Wednesday, 19 December 2012

The French death rattle, by Professor Brigitte Granville

Professor Granville discusses the French way of economic policymaking in a recent contribution to Project Syndicate. According to Granville, the difference between the failing French model and the more successful Scandinavian model rests on the understanding in Scandinavia that citizens must pay high taxes in exchange for public services. In France, in contrast, households pay lower tax rates on consumption and personal income. The gap is bridged by a mixture of deficit spending and high taxation on employment. The future of the French economic model looks grim according to Granville, and the only question that remains is how the end will come. 'Whether it comes in the form of a capital strike by foreign bondholders, or of domestic labor strikes and wider social and political unrest, France’s leaders remain entirely unprepared for the inevitable', as Granville argues. The entire article can be read here.

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