Vive la France?

I found this video featuring a French economist talking about the differences in French and U.S. economics entertaining and informative. While the video does not go into much detail, it quickly sheds light on the fact that France, while a lovely place to visit, with considerable contribution to world culture, is no model for economic freedom or success.

For example, French labor law is ruled by strict collective bargaining agreements. The French law firm Triplet and Associes notes,

The intellectual and legal framework, as well as the general day-to-day approach, to the relationship between employer and employee in France is very different indeed from that generally encountered in the common law system and it is vital to take into account that employment in France is not 'at will'.

That last line is ominous, no? The history of French labor law is littered with ceilings on hours worked, floors on wages, and collective bargaining disasters. By limiting the hours a French citizen is allowed to work, the government is not doing them a favor. 

Think about yourself - have there been points in your life you wanted, or needed, to work more than a 35 or 40 hour week? Many people are in this position, but are forbidden to work more! This is a ridiculous and discriminatory policy aimed at crushing the lifeblood of an economy: productivity and competition; not to mention freedom of choice!

Furthermore, French labor laws have historically made hiring and firing an overly complex process for employers, often with the threat of pecuniary or litigious punishment for non-compliance. Again, this may keep unproductive employees working, putting employers at a disadvantage, robbing consumers of better products and/or lower prices for their goods and services!

The Association of European Chambers of Commerce and Industry concluded that,

...the economic performance of the EU is about 20 years behind that of the U.S...[T]he current EU levels in GDP, R&D investment, productivity and employment were already reached by the U.S. in the late 70s/early 80s.

How can an economy be expected to prosper when it is mired by restrictions? Oh wait, it can't.

More recent news shows that the French economy is contracting considerably in the economic downturn. 

The French economy shrank at its fastest rate in at least six decades year-on-year in the first quarter of 2009, but it outperformed its neighbours thanks to resilient household spending, data released on Friday showed.

Analysts said France was protected by its powerful state sector, generous welfare benefits and rigid labour laws that prevented the economy adjusting rapidly to the global slump.

Although they boast they are faring better than their neighbors due to considerable government intervention (ah yes, being the most protectionist economy is quite a prize), they forget their restrictive measures will make recovery far slower than freer nations.

'The welfare state is helping very much. This has cushioned the blow, but it will be a handicap when the recovery arrives because France will respond less quickly than its neighbours,' 

I know France is a lovely place, and an evaluation of their economic policies does not diminish their contributions to world culture at all. The French people cannot help that their leadership has put them in this position. But let's not allow our leadership to do the same.

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