Is The French Revolution Relevant?
The French Revolution was born at the convergence of a debt crisis in France coupled with a monarchy that lost touch with its subjects. King Louis was born to privilege and had assumed the throne with no meaningful experience.
The French King Louis XVI came to power at the age of 20 in 1774. When he came to power, France was deeply in debt as the result of the Seven Years War and the French support for the American Revolution. The French debt consumed half of the country’s budget. Having a debt service as a significant part of a European country’s budget was common in the 1700s and that practice continues today. King Louis had an able and experienced administrator in Anne Robert Jacques Turgot, who attempted to push through financial reforms aimed at making tax collection more efficient.
The landowners or parlements had rejected the taxes and insisted that the monarchy had no right to assess new taxes. Louis replaced Turgot with Jacques Necker as director-general of finances and carried out a policy of taking out loans to pay for the France’s support of the American Revolution rather than increase taxes. Necker tried to reform the tax system, but as a result made many powerful enemies, including Louis XVI wife, Marie Antoinette. Necker was blamed for worsening the debt position of France and was sacked and replaced with Charles Alexander d’Calonne. Calonne performed a financial audit on the state of France’s financial situation and concluded that there was no way to pay off the country’s huge debt without significant reforms. Calonne proposed reforms including:
- • Cut Government Spending
• Create a revival of free trade methods
• Authorize the sale of Church property
• Equalization of salt and tobacco taxes
• Establish a universal land tax
Similar reforms had failed in the past, and Calonne had attributed the failures to the lack of the support of the parlements. Calonne convinced King Louis to call for the Assemblies des Notables to meet in 1787, a meeting which had last occurred in 1626. The Assemblies des Notables was a body that consults with the king when requested. When the Assemblies des Notables learned of the size of the deficit, they refused to accept the proposed reforms. They said only the Estates General can approve these reforms.
The French Revolution became possible when the Estates General opposed the monarchy over the financial reforms. The Estates General consisted of the First Estate (clergy), the Second Estate (nobility), and the Third Estate (the people of France). There were three votes in the Estate General, one for each Estate. Prior to the Revolution, the nobility sided with the clergy. As a result of the opposition of d’Calonne’s plan, the balance of power had shifted, forever. This united the peasants with the nobility in opposing the reforms which eventually led to the overthrow of the monarchy and the death of King Louis XVI after a trial that found him guilty of treason.
Some analogies between France in the 1780s and America today are clear, but there are also some big differences in the attitudes and global political environment.
America is locked at the crossroad of a debt crisis and a bloated government failing to execute its responsibilities — namely to uphold and enforce the Constitution of America. This failure is seen in the failing to secure the borders, failing to regulate the financial industry — especially the government-sponsored enterprises which have been at the root of the credit crisis. Promises that the government has made for ensuring Medicare, Social Security, and the social safety net (and implemented through taxation) must necessarily be broken as they are not sustainable. The resolution will be decided on how the balance of power shapes up between people who pay taxes through wealth generation activities and those who benefit from the taxes. Nearly half of households today pay no income taxes, and many receive some form of government assistance. The resolution will be achieved either by incentivizing Americans to go forward and create wealth, or when people revolt when their Social Security and retirement checks bounce.
Written by Alan Aronoff.