Since the Great Recession, the U.S. has been struggling in its ability to generate job creation and sustain an economic recovery. There are numerous reasons for the lack of job creation; some are theories, and some are based on actual experiences. I like to look at other countries that are also struggling with a weak economic recovery and learn from their mistakes, as well as their policies and initiatives that are preventing job creation.
One country from which America can learn a great deal about how not to create an economic recovery is France, due to its completely clueless policy initiatives. I have heard a lot of strange and ridiculous ideas about what’s best for an economic recovery, but the rhetoric emanating from France’s political leaders takes the cake.
To begin with, France is encountering an extremely weak economic recovery, with no chance of job creation anytime soon. In fact, the latest data for job creation in October reported that the number of people unemployed in France is the highest in over 14 years. This is the 18th consecutive monthly increase in France’s unemployment rate. (Source: “French Jobless Total Hits 14-Year High,” CNBC, November 28, 2012.)
Not only is the economic recovery failing to ignite, but France is also moving away from any possibility of job creation in the near future. The newly elected French President, Francois Hollande, a hard socialist, has enacted policies that will only make job creation that much more difficult, since he and his party have a strong anti-business sentiment.
So with the French economic recovery being extremely weak, one would think that the government would try to entice businesses to expand, ultimately resulting in job creation. Instead, we are hearing comments from the country’s political leaders such as France’s Minister of Industrial Renewal, Arnaud Montebourg, who, upon hearing that international steel conglomerate ArcelorMittal (NYSE/MT) will be reducing some of its French operations, stated, “We don’t want Mittal in France anymore.” (Source: “Francois Hollande shows true colours with threat to nationalise ArcelorMittal,” The Telegraph, November 27, 2012.)
ArcelorMittal has significant facilities in France, employing approximately 20,000 workers. The conflict has arisen due to one of the steel furnaces that has to be shut down; although, ArcelorMittal will still keep three-quarters of the 2,500 jobs at that specific location. That type of compromise is unacceptable to socialist leaders, and the political leaders have openly discussed the notion that the French government might actually nationalize ArcelorMittal’s steel operations.
Job creation is not easy for any country, especially when the global economic recovery is so weak. However, implementing ludicrous policies, such as threatening the very companies that will be involved in the actual job creation, simply will not work.
If you were a company thinking about setting up operations in Europe, why would you ever consider France with these draconian policies? In fact, if I owned facilities in France, I would be looking to sell them and move, just in case they decide to nationalize my property next. That is not a recipe for job creation.
What we are learning from France’s example is that to get an economic recovery and job creation moving forward, the political and regulatory environment must support businesses of all sizes. Politicians can’t simply threaten to nationalize companies if they want businesses to expand or to try to attract foreign capital.
Conversely, this insane socialist agenda can actually help other nations trying to kick-start their economic recovery, such as America. In fact, Boris Johnson, the mayor of London, England, is already taking advantage of the poisonous French business environment by inviting persecuted companies to move to London. (Source: “Francois Hollande shows true colours with threat to nationalise ArcelorMittal,” The Telegraph, November 27, 2012.)
American politicians should do the same. For the economic recovery to really accelerate, American politicians should invite and offer incentives to companies and foreign capital for setting up shop in the U.S., which will ultimately help job creation. This means we can’t go down the same socialist path as the French. Hopefully, our politicians in Washington have enough sense to look at the failed and ridiculous policies set by other countries and not make the same mistakes.
The post What U.S. Politicians Can Learn from France’s Crazy Policy Initiatives appeared first on Investment Contrarians.
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