French President François Hollande, insofar as he is known at all, is remembered in the popular mind as the president on the scooter, heading to a tryst with his new companion. His personal travails became the subject of endless jokes.
The state of the French economy, society, and politics, can also be something to laugh about, but the latest twist in events has some sobering lessons for us all. Mr. Hollande's recently chosen prime minister dissolved the Cabinet – on behalf of the President – and fired an economic development minister whose public questioning of the new economic direction of the government was leading to an entirely dysfunctional (as opposed to a moderately dysfunctional) government.
Mr. Hollande was an unconventional functionary of the Socialist Party whose presidential campaign was based largely on bromides. He did not so much win the election as then-president Nicolas Sarkozy lost it. His campaign was based on the premise that France did not need to change, that Europe needed far milder medicine than that being proposed by the IMF and his German counterpart Angela Merkel, and that the "French model" of a big state, major spending and high taxes was a world significant antidote to the orthodoxy of smaller government and lower taxes that were happening all around him. Taxing the rich would solve the problem, and the crisis of inequality could best be overcome by even more borrowing, more spending, and more intervention.
Mr. Hollande's election was also marked by a a triumphal Socialist majority in the National Assembly, and so there were no apparent obstacles to his being able to implement his program. He could do as promised, and things would improve according to the theory.
Remember that Mr. Hollande did not take office before the financial crisis of 2008, but well after it, that his predecessor had (together with every other government) primed the pump, bailed out banks, increased social spending, and done it all with borrowed money. Mr. Hollande came to office when the binge was over and the hangover had well set in.
Two years into office, the hangover is worse. Taxes are higher (one businessman referred to France as "Cuba without the sunshine"), debt is higher, and unemployment is still at historic levels. Those pesky souls called "rating agencies" have begun to descend, and have lowered France's credit rating. Long before his personal problems became public, Mr. Hollande's popularity was plummeting. He was eviscerated in the municipal elections, with the National Front now firmly established as a political party no longer seen by many French voters as on the lunatic fringe. Its anti-immigrant, populist, right wing message has now achieved alarming resonance.
Mr. Hollande has done what French presidents do when faced with massive unpopularity – shuffled his cabinet. His economics minister, Arnaud Montebourg – who disagreed openly with his policies – has been replaced by Emmanuel Macron, who rejects the "socialist" label, and insists he is a "social democrat" who believes in structural change.
The sputtering French economy is not alone – Italy and Germany are perilously close to deflation, and even tougher sanctions against Russia will deepen the challenge.
Harold Wilson once memorably remarked that change for labour and socialist parties was difficult because it was "like the Salvation Army telling its members there was no salvation." Mr. Hollande has lost the narrative, and is losing his base. He doesn't just need to shuffle his cabinet, he needs to explain the new direction, admit mistakes, and have the courage to chart a different course.