Patrick Chamorel, who specializes in comparing American and European politics, argues in The American Interest that French president Emmanuel Macron’s economic vision is a mix of the Californian and Scandinavian models:
On the one hand, an embrace of start-up culture, a preference for entrepreneurship over rent-seeking, outsiders over insiders and individual mobility over jobs-for-life; on the other, he evinces a belief in the positive role government can play to protect the weak and equalize access to opportunities.
Macron wants to free companies from excessive social costs and bureaucratic constraints, but he has also pledged €50 billion in public investments.
His inspiration for labor reform is Denmark, which — by European standards — gives companies a lot of leeway to fire workers but then provides them with security between jobs.
Concretely, this would mean allowing French firms to go around workers’ councils, which are often dominated by trade unions resistant to change; allowing multinationals to lay off workers at loss-making French subsidiaries even if the foreign-based parent company is profitable and at the same time extending pension and unemployment-insurance rights to freelancers and flex workers.
Cut like the Swedes
In terms of spending and taxes, Macron’s inspiration is Sweden, which cut both and saw higher growth.
His proposal would lower corporate tax from 33 to 25 percent and taxes on investment earnings from 50 to 30 percent.
Macron already lowered payroll taxes paid by employers during his two-year stint as economy minister under the previous president, François Hollande.
Government spending should fall from 56 to 53 percent of the economy, largely by reducing the public-sector workforce.
Currently one in five French workers are employed by the state.
The “California” part of Macron’s vision is less clear.
France has a more lively start-up and tech scene than many in the English-speaking world give it credit for, but it’s a long way from freewheeling San Francisco.
The city of Paris is clamping down on property owners who rent out their homes illegally through websites like Airbnb.
Uber, the cab-hailing service, has been forced to suspend operations in France altogether.
There are fair arguments to be made against both, especially in a heavily-regulated economy like France’s.
But that’s the point. France is so heavily regulated that it stifles entrepreneurship and innovation. Changing that is as much about liberalizing the rules as it about relaxing French attitudes. Macron can only (try to) do the first. The second will take time.