The "French way"

On the website of the Conservative Institute of M. R. Stefanik in Bratislava, Pierre Garello, Professor of Economics at the Univeristy Paul Cézanne Aix-Marseille, gives his view of the French economy and the French way of thinking about the economy and society. He argues that the "French way" approach to economic and social policies is nothing more than the "third way" and in many aspects is the "socialist way". A way, in Garello's view, to a dead end.

Garello says,

... that the French economy is doing poorly is obvious. Unemployment is still fairly high (7.8% end of 2007); so that nearly 3 millions individuals would like to work but don’t find a job. GDP growth is sluggish (1.7% in 2005, 2.2. in 2006 and below 2% in 2007) so that, in a once wealthy country, GDP per capita is now close to the average for OECD countries.

Prospects for the future are not good either. France has one of the fastest growing national public debts (14% of State revenues serves the interest of the debt) and the money borrowed has not been used for investment. Worse: France has left almost untouched its pay-as-you-go system so that taxpayers will have to make a tremendous effort in the coming decades.

He goes on to say that to find the cause of such problems is not easy

[b]ut it can surely not be imputed to France endorsing free market policies! As a matter of fact, regardless of their political circle, French politicians (and citizens) despise the market system and, if they have to put with it, they attempt to regulate it by every possible mean.

Garello illustrates this anti-market view with a few examples. He writes,

I have already mentioned that France has a fully State-run retirement pension system, hence avoiding the capital market. The education system, with 1.2 millions civil servants, is another illustration of “the French way”. This system is indeed close to breaking a world record in terms of centralization. Hence, if greater autonomy was recently given to universities, this does not include the possibility to select students or ask for tuition. Besides retirement scheme and education, the State interferes in many fields and the consequences are invariably the same. Hence, even though we are able to walk on the Moon, in France there is a shortage of housing. This housing crisis is due to a long-standing desire to regulate urban development and control rents. Another issue that concerns the present government is the high price of basic products (such as food and cleaner). From both the politicians’ and the consumers’ perspective, retailers are to be blamed; they raise prices to increase their profits at the expense of consumers. The truth, however, is that this is due to a regulation limiting the creation of new malls and of hard discounters and therefore limiting competition. Finally, to give the right dimension of the involvement of the State in economic and social life, let us recall that France is today second among OECD countries in terms of public spending (54% of GDP), just after Sweden (at 56% but down from 67.5% in 1993).

The "French way" does appear to be having a (bad) effect on the young.

In a recent poll (L’Express 2948, January 3rd, 2008) some questions were put to individuals between 16 and 29 years of age from various countries. As it turns out, in France only 27% of them believe they have a bright future ahead of them (compare to 60% in Denmark), only 26% believe they will get a good job (compare to 60% in the US). Also, a record low 20% of the youth thinks that globalization brings new opportunity and a record low 11% say they are ready to pay taxes for the older generations.

This is not a good look for the future of a country. Garello concludes by noting that even if the French can not see the dangers of the third way

... let’s hope, at least, that the French experience will lead other countries to opt for wiser policies. That is, to stick to the principles of free market and individual responsibility and to refuse to entrust to the State everything. Including their soul.