Economic Misinformation and the French Election

Mark Weisbrot, co-director of the Center for Economic Policy Research (CEPR) recently produced a convincing analysis and alternative view of the stakes in France’s run-off elections. You will find the article, “Economic Misinformation plays a Major Role in French Election” on-line at www.cepr.net.

I have long felt that there was little sense in comparing U.S. and French income figures, largely because French productivity is higher for the most part. His employment analysis for males in the 15-24 age bracket however, had escaped me and of course, makes perfect sense. I wondered how Mark’s mathematics-of-unemployment calculation would hold for other segments of the population…?

I wonder whether Mark Weisbrot’s evaluation of the Sarkozy measures were correct, or even, if correct, whether they fairly represent the economic issues currently debated here in France.

What Sarkozy is promoting is labor market flexibility, not a redistribution of wealth as claimed by Mr. Weisbrot. (While the difference may be semantic, no French politician would get very far on a platform of “wealth redistribution”.) But the difference is important. Despite having created a viable society in which an educated population aggressively defends and promotes their social and economic rights, France sufferes from “immobilisme”, a self-inflicted inertia.

The Socialists (a better characterization of Ségolène Royal’s “left of center” group) preach “job security” and “redistribution” through job guarantees. Consumer stimulus may be well and good except they do not say how they would create such jobs or even what self-financing “public service” such employees could provide. In the process, the Socialists manage to avoid meaningful discussion of just how they would address the main cause of labor market inertia: the high cost of job creation (45% employer social security contributions) and labor laws that favor employment security over measures to increase disposable income.

There are other issues, to be sure, including important matters of public finance and community empowerment, of the reduction and redeployment of a civil service that continues to have a very high level of redundancy and functional overlap, and finally, the reform of higher education.

In my own opinion, and, I think, in the opinion of a majority of French voters, society needs a good shaking. The Youth riots of 2005 are not at the center of national debate, and the threat of force to contain and redress what are fundamentally social issues troubles me (and the French electorate) considerably, but these are not at issue here. Rather, the culture of social entitlements mixed with a profoundly cautious national ethos produce a deadly mix which stifles private initiative and places a unreasonably high cost on innovation.

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