France As Perfect Laboratory – More’s The Pity For Its People

Today I had the misfortune to read the French business daily, Les Echos. It was a stretch for my French, but oddly enough, the higher the language level, the easier it is.

The misfortune was to discover, in detail, the first steps of the Hollande government.

If you thought that the Rudd government’s hardening of workplace regulation in the midst of a financial crisis was, well, utterly stupid, then what the Hollande government is doing will take your breath away.

OK, France has a tradition of corporatist consulting with “social partners”, the composition of which is dominated by unions and similar bodies. But the early indications are that the retro-ideologues are well in control and that being in government hasn’t added much in the way of prudence or history-driven humility.

Consider, during a currency, financial and business confidence crisis doing the following: increasing the minimum wage and indexing it to GDP growth; taking the first step to reducing the retirement age to 62 from 60 after a grand struggle to increase it; hiring 60,000 more public servants in education; new business taxes that outweigh earlier reductions still in place; new jobs financed 75% by the state; a law forcing multinationals that are closing down to accept a buyout when determined by a “tribunal de commerce”; and a law allowing workers to “seize justice” in cases “manifestly contrary to the enterprise’s interests”, whatever that means.

But above all, it is the open door policy to unions agitating for increased “sharing of value-added” that is striking. The first consultation invites from the incoming government were to unions and union peak bodies. Wherever you turn, commentators speak of “reassuring the social partners” – read unions, though it includes employer groups – and of voter or union knee-jerk responses to poorly chosen words asking for reform, rather than dealing with the substance.

It is sad to see French articles and debate in 2012 covering topics addressed in Australia in the early 1980s. Even Xavier de Yturbe, a commentator in favour of substantial reform, wrote in an op-ed piece that using the term flexibility was “psychologically maladroit”, as unions and workers subconsciously associate it with unemployment. FFS!

The belief remains across France that a government can legislate for perpetual financial security.  The unhappy truth, in any country, is that the only security you have is your capacity to earn and your capacity to adjust to meet changed circumstances.

Television chat is full of Sarkozy-era players trying to defend the reforms they did manage to get through – Sarkozy was a terrible disappointment – in the face of a media pointing to Hollande’s election as a clear repudiation of commonsense.

Interestingly, some of the highest profile ex-Ministers (such as former Foreign Minister Michèle Alliot-Marie) are openly attacking the Left-bias of reporters (not commentators) and the overt stacking of tribunals and bureaucracy. Add that to Mitt Romney’s speech calling out the media a few weeks ago, and a new front may be emerging in the conflict with the Left political class. One that has been a long time coming.

A triumphant French Left is operating in complete ignorance of their situation, or that of their country. It reminds me of the high-fives in the Australian House of Reps on passing the Carbon Tax; the self-congratulation of people so buried in ideology that they don’t realise they are stepping towards their own and their economy’s destruction.

After the first round of the French Presidential elections I wrote that the voters had stuck their head in the sand; more strikingly, it is clear the French political class has done the same for the past 50 years.  Serious players in the previous administration had pulled theirs out of the sand, shaken them clear and started to get to work, only to be let down by Sarkozy’s ego and lack of focus. The media, bureaucratic, academic and policy classes though, carry on as before, safe with their government salaries and Euro-junkets, free from facing the consequences of their beliefs.

If Hollande doesn’t reverse course soon in face of financial restrictions, eventually the social contract will fall over and French students and unions, loving the asphalt as they do, will cause the government to do the same. In twenty years or so we may well be able to add one more number to the list of French Republics.

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