Well it didn’t take long. Its not even 24 hours since François Hollande has assumed the Presidency of France and already some insiders are claiming, perhaps accurately although in my view its still too early to say definitively that M.Hollande is not a Keynesian but rather a supply sider in the tradition of Jacques Delors. Je suis désolé, M.Hollande mais cette stratégie ne fonctionne pas.Certainly not on its own and not after a major slump.

The source for this rumour is an article in the Financial Times by Phillipe Aghion which argues that he is a close economic advisor to M.Hollande , and states he teaches at Harvard and knows that Hollande believes in supply side economics as opposed to the economics of Keynes. I can assure you in the current circumstances where aggregate demand is hugely depressed through out most of Europe outside of Germany and Austria an approach which focuses on incentives to supply alone will not work. You will be spinning your wheels as we often discover here in Canada during winter when our cars are stuck on an icy rut in the road. One needs instead a big push to get the car out of the rut and on its way again. This is precisely what is needed in Europe . By all means target the expenditures and investments strategically to enhance education , training, work experience for the young, the environment and competitiveness but you must privilege increasing aggregate demand as opposed to direct deficit reduction through budgetary compression if you are going to make progress and escape from the trap of austerity. With the co-operation of the central bank in keeping interest rates low a proper recovery can occur.