The 2007 French Election

[Mark Stapleton]

An antidote to the only take on French economic life that I ever see in the major English-speaking mass media - which sells Sarkozy on the basis that at least he offers hope of solving France's "economic woes" with "harsh medicine".

Mark Weisbrot suggests these woes may be seriously over-stated, and the proposed cure a lot worse than the imagined disease.

A must read, IMO - along with this additional bilingual reference: France is not in decline and the last thing it needs is "reform"

Economic Misinformation Plays Major Role in French Election

Posted by SuperFrenchie

in Bashed in America (May 5, 2007 at 5:59 am)

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The Mighty Frog Dollar[The following article was written by Mark Weisbrot and is reprinted with permission. It originally appeared on washingtonpost.com]

[French version]

The elections in France demonstrate the power of faulty economic analysis, and more generalized problems with arithmetic, to shape ideas and possibly the future of not only a nation, but a continent.The United States has faced similar problems with its debate over Social Security, in which the majority of Americans were convinced - based on verbal and accounting trickery - that the program is facing serious financial problems when the baby boom generation retires. (It isn’t).

In France, Nicolas Sarkozy, the right-wing candidate, has taken the lead after Sunday’s election with 31.2 percent of the vote, against Ségolène Royal, the left-of-center candidate of France’s Socialist party, who garnered 25.9 percent. They face a runoff election against each other on May 6.

The general theme that has propelled Sarkozy into the lead is that the French economy is somehow “stuck” and needs to be reformed to be more like ours. It is also widely believed that France needs to be made more “competitive” in the global economy, since competition is tougher now in a more globalized world.

New York Times columnist Thomas Friedman has been the most popular proponent of the idea that French workers must lower their living standards because of the global economy. “All of the forces of globalization [are] eating away at Europe’s welfare states,” he writes . . . “French voters are trying to preserve a 35-hour work week in a world where Indian engineers are ready to work a 35-hour day.” For Friedman and most of the pundits, this is impossible.

It is important to understand that there is no economic logic to the argument that the citizens of any rich country need to reduce their living standards or government programs because of economic progress in developing countries. Once a developed country has reached a certain level of productivity, there is no economic reason for its residents to take a pay or benefit cut, or work more hours, because other countries are catching up to their level. That productivity, which is based on the country’s collective knowledge, skills, capital stock, and organization of the economy, is still there, and in fact it increases every year. To the extent that international competition is being used by special interests to push down the living standards of French or German or U.S. workers - and it is - it just means that the rules for international commerce are being written by the wrong people. It is a problem of limited democracy and lack of representation for the majority, not a problem that is inherent to economic progress.

Another mistake that is commonly made in this debate is to compare France’s income or GDP per person to the U.S., by which France lags: $30,693 for France versus $43,144 for the U.S. (these are adjusted for purchasing power parity). But this is not a fair comparison, because the French do not work nearly as many hours as we do in the United States. Economists do not say that one person is worse off than another if she has less income simply due to working fewer hours. A better indicator of economic welfare in such a comparison is therefore productivity, which is as high or higher in France as it is in the United States.

Now for some arithmetic regarding France’s notoriously high unemployment rate among young people, which shaped politics there and influenced world opinion during the youth riots in 2005. The standard measure of unemployment puts the unemployed in the numerator, and unemployed plus employed in the denominator (u/u+e). By this measure, French males age 15-24 have an unemployment rate of 20.8 percent, as compared to 11.8 percent for the US. But this difference is mainly because in France, there are proportionately many more young males who are not in the labor force - because more are in school, and because young people in France do not work part time while they are in school, as much as they do in the United States. Those who are not in the labor force are not counted in either the numerator or the denominator of the unemployment rate.

A better comparison then is to look at the number of unemployed divided by the population of those in the age group 15-24. By this measure, the U.S. comes in at 8.3 percent and France at 8.6 percent. Both countries have a serious unemployment problem among youth, and in both countries it is highly concentrated among racial/ethnic minorities. But the problem is not much worse in France than it is in the United States.

Sarkozy proposes making it easier for employers to fire workers, cutting taxes (including inheritance taxes), pushing back against the 35 hour work week, and other measures that will favor upper-income groups and owners of corporations. These measures will certainly redistribute income upward, as we have been doing in the United States over the last 30 years. But once again, there is little or no economic evidence that these measures will increase employment or economic growth.

Royal proposes a series of measures to boost economy-wide demand - including raising the minimum wage, unemployment benefits, and state-subsidized employment. These make some economic sense, since they at least have a chance - mostly by boosting aggregate demand and spending power of consumers - to create more employment.

If France makes a historic shift to the right in this election, it will be largely due to economic misinformation.

Weisbrot is right on the money, imo.

Governments in western democracies, at the insistence of their corporate donors, are citing global competition as the justification for the necessary erosion of living standards for the non-elites. Abolishing collective bargaing and promoting individual contracts is merely a tool for lowering the cost of labour. Cheap labor is the holy grail for the corporate sector--that's why they also urge Governments to increase immigration. The fact that cities (such as Sydney) have chronic infrastructure problems eg, housing, health services, traffic congestion, public transport, shortage of water etc, doesn't bother the corporate elites. The corporate sector doesn't care about the overcrowding of cities---they just want that large pool of cheap labour to be there on call.

Critics will claim that Royal's plans would turn the clock back to the era of Government economic meddling and socialism. But Sarkozy's ideas, like those of Howard here in Australia, will turn the clock back even further--to the Dickensian era.

If Sarkozy wins and introduces those workplace reforms, the French will learn the hard way that there is strength in numbers.

Edited May 6, 2007 by Mark Stapleton

[Sid Walker]

Governments in western democracies, at the insistence of their corporate donors, are citing global competition as the justification for the necessary erosion of living standards for the non-elites. Abolishing collective bargaing and promoting individual contracts is merely a tool for lowering the cost of labour. Cheap labor is the holy grail for the corporate sector--that's why they also urge Governments to increase immigration. The fact that cities (such as Sydney) have chronic infrastructure problems eg, housing, health services, traffic congestion, public transport, shortage of water etc, doesn't bother the corporate elites. The corporate sector doesn't care about the overcrowding of cities---they just want that large pool of cheap labour to be there on call.

Critics will claim that Royal's plans would turn the clock back to the era of Government economic meddling and socialism. But Sarkozy's ideas, like those of Howard here in Australia, will turn the clock back even further--to the Dickensian era.

If Sarkozy wins and introduces those workplace reforms, the French will learn the hard way that there is strength in numbers

Well Mark, I hope you are wrong, but fear you are correct.

The French are about the find out from personal experience.

One of the things I found most revolting in 80s and 90s debates about 'economic rationalism' was the assumption, implicit in so much of the discourse, that the only way to encourage the poor to work harder is slash the welfare net and minimum wage - while the only way to encourage the well off to work harder is to tax them less and pay them more.

Whatever happened to equality? Whatever happened to leisure?

Homo economicus is a rather sad animal.

I had a personal theory that Royal might prevail, in the second round, simply because (1) it was a genuine election in which ballots are counted accurately and (2) she is very a very charming and appealing lady.

Perhaps someone slipped bromide in the water supply?

Edited May 7, 2007 by Sid Walker

[Derek McMillan]

Sarkozy has won the French election. He will cause a civil war. He says he now represents the French people although he calls the poor scum ("racaille") and urges the police to beat them up.

He intends to force through a neo-liberal agenda (worsening of working conditions and wages and the removal of workers' rights which have been successfully defended in France). He will do it with a vengeance and all the power of the gendarmerie. His claims to seek reconciliation echo Margaret Thatcher's "where there is discord let us bring harmony." Not many people confused her with Francis of Assisi for long!

Whereas in England we would grumble or write a letter to the newspapers when the government does something outrageous. They have this "out on the streets and build barricades" response in France.

And the first thing that happened when the teacosy won? Tony Blair congratulated him

Enough said really.

[Sid Walker]

And the first thing that happened when the teacosy won? Tony Blair congratulated him

Apparently Sarkozy appreciated the congratulations.

Just when you thought you'd heard the last of Tony Blair (at least for a respectable interlude)...

That's why old-fashioned vampire-hunters recommended a stake through the heart. It's more conclusive than resignation.

Meanwhile, on the French left, life is quite exciting really. The parliamentary elections went better than expected - and there is scandale moderne.

Time was when a French politician had a mistress, everyone knew (including madame) and enjoyed the gossip.

These days everyone still enjoys the gossip, but madame kicks him out, concerned lest it upset HER political career.

Read all about it.

Edited June 19, 2007 by Sid Walker

[Mark Stapleton]

Read all about it.

Sacre BLUE!

[Sid Walker]

Read all about it.

Sacre BLUE!

Yeah.

French politics makes the rest of us look dull.

I have a conspiracy theory that the break-up is a clever ploy to increase Royale's popularity among French males (as she is once again eligible) while shoring up the female sympathy vote.