Interesting stuff in this Commentary piece on the Yellow Vests, including arguments that make my pal Kirblar seem like a right winger due to his support for labor reform and privatization in France, because here, a French conservative writers opposes them.
Or take “labor-market reform.” France has onerous labor rules that hold back employment, right? Despite trying, I have yet to find a single French legal expert who believes it is hard to fire people under current law, and I did not interview the Socialists. Since 2002, French governments left and right have done many rounds of small-bore reforms to France’s labor code, whose cumulative effect is that 15 years later it is now easy to hire and fire in France. So why doesn’t France have full employment? In the abstract, a lightly regulated labor market should encourage employment. But in a depressed economy, it creates an incentive to fire but does little to promote hiring. The story of the lightly-regulated U.S. labor market over the last decade shows us how it works. When macroeconomic conditions collapsed, mass unemployment appeared; when macroeconomic conditions improved (in large part through fiscal and monetary stimulus), full employment returned."
Perhaps the most egregious example is the 2000s-era privatization of highways by French governments left and right. Given the excellent state of French highways—I still have fond memories of a friend, a student at an elite school for government engineers, waxing lyrical about how French highways have a unique high-tech, rain-absorbing, and therefore life-saving coating—a conservative should be forgiven for wondering what was broken that needed fixing. I have an idea what: The government’s independent auditor later found that the government-linked companies that bought the highways underpaid by 40 percent, and tolls later increased by 20 percent with no corresponding increase in quality. Had this happened in Venezuela or Russia, everyone would know what to call it, but here in France it is “reform.”
Today, Macron intends to implement an EU mandate to liberalize France’s railways, generally regarded as among the best in the world. Why? Just because, the answer seems to be. He also means to privatize France’s national lottery and the Paris airports—in other words, two businesses that are essentially licenses to print money—ostensibly to pay down the debt. Apparently Macron, the former Rothschild managing director, is unaware that an investment banker who advised a CEO that he should sell assets returning 10 percent a year to pay for debt that costs him 2 percent a year would be summarily fired for gross incompetence. Does the vaunted expertise of French technocrats not extend to arithmetic?
This cultural history also explains a lot of the hostility to “labor-market reform.” In France, if you think your boss will use any legal loophole to screw you over, well, you’re probably right. A tight labor market punishes bad bosses as a class, as employees simply vote with their feet. France rewards exploitive bosses. With mass unemployment, employees will tolerate a lot more abuse for fear of walking, and with no growth, squeezing employees is a much more rational path to profit than investment or innovation. Is it any wonder that most French people will hold on to their labor protections for dear life? That they have such a negative view of private business and anything labeled “market reform”?
Municipal government is one of the quiet wonders of French life, both in terms of policy delivery and, what’s important in an age of rock-bottom trust in public institutions, democratic engagement. Naturally, this offends French policy wonks, who want to merge townships together to, you guessed it, generate synergies and economies of scale.
Paris is too large for anyone to know the mayor, so it makes sense that Parisian mandarins don’t understand what mayors mean to French small-town life. And so instead of improving on a good thing, giving municipalities more power, decentralization laws have invested more prerogatives in intermediate levels, départements, and, especially, the highest level, regions. The idea is to imitate France’s neighbors, which have a federal system of government; a typical reflex of French mandarins is to hold in contempt whatever is uniquely French and want to replace it with something foreign. Now, Germany, Italy, Spain, and the UK have a federal or quasi-federal system of government for reasons having to do with their own history and culture, while France has a very different history and culture. But the idea that imitating their system might not work for France for cultural and historical reasons simply does not compute for a technocrat.
Thus, François Hollande decided to merge regions together to “generate economies of scale”—and later audits found, surprise, that this disrupted the delivery of public services and failed to deliver expected savings. A popular idea among wonks is to finish the work by putting all power in the hands of regional governments and merged mega-townships—that’s right, they can’t help it, even when they want to decentralize, French technocrats centralize. That this approach has been a dismal failure over the past 30 years does not enter the equation, even with government spending ballooning while the quality of public services and public trust in local government have deteriorated.