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To search for efficacy and coherence in the economic policy conducted by France's President Francois Hollande and Prime Minister Jean-Marc Ayrault has become an arduous if not fruitless task. Welcome to 21st century France, where daily headlines detailing dismal employment numbers, factory closures and redundancy plans are edged out only by cases of government muddling and backpedaling.

President Hollande's woes stem, to a large extent, from the difficulty in reconciling his commitment to reduce by 2015 the public deficit to three percent of GDP with the pressure exerted by his political base to maintain France's profligate welfare state -- and an overall public spending that absorbs 57 percent of GDP (the highest ratio, along with Denmark, in the Eurozone).

Constrained by these political parameters, President Hollande and his prime minister have tried to shave France's public deficit by lavishly raising taxes and creating all kinds of new levies.

But then, confronted with the massive discontent that such measures have provoked among firms, farmers and households, the government has been obliged to backpedal and even capitulate on multiple occasions.

President Hollande recently gave the impression that he understood the malaise France is stuck in when, in August of this year, he announced a "fiscal pause" (a standstill on taxes) for 2014. In September, he went further and promised that there would be "no more tax increases" apart from those already in the pipeline.

The commitment proved to be short-lived. Prime Minister Jean-Marc Ayrault corrected the president by stating that, in fact, the "fiscal pause" would have to wait until 2015. What's more, a new tax hike -- retroactive to 1997 -- was imposed on household savings, while a pro-environment levy on road transportation (ecotax) was programed to be collected as of January 1, 2014.

These new measures gave rise to large-scale protests that forced the government to backpedal in both cases.

The cocktail of tax increases and policy climbdowns has brought about an environment characterized by fiscal instability and economic uncertainty. Not surprisingly, firms are reluctant to invest and hire as they fret the arrival at any moment of a new fiscal blow that would damage their profitability.

Reflecting the current funk among entrepreneurs, a survey commissioned by the American Chamber of Commerce in France, released last October, indicates that only 13 percent of U.S. firms operating in France have a positive perception of France's economic outlook, down from 56 percent in 2011. Likewise, France fell from 34th to 38th place in the latest World Bank ranking of the most attractive countries in which to do business.

For sure, the predicament of the French economy antedates Francois Hollande's tenure. Yet, the current tax spree and the ensuing policy insecurity have made things worse. This explains why Standard & Poor's has just downgraded France's government debt (the second time in less than two years) on the grounds that the country's fiscal flexibility is "constrained by successive governments' moves to increase already high tax levels, and what we see as the government's inability to significantly reduce total government spending."

Playing the contrarian, Nobel laureate and New York Times columnist Paul Krugman recently came to the defense of Francois Hollande's economic policy by asserting that the S&P's downgrading was "much more about ideology than about defensible economic analysis."

French authorities, however, would be well advised not to place their bets on his support. Indeed, Mr. Krugman's policy judgment on European economies has been far from infallible, as documented in a recent article published by Anders Aslund of the Peterson Institute for International Economics.