Yellow Vest Protesters in France =/= Tea Party Activists in America

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admired the Tea Party because it was made up of people who were upset by the bipartisan waste and corruption of Washington. And I think they even had a positive – albeit only temporary – effect.

But the “Yellow Vest” protesters in France, as I explain in this interview, are much less coherent.

Needless to say, I’m glad the Yellow Vests are upset about France’s oppressive tax regime. In that sense, they are like the Tea Party in America.

But the Tea Party also wanted smaller government. That doesn’t seem to be the case in France.

Which means the Yellow Vests are either ignorant or hypocritical. After all, the burden of government spending is very onerous in France, and the country also has high levels of debt. So how is the government supposed to lower taxes unless there’s at least some degree of spending restraint?!?

Some of the Yellow Vests seem to think that class-warfare taxes on the rich could be a silver bullet, but that didn’t work for Francois Hollande and there’s no reason to think it would work for Emmanuel Macron.

Ironically, some American politicians think America should copy France.

Veronique de Rugy, who was born and raised in France but is now an American, explained for FEE why her former nation is not a role model.

…what Sanders and AOC actually have in mind is a regime more like that of France. …That’s because there is one aspect in particular that the AOCs and Sanders of the world fail to mention to their followers when they talk about their socialist dream: all of the goodies that they believe the American people are entitled to receive in fact come at a great cost—and so the only way to pay for these goodies is with oppressive and regressive taxes (i.e., taxes heaped on to the backs of the middle class and the poor). …Paris relies disproportionately on social-insurance, payroll and property taxes. …In France, VAT and other consumption taxes make up 24% of revenue… Consumption taxes often fall hardest on the poor and middle class, who devote a greater proportion of their income to consumption.

Amen.

Big government means stifling taxes on lower-income and middle-class taxpayers. This is the point I’ve made, over and over again.

But Veronique notes that France also suffers from excessive regulation and other forms of intervention.

France has all sorts of labor regulations on the books: some preventing firms from firing workers and, hence, creating a disincentive to hire workers in the first place. …the French also have all sorts of “generous” family friendly laws that end up backfiring and penalizing female employment. …All of these policies make the lives of lower and middle-class people harder… The bottom line is this: All those people in America who currently fall for the socialism soup that AOC and Sanders are selling need to realize that if their dream came to pass, they, not the rich—not the bankers and politicians—will be ones suffering the most from the high taxes, high unemployment, and slow growth that go hand in hand with the level of public spending they want.

Interestingly, Bloomberg recently reported that the French want tax cuts.

The French want to pay less tax. That was the clear message that emerged from a two-month “Great Debate” that saw voters present their grievances and suggest remedies to President Emmanuel Macron. …Prime Minister Edouard Philippe said…“The clear message is that taxes must fall and fall fast.” …Macron announced the “Great Debate” in December to respond to the Yellow Vest protests… Among the findings, valued added tax and income tax were the levies that most people listed as needing reduction. …For 75 percent of the participants, the lower taxes must be accompanied by cutting government spending, though they were vague about where the cuts should come, with 75 percent citing “the lifestyle of the state.”

This is all good news. And it does echo polling data I shared back in 2013.

But I’m nonetheless skeptical. I suspect the French (including the Yellow Vests) would be rioting in the streets if the government proposed to curtail the nation’s bloated welfare state.

Though I hope I’m wrong.

In any event, there are signs that President Macron actually does want to move policy in the right direction.

He’s already gone after some bad tax and regulatory barriers to prosperity.

And the Wall Street Journal recently opined about his effort to trim the country’s massive bureaucracy.

The French President is still reeling from months of “yellow vest” protests against his poorly conceived fuel-tax hike, but now he has a much better idea to take on France’s infamously bloated civil service. …Bureaucrats would lose much of their extra time off and instead work the 35-hour week that’s standard in the private economy. The plan would streamline staff reassignments within the civil service and make it easier for local officials to reorganize government departments. …if the reforms happen, they’ll still be a long-overdue step in a country where 5.5 million government employees out of a population of 67 million consume around 13% of GDP in wages. …The political test will be whether Mr. Macron can dust himself off from his fuel follies and persuade French voters to embrace another crucial reform.

I’ll close with the pessimistic observation that France may have passed the tipping point.

Simply stated, government is so bigand there’s so much dependency that real reform is politically impossible.

Heck, I worry the United States is on the same trajectory.

P.S. Veronique has a must-watch video explaining why America shouldn’t become another France.

P.P.S. While I’m sympathetic to Macron’s domestic agenda, he’s very bad on European-wide policy issues.

by Dan Mitchell
Daniel J. Mitchell is a leading expert on fiscal policy issues such as tax reform, the economic impact of government spending, and supply-side tax policy. Mitchell is a strong advocate of a flat tax and international tax competition. Prior to joining Cato, Mitchell was a senior fellow with The Heritage Foundation, and an economist for Senator Bob Packwood and the Senate Finance Committee. He also served on the 1988 Bush/Quayle transition team and was Director of Tax and Budget Policy for Citizens for a Sound Economy. His articles can be found in such publications as the Wall Street Journal, New York Times, Investor’s Business Daily, and Washington Times. He is a frequent guest on radio and television and a popular speaker on the lecture circuit. Mitchell holds bachelor’s and master’s degrees in economics from the University of Georgia and a Ph.D. in economics from George Mason University. Original article can be viewed here.