How to reflate Frances economy Essay Example for Free

How to reflate Frances economy Essay Introduction There are two different ways to help France’s economy get back on track. They are austerity and growth. Austerity programs consist in a set of policies established by governments in financial debt difficulties. These policies aim to reduce spending for public goods and services. (Example in France, with president Sarkozy, approximately 150.000 civil servants were fired, this decreased the amount of money used to pay civil servants in France, which in turn, made it possible to run the country without having to borrow as much money). Growth programs consist in increasing the GDP and spending money, to reflate the economy. Of course this money has to come from somewhere, so growth programs often include imposing a lot of taxes. (Example in France, with president Hollande, taxes were imposed on bank profits, and taxes on the richest part of the population were increased). Economists are very divided on this subject, and both of theoretically work; it depends of the situation we are in. Economic Program Austerity is a short term solution only; a country’s economy cannot rely on it forever. This is why as a president; it would be good to start by making the debt of France smaller, then using this to our advantage, and Firstly, we have to make France more competitive. To do this, we will change the work time of the French, and their minimum age of retirement. Today, the French work on a minimum basis of 35 hours per week, and retire at a minimum age of 60. To make France more competitive, we will change these to 40 hours, and an age of 64. The average life span keeps on rising thanks to better health care; it would only go well for the economy if people were to work a few years more, because there would be less to pay for people who work. The 40 hours will be payed the same, because if there were the same amount of workers in a company but all of them had to be payed more, the company in question would either lose money in paying them, or fire a part of them. To increase competitivity, we have to make the price of production in France lower, so that fewer companies send their production in China for example. To do so, we have to lower the national insurance contribution payed by the employer to pay his workers in France. Products that are made in France will therefore be more expensive because the workers are payed in France than in China for example. To counter this, we will add a tax on products (depending on the price of the product) made in countries that have very cheap labor. (China, Vietnam, Turkey, Thailand, etc†¦) This will bring part of the production back to France, and the loss of money in the lowering of the national insurance contribution will be compensated by the tax. Next, we will reduce the salaries of the ministers and the president. The salaries of the ministers is now of 9940 euros (Under president Hollande), which will be reduced by 30%, leaving them with 6660 euros per month. The salary of the president is now of 14 910 euros (Under president Hollande); it will be reduced by 40%, leaving the president with 8950 euros per month. We would also stop having mayors in every single city, and do like in the U.S.A, which is to instate a governor for each department. This governor would be in charge of all the cities in his department, and when a decision is to be made, 20 inhabitants of the department will be called, to hold a â€Å"committee† and make the decision. It will be a duty, which means the inhabitants will have to go. This will help the economy, as there will be only one person to pay per department, and not dozens of mayors, it also gives a â€Å"voice† to the citizens in decision making. There are many people who are unemployed in France (10%) and receive unemployment benefit for a very long time, without trying to find work. As this does not motivate them to find one because they receive money without doing anything, we will keep on giving this unemployment benefit, but only for 2 months, the time for them to find work. This reform will motivate them to find work, this way they will be productive, therefore helping a company or industry to grow, and money will not be wasted. This change will of course also make unemployment decrease. Small companies are very important to the economy, as they might end up as the next multinationals, but they are heavily taxed, which makes them very hard for them to grow. If we make these taxes smaller, people would be encouraged to start their own companies, and this will create employment. Small companies that are already created will grow faster, and will create jobs, which will make the company itself more productive. These jobs will be there for the population receiving unemployment benefit. There will be a loss if we just relieve taxes on small companies, so we will compensate this by taxing bigger companies, which have already emerged, because they will not be affected by a tax as much as a small company. (The tax in question will not be too strong; it will just be enough to compensate for the loss in the tax relief on smaller companies) Education is a very important part of the French economy. Schools are here to â€Å"train† the future generations of workers. Access to education is free today in France, but the quality of this education is sometimes questionable. Firstly, there are not enough professors in the schools. It is logical that if there were to be one professor for 25 students, the quality of the education they would receive would be better than today, where we have in average one professor for 30 students. To compensate this lack of professors in schools, we will create 12000 jobs for professors in school; this will make the student/professor ratio smaller, which will increase the quality of the education received. To become a professor, you have to be â€Å"trained† two years in a university. This is not enough, considering the disciplinary problems in some schools. Professors should have 3 years of complete training, which would include a deeper disciplinary course, teaching methods, etc†¦ The principal sectors of production of France are agriculture, energy, tourism, trade and industry (France is one of the first industrial powers worldwide). Mass market retailing is choking the sector of trade, as it attracts the clients of little traders and makes mass profit out of it; it also allows itself to buy products at very low prices from producers (Farmers in the case of a supermarket). To resolve this problem, we would add a tax on products bought in mass market retailing services, which would bring clients back to the little traders, so that they don’t die out. Little trades do not buy products as low priced as supermarkets do, which would make money for producers. In the case of a supermarket, the trade and agriculture sector would both benefit from this tax. A French household produces in average 16.4 tons of Co2 every year; this is far too much. To avoid this, and preserve the environment, a tax will be imposed on households that end the year with more than 16 tons; of course this number will decrease every year to improve the given results. Renewable energies provide 13% of the electricity needed in France, nuclear energy provides 76% and fossil fuels provide 11%. We would invest in research for renewable energies (Hydro-energy, wind energy, solar energy), and close down the most risky nuclear reactors. (For example the 4 reactors in Blayais, Braud-et-Saint-Louis, which are not very productive and are very old and unsafe). Conclusion As a president, I would go towards austerity first, to reduce the debt of France, and to have more possibilities in my actions later. France is already in a dangerous situation, and going into a politic of growth would be spending too much money that we don’t have (Which is why I chose austerity as a short term solution), and it would be too much, France would go into a recession. After a period of austerity (Which means: after having reduced the debt), I would have gone in a politic of growth, which would have thrown France’s economy back on track.