejects it at this point, because the idea does not fit into the official discourse about reducing the tax burden. Or rather, it leaves it to each company to direct its criticism and contribute to the national effort: a fair return after overtaking the audience that benefited the most in March 2020. The EDF had no other choice. TotalEnergies, accustomed to these controversies, is looking for the right discount on refueling. CMA CGM, which became 18 billion euros richer in one year thanks to higher shipping prices, is well advised to return a part of it before you have to do so.

In France, crises lead to an increase in public spending, and a revival of activity does not reduce it. The current sequence reinforces for a long time the influence of the state on the economy. None of the recipes used will help quell the grumbling about purchasing power. But we know the bidding cost. Inefficient public services, while their prices – which are also managed – have been growing faster than inflation for twenty years. Exorbitant and poorly targeted subsidy policies, while the purchasing power shock is uneven. And when it finally does have to foot the bill, tax rates will still be among the highest in Europe, while families struggle with the weight of their constrained expenditures.


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