Folk lore holds that a live frog placed in a cool pot of water will, as the heat increases, will fall asleep and be boiled alive. In actual experiments, the frog jumps out of the pot.
"Hollande Converts, Proposes Austerity and Lower Taxes To Boost Growth in France"
The policy battle of the last six years has been over how governments should respond to the recession that swept most of the globe, the slow growth that followed, and high unemployment. One camp argued for immediate large increases in government spending financed by borrowing, followed early in the recovery by higher taxes on the rich. The other recommended decreased government spending paired with tax cuts and increased labor market flexibility. For the most part, the first camp has carried the day, with governments around the world first reaching record budget deficits and then passing tax increases on high earners. However, this week in a major sea change on the policy battlefield, President Hollande of France announced a conversion.
FranÇois Hollande is not just the President of France; he is a socialist who had until this week campaigned boldly on a platform defending government spending, maintaining social benefits, and high taxes on the wealthy. France has the highest ratio of government spending to GDP of any developed economy, at 57 percent. So when President Hollande announced he now wanted tax cuts on businesses and cuts in government spending, the news caused tremors throughout the world of economic policy makers.
Even more devastating for those pushing for more government spending as the solution, President Hollande specifically said that only businesses could create jobs and revive growth. Somewhere, Paul Krugman probably cried"
I've heard that even larger tax and spending cuts may be in order.