Economic science is frequently based on reasonings. They could reveal themselves right and the authorities which have taken the decisions which were based on them and their populations are taking the benefits. But they can also lead to failures with heavy consequences; this is not new and this not only regards France. A century ago, Keynes, then a member of the British delegation which was negotiating what will become the Versailles Treaty resigned because he thought that the sanctions imposed to Germany were too heavy and could send the country into a crisis. We know what happened after, with the depression and the hyperinflation which were not without connection with the coming into power of Nazism. Some years ago, British political leaders considered that to belong to the European Union presented more drawbacks than advantages and proposed to get out of it through the organization of a referendum. It was the Brexit which every day more weakens the United Kingdom confronted to an aggravation of its deficits, to inflation and a fall of the pound, an environment which, atop of that, penalizes City of London.

In the days following the war, along with building an ambitious welfare system, the French State thought that it was its duty to control the goods and services prices. The 1945 Ordonnance was published. During near 40 years, enterprises had to negotiate with the Finance minister administration the price increases, from the bread baguette to rentals and hotel tariffs. That method, as it was thought, allowed to protecting economic agents against inflation. It was a total failure which harmed the French reputation inside the European Economic Community at a time when was created the European Monetary System imposing fixed parities between State-members. In 1980, after the second oil shock, inflation had reached 14%. It will be necessary to wait for 1984 and the reforms initiated by Pierre Bérégovoy and supported by all the following governments that the enterprises have at last the possibility to freely set their prices.

Competition, much more than the bureaucratic apparel, was in a position to guarantee stability and in many domains prices reductions favorable to the consumers and their purchasing power. France progressively became one of the Europe good pupils and the current crisis brings the proof of it with an inflation rate inferior by 3% to the European average when everywhere have been put into place shield measures or even price freezes in the most exposed sectors. The process having been launched by the left, it was accused of treason of its promises in approving the liberal ideology when the issue was only a good sense one and a right economic reasoning.  

But this reasoning suffers exceptions. France has accepted the opening to competition of the main public services in the energy, transportation and telecommunications sectors. That opening remained limited because it was not possible to question the status of the major infrastructures. We were not going to build new High-Speed-Trains tracks near these which already existed or multiply the high-tension lines. But the consequences for the operators have been frequently severe without consumers take a real profit.

The executives of these companies started by launching a wave of costly foreign acquisitions. The point was simple: since they were going to lose markets shares in their country of origin, they must compensate that through winning market shares abroad. The result has been a high increase of their indebtedness, going until to put in danger the situation of the company, the most significant case being France Telecom, which became Orange. But the consumers, to the opposite of the initial objective, did not take any advantage because the companies, along with the financial charges resulting from their acquisitions, had to incurred new operating expenses with the strengthening of the commercial functions and the increase of the advertising budgets which were going with them and they passed on them to their clients.

In the power sector, the State has approved the obligation imposed to EDF to sale to its competitors a share of its nuclear power production at a price very inferior to the market one. The absurdity of such a measure appeared when has been noticed that many new electricity distributors preferred to terminate their contracts with their clients in order to sale on the market the power acquired at a good price and to make huge profits. In the same time, EDF had to import at a high price the power it needed to deliver to its own clients.

Third major mistake, the choice made in 2013, with the Credit Tax in favor of Competitiveness and Employment, to reduce enterprises social charges in focusing the measure on low wages. The purpose was to reduce the labor costs to regain competitiveness and to lower the trade deficit which was continuously rising since 2002, the last year with a surplus excluding energy, and to slow the current de-localization trends. The failure is obvious since this deficit has not ceased to become bigger these last ten years. The dozens of billion taken in charge by the State had to be covered by taxes increase on household and by a rise of the public debt. The main benefactors of that decision have been big retailers and the services activities which are not submitted to international competition. The industry, which was the target, has taken little profit from it because the highly-qualified jobs, from which it depended to stand out in front of its competitors could not profit of it and its share in the GDP has continued to fall.

At last, the closing of the Fessenheim nuclear power plant will remain as the example of what must not be done. It was apparently a political decision dedicated to get ecologist votes and to please Germany which had just decided the closure of its own power plants and toward which a large share of the Fessenheim production was exported. But, in fact, what was at stake was the nuclear power place in the French electricity production. The State didn’t anymore believe in its importance and, especially, in its future. The arguments (age, seismic or flows risks) put forward were not relevant since the Nuclear Safety Authority, in general very fussy about these issues, had renewed the operations licenses.

We measure today the consequences of that mistake. France has always been a net power exporter. It has become an importer due to the unavailability of a share of its plants and the situation has been made worse with the Fessenheim closure. The government has admitted its mistake because it has abandoned the objective to reduce the share of the nuclear power production to 50% and has asked EDF to launch plant works to build at least six new nuclear power plants. But the cost of that mistake is still to be calculated and it has not yet been fully recognized by these who committed it.

All these decisions, from the price control which must allow to fighting against inflation to the denial of the nuclear regarding France independence and safety energy supply including the opening of the public services to competition and the closing of Fessenheim, have been taken in the name of economic reasonings which proved themselves to be wrong. If we want that such errors don’t reproduce in the future, it is essential that political leaders admit that. The “economic experts” must show their modesty and real debates must be organized.