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Never judge a newspaper column by its title – because while the words below the byline belong to the author, the headline was almost certainly supplied by the editorial staff.

Thus in his recent column for the New York Times entitled ‘the fall of France’, it probably wasn’t Paul Krugman flirting with Godwin’s Law, but a naughty sub-editor who saw the subject – France yielding to Germany on economic policy – and couldn’t resist.

The thrust of Krugman’s argument is that the French President has betrayed the manifesto that propelled him into power:

“He was elected on a promise to turn away from the austerity policies that killed Europe’s brief, inadequate economic recovery. Since the intellectual justification for these policies was weak and would soon collapse, he could have led a bloc of nations demanding a change of course. But it was not to be. Once in office, Mr. Hollande promptly folded, giving in completely to demands for even more austerity.”  

In the dramatic reshuffle that took place at the end of last month (it’s a bit of an exaggeration to say that the French government ‘fell’), Hollande accepted the reality of his situation or, as Krugman puts it, he purged “members of his government daring to question his subservience to Berlin and Brussels.”  

Paul Krugman, of course, is the king of the neo-Keynesians – and therefore an opponent of austerity economics. US anti-austerians used to look to Britain for an example of how not to run an economy, but now that doesn’t work for them anymore their case study of choice is the Eurozone. 

“…after a debt crisis erupted in 2010, some European nations were forced, as a condition for loans, to make harsh spending cuts and raise taxes on working families. Meanwhile, Germany and other creditor countries did nothing to offset the downward pressure, and the European Central Bank, unlike the Federal Reserve or the Bank of England, didn’t take extraordinary measures to boost private spending. As a result, the European recovery stalled in 2011, and has never really resumed.”

That’s far from being the whole story – but Krugman is right to say that the Eurozone crisis is not over, but has entered a different phase:

“At this point, Europe is doing worse than it did at a comparable stage of the Great Depression. And even more bad news may lie ahead, as Europe shows every sign of sliding into a Japanese-style deflationary trap.”

His advice to the French is to spend their way out of trouble:

“French job performance isn’t too bad. In fact, prime-aged adults are a lot more likely to be employed in France than in the United States.

“Nor does France’s situation seem particularly fragile. It doesn’t have a large trade deficit, and it can borrow at historically low interest rates.”

What Krugman doesn’t mention is that French unemployment is at a record high, that French sovereign debt exceeds 90 per cent of GDP and that French government spending stands at 57 per cent of GDP. Just how much more debt-fuelled statist excess will it take before the Keynesian black magic starts working?

With numbers that bad, the main reason why France is able to “borrow at historically low interest rates” is because of its membership of the Eurozone. And the only reason why the money men still have confidence in the Eurozone economies is that they believe that Germany and the other grown-ups of the family are capable of stopping the likes of France or Italy from running away with the joint credit card.

Even if the neo-Keynesians are right, the only way the French could go on a renewed spending splurge is by quitting the Euro – in which case, bon chance with the ensuing sovereign debt crisis.

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