News French economy- how can it not collapse

[vanesch]

The solution would be :
- make it easier to fire and to hire (you loose your job, no big deal you'l get another one tomorow)
- make sure , once the government finds you a job, that if you refuse it you don't get money from the government anymore (for now , you can refuse 3 times)

This "3 times refusing and you're out" is in fact pretty new and gave rise to a lot of protesting. Before, you could refuse as many times as you wanted.

But it is not true that all people who are unemployed are unwilling. I have known many people who really wanted to work, and it is simply not easy to find a job. The system is a bit locked up: as it is difficult to fire, it is also difficult to hire. For those that are "in", this is a security, for those that are out it is "bad luck". Usually, to get hired somewhere, you need to know people, you need to use your social network. Jobs are often given out as "cookies" to friends and relatives. The only "clean" way is often the entrance competitions in public service, for which France is well-known. They are because of market mechanisms (few places, lots of candidates) extremely hard! If you want to be a postman, you better have your masters in history or something, because the entrance competition is on general culture (a written exam). But once you're in, as long as you don't kill your boss or something, you're in for life. So French society is EXTREMELY competitive around 18-25 years: you play all your cards at that age, it determines where you will end up, and once you're in, you're in for ever. This is really rooted deeply in the French system. Sarkozy also wants to tackle that - only, I'm affraid that he's killing the good parts of it, and not solving the problematic parts.

 

[Art]

The point of focusing on developed nations only is that developing nations can have double-digit growth for a little while because they have so far to develop. But it isn't sustainable or stable. So it isn't reasonable to compare developed and developing nations.

Err yes that was the point I made in my first response to Gokul. Good to see you agreeing with me.

The point then is that among nations with mature, stable, developed economies, the French aren't doing well.

The question posed in the OP is why the French economy has not collapsed and when one sees that France fits comfortably into the very narrow band of growth for developed countries the answer becomes obvious.

And before becoming too 'holier than thou' when criticising France's social structures and it's 2.1% growth rate bear in mind the latest forecast from the IMF for US growth in the coming year is 1.8% (down from it's 1.9% this year ) against a world economic growth rate of 4.8% and the risk is on the downside as that's if the credit debacle sorts itself out quickly otherwise it's recession. They also say despite the already huge fall against the Euro the $US is still overvalued. As you know a strong currency is a reflection of a strong economy and vice versa! You will also find France's inflation rate was a full % point lower than the US's in the current year and this is expected to be repeated next year. No doubt French posters on here will be happy to tell you where you are going wrong .

 

[vanesch]

Err yes that was the point I made in my first response to Gokul. Good to see you agreeing with me. The question posed in the OP is why the French economy has not collapsed and when one sees that France fits comfortably into the very narrow band of growth for developed countries the answer becomes obvious.

Well, things could be better, but it is not as bad as it seems. As I tried to point out (maybe I failed), most of French "communism" resides in some idealized public opinion, not in real business (which is rather capitalistic). But this has side effects which have put some burden on the French economy, which is too fat and too inefficient a state administration, maybe too high taxes, and too much social security which kills some motivation. All this grew out of good intentions, but was mixed with too much zeal and abuse in the past. But my impression is that winds are changing here, and Sarkozy is probably the incarnation of that change. It will take some time, but I have the impression that things are in general, going in the right direction. Of course there will be some battles (especially with the very powerful unions), and it will take a very able politician to get his boat through the mine field. We'll see.
France might then settle for about the right mix in social wellfare and initiative. I'm pretty hopefull in fact. But, as I said, it will take some time to get the old ghosts out.

 

[JPC]

Well, things could be better, but it is not as bad as it seems. As I tried to point out (maybe I failed), most of French "communism" resides in some idealized public opinion, not in real business (which is rather capitalistic). But this has side effects which have put some burden on the French economy, which is too fat and too inefficient a state administration, maybe too high taxes, and too much social security which kills some motivation. All this grew out of good intentions, but was mixed with too much zeal and abuse in the past. But my impression is that winds are changing here, and Sarkozy is probably the incarnation of that change. It will take some time, but I have the impression that things are in general, going in the right direction. Of course there will be some battles (especially with the very powerful unions), and it will take a very able politician to get his boat through the mine field. We'll see.
France might then settle for about the right mix in social wellfare and initiative. I'm pretty hopefull in fact. But, as I said, it will take some time to get the old ghosts out.

Yes, I hope he will be able to step France out of it