France's government has fallen. With a 17 percent approval rating, President Francois Hollande cannot keep his Socialist ducks in order.
Economy Minister Arnaud Montebourg flew away after a weekend squabble over Hollande's leadership. You can't blame him; it's hard to be Economy Minister and defend a 10-percent unemployment rate along with a mucky business climate.
Hollande stormed into office in 2012 with populist propaganda condemning business owners and catapulting the top individual tax rate to 75 percent. At that point, giant actor Gérard Depardieu packed his bags and gleefully waved before the television cameras a Russian passport given to him by Vladimir Putin. Meanwhile, Chanel fashion designer Karl Lagerfeld called Hollande an "imbecile."
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This year, Hollande has tried to backtrack and has angered ardent Socialists like Montebourg by suggesting business tax breaks. Can Hollande perform a successful 180-degree U-turn on economic policy? It's been done before — in France. Hollande can look to Francois Mitterrand, who was elected with strong left-wing backing in 1981. He embraced socialist nostrums: fat pay raises for government workers, a wealth tax on the rich, more vacation time for workers, and a boost in the minimum wage. Union members got bigger voices at the bargaining tables. Mitterrand even attracted four communists to his cabinet. Happy Days were here again. The Socialist Mitterrand would leave Ronald Reagan's entrepreneurial America in the dust. Or so they thought.
Two years later, the French economy was a flattened soufflé. Inflation hit double digits, while Mitterrand's policies boosted the jobless rate above 10 percent. Smart French businessmen hopped aboard the Concorde and fled the crumbling regime. The French franc was evaporating.
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Mitterrand was no fool. By 1983, he began to push aside his socialist ideas for a French version of Reaganomics. Suddenly, budgets were frozen, government payrolls shrunk, monetary printing presses shut down, and a Socialist government made it easier for firms to fire feckless workers. Mitterrand called this "La Rigueur." Political observers called it the "Great Turn." The people called it a success, as the inflation rate plummeted and jobs came back to France.
Can Hollande execute a pirouette as gracefully as Mitterrand? I doubt it. Though Mitterrand was an avowed and proud Socialist, he was also a nimble rascal. Some insiders referred to him as the "Florentine," as if he was tutored by Machiavelli himself. Hell, he successfully covered up his work for the Vichy collaborators during World War II! And when dying of cancer in 1996, ravenously swallowed his last meal: a tiny songbird called the ortolan — banned from restaurants by socialist environmentalists!
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Hollande strikes me as far less lithe than Mitterrand. It's a stumbling performance worthy of Inspector Clouseau.
Commentary by Todd G. Buchholz, a former White House economic advisor and managing director of the Tiger hedge fund. He is currently the CEO of Sproglit, which makes educational tools for children. He is also the author of "New Ideas from Dead CEOs and New Ideas from Dead Economists." Follow him on Twitter @Rushbook.