Monday, 5 December 2016

Jean Bapiste Holland

Francois  Hollande announced he would not be a candidate for President in the forthcoming French elections.
He has a very unhappy term as President. The main reason for this was his embrace of supply side economics.

Francesco Saraceno writes about this very well.

There is nothing wrong in boosting the supply side of the economy however it will not boost demand ( unless you are embarking on a significant infrastructure program)for goods and services but will boost efficiency when demand is increasing.  Supply reacts to demand.  Employers do not invest because you try to boost the supply side. ( Neither do they invest merely because taxes are cut )They invest when they are confident about demand over the medium term.

Hollande has now learned this the hard way. A program of austerity and supply side measures was always going to fail and fail it did badly.