French President Francois Hollande, gestures as he speaks during as he awards French sociologist Alfred Grosser, unseen, with the Grand Officier of the Legion d’Honneur during a ceremony at the Elysee Palace in Paris, Tuesday, April 2, 2013. (AP Photo/Philippe Wojazer, Pool)
Unemployment in the eurozone reached a record high of 12 percent in the first months of 2013, casting fresh doubt on the European Union’s preferred fix for its ailing economy: austerity. But even if German Chancellor Angela Merkel’s policy toolbox is failing to pay dividends for many of her neighbors, her own domestic economic outlook is rather rosy, paving the way for a smooth re-election campaign — barring a fresh debt crisis in an E.U. member — this September.
French President François Hollande, on the other hand, remains mired in record-low approval ratings, which may only get worse now that his former budget minister — the first member of his cabinet to resign — has finally admitted to holding a secret Swiss bank account. To make matters worse, a high-profile television appearance last week that was billed as a chance for the president to get back on track earned criticism from left and right alike. Indeed, rather than stanching the bleeding, the interview seems to have reinforced the narrative that he is a well-meaning but hapless figure who lacks the ability to turn things around. Lest we forget, it was in the context of an already-ailing French economy (and years of E.U. consensus on the need for austerity) that Hollande was elected over incumbent Nicolas Sarkozy in the first place. Which suggests that the shocker of record joblessness can be turned to his advantage, if only he finesses it correctly.
After all, the French electorate sent Sarkozy — and European elites everywhere — a message: let’s try another approach. And even if Hollande has failed to move the needle since taking office last spring, enjoying only the briefest of popularity spikes during the peak of French efforts to oust Islamic militants from northern Mali, he is still early in his term. Now seems the perfect moment to make a muscular move to, yes, enact some of the labor reforms economists say might help the troubled French job marker, one that is enduring a seemingly endless succession of automobile industry woes (a dynamic that might sound familiar to Americans, except the U.S. auto industry is on the upswing after being bailed out by the Obama administration), but also to stick his neck out a bit and aggressively challenge Merkel. She might not suffer much domestically for trading barbs with the French president, but he could benefit enormously, sticking it to a figure villianized by the trade unions, Communists, and other left-wing constituencies he has alienated with his cautious approach (and who now stand in the way of his labor reforms).
In terms of policy changes, new spending to stimulate the economy seems like a worthy approach, especially when one compares the U.S. unemployment rate — 7.7 percent, still grim but at a five-year low — with the numbers coming out of European capitals. (Over $1 trillion was spent to increase U.S. demand in 2009, 2010, and 2011, dragging Obama down for those years but paying off just in time for his re-election last November.) A bolder alternative to austerity at his weakest moment might smell like political suicide for the embattled incumbent, but, just as Obama had time to recover from sticker shock of the debt he racked up early on, Hollande can justify the expenditures once unemployment has come back down to earth. It may seem a strange moment for the French president to gamble, but with statistics this dire, and his popularity so low, a big and risky bet is the only move that makes sense for his long-term survival.
