As we all are looking at the accusations towards Saudi Arabia, the political presented power plays (not real ones) against Iran on ‘no more sanctions waivers‘, all issues we knew were coming upfront of all the other issues, most people forgot to look at France. Or perhaps others were able to pull attention away from France.
Some give us ‘France’s Macron Promises Tax Cuts, Reforms in Response to Yellow Vests‘, others give us ‘Unsatisfied in France: Muted response to Macron sales pitch‘, the short and sweet of the matter is that tax cuts are almost out of the question. The French national debt has risen to over €2,446,051,000,000, France is approaching the €2.5 trillion mark and France is presently dangerously close to the next recession, they only passed it last quarter by nothing short of a miracle, it had nothing to do with President Macron or anyone else, for the most it was merely sheer luck that they avoided the recession stamp, Q2 might not be that lucky a moment. At that point, all the claims of ‘tax cuts via less spending‘ will fall flat soon thereafter, less spending will be the massive agenda point of Q3, and France will have no other way of dealing with it. It is even less good when we consider yesterday’s Financial Times (at https://www.ft.com/content/f9920a26-6750-11e9-9adc-98bf1d35a056) where we are treated to ‘French employees face challenge to short-hours culture‘. When the French system starts applauding the casual work staff solution, France will be heading to a much deeper pit than they imagine, President Macron played the game wrong and even as most would applaud a mental change to the workers environment and how things were done, the system is too rigid to accept changes and as that system went into shutdown mode for too often, the larger impact was ignored, President Macron was too stubborn and now there is a much large impact to be seen.
The FT opens up with the best statement ever: “French workers pride themselves on being more productive than their peers in other countries, despite the fact that they work fewer hours — but that advantage is waning“, it is the ‘waning‘ part that matters. The world had adjusted for the longest of times and their advantage is no longer there, so we have a protective system (which is fair enough) and whilst it was an advantage no change was going to happen, but now that the advantage is gone change is still not an option and now these labour laws become a noose, new investors and new companies are trying to find ulterior solutions (apart from growing outside of France), now we see that the need for longer hours is essential, or we see that these people are in a stage of becoming casual workers and being complemented (read: replaced) with other casual workers and the hours will go to the best performing people, making this solution more than a slippery slope. The Financial Times is giving us numbers where we see that French production is already surpassed by the Netherlands and Germany and that is also where we see that a growth system of part timers made that happen. You see in the end two people working 20 hours part time will perform better and get more done than one doing 40 hours and that is the shift that some France exploiters seem to be looking at, it partially improves tax revenue, but it also does something else. In the stage of cost of living these people will often work two jobs, so doing 2 times 20 hours and merely ending up working 20% harder for the same pay. When France gets there it will hit the French workforce really hard.
Now we get to the part where the €2.5 trillion mark matters, as the ECB is trying to find new ways to convince others that the continued provision of stimulus to the economy matters, that against all the odds and against all the previous parts, we see that the ECB policies will hit France harder, the debt makes it so and whilst the ECB is not an elected official, it is draining the options away from the European nations, all whilst so far it has been proven that there was no actual benefit to the economy twice over. So after three trillion in unacceptable spending the ECB still believed it can work, all whilst we see the data different.
It comes down to the old premise from Albert Einstein no less: “The definition of insanity is doing the same thing over and over again, but expecting different results” and this now gives us the optional premise whether ECB rate-setter Olli Rehn should be committed under section 20 of the Mental Health Act (the involuntary committing of a patient).
It hits several nations, yet in all what is happening these issues will hit France and Italy the hardest I reckon. That part is seen when we consider “In France only 71 per cent of the population was in employment last year, compared with 79 per cent of the UK and 80 per cent in Germany“, in this the case for casual workers is often easily made, yet in France the impact gives a larger rise, lets consider that it reduces 10% of the unemployed force, which would be great, if not for the fact that these 10% now employed imply that the same amount of employed people will see a 30% reduction to their quality of life as they now share the one job with another person. It will not increase tax revenue ad that is easily shown.
At present in France the first two tax brackets are: €9,964–€27,519: 14% & €27,519–€73,779: 30%
Example one: A person makes a full income of €35,000. This gets the treasury €4702, we now get two part-timers, giving each €19,000, giving the treasury two times €1265, making it €2530, a treasury loss of €2172.
Why? The zero bracket will now apply to both employees, and even they will not see it in their second job, we see a larger shift that will occur, so in their time of great debt the treasury will fail itself twice over and even in more ways than one thinks. When you consider that the average income in France is €26,700, the part timers will dent the treasury a lot further than you think, and consider that the second job is fully taxed, how long until the French will not go that way? How much will the treasury miss out on, that is beside the next wave of badly designed stimulus ideas, a game that only sees banks and members of the ECB winners, the rest gets an added debt, how was that ever fair, just or even beneficial to any economy? Yes, France too will face their endgame, yet whether this Endgame involves President Macron (Thanos) and the Avengers (the yellow coats) to come to blows is not a given, it is an expected must soon enough.