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AB 2000 studies

Alain Boublil Blog


The true cause of the French crisis

Among the three causes generally quoted to understand the French crisis, wrong economic choices, mistakes made about fuels taxation and executive power communication policy, this last one is, definitely, the deepest. When concerns regarding communication are taking the priority against an efficient management of public affairs that leads to disastrous results. France is today going through this regrettable experience. Everything has started in the course of 2018 with announcements regarding tax increases on gasoline and diesel for the next four years. These measures were justified by environmental as budgetary reasons. They couldn’t avoid deeply hurting concerned people, i.e. most of the population for two reasons.

The first reason was the fact that it was going into the opposite direction of what had been put in place about ten years ago and that turnaround was carried out without any precaution. To reduce CO2 emissions, the state had decided, at that time, to incite French people to buy cars with diesel engines through a more favorable taxation. So a vehicle has life duration of about twenty years. 70% of buyers of a new car in 2011 made this choice to follow the recommendations of the political power. With the proposed new taxations, they would be doubly penalized. Instead of taking advantage from a lighter taxation, they will pay more taxes. Atop of that, their car, when they resale it, would have lost value. So there were a lot of reasons to be unsatisfied.

The second mistake was to announce that there was going to have not one but four successive tax increases during the coming years. For communication reasons, it was necessary to generate a shock to show government determination. The shock occurred but its consequences have surpassed all what the instigators of that policy had imagined. The worst is that this spectacular announcement was deprived of any real significance. As far as fiscal measures are concerned, the government must respect the annual budget principle. Constitutional council has just reminded that to it through the invalidation of pensions de-indexation for the year 2020 which was included in the 2019 Social security Bill because it didn’t comply with this principle. It the government wanted to abide by this decision, voted for the year 2019, during 2020, it had to include it in the 2020 Social security Bill.

Measures regarding oil taxes for 2020 and the following years would have been invalidated in the same way. Priority given to communication against a professionally elaborated political action which respects the constitution has lead to the result we see today: the abandon of these tax increases, including those regarding 2019. The crisis France is going through overpasses this simple fiscal issue and has acquired a systemic dimension. The weakness of strategic reflection has had another negative impact. Nobody seems to have estimated it was useful to include the fossil fuels fiscal policy in its international context and with regard to the evolution of oil prices and of the currency in which it is quoted, i.e. the dollar.

That year, during the first half, barrel of Brent had fluctuated around 70 $, with a temporary fall in August under 60 $. Its rate has brutally increased during September to reach a peak at the beginning of October at 85 $. During that period, dollar increased against the euro by roughly 5%. If we take into account the necessary delay to transferring rates fluctuations toward prices offered in gas stations, these ones increased abruptly at the precise time when the government was promising new and high tax increases for the coming four years. The result was not long to come. The car users discontent, in low urbanized area and so, not or poorly deserved by public transportations, added itself to the phenomenon, which is not new of the rejections of “Parisian and globalized elites” which were overrepresented until the highest level of the state. Fuels constitute a very sensitive sector. You fill your car frequently and you can see, at any time, prices all along the roads when you drive.

These reactions are not completely justified because protesters forget to say they pay rents three or four time cheaper than in the large cities, when they are tenants or they can acquire a house at a price without any comparison with an apartment in Paris or in Lyon. But what is important is what is felt and it has been aggravated by the form these announcements had taken. It would have been infinitely more efficient to put in place a mechanism which, along with the answer to the expected results, i.e. the end of the comparative advantage of diesel against gasoline, would have taken into account world prices fluctuations. It would have allowed car users to be protected against brutal increases, but it would also have included a limitation of the repercussion of a fall if it was to happen in order to keep the objectives regarding the fight against pollution. But it would have been necessary that the priority was given to the definition of the objectives and to the best way to achieve them and to make them accepted and not the chosen form to announce them.

The aggressive communication policy has concerned several other fields of the public action, but with no more results. The progressive suppression of the property tax gives another good example of the mistakes observed with fuel taxes. The government hoped to take a political advantage. The suppression was supposed to be fragmented during several years. But tenants and home owners will not feel its effects in the short term. We always believe bad news, even when they have not yet occurred but we wait good news are put in effect to take them into account. All these “communication” choices have produced only anger or disappointment. They generated the deep fall of the president and his prime minister popularity in the poll opinions, which were forewarnings of the current crisis.

Political world is not the only one to use these practices. Companies abundantly have resort to them. When they want to follow a trend aroused by the media environment, as for instance the future of electric cars, they announce spectacular investment programs representing dozens of billions, but split on four to ten years sometimes. That impresses and can push up, or not, stock prices but consequences are much less serious than the massive rejection political leaders in function, notably in France, and which are one of the causes of the rise of populists.

More than two thousand years ago, the Chinese sage Sun Tzu recommended to his master, the King of Wu the following advice: “Be subtle, to the point to be invisible. Be mysterious, to the point to be unpredictable. So you will control the fate of your rivals.” He had already understood to which point communication could play a decisive role in the art of governing. The hyper media coverage makes of course today impossible to put in practice to the letter these wise recommendations. But their philosophy is extraordinarily present if we take time to think about it and to draw inspiration from it.        


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