At the end of this week, a ceremony in François Mitterrand honor will occur on the occasion of his death 25th birthday. Next May 10th, will be celebrated the 40th birthday of his election as French president. These events will provide the opportunity of a thought regarding his achievements. If his role in the French society transformation with the liberalization of audio and TV sectors and the abolition of death penalty and if his action in favor of France cultural influence and of European construction are not disputed, his economic policy has been most of the time criticized. Time has come to make the difference between what is true and what is false.
The first challenging issue, still today very present, has been the rebound policy decided in 1981. The adopted measures were inscribed in his program. Is it necessary to remind that the duty of a political leader is to respect his commitments? Wages and social benefits increases and household consumption they generated would have provoked, are we still hearing today, the huge trade deficit which, since France was a member of the European Monetary System, has been at the origin of the three devaluations, in October 1981 (3%), June 1982 (5.75%) and March 1983 (2.5%). The devaluation word is in fact inappropriate. They were re-alignments including each time several currencies. From the EMS creation in March 1979 and September 1987 it will have eleven operations of that kind in which five involving the French Franc, four depreciations and one reevaluation in June 1985.
At that time, currencies which were not in the EMS were freely fluctuating which was not without consequences on other countries. The French economy was then fragile because the Barre government had left at its departure a substantial trade deficit (55 billion) and a high inflation rate (14%).Germany enjoyed a strong trade surplus and an inflation rate much more moderate (6%). In the U.S., in 1979, the new Fed chairman, Paul Volker, had launched an aggressive policy with high interest rates to fight against the consequences of the second oil shock. The impact was immediate on the exchange market. The value of the American currency goes from 4.20 FF as an average in 1980 to 6.56 FF in 1982, i.e. a 56.2% increase.
That dollar rise will impact the main line of the French trade balance, the energy bill, because oil prices were denominated in dollars. It goes from 133 to 178 billion, i.e. a 45 billion increase. The trade deficit will follow, with a 2 billion difference, the same evolution, going from 55 to 102 billion. So it is wrong to pretend that it is the consumption rebound which has deepened the deficit because families did not buy more oil in such proportions. The trade deficit increase had an exogenous cause, the American monetary policy. But that has had destabilizing consequences in Europe because Germany, with its coal production, was less dependent than France from fossil fuels imports.
The current government ignored the real origin of this imbalance, which will lead to the famous “rigor turnaround”, which will be interpreted as a political turnaround and the recognition of its past mistakes. The adopted measures, in a political crisis climate, will be quickly abandoned and will not impeach France to going on its economic growth, after having been one of the very few countries, along with Japan, having avoided recession and knowing how to contain its public deficit which will remain until 1985 clearly inferior to German one.
This debate has occulted the major achievements, and even historical ones, decided by François Mitterrand during his two mandates. In 1981, at the inauguration of the Paris-Lyon high-speed line, which a portion was remaining to be built because the previous government had stopped the works, he will ask SNCF to make proposals to link to Paris, the major cities in the west and the southwest of the country. He will soon after initiate discussions with Margaret Thatcher about the realization of a line across the Channel and the Canterbury Treaty will be signed in 1986. The objective was of course to strengthen the links between the United Kingdom and its European partners. High-speed lines toward the North of France, Brussels, Amsterdam and Cologne will follow with the same purpose as the mission given to Jacques Delors to create the Unified Market. There too, these projects will reach their objectives as his Major Works Program : the Big Arch has contributed to the rebound of La Defense which became the largest business center in Europe as the transformation of the Louvre Museum which has increased Paris touristic attractiveness.
That can appear as a paradox in a country managed by socialists and having, during three years, communists as members of the government, to see the emergence of the creators of the great groups which are making France pride today. Despite that, it is what happened. Through the acquisition of Boussac and its jewel, Dior, in 1985, Bernard Arnault, through well selected and properly managed acquisitions, has made LVMH the biggest French market capitalization (250 billion). François Pinault was at the beginning a simple importer of wood coming from Northern countries. He succeeded, starting in 1984, to build a retail group and a luxury one, Kering, which promote French excellence. Its market capitalization overpasses 70 billion. Vincent Bolloré, in 1981, has started his carrier at the head of a small family enterprise producing cigarette papers. He has, all along the Eighties and the Nineties created a major player in logistic and in media whose market value is near 10 billion. It was also in 1981 that two major international industrial partnership will be, regarding the first one, strengthened (aircraft engines) and regarding the other one, concluded (soft ware). Strong pressures existed in order to abandon the alliance with General Electric to the profit of Rolls Royce. And the agreement between Dassault and IBM has constituted a major turnaround because the whole public strategy in this area was, until that, to be independent from the American computer maker. Market capitalization of Dassault Systems which was born to run the alliance, today overpasses 40 billion.
But paradoxes were not limited to the creation of successful enterprises. Thanks to François Mitterrand support, Pierre Bérégovoy has started the de-bureaucratization process of the economy. Under the supposed liberal Giscard presidency, credit was managed by administrations. Prices were controlled as were transactions with foreign countries. All these constrains which were weighting on the State to issue bonds, on enterprises to finance their investments and on household to manage their savings or simply to travel abroad, and which were unique in developed countries with the exception of Japan, have been progressively lift. There is still a lot to do to eliminate the bureaucratic delirium, as the manner the current pandemic is managed shows it. But it is under the François Mitterrand aegis that the first progresses have been made.
So, time has come to recognize the reality. François Mitterrand did not withdraw its interest on economic issues. To the contrary, he has leaded the adaptation of the French economy to the disruptions generated by the nascent globalization. He knew, thanks to his family environment and to his network of faithful friends who had accompanied him all along his life how an enterprise was functioning. It is that which will allow him to dictating strict rules on nationalized enterprises and to making the good choices of their executives.
That demand of truth is not simply dictated by historical considerations. The decisions he took are based on principles which are still valid. Current political leaders, whatever they are in power or they hope to conquest it, would be well inspired, at their turn, to remember that.