After Jospin's victory, the country's unemployment rate began to
fall, and the economic growth rate slowly to rise. France now is
forecast to have the highest growth rate of the major industrial
countries in 1999. Investment is up sharply, as is consumer
confidence, and inflation is negligible, around 1 percent. The
national statistical agency, Insee, expects a net creation of 360,000
jobs this year, with unemployment, adjusted for population increase,
falling to 11.6 percent of the active population by year's end, down
from 12.5 percent last year.

Insee's October report said that GDP growth fell in the third quarter
to 2.5 percent from 3 percent, but it still predicted a final growth
figure for 1998 of 3.1 percent, which is the government's own
estimate. However, this reflects the high figures of the beginning of
the year, and the fourth quarter figure is likely to fall to 2.5
percent annualized, which suggests that the government's expectation
of 2.7 percent in 1999 may be overly optimistic. The budget for 1999,
seen by the Wall Street Journal as "pro-business", is based on the
2.7 percent growth forecast, although at the time of the Washington
G-7 meeting at the beginning of October the prime minister qualified
that by saying that it depended on Europe's "economic actors
continuing to bet on growth."

Insee's own projections also do not yet take into account the effect
that the September-October collapse of the dollar will have on French
exports. (By early October the dollar had fallen 17 percent from its
year's high against the franc.) Airbus has already characterized the
dollar's fall as "a disaster", although this will speed the
redenomination of Airbus contracts in the new European single
currency, which comes into use in January. The Belgian airline Sabena
has already asked to pay for future aircraft in euros, and other
European airlines are expected to follow suit.

The government is counting on growth to create jobs. At the
officially forecast rate of 2.7 percent GDP growth in 1999, enough
jobs will be created eventually to absorb France's unemployed. At a
2.5 percent rate, unemployment will be stable. Under 2.5 percent, the
rate of unemployment will again begin to rise from the existing
level--already the highest among the five leading industrial
countries.

The consumer confidence figure issued in October was significantly
higher than anticipated, indicating that the international crisis had
not yet shaken the domestic economy. This is also true elsewhere in
the euro-currency group and reflects a belief that the European
single currency will reinforce the strength and stability of the
European economy (90 percent of whose exports are within Europe), and
will continue to defend Europe against the effects of the world
crisis. An indication of this is that the crisis has produced no
speculation against any of the eleven currencies that will enter into
the euro.

Disposable income has also risen, thanks to a reduction in social
security taxes provided by the economics minister, Dominique
Strauss-Kahn (the first fall in social charges in fifty years).
Consumption rose again in September and is up by more than 9 percent
over September 1997. Confidence and disposable income imply
continuing consumer spending, an expectation reinforced by the fact
that the French public has resisted the lure of the stock market.
Less than 20 percent of household financial assets are in equities
and more than 40 percent in bonds. Yesterday's alleged archaism has
proven today's asset.

The 35-hour work week and the youth employment program, both of which
figured prominently in the Socialists' election campaign and are dear
to the leading figure on the government's Left, Employment and
Solidarity Minister Martine Aubry (Jacques Delors' daughter), are
generally thought unlikely to have a major effect on employment.
Both, however, have had positive consequences critics did not expect.

As the conservative newspaper Le Figaro has observed, the law
imposing a shortened work week on larger companies by the year 2000
has had the serendipitous effect of "accelerating the movement
towards flexibility." It requires company-by-company negotiations on
changed hours and as a result requires a general review of
long-standing work restrictions. Le Figaro concluded, "The heads of
enterprises are secretly delighted, the unions officially furious."
(Strauss-Kahn, the economics and finance minister--and Jospin's
presumed successor if the prime minister runs for president in 2003
and wins--said last summer that "our difference with the [market]
liberals is not that we believe in reducing working hours and they
believe in reducing the cost of labor. It is that we do not want to
deprive ourselves of either of the two.") The Jospin government has
already privatized more companies than the conservative Juppé
government did, even though it is in principle opposed to
privatizations.

The 320 company agreements on the 35-hour week that had been recorded
by early October produced a 7.5 percent rate of job creation in those
companies, higher than the government had demanded. As the 35-hour
week already exists in Germany, for all practical purposes, and is on
its way in Italy, it produces no particular competitive disadvantage
for the French with respect to their principal competitors and
markets, all of which are European.

The youth employment program is producing a social if not economic
return. By the end of the year it will have supplied 150,000
auxiliary policemen, teachers' aides and school monitors, sports and
social assistants in difficult neighborhoods, and people to go
shopping for old ladies or help in retirement homes, all with
five-year contracts based on the minimum wage (which in substance
would otherwise have been paid to them in unemployment benefits).

There is a Jospin "method." It consists of constant consultation and
discussion inside the government and much use of outside studies and
reports from specialists and university personalities. The utility of
the latter is less to evoke new ideas, since the views of the
specialists are ordinarily well known, as to implicate as wide as
possible a part of the intellectual and political community in the
Socialists' decisions, and to make use of their authority to build
popular support.

This method has been employed in immigration and nationality policy
reform, policy change on social charges on wages and employers, in
what in U.S. parlance would be called welfare reform, in legislation
on new technologies, including Internet commercial practice and
privacy, and a score of other issues. A Council of Economic Analysis
has been formed, composed of economists from the Right as well as the
Left.

The intent of all this has been to mobilize opinion from the
"bottom-up" (the English expression is used) rather than instructing
it from the top-down, as was the case in the previous governments. By
bringing a wide variety of views into the debate, decisions when
finally taken allow all parties to feel that they have had a hearing.
This is a new practice in France, accustomed to a Jacobin
authoritarianism and the "elected monarchy" of Fifth Republic
government, and so far it is a considerable success.

The method is so much of a success that a leading intellectual of the
Right, the novelist and commentator Jean d'Ormesson, recently asked
in a full-page article in Le Figaro, "Must one become a Socialist?"
He said that the factions of the Right were in such disarray, and
their debate so distorted by personal ambition and score-settling, as
to disqualify them as a serious political force. On the other hand,
he said, Mr. Jospin's government was of such intellectual quality,
and its principal ministers so clearly superior to their rightist
predecessors, that people like him who wanted to influence the
country's direction had perhaps no alternative to joining the
Socialist party, so as to influence it from within.

The crucial reason for the Right's disarray is the threat to it from
the extreme-right National Front (NF). The Front is less an electoral
danger to the "republican Right" (as the anti-NF parties are called)
as a coalition temptation; with the republican Right and Left fairly
evenly distributed, the Right, in order to win, is under pressure to
form alliances with the NF. This has already happened in the
aftermath of several elections to regional councils. The NF wins its
usual minority of some 15 percent of the popular vote, which with
proportional representation (the system used in regional elections)
can empower it to decide the outcome of the vote on regional
president. If the parties of the republican Right renounce National
Front support, the Socialists win, even though with a minority of the
popular vote.

The president's party, the ex-Gaullist rpr (Rally for the Republic),
firmly refuses any collaboration with the NF, but several centrist
politicians have accepted election to council presidencies with its
support, arguing that to give the presidency to the Socialist
minority is perverse (and undemocratic).

Thus the most important nationwide debate inside the Right is whether
"republican" candidates and even parties should accept "objective"
collaboration with the NF, which of course is exactly what the
National Front leadership wants. This is a factor demoralizing the
Right, and it threatens to break down the quarantine of the NF, which
until now has been imposed by the republican parties of both Left and
Right. It is a considerable victory for the strategy promoted by the
man most likely to become the next leader of the National Front,
Bruno Mégret.

Essay Types: Essay