1/6. Tweet thread. Why do I think the economic program of the Nouveau Front Populaire is worse than that of the Rassemblement National?
The nature of the two programs is very different. I have argued that the RN economic program is a Christmas tree, without logic or coherence (previous tweet thread). The NFP economic program is instead mostly internally coherent, based on an epochal redistribution from rich to poor, and from firms to workers.
2/6. Why is it so dangerous? It is essential to distinguish between two types of programs on the left. A social democratic one, that tries to equalize chances and redistribute without destroying the incentives to create and to produce---roughly the program of the socialist party of old. A revolutionary one---to use the words of Jean Luc Melenchon---which goes much further, is nearly confiscatory in nature, hoping that, somehow, the economy will continue to function.
3/6. For all practical purposes, the NFP program is of the second kind. It intends to tax income through much higher tax rates. The program does not give a number, but in 2022, LFI suggested a marginal tax rate of 90% for the highest tranche. It intends to tax successions through much higher tax rates as well, indeed with a 100% tax rate above some level. It intends to reintroduce the ISF and tax wealth at 3% a year, according to Manon Aubry. It is hard to see how this will not lead entrepreneurs to move en masse their operations elsewhere.
4/6. It intends to increase the SMIC right away to 1,600 euros. Given how many wages move with the SMIC, this means a major increase in labor costs for firms. It argues that, on Keynesian grounds, this shift in income will lead workers to spend more, increase output, and benefit all. It ignores the fact that, on the supply side, the increase in costs will lead many firms to go bankrupt, many more firms to become uncompetitive and layoff workers, all firms to decrease investment, and growth to decrease.
5/6. As a social democrat, I believe in equalizing chances, in improving education, in redistributing income from rich to poor. As an economist and someone sometimes involved in policy design, I also know there is a delicate balance between reducing inequality and maintaining strong growth. The NFP program simply ignores this balance, and can only, like many of its predecessors, lead to an economic catastrophe.
6/7. Just as for the RN program, we are told, sotto voce, not to worry, that the program will not be applied. I am skeptical. The program commits to taking dramatic measures in the first 15 days and it is hard to see how it can renege on those. In any case, a less bad program would still be very bad.
なぜそれがそれほど危険なのか? 左派のプログラムの2つのタイプを区別することが肝要である。一つは社会民主主義的なもので、創造と生産のインセンティブを壊すことなしに機会の平等と再分配を求めるものである――概ねかつての社会党のプログラムである。もう一つのジャン=リュック・メランション*2が言うところのより革命的なものは、それをさらに推し進めたほぼ収奪的な性格のものだが、それでも経済は機能し続けると期待している。


To be clear, there are other central issues at stake in this election, immigration, racism, foreign policy, support for Ukraine, etc, and they may be determinant in how people decide to vote. I try to stay in my lane, the economic aspects of the programs.


1/4. My thread on the economic program of the NFP has triggered a fascinating set of reactions. I have picked up three main critiques.
2/4. Critique 1. The RN is a fascist party. Thus, we must vote NFP, even if its economic program is dangerous. Pointing its shortcomings is irresponsible. Example:
“I understand Blanchard's criticism of the NFP programme. And I surely agree with him on more than one point, with numbers on the table. BUT as a citizen, it sounds a bit like equidistant ambiguity with the RN. What kind of society do we want?”
Answer : I simply do not accept the logic that the only alternative to RN is the NFP. (and even if it were so, I would still feel compelled to assess its economic program). One can vote for the center. Centrist parties may be far from perfect, but they are not racist, and their economic programs are much less dangerous. (I shall do another thread on this)
3/4. Critique 2. Don’t worry. The NFP will not apply its economic program. Example:
“Olivier Blanchard assumes the program of the NFP will be wholly implemented and focuses only on the measures LFI promotes. This is red scare-mongering. NFP will have to share power with centrists.”
In other words, don’t worry. The program will not be applied. (We hear the same thing from the RN side. ) I am not sure that this is a very convincing argument, especially given the promise of the NFP (not just LFI) to take several very strong measures within the first 15 days.
4/4. Critique 3. The program will not have adverse serious economic effects. There are actually surprisingly few arguments made along these lines. There are a few. Example:
“Only a very small part of the economy is firms where it will be difficult to raise SMIC without these impacts. Most of the economy is large chains which will be fine, a dent in their profits maybe, not a big deal.”
I wish I could share this optimism. Small firms will be hurt. Big firms may be better able to withstand the shock, but they are also the firms that can decide to produce elsewhere, or even to move headquarters.