July 13, 2008


France's Broken Social Model (Jurgen Reinhoudt, 7/14/08, Real Clear Politics)

That France's famed social model is economically inefficient and morally flawed--as opposed to being economically inefficient but morally virtuous--is an argument brought home with eloquence and vigor by Timothy Smith in his book France in Crisis (Cambridge University Press, 2006). Originally published in 2004, the book has not received the attention it deserves.

To say that France's social model is far from perfect is an understatement: in spite of the state absorbing more than 50% of GDP, France has suffered, since the 1980s, from rising child poverty rates, persistently high unemployment, a chronic sense of economic malaise, and the continual enrichment of the system's "insiders" at the expense of the system's "outsiders." More importantly, France's social model fails to deliver precisely what it proclaims to: economic justice, inter-generational fairness, economic opportunity and social protection, particularly to young workers entering the labor market, minorities, immigrants, middle-aged women and other vulnerable groups.

For those who wonders how France's large welfare state could afford to fail so many--and confer so many privileges on the over-privileged few--Smith's book is a must read.

Smith, a Professor of Comparative Public Policy at Queens University, Canada, is an admirer of Social-Democratic welfare states such as Sweden or the Netherlands. No right-winger, Smith admires these countries for their labor market flexibility, progressive taxation structures and active income re-distribution policies. France, Smith points out, lacks all three: France's labor market is remarkably inflexible, something that benefits white, male, middle-class white-collar workers at the expense of women, minorities, immigrants, young workers, and the unemployed. France's taxation structure can easily be described as regressive: it contains large tax breaks for independently employed professionals and wealthy families with numerous children, while poor and lower middle-class families must pay one of the highest Value Added Tax rates in the world. And just as important, France lacks effective income re-distribution policies, with its pension programs re-distributing tens of billions of Euros in reverse, from economically struggling workers to upper-middle-class French retirees, the wealthiest age group in French society today.

The "insiders" in the French system are people who benefit from France's well-known perks, including lifetime job security; 6 weeks or more paid vacation; a generous medical system that is a complex public-private hybrid; and a steady, dependable source of income.

France's special-interest groups, encompassing not only privileged public sector worker but also upper-white-collar workers (cadres) have carved out positions of extraordinary economic privilege for themselves, with the support of left-of-center and right-of-center governments, while saddling the non-privileged public (the so-called "outsiders") with the bill and, often, a lifetime of economic exclusion.

...is that they celebrate imprisoning themselves in an socio-politico-religio-economic model that's been relentlessly anti-human.

Posted by Orrin Judd at July 13, 2008 8:32 AM

Seems only fit. I would swear the only "prisoner" in the Bastille was De Sade.....

Posted by: Robert Mitchell Jr. at July 13, 2008 11:05 AM

... "in spite of" the state absorbing more than 50% of GDP, France has suffered,...

Shouldn't that be "as a result of" ?

Posted by: erp at July 13, 2008 11:14 AM

Three bucks Mr. Reinhoudt never read The Road to Serfdom.

Posted by: Benjamin at July 14, 2008 1:30 AM
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