18 June 2007

A victory with a grimace
and a defeat with a smile

The big news in France this morning is the unexpectedly strong performance of the Parti Socialiste's candidates in yesterday's second-round of parliamentary elections. While President Nicolas Sarkozy's UMP party won a clear majority in the parliament (called the National Assembly) with 322 out of 577 seats, it fell far short of the landslide predicted just a week ago. Pundits who said the UMP would win 400 seats or more in the new Assembly were wrong.

Une rose

The Parti Socialiste (or Labor Party), despite losing in the presidential election, won 40 more seats in the new Assembly than it held in the outgoing one. That will make it much more interesting to see if Sarkozy and his prime minister can get their entire program passed by the legislature this summer and fall. There will be a more interesting debate than there might have been.


Blue vs. pink The press in France is describing Sarkozy's party's performance in yesterday's legislative elections as a "victory with a grimace" — the president's party actually lost seats in the National Assembly compared to the last elections in 2002, even though it retained a majority.

The Parti Socialiste's performance is being called a "defeat with a smile" — the socialists picked up 40 extra seats compared to their numbers in the outgoing Assembly.

All along, pundits and analysts had been predicting a "blue tidal wave" for Sarkozy's candidates. His UMP party is represented by the color blue, while the French socialists' color is traditionally pink (for the color of a rose). One headline I saw yesterday said that la digue rose (the pink sea wall) had held back la vague bleue (the blue wave).

Hydrangeas are just starting to bloom.
Ours are turning pink, not blue.

It's interesting that in the U.S. it's the Democratic Party (the left) that controls the Blue States, and the RepublicanParty (the right) that rules in the Red States. It is the opposite in France, where the right is blue and the left is pink. That is symbolic, I think, of the differences between France and the U.S.

Most of the big names in French socialism won the right to keep their seats in the new National Assembly, and some won very comfortably. François Hollande, who has been head of the party, for example, won 60% of the vote in his district. Former culture minister and socialist éléphant (heavyweight) Jack Lang won 55% in his. Laurent Fabius and Dominique Strauss-Kahn, two other éléphants of the party, will be back too.

Centrist François Bayrou did better than expected, with his party winning four seats in parliament, and the Parti Communiste won 15 seats or more. Overall, the left-leaners will have 230 or so seats, and the right-leaners will have about 350, in the new Assembly.

In the district we live in, the Sarkozy candidate got about 55% of the vote. This is a fairly conservative, rural area.


Au revoir Some of the people who were defeated yesterday were Marine Le Pen (extreme right presidential candidate Jean-Marie Le Pen's daughter and heir apparent), Jean-Pierre Chévènement (a former government minister and presidential candidate who said he would retire from politics if he lost his seat in parliament), and especially Alain Juppé, still mayor of Bordeaux but as of today without a seat in the National Assembly.

Yesterday's weather

Juppé was a Chirac favorite, was seen as the wonder boy of French politics until scandal brought him down a few years ago, and had been appointed über-minster of the environment and the economy by Sarkozy. He's been compared to Al Gore for his focus on environmental issues and sustainable development policies, and his general wonkishness.

Juppé lost his seat in the Assemblée by 670 votes to the socialist candidate in Bordeaux, a woman named Michèle Delaunay. Now he will turn in his resignation as a government minister this morning. His national political career may have bitten the dust last night.

By the way, there are about 30% more women in the new Assembly than there were in the outgoing legislature, according to France Inter radio. That's 107 women now, out of 577.


Splitsville To nobody's great surprise, Parti Socialiste presidential candidate Ségolène Royal announced last night that she and François Hollande are ending their 25-year concubinage (they have four children together) . Rumors that their relationship was on the rocks had been circulating ever since Royal secured the Parti Socialiste's presidential nomination last winter. Hollande has long been the general secretary of the party, and some speculated that he wanted the presidential nomination for himself.


It's the taxes, stupid Why did the socialists do better than expected in the legislative elections, and why did Sarkozy's party fail to realize its dream of an electoral landslide? The analysts seem unanimous in blaming Sarkozy's minister of the budget, Jean-Louis Borloo, for the party's relatively poor showing. He's the one who last week raised the prospect of a hike in the French value-added tax from 20% to 25%.

Callie's reaction to the whole situation

The value-added tax, or VAT (which in French is the TVA, la taxe sur la valeur ajoutée) is fundamentally a sales tax. Whereas in the U.S. the sales tax is added to the price on an item at the time of purchase, in France the TVA is just part of the advertised price of things you buy. The price you see is the price you actually pay at the cash register.

In that sense, it's a hidden tax. If a computer is advertised for sale in a store at €500, for example, about €100 of that is the TVA that the government collects.

It's ironic that it's the right wing in France that proposed a tax increase, and the left wing that reaped the electoral benefits of the public reaction. That's what they call counter-intuitive, in American terms. Right-wing American politicians accuse the left of always wanting to raise taxes.

But what the Sarkozy people were talking about was lowering the payroll taxes that businesses pay and making up the lost tax revenue by increasing the taxes consumers pay on the goods they purchase. It's seen by those who advocate it as a way to encourage businesses to hire more workers.

Someone said that businesses will be able to lower the prices of the goods they produce if they don't have to pay so much in payroll taxes. Do you believe that? I'm not sure I do. But if it were true, the added sales tax wouldn't actually increase prices for consumers.

Sounds like the old voodoo economics of the Reagan years to me. The TVA debate will be a major component of the political noise coming out of Paris for the rest of 2007.


  1. You got it right... French voodoo economics. As a sometimes retailer myself, I suspect very few products would see a price adjustment because the company got a new break in the social charges of their payroll taxes. It might slow down price increases. But I'd be willing to bet that the first use would be to improve the bottom line, whether that was for share holders or simply the owner's pockets.
    Not to mention that it is pretty well documented that "sales taxes" place a disproportionate part of the tax burden on those who can least afford it.

    I don't dispute that France has some hard choices to make in order to be competitive in the global market. And to improve the business climate for smaller entrepreneurs. But just simply shifting more of the burden to the consumers in a higher TVA seams like a ... well, dare I say, "chicken-shit"... way to go about it.

    An interesting note about the French TVA as compared to US state sales taxes. As a retailer in France you often pay those taxes up front before you even sell it. While in the US you "collect" the sales tax from the consumer and give it to the government late when you file your sales tax returns.

    That confuses a lot of Americans who see the TVA as a tariff on imported goods because it gets paid as soon as the merchandise comes into the country.

  2. Ken, we are just back from a long weekend, so I have just read your blogs re: Callie and puddles. We (the establishment)have a border collie here at Quail, but she chases geese & coots. But I recognize the strong hind legs as being in the same racing family. No matter what they chase, they put their all into it. Love the pictures. Best regards, Mary Boyken

  3. I enjoyed your comments on the French election. My guess is that too many Sarko supporters stayed home feeling that a huge victory was in the bag. Also, the left really got out the vote. And many also may have felt that Sarko's big victory needed to be tempered a bit. The next year should be a most interesting time to live in France.

  4. A very interesting and well documented post. I enjoyed it.
    Back online after a week roaming Paris cemeteries with my friends from Norwich and both my blogs being down!


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