French Fallacies: Inaccurate Conclusions From the Hollande Victory

Much will be read into the victory of socialist François Hollande in Sunday's presidential election in France -- most of it either inaccurate or irrelevant. Let me try to pierce through four fallacious assertions that are being advanced.

1. Hollande Won -- No; Sarkozy Lost. While some may suggest that the election results reflected the appeal of Hollande's message, they would ignore the more accurate description that the outcome was a referendum on the conservative incumbent Nicolas Sarkozy and a reflection of the woeful state of the French economy. The same prospect looms large in the U.S. presidential election, as Dan Balz highlights in The Washington Post. Sarkozy's own aloofness, seeming detachment and elitist lifestyle that seemed out-of-place for the times contributed to his downfall. His failure to reignite the anemic French economy led to his defeat.

2. Austerity is Dead -- No; Economic Gravity Rules. However popular it might be to think that one can vote to suspend the rules of finance and economics, sooner or later, these realities call all to account. As a retailer, I understood that you couldn't buy more than you sell for long. Similarly, a country cannot forever spend more than it receives in revenue. While piling up national debt and escalating tax levels can delay the inevitable, sooner or later, things must balance. The French do not have America's luxury of issuing the world's primary reserve currency, so their day of reckoning will come sooner. No matter how central the desire to move beyond austerity toward stimulus was to Hollande's victory, the president-elect's ability to respond will be constrained.

3. Hollande Cannot Work with German Chancellor Angela Merkel -- No; the Times Will Force Pragmatism. Hollande's firm grasp of detail in the final debate shows that he is indeed a "Mr. Normal," or at least Mr. Normal as far of French bureaucrats are concerned. As a graduate of the École Nationale d'Administration, like most French political leaders, Hollande was schooled in the same pragmatic, albeit big-centralized-government, approach that has characterized the French civil service. "Normal" for the French is figuring out a way to get along with the Germans. Hollande is bright enough to realize this imperative.

4. Bankers and Germany Must Fund Stimulus -- No; Class Warfare Doesn't Cross Borders. We in America are familiar with class warfare as part of our presidential campaigns. Centrist Democrats might console themselves that bashing the rich is campaign rhetoric and not governing intent (despite the fact that the United States has the highest corporate tax rate in the industrial world). In contrast, the separation between campaign rhetoric and legislative intent is more of a reality in Europe. It is well and good to say that "we have enough money; it is in the pockets of rich bankers," yet since excessive regulations have chased all the rich bankers to London, they are mostly beyond the reach of France. It may be a good campaign line to say that Europe must do more to inflate the economy, but Germany is the only European country with the resources to do so, and Merkel answers to German -- not French -- voters.

Europe and the global economy are at a crossroads. The flexibility to miss a poorly marked turn and still find our way back is quickly evaporating with mounting national debt obligations. It would behoove us all to study the map to renewed prosperity carefully to ensure miscues do not send us down the wrong path.

Mark R. Kennedy leads George Washington University's Graduate School of Political Management and is Chairman of the Economic Club of Minnesota. He previously served three terms in the U.S. House of Representatives and was Senior Vice President and Treasurer of Federated Department Stores (now Macy's).