April 12, 2007

QUARTER MILLENNIA, NOT QUARTER CENTURY:

France's chance: After a quarter-century of drift Nicolas Sarkozy offers the best hope of reform (The Economist, 4/12/07)

France is the euro zone's second-biggest member and home to ten of Europe's 50 biggest companies. But it is deeply troubled. It has the slowest-growing large economy in Europe, a state that soaks up half of GDP, the fastest-rising public debt in western Europe over the past ten years and, above all, entrenched high unemployment. Over the past 25 years French GDP per person has declined from seventh-highest in the world to 17th. The smouldering mood of the suburbs (banlieues), home to many jobless youths from ethnic minorities, blazed into riots in 2005 and lay behind new trouble that flared recently at a Paris railway station. The disenchantment of voters is reflected not only in opinion polls but also in their rejection of the European Union constitution in 2005. Tellingly, they have not re-elected an incumbent government for a quarter-century.

The most urgent cure for all these ills is to get the economy growing faster. That requires radical liberalisation of labour and product markets, more competition and less protection, lower taxes and cuts in public spending, plus a shake-up of the coddled public services. None of these things was seriously tackled in the past 26 years, under the presidencies of Fran├žois Mitterrand, from the left, and Jacques Chirac, from the right. This was a time when other European countries, such as Britain, Spain, the Netherlands, Ireland and the Nordics, transformed themselves for the better, and still largely retained their cherished social models and welfare systems. Here lies the biggest challenge for the next French president.


Odd not to count the two centuries during which they eagerly followed the French model into this mess, only the 25 since even they realized the Anglo-American model is the only way out.

Posted by Orrin Judd at April 12, 2007 12:53 PM
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