The French president believes he can grow employment while cutting government spending in the face of negligible growth. He needs a reality check and advisors who didn’t study economics at a European university

According to Reuters: ‘President Francois Hollande is banking on a turnaround in French unemployment by the end of the year. Not only that, he has upped the stakes by making it the top political priority of his Socialist government. "I will be judged on it," he told the nation in a Bastille Day television interview last month. “Politics is not magic,” Hollande told the Bastille Day television cameras. “It is will”.”

Hollande is a well-meaning politician trying to create employment growth without an understanding of capitalism. His thinking proceeds from the socialist idea: the size of the economic pie is stagnant, but income and wealth redistribution can create jobs.

The president and his economics team believe that they can grow employment while cutting the government budget in the face of negligible growth. ‘Unemployment can start to ease by itself at a growth rate of around one percent,’ said Reuters' government source.

Their plan: to create jobs by increasing the number of unproductive state employees and by ‘retraining’ people who are lucky if they can read and write.

Reuters added that when French children return to school in September ‘they will be welcomed by an army of 30,000 new classroom minders and playground assistants in many cases taken straight from the dole queues’. The government will also fund ‘jobs of the future’ to help unqualified youths take up jobs in the health, charitable and other non-commercial sectors.

That’s his plan. How is he planning to pay for this new serving of government largesse? France has no fiscal room to increase spending, so this programme will have to be paid for with new taxes or with magic. Most likely magic (or, should I say, ‘will’).

What is Hollande’s vision of the future for France? A society of classroom minders and playground assistants, plus subsidised jobs for the unqualified in the health, charitable and other non-commercial sectors. France will be a nation of social workers and the clients of social workers. The ‘engine of growth’ will be ever-higher taxes on the rich.

What this man needs is an economic advisor who never studied economics at a European university, and who can explain the quantity theory to him in words that he can understand: ‘Mr. President, we surrendered our money policy to Germany 14 years ago, and it is urgent that we get it back. Zero growth is killing our economy.’

Failing that, Hollande should read Irving Fisher:

'Unless some counteracting cause comes along to prevent the fall in the price level, a depression tends to continue, going deeper in a vicious spiral for many years. There is no tendency of the boat to stop tipping until it has capsized. Only after almost universal bankruptcy will the indebtedness cease to grow. This is the so-called "natural" way out of a depression, via needless and cruel bankruptcy, unemployment, and starvation.'

Christopher T Mahoney is a former vice chairman of Moody’s. This post first appeared on his Capitalism and Freedom Blog