When you come to the end of your bumpy road, veer to the right.

French President François Hollande is only a year and a half into his five-year term, and already he has become the most despised president of France. He’s presiding over an economy that is sinking deeper into a quagmire even as other Eurozone countries are digging their way out. He has raised taxes and fees to confiscatory levels on everything and everyone that moves, has stopped moving, or never moved. Corporate operating profit margins are among the lowest in Europe, depriving French companies of any incentives to invest in France.

The number of unemployed has broken all-time records despite his repeated vows to “bend the unemployment curve.” So the government has resorted to paying companies and municipalities to hire the unemployed, whether or not there are any real jobs for them to do, a time-honored French remedy. Even conservative Jacques Chirac, when he presided over his own unemployment fiasco, resorted to it. These “aided jobs” have been effective in making the unemployment rolls look less awful. But hey, any job is a good job these days. And paying the unemployed costs a lot too.

Yet even this show of how the government is doing something about the unemployment fiasco hasn’t accomplished much in the cynical minds of the French. And so their morale has dropped to the lowest level ever recorded, according to a semiannual survey conducted by Ifop for the regional paper, Dimanche Ouest France. The survey series started in 1995. And things were pretty bad then, under the aforementioned Chirac.

Only 30% of the respondents said they were “optimistic” about the future. A brutal 14-point drop from August, the last time the survey was done, and down 19 points from a year ago. The most pessimistic were retirees (76%), people in rural communities (72%), and workers (70%). That’s a lot of people. The most optimistic were professionals (such as lawyers) and executives (37%). That the morale of workers is in the dumps while top earners seem to be doing alright in a country where social expenditures are among the highest in the world is a conundrum for a government made up of Socialist Party stalwarts. But it’s an ancient rule, applicable anywhere: those in front feel better; and when things get rough, those behind them eat dust.

The details of the malaise are ugly. Only 13% were optimistic that the government could raise “purchasing power” – an official metric that includes wages, taxes, and state subsidies. Only 20% thought that the government could do something about unemployment, despite the “aided jobs.” The survey goes on, and in all but two categories, optimism hit all-time lows.

This may explain why the French paid record amounts for flickers of hope. Française des Jeux (FDJ), third largest lottery in the world, 72% owned by the state, employer of 1,700 people, just reported revenues for 2013, and they broke another all-time record!

Despite inroads by online gambling on FDJ’s historic monopoly, it booked €12.35 billion in sales in 2013, up 1.8% from the phenomenal 2012, which had been goosed by three Fridays the 13th and other seductive calendar abnormalities. A stunning 27.1 million “participants” – 41% of the country’s population – spent €8.80 on average per week. A few turned into instant millionaires. But net after all gains, the average participant lost €3.00 per week, or €156 ($212) for the year. Neither the state-controlled company nor the revenue-hog of a government said it that way: it’s a special tax on desperate people who cling to straws and don’t know how to do math.

But now Hollande has a grander solution than the lottery – with similar odds of becoming reality. During his New Year’s wishes, he announced that he’d launch a “responsibility pact.” It’s another one of his phrases that usually come to haunt him later. He packaged it in vague rhetoric. Details to be revealed on January 14. Until then, the French will be sitting breathlessly on the edge of their collective seat.

A few things seem clear. No more diatribes against finance. Payroll-based taxes and social contributions – among the highest in the world – would be cut. At the same time, the budget deficit would also be cut. To make that possible, government spending would be cut! Alas, the one thing no one has ever been able to cut in France is government spending. Keeping it from ballooning is already a herculean task. But it would have to be cut. And “excesses and abuse” in the state healthcare system would be reined in. Radical stuff.

Gasps of horror in his own Socialist Party. Suspicion arose instantly that the government would cut taxes and reduce the budget deficit on the backs of the sick.

Budget Minister Bernard Cazeneuve came to Hollande’s defense. Cutting the budget would be essential. “That’s not only an issue of sovereignty but one of the conditions for the return of economic growth,” he explained. He called the new policies “courageous.” But in the next breath, he explained that they’ve been part of the Socialist platform all along. “These are policies that we already have,” he told his incredulous compatriots. The government would only “amplify them.”

Hollande has finally come to grips with the fact that a desperate situation – ha, not the economy but his collapsing political future – requires a desperate solution. When you come to the end of your bumpy road, veer to the right.

Alleviating the payroll-based taxes and charges would reduce the cost of labor and would take a huge burden off the anemic private sector. It might induce companies to invest in France, rather than in Poland or China. It might actually help create some real jobs in France. It wouldn’t hurt workers, and it could pass.

But whittling away at social expenditures, subsidies, and aid packages, and cutting “excesses and abuse” in the state healthcare system would cause months of upheavals in the streets. His ratings would plunge further. His supporters would abandon him. And then he’d do what he has done so far: backtrack. So it would be a miracle if France’s most despised tax-and-retreat president had the guts to pull off a radical change in the opposite direction. A more likely outcome is a handful of cosmetic changes that maintain the status quo while the private sector sinks deeper into its quagmire.

Suddenly, there’s a solution to France’s economic crisis. Unlike the cacophonous clamor from the far right to drop the euro, this one is attractively presented with graphs and in terms that even a French politician might understand. And it’s not contaminated by partisanship. Read…. French Megabank: “Germany Should Leave The Eurozone”

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