The French have voted with their hearts and picked Francois Hollande as President. And who can blame them for wanting to be more like Italy and less like Germany? More Roman Holiday and less The Spy Who Came In from the Cold?
We should be grateful to the French. We need exemplars—countries whose policies we embrace and countries whose polices we avoid. France seems determined to set a bad example, if they expect Hollande to follow through on his promises. This is a nation that hasn’t run a budget surplus in 35 years, where labor costs have been rising in the face of blistering global competition, and where the public sector controls more than half of the economy. Hollande promises to hire more public sectors workers, raise the marginal tax rate to 75%, and reverse Nicholas Sarkozy’s feeble encroachment on the entitlement mindset of the French worker. Read more »
I was transfixed by the recent riots in France over raising the retirement age from 60 to 62. All the more striking was the participation of high school students in the riots. That, more than anything else, convinced me that France was in trouble.
My suspicions about the French were confirmed after I consulted the OECD PISA scores (that’s the Program for International Student Assessment from the Organization for Economic Cooperation and Development). In the percentage of students performing at an advanced level in mathematics, France ranked 20th, barely ahead of Estonia and way behind educational powerhouses like, oh, the Czech Republic and Liechtenstein. Clearly, these poor young people can’t do the simple math of retirement. If their parents and grandparents are going to continue to retire at the cushy age of 60, the younger generation’s taxes are going to go through the roof.
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The financial problems of the nation and many large states—California, Illinois, New Jersey and certainly New York—present a problem that is challenging economically and hazardous politically. Since it’s impossible to separate the economics from the politics, it is truly a Gordian knot – rather than untying the knot, Alexander the Great sliced the Gordian knot in two with a single, bold stroke of his sword.
The Congressional Budget Office forecasts the federal deficit to decline from about $1.5 trillion in 2009 to $608 billion in 2014, then rise to nearly $800 billion in 2020. This is a hefty deficit, particularly when you consider that we had a surplus as recently as 2000. Then consider that the cumulative public debt, which currently stands at $7.5 trillion, is expected to nearly double by 2020 to $14 trillion.
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