Thursday, January 12, 2006

Even the French Government Can Cut Government Spending

The French government could certainly not be characterized as "free market" given its strong support for the destructive EU farm policies and a protectionist trade policy. But even they are now announcing plans to actually cut spending. Spending is to rise with 1% less than inflation, which is to say it will be cut with 1% at an annual rate. Given a positive real GDP growth, the reduction of government spending relative to GDP will of course be even greater. While the cuts could and should have been even greater given the bloated size of the French welfare state, it is still a step in the right direction (provided they actually implement it which one of course cannot be certain of when it comes to politicians) and is far better than the sharp expansion of government spending in America not only in nominal and real terms but also relative to GDP, that we have seen under the Bush administration.


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