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France is famous for its wine, cheese and…unions. It is well established now that any reform considered by any government, left or right, has to be approved by unions (or, at least, not strongly opposed) in order to have a chance to be passed. Strange situation in a country where less than 8% of all employees have a union membership card–the lowest rate in the EU. Despite the poor legitimacy that such a low membership rate implies, unions are getting important grants and allowances from the state as well as from businesses.

A widespread understanding of the 2007-2008 crisis places the origins of the crisis in a capture of global economy by the finance industry. The “occupy Wall Street” group would surely agree, as well as most of those who get their economics from the general media. And President Sarkozy in his recent Toulon’s speech did confirm the thesis. If this understanding is correct then it is natural to call for further regulation of the finance industry. But not everyone agrees, and some economists favor another understanding.

The sovereign debt crisis forces our governments to stretch their imagination in order to find additional budget revenues. In Europe, as well as in the US, many voices call for additional contributions from the rich (not such a big stretch of imagination, in fact, if it was for the already high contribution asked from them). Interestingly, some eminent wealthy people like Warren Buffet in the US or Liliane Bettencourt (L’Oréal) in France welcome the idea, denouncing a system that deprives them from the possibility of making an equitable tax contribution (read more about this here).

For the French government, it is more than ever urgent to convince everyone that the State deficit is moving in the right direction and the public debt is sustainable. In the context of an uncertain future for the French credit rating triple A note, the present debate on the budget of the State for the coming year and the austerity measures it includes became a really hot issue. The initial project of budget for 2012 has been already adopted by the Financial Commission at the French National Assembly and is now being discussed by the deputies.

This article appeared in The Wall Street Journal

In next year’s French presidential elections, it seems increasingly likely that voters will be asked to choose between two types of statism: statism of the left and statism of the right. Over the weekend François Hollande won the final round of the Socialist Party primaries, handily besting party leader Martine Aubry, and is now set to face off against France’s ostensibly center-right president, Nicolas Sarkozy.

European governments are under pressure to shore up the banking sector in the face of growing worries about the industry’s capital levels, access to funding and earning power in the context of global crisis. Indeed, weakened by their bad sovereign debt holdings, several banks are scrutinized by the credit rating agencies and two of them, the French Société Générale and Crédit Agricole have recently been downgraded by Moody’s.

Yesterday, the US President Obama announced a new debt plan built on taxes on rich. He called for $1.5 trillion in new taxes on upper income taxpayers. His plan would end Bush-era tax cuts for top earners and would limit their deductions. This proposal is following the public debate on the issue of high-income taxes, launched by the investor Warren Buffet few weeks ago. In the following paper, Toni Mascaró reminds us why this approach to taxes and deficits is wrong.

The French Minister of Finance, François Baroin, concluded the G7 meeting in Marseille with a statement that an equilibrium had been found between the necessity for fiscal consolidation and the necessity to avoid a recession. What kind of equilibrium is he talking about and is this equilibrium stable?

The discussions in Marseille started on a fairly correct assessment of the situation: one needs to tackle the sovereign debts crisis and the global economy (and in particular western economies) is slowing down.

The French bank BNP Paribas published a disclaimer to this article signed by our Director of development Nicolas Lecaussin and published in the Wall Street Journal. The paper is mentioning the difficulties of some of the French banks, including BNP.

The game of representative democracy is such that we constantly have to choose, not between policies, but between programs that are best seen as baskets of policies to be implemented if the candidate supporting that program is elected. The basket that the French President, Nicolas Sarkozy, “sold” to his electors in 2007 was, as always, made of all kinds of policies. But there was one on which he particularly insisted on during the elections and that, in my opinion, brought him the support from many voters: the promise that, if he was elected, individuals who will work more will earn more. “Travailler plus pour gagner plus”– with those words, he was promoting a move away from a society in which the extra money you make is redistributed away from you. At least that’s the way many people understood it.