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Thursday, January 16, 2014

Free Markets, Infidelity and the President of France

François Hollande, the president of France, after voting in the April 22, 2012, election that brought him to power. Seated next to him is his partner, Valérie Trierweiler.Thierry Zoccolan/Agence France-Presse â€" Getty Images François Hollande, the president of France, after voting in the April 22, 2012, election that brought him to power. Seated next to him is his partner, Valérie Trierweiler.

PARIS - Is it worse to be an ardent advocate of the free market than a suspected adulterer?

The answer appears to be a resounding yes, if you are the president of France.

In recent days, the French capital has experienced a mix of finger-wagging, indifference and no small helping of mischievous pride over revelations of President François Hollande’s supposed infidelity with a vampish actress. The news, reported in a French gossip magazine, sent his partner, a woman considered France’s first lady, Valérie Trierweiler, to a hospital with a serious bout of the blues. But for some leftist members of Mr. Hollande’s Socialist party, it was the president’s rightward shift this week on economic policy that gave them a jolt akin to Ms. Trierweiler’s.

Among Mr. Hollande’s proposed changes was a pledge to cut public spending by €50 billion, or about $68 billion, and slash the payroll taxes for business by €30 billion, or about $41 billion. In return, businesses would be expected to expand their workforces and offer respectable wages.

At a time of 10.8 percent unemployment, when economic growth is woefully low, and France, fairly or not, is being portrayed as the next Sick Man of Europe, the policy move hardly seemed radical. Yet in a country where citizens expect the state to provide from cradle to grave - and Mr. Hollande has fashioned himself as the standardbearer against growth-destroying, German-style economic austerity - a blog in Le Monde this week called his proposed changes no less than “revolutionary”.

President Hollande's affair with Julie Gayet, an actress, has been less jarring for some in France than his apparent embrace of economic liberalism.Thomas Samson/Agence France-Presse â€" Getty Images President Hollande’s affair with Julie Gayet, an actress, has been less jarring for some in France than his apparent embrace of economic liberalism.

Some compared Mr. Hollande, a onetime Socialist die-hard, to Tony Blair, the former British prime minister, who wrenched Britain’s Labour Party toward the center. Others invoked former Chancellor Gerhard Shroeder of Germany, who more than a decade ago started wide-ranging labor market changes that helped revive his country’s moribund economy. Le Monde asked whether Mr. Hollande was copying former President Nicolas Sarkozy, his nemesis on the right, whose “bling bling” approach was greeted with barely concealed disdain.

Being economically “liberal” in the French context connotes an adherence to the free market, and Mr. Hollande immediately went on the offensive, declaring at the Élysée Palace on Tuesday night, “I am a social democrat.” He insisted he would continue to adhere to that vision, no matter how many times the issue was broached.

By cleaving to a social democratic line, Libération, a leftist newspaper, wrote approvingly, the president “clarified his political position at the risk of being accused of turning liberal.”

Mr. Hollande’s declarations as a social democrat was mimicked by France’s prime minister, Jean-Marc Ayrault, on Thursday morning, Le Figaro reported. Apparently seeking not to appear slavishly pro-business, he insisted that the purpose of his boss’s proposed pact between business and labor was not calculated to help bosses or employers, but rather to embolden businesses’ ability to invest, innovate and hire.

Yet some in the French business community appeared to express glee at Mr. Hollande’s change of approach. Alluding to the socialist president’s professed intention to slash spending, Geoffroy Roux de Bézieux, the vice president of a powerful employer’s association, wrote on Twitter this week: “Keynes Killed With One Bullet to the Neck!”

Mr. Hollande’s new drive to shake up the French economy comes amid a recent barrage of stories in the United States and British media heralding a French decline, including an article in Newsweek, under the headline, The Fall of France, which argued that high taxes and overprotective labor laws were forcing the exodus of the country’s best and brightest. The story inspired an angry riposte from Le Monde, which accused the magazine of French-bashing.

Meanwhile, the French Embassy in London last week published an unusually undiplomatic blog post refuting claims about France’s economy from Allister Heath, the editor of City A.M, a British financial newspaper distributed free around London’s financial district. Writing recently, Mr. Heath argued that “France’s economic sickness is primarily due to its overbearing state, horrendously high tax levels, insane regulations, absurd levels of inefficient public spending and generalised hatred of commerce, capitalism, success and hard work.”

He added, “Companies should not bother opening offices in France.”

The French Embassy in London shot back at Britain’s “ailing” National Health Services, and noted that the average French worker put in longer hours each week than its British counterpart.

Mr. Heath, for his part, said he had no regrets, and wrote a tweet this week, playing on a famous Édith Piaf song: “Je ne regrette absolument rien!”