Advocates of economic reform in France often resemble Fox Mulder, the fictive FBI agent investigating mysterious phenomena in the TV series “The X-Files.” On Mulder’s office wall hangs a large poster with the words “I want to believe.” Those with an interest in reforming European welfare states tend to feel the same way when they hear European political leaders speak of reform. Well aware that so many attempts at reform have fizzled in Europe—and in France in particular—they often let hope triumph over experience. 

But Nicolas Sarkozy, the new President of France, may be different. So far, all indications are that at least one key component of his promises—a significant package of tax cuts—will be passed into law. Other measures, particularly proposals designed to crack down on massive strikes—the favored pressure tool by unions to stop reforms—are in store as well. 

The French House approved a 10 to 13 billion Euro per year tax cut package on July 16^th, while the Senate is set to review it starting the 25^th. And while the House was busy reviewing the tax cut package, the Senate reviewed ways to make it more difficult for unions to organize paralyzing strikes. 

Do the current reforms mean that France is governed by a Reagan or a Thatcher? No. But with Sarkozy’s encouragement, the French Parliament finally has seen the need to change.

The Senate’s measure would force workers, on an individual basis, to declare themselves in favor of a strike to their employers 48 hours before beginning any strike. In addition, the Senate voted to mandate that, if employers so wish, a secret ballot vote must be held among workers on whether or not to continue a strike beyond an 8-day period. The bill also mandates that a minimum level of ground transport (rail and other) service be maintained throughout the duration of a strike, making full paralysis much more difficult for unions to achieve. The House is set to review this set of reforms, the so-called “minimum service law”, starting July 30^th.

Needless to say, this package of reforms has angered the left, in and outside of Parliament. Unions have already announced a protest day, July 31^st, to express their anger at the reforms, with an alphabet soup of major national unions all participating. Their anger doesn’t mean that the right to strike has been fatally wounded; to the contrary, it would emerge unscathed. The change concerns what effect those strikes can have: implicitly, Sarkozy’s cabinet and his Parliamentary majority want to remove the de facto veto that unions currently hold over decisions taken by democratically elected legislators. The right to strike is one thing, but bringing the country—including those who are not striking—to a standstill is quite another. 

Also in store: much-needed reforms to France’s stale system of higher education, proposals for which have already angered leftist student organizations. 

Yet what matters as much as the measures themselves is the fundamental change in attitude that Sarkozy and his team bring to the table. Yes, Sarkozy is a protectionist and is not averse to industrial engineering when he thinks it suits France’s national interests. Yes, Sarkozy wants to maintain French agriculture through massive subsidies. Yes, Sarkozy would like to put political pressure on the European Central Bank to bring interest rates down to lower the Euro’s value against the dollar to help French exports, especially Airbus. But in all this, he is not so different from many other French politicians. 

What makes him different is that Sarkozy realizes, and dares to say, that the French economic status quo in general is not sustainable—that France has much to learn from the dynamism of the UK and the flexible labor laws and low unemployment of Scandinavian countries. As he writes in his political manifesto, Testimony: “I’m convinced that… France—notwithstanding its undeniable merits and prestigious past—will become a thing of the past if it doesn’t take the steps necessary to adapt to the changes taking place in the world.” 

This fundamental change of attitude has already rubbed off—in a positive sense—on Sarkozy’s team of ministers. Sarkozy’s finance minister, Christine Lagarde, could not have been more blunt and unusual in French politics when she told Parliament, assembled on July 10^th to discuss the 10 billion Euro per year tax cut package, that “France is a country that thinks. There is hardly an ideology we don't have a theory on. That's why I would like to tell you: that's enough thinking, enough prevaricating. Let's just roll up our sleeves.” Commenting on the countless French bankers who work in London for fiscal reasons, she told MPs: "All you have to do is go to Gare du Nord [large train station in Paris] on Friday night to Eurostar and Thalys arrivals to understand that these French bankers, who have gone to work in the city, and those tax exiles in Belgium, want one thing, to come back to France.” And in a truly remarkable move, Lagarde extensively quoted Tocqueville on the inherent moral worth of work:

[In democracies, as opposed to aristocracies], ‘every man works to earn a living, or has worked, or is born of parents who have worked. The notion of labor is therefore presented to the mind, on every side, as the necessary, natural, and honest condition of human existence. Not only is labor not dishonorable among such a people, but it is held in honor; the prejudice is not against it, but in its favor.’ Can one express more clearly, ladies and gentlemen [Members of Parliament], the choice that our country must make today? … Work is a natural thing, necessary for man to lead a balanced life, indispensable to the individual to form himself and develop his potential to the fullest. It is not an alienation… only meant to [help one] subsist on a daily basis… Here is therefore work being put again on the saddle as the #1 democratic agent. Let’s listen to Tocqueville in the rest of his text: ‘Equality of conditions not only ennobles the notion of labor, but raises the notion of labor as a source of profit.’ Another way of saying that all work deserves compensation.

Lagarde said that the key part of the reform package, eliminating the current additional tax on overtime hours, would cost about 6 billion Euros per year, while cutting the top tax rate from 60 to 50% would cost about 600 million per year. Following the speech, as a Socialist MP fumed in the hallways of Parliament that these are “fiscal presents to the privileged few, to the 13,000 richest families of France,” one thing was clear: winds of change are blowing through France’s political leadership, working to revitalize an economy weakened by decades of socialist policies pursued by the left and the right. 

Do the current reforms mean that France is governed by a Reagan or a Thatcher? No. But with Sarkozy’s encouragement, the French Parliament finally has seen the need to change.

Jurgen Reinhoudt is a Research Assistant at the American Enterprise Institute.

Image Credit: Photo by flickr user fdecomite.