Challenge for the American Left: Go on Record For Hollande’s Socialist Program

by Paul R. Gregory During the French presidential campaign, pundits assured us that Francois Hollande was simply playing to his socialist base. Once in office, he’d prove to be a pragmatist. All his talk of 75 percent income tax rates, wealth surcharges, infrastructure banks, new taxes on dividends, hiring more public employees, not giving an inch on entitlements, and punishing the financial sector was just talk. Two months later, we know Hollande meant every word. Armed with a solid parliamentary majority, he is carrying out his socialist agenda, no holds-barred. . I’d like to count them when the French economy goes down the toilet, as it certainly will unless Hollande changes course. The American Left counts among Hollande’s many cheerleaders. At long last, a leader of France is standing up to the austerity crowd. Liberal New York Times columnist, Paul Krugman, rails against the Hollande hysteria of the staid Financial Times and the stingy Germans. Per Krugman: we need not fear someone who genuinely believes in the need for a fair society, and we know the mess we get into when the government does not run things.  By ignoring the austerity nonsense, Hollande offers the “possibility of something better” not only for “new Keynesians and old socialists” but for France, Europe, and the world economy. As they say, time will tell. President Obama was diplomatically constrained not to root for Hollande, but he is a cheerleader no less. After all, French socialists are test driving Obama’s own electoral program. Obama must be watching with envy.  If only he also could do what he wants without those obstructionist Republicans! If...

American Exceptionalism: Obama’s Achilles Heel?

American exceptionalism is the notion that the United States occupies a unique position in the world, offering opportunity and hope to others by its unique balance of public and private interests and constitutional ideals of personal and economic freedom. The phrase, often attributed to Alexis de Tocqueville in his 1835 Democracy in America,  offers Romney an opening wide enough for a truck: If America is exceptional, why must we fundamentally transform it as Obama promises? Instead, we need a steady-hand Mitt to restore America’s greatness. Romney can easily demonstrate that  Europhile Obama wishes to turn the United States into a European-style welfare state that refuses to defend itself from external enemies. If  this were not true, why does he push so hard for government health care, a larger state, and income redistribution? Why is  Obama’s electoral platform the same as Europe’s leftist parties? Obama cannot admit outright he wishes America to become Europe. Instead, his subliminal message is Europe is doing just fine; it truly protects those in need; and there are no real differences anyway, so the debate is phony. My  checklist of American exceptionalism demonstrates that the differences between Europe and the US are real, that America is truly exceptional, in a positive sense, and the better the American people understand and value American exceptionalism, the more they will support an American-exceptionalist candidate like Romney. My discussion does not cover U.S. military might and its role on the world stage. That is the subject for a separate essay. Americans are prouder and more patriotic than Europeans Americans are three times more likely to answer that they are proud  of their country’s...

Should The New York Times Investigate Wal-Mart Or Carlos Slim?

The  New York Times’s Vast Mexico Bribery Case Hushed Up by Wal-Mart After Top-Level Struggle suggests that Wal-Mart violated the Foreign Corrupt Practices Act. The smoking gun: Seven years ago, Wal-Mart de Mexico hired two outside lawyers for $8.5 million to “facilitate” store permits. The lawyers were effective:  “Legal and bureaucratic obstacles melted away after payments were made to minor officials who could thwart Wal-Mart’s growth.” Wal-Mart executives, the  article charges, did not take appropriate action after an internal investigation. No believer in free enterprise should excuse or make light of violations of laws by Wal-Mart or any other private company. We hope that Wal-Mart moves forcefully to put this business behind it. In its anti-Wal-Mart fervor, the Times inflates the $8.5 million into an “orchestrated campaign of bribery to win market dominance” that erected Wal-Marts on “virtually every corner of the country.”  No mention of the possibility – if not  probability – that local officials could not pass up a once in a lifetime opportunity to extort Wal-Mart.  A Wal-Mart success story explained by its “everyday low prices”  does not fit the Times’ political agenda. Greasing the palms of local officials with a few dollars is a more convenient explanation. A few blocks away from 620 Eighth Avenue, Carlos Slim, the Times’ second largest shareholder behind the Sulzbergers, oversees his sprawling Telmex and Latin American telecommunications empires from atop Rockefeller Center. Slim is a welcome guest at the most exclusive of Manhattan cocktail parties.  Wal-Mart’s hillbilly executives from Bentonville, Arkansas would simply not fit in. Economics 101 teaches that only efficient businesses survive and prosper in competitive markets....

Look To Sweden! Obama’s High-Tax Gurus

by Paul Gregory Peter Diamond and Emmanuel Saez (Wall Street Journal High Tax Rates Won’t Slow Growth) offer a beguiling Leftist narrative: The 1% will cough up incremental tax revenue up to a 70 percent rate without cutting the things they do to generate economic growth. We can then use their money to fund “higher-return public investments” (such as Solyndra and the public-education black hole?) without cutting back the entitlement state. Although Diamond’s Nobel Prize and Saez’s J. B Clark Award make them eminently credentialed, Alan Reynolds (Of Course 70% Tax Rates Are Counterproductive) exposes the convoluted contortions behind their counter-intuitive finding that a tax that leaves you 30 cents on every extra dollar does not affect your decisions to start a new business, assume extra risks, or take on new clients. That’s a hard sell for anyone who thinks about it. Note that tax guru, Saez, sings a less confident tune when he writes for fellow economists that: “There are no convincing estimates of long-run elasticities of taxable income and marginal tax rates.”  My translation: “We really do not know how taxable income responds to high marginal rates, but we are guessing we can go up to 70 percent.” It pays to read the fine print before making the purchase. Economists can use different data sets and methods to debate forever how people react to marginal tax rates. “Natural experiments,” however, provide conclusive answers because they represent real-world experience. It is hard to ignore what your “lying eyes” (to use Groucho’s expression)  see. As described by Assar Lindbeck, Sweden’s social democrats and their union allies  experimented with steroidal...

French Socialists Test Ride Obama Platform

French voters went to the polls today to winnow a ten-candidate presidential field down to the “right-of-center” incumbent (Nicolas Sarkozy) and his socialist challenger (Francois Hollande). The two will face each other in a  runoff election on May 6. A Sarkozy loss would be the first of an incumbent French president in  thirty years. It would threaten the German-French sponsored European Union rescue package. It is no surprise that Germany’s Angela Merkel openly supported Sarkozy’s candidacy. The French election previews the U.S. November election contest between incumbent Barack Obamaand challenger Mitt Romney in the following four ways: 1). Both Obama and Hollande offer almost identical leftist platforms (details on this below). 2) The bland challengers (Hollande and Romney) ignite electoral passions less than their more colorful opponents (playboy Sarkozy with his celebrity wife and Obama, the first black president). 3) The sorry state of the economy gives both challengers a hefty leg-up. 4) The French and American elections are foreshadowed by electoral disasters for the incumbent party in off-year races in 2010 and 2011. In both, the incumbent  party lost long-held majorities in one house of Congress or parliament. Whereas the outcome of the U.S. election is currently too close to call, opinion polls show the French socialist candidate poised to win in the run off. As the odds tip increasingly in favor of a Hollande victory, the risk premium on French bonds will rise. It is no secret that the investment community views a Hollande victory  a threat to France’s solvency. It is too early to count Sarkozy out. The unexpected strong showing of the far right candidate...