Since it was taken away from townships after WWII, law enforcement, in France, is a central state function. Policemen are civil servants, recruited for life on a national basis. Since they, too, age and retire, failing to do so any particular year means that the numbers of policemen in French streets will drop, probably dramatically. Of course, there are other law enforcement agencies in France : the gendarmerie, a military police in charge of rural areas an the Internet, and various municipal polices but they are still of lesser importance and certainly cannot make up for the National Police's deficiencies.
The immediate reasons of Sarkozy' decision are quite obvious. Like everybody those days, he is desperate for cash and due to European regulations he cannot run too large a deficit or print. Budget cuts, especially those kinds of budget cuts, are hardly absurd. They can help create some maneuver room and liberate resources for more vital, or politically more important, domains.
The problem is that it works only for temporary crisis, something the one we face is definitely not. While its immediate cause has been the subprimes debacle, it is fundamentally a manifestation of our colliding with the Limits to Growth the Meadows Report highlighted thirty years ago. Our economies are dependent upon a steady inflow of high grade energy only fossil fuels can provide and the supply of those is stagnating and will soon enter terminal decline. This means that the resource available to support state apparatus – whether or not they are as bloated as the French one – will become scarcer and scarcer.
Of course, we should not imagine a state suddenly collapsing under its own weight. It never happened in the past, it won't happen this time. What will happen is that states will focus their remaining resources upon maintaining what they see as vital services, at the expenses of the others – the same way a human body immersed in cold water will concentrate whatever heath it is left around vital organs, even if that means letting one toe or two freeze. As I said, it is not an absurd strategy on the short term. There is, after all, little point in subsidizing , say, classical music when you are at risk of being overrun by a foreign invasion.
The problem is, of course, that budgets cuts which are relatively safe in the short term can land you in a sea of trouble if the crisis lasts. Underfunding road repair cans sound like a good idea for a resource-short government. After all, roads take time to deteriorate and even if they do, it won't stand in the way of your reelection. Besides there are always ways to put the blame on somebody else shoulders – for instance the company you sold the said road to. On the long run however, you will end up with a very bumpy, and nearly useless road network.
The same is true with administration in general and security in particular. As their resource based declined, past civilizations tended to scrap services they deemed unessential. Of course that rarely meant security. No matter how powerful kings and emperors were, there was always some neighbor more than ready to part them from their throne. That could mean, however, abandoning peripheral territories or trusting local authorities with the organization – and the funding – of their own defense. That is what the late Roman Empire did. It did abandon Dacia and Britain, and hired Germanic tribal warlords to defend its borders. Let's say it was not a resounding success.
Such a fate is unlikely to befall us. Abandoning territory is taboo in our political culture, unless said territory really wants to go away, as for settling foreign mercenaries under their own laws... no matter what conspiracy theorists say, it is as likely to happen as an invasion of flying pigs. It is just incompatible with the ruling paradigm of the nation-state.
What will probably happen, however, as we slide farther and farther on the road to catabolic collapse, is a slow but irremediable loss of control by the state. Even though it is not all powerful, modern states exert an unprecedented control upon their own society. It is not because they are particularly power-thirsty, of course. Ivan IV would have been as totalitarian as Stalin it he could have and some Chinese emperors were very fond of intrusive laws and secret polices. They just didn't have the means to fully control their territory.
Modern states have. Their economy creates enough surplus to fund huge administrations and police forces able to reach down to the remotest part of their territory. Those are very costly, however, and as states focus their dwindling resources on their core functions, they will grow thin on the ground. This may take various forms, of course. Administrative service, among which, security, may be sold out to private agencies which will only partially assume them. They may be devolved to local authorities, without the means to assume them. They may become so chronically underfunded they become both ineffective and corrupt.
The end result will always be the same. The state will lose the control of the peripheral parts of its society and territory. Of course, it will still be able to crush any open revolt, but it will no longer be able to provide any effective day to day administration. Local authorities will have to step in – arm their municipal police and use it as a real law enforcement agency, for instance – and in some places ganglords will become de facto rulers. Of course this will hinder the states' ability to efficiently mobilize its remaining resources, which will trigger another round of budget cuts and loss of control until the state itself become a mere fiction and is replaced by whatever really controls the territory.
Another consequence, is that we may see the rebirth of that rural banditry which plagued pre-industrial countries and is still very present in the Third World. We have forgotten how common highwaymen were in pre-industrial Europe, how they could defy the central power for years and even wage small wars against it. As public authorities become less and less able to police their territory they may very well be reborn and accelerate the post peak version of the withering of the state, whether it be by depriving it of much needed resources or by encouraging locals to step in.
During the seventies, the Breton singer Gilles Servat sung about what he thought would be the 2000s
Il y avait encore des grands chemins
que les bandits fréquentaient guère
Aujourd'hui on croirait la guerre
Les embuscades au petit matin
There were still highways
Bandits didn't roam
Today one would believe to be at war
Ambushes at dawn
He may have been wrong only about the timing