How to reflate France's economy - Essay

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Grégoire Michelin 2nd2                                                                                                             13/11/12                      

Economy Essay

“We” in the essay = me and my government.                                                                                                                         1428 words

Introduction

There are two different ways to help France’s economy get back on track. They are austerity and growth. Austerity programs consist in a set of policies established by governments in financial debt difficulties. These policies aim to reduce spending for public goods and services. (Example in France, with president Sarkozy, approximately 150.000 civil servants were fired, this decreased the amount of money used to pay civil servants in France, which in turn, made it possible to run the country without having to borrow as much money). Growth programs consist in increasing the GDP and spending money, to reflate the economy. Of course this money has to come from somewhere, so growth programs often include imposing a lot of taxes. (Example in France, with president Hollande, taxes were imposed on bank profits, and taxes on the richest part of the population were increased). Economists are very divided on this subject, and both of theoretically work; it depends of the situation we are in.

Economic Program

Austerity is a short term solution only; a country’s economy cannot rely on it forever. This is why as a president; it would be good to start by making the debt of France smaller, then using this to our advantage, and  

Firstly, we have to make France more competitive. To do this, we will change the work time of the French, and their minimum age of retirement. Today, the French work on a minimum basis of 35 hours per week, and retire at a minimum age of 60. To make France more competitive, we will change these to 40 hours, and an age of 64. The average life span keeps on rising thanks to better health care; it would only go well for the economy if people were to work a few years more, because there would be less to pay for people who work. The 40 hours will be payed the same, because if there were the same amount of workers in a company but all of them had to be payed more, the company in question would either lose money in paying them, or fire a part of them. To increase competitivity, we have to make the price of production in France lower, so that fewer companies send their production in China for example. To do so, we have to lower the national insurance contribution payed by the employer to pay his workers in France. Products that are made in France will therefore be more expensive because the workers are payed in France than in China for example. To counter this, we will add a tax on products (depending on the price of the product) made in countries that have very cheap labor. (China, Vietnam, Turkey, Thailand, etc…)  This will bring part of the production back to France, and the loss of money in the lowering of the national insurance contribution will be compensated by the tax.

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 Next, we will reduce the salaries of the ministers and the president. The salaries of the ministers is now of 9940 euros (Under president Hollande), which will be reduced by 30%, leaving them with 6660 euros per month. The salary of the president is now of 14 910 euros (Under president Hollande); it will be reduced by 40%, leaving the president with 8950 euros per month. We would also stop having mayors in every single city, and do like in the U.S.A, which is to instate a governor for each department. This governor would be in charge of all the cities ...

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