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This Free Market Prophet May Find Honor After All


International Business: FRANCE

THIS FREE-MARKET PROPHET MAY FIND HONOR AFTER ALL

Former Economics Minister Madelin's comeback drive

It looked like a career in ruins. Last August, French Economics Minister Alain Madelin was fired by his boss, Prime Minister Alain Juppe, for publicly questioning why government workers deserved their rich benefits. Pundits took Madelin's sacking as a sign that serious economic reform in France was dead--and that Madelin, politically speaking, was a goner.

But the maverick Madelin refuses to stay on the mat. Six months later, he's back in the news, garnering headlines in Le Point and other periodicals as author of a best-selling book and the possible leader of one of France's biggest political parties. And with France's malaise deepening, Madelin's standing as agent provocateur of free-market reform looks likely to grow.

GODCHILD. The 49-year-old Madelin launched his comeback effort on Jan. 30, when he declared his candidacy for the leadership of the center-right Union for French Democracy, the junior partner in France's governing right-wing coalition. An intellectual godchild of Margaret Thatcher, Madelin wants to unify the UDF behind his program to get government out of the markets and to slash public spending and taxes. He also wants private pension funds that could invest in small businesses, which Madelin believes are key to creating new jobs.

Madelin's platform is shaking to the roots a UDF membership divided between free-marketeers and those who back a strong state role in economic planning. Several centrist candidates may still challenge Madelin for the party leadership, so his grab for power is not sure to be successful. But a victory would be an enormous boost for him: The leader of the UDF wields great influence over national legislation, and is usually a serious contender in presidential elections.

But even if he fails to win the UDF post, Madelin has other ways to keep his public profile high. The boyishly handsome politician has gotten himself elected as a representative from a district in Brittany, and he is mayor of the small town of Redon. He is running a think tank, called Idees-Action. And he has just published a book promoting his solutions for France's troubles.

True, Madelin's work, When the Ostriches Finally Lift Their Heads, does not offer anything much more radical than standard Thatcherite economics. Yet as France's costly welfare state continues to grow at an alarming rate, Madelin's prescriptions look better and better to the shopkeepers and small-business owners who have been rallying against punitive tax rates, rigid labor laws, and heavy social charges. Madelin, the son of an auto worker, also wants to appeal to the working class, which he says is being overtaxed and overregulated by an elitist political class.

Madelin's quest for more power may benefit from Juppe's own rocky performance. After promising a strong antidote for a paralysis of consumer confidence and a slide toward recession, the best the government was able to come up with was a dollop of Keynesian stimulus, unveiled on Jan. 31. Few expect the plan, which lowers the government-set interest rate on passbook savings and provides new incentives for construction, to make any noticeable difference in the poor economic outlook. A new round of state spending to boost the economy is also unlikely: The government has sworn to contain its swelling budget deficit to qualify for monetary union by 1999.

With France in such a mess, Madelin's critics doubt he could do better than Juppe, should he ever have the chance to put his ideas into action. Juppe in fact did try to scale back civil servant perks--one of Madelin's ideas--shortly after Madelin left the government. A series of crippling strikes ensued. And even supporters admit that as Economics Minister and in an earlier stint as Industry Minister, Madelin displayed disappointingly little skill at implementing even mundane policies, much less the kind of frontal assault he envisions for reforming the welfare state.

But Madelin doesn't have to run the country to be influential. He just has to cultivate his image as a hard-thinking realist, the only one with new ideas, now that Juppe is paralyzed and the opposition Socialists have no clear alternatives. "Madelin's ideas are going to be dominant," says Morgan Stanley & Co. economist Eric Chaney. "He's in the trend of what is happening in every European country." This is one voice in the wilderness the French will be hearing more and more.BY BILL JAVETSKI, WITH MIA TRENEPHI, IN PARIS


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