March 29, 2006 -- We can always count on the French to show us how holding the wrong moral values and following the wrong economic policies will produce a comédie that becomes très tragique.
From Paris to Lyon, hundreds of thousands of students have been taking to the streets, demonstrating and rioting against a new labor law that will allow employers to dismiss without cause employees 26 years old or younger within the first two years of being hired. France has some of Europe's most stringent laws restricting the freedom of employers to manage their labor force. It’s virtually impossible to get rid of workers who either aren’t performing their jobs well or whom employers simply can’t afford to pay because demand drops for the goods and services produced by their enterprise. Not surprisingly, even when demand is high, employers will not hire costly workers because it would be extremely difficult to downsize if business becomes bad.
And costly they are! In France, wages, labor rules, and regulations are set by negotiations between the major unions, business groups, and the government—that is, by corporatist collusion rather than voluntary contracts between employers and employees. The French government also mandates six weeks of paid vacation, lots of paid holidays, and other benefits. Nice work if you can get it. The trouble is that 1 in 10 can't.
Not surprisingly, unemployment in France has averaged over 10 percent for the past 15 years, with the current rate at 9.6 percent. Private sector job creation has been almost non-existent. With France's population stagnant, you'd think that the demand for labor would be high. By contrast, America’s unemployment for the same period averaged just over 5 percent—the current rate is 4.8 percent—with 23 million net new jobs added to the economy, and this with the population jumping by 40 million. America is a job creation machine!
But are the French who actually do have jobs better off? Not really. Per capita gross domestic product in France is $29,000, compared to nearly $40,000 in America.
In the late 1990s, the French government decided on a bizarre strategy to combat unemployment. It mandated a cut in the work week to 35 hours but without a corresponding pay cut, on the theory that employers would need to take on more workers to make up for those lost hours of production. It became a crime to work too much. Government agents literally kept watch for people who might be putting in too much time on the job. Like criminals meeting in dark bars to plan crimes, honest individuals had to meet secretly to plan productive activities. It was a nightmare right out of Atlas Shrugged .
And how were French employers supposed to pay for more workers? Ah, there's the problem. The employers didn't have piles of money sitting around or stuffed in their mattresses. To pay for extra workers, they would need to increase the prices for their goods and services which would—you guessed it—hold down demand for those products, meaning less reason to hire more workers to make merchandise that people couldn't afford to buy. Is this the fabled logic from the country that gave us Descartes?
Add another perspective to this picture. Last summer, poor, mostly young Muslim immigrants from North Africa rioted, burned, and looted throughout France in part out of frustration because their jobless rate was 40 percent. Part of the motivation for the new law allowing easier dismissals of workers is to remove the disincentive to hire such workers to begin with. And that is what has set off this latest wave of protests and riots by young students as well as union leaders, who don't want to see their stranglehold on a dying economy loosened.
These failed economic policies have their origins in—and have in turn fostered—the moral failings of France's petulant population. Its citizens think that the world, society, and their neighbors owe them a living, and they demand secure jobs as a "right" to be paid for by others. If their whims aren't granted, they consider themselves "slaves." Bottom line: They want the unearned. And how, exactly, do they think their economy, failing under such demands, will continue to meet them? Bottom line: They don't think. These children masquerading as adults are too busy throwing temper tantrums to ask such questions. Who would want to hire such crybabies to begin with?
It doesn't enter their minds or moral code to take personal responsibility for their own lives, to act like entrepreneurs by trying to make themselves the best employees possible so that their employers would work to keep them, or to demand complete economic freedom so that they and their employers can prosper together.
The economic mess in France is the manifestation of a moral mess at the basis of all welfare states, and is a preview of what's in store for America if we continue along the path of our Gallic cousins. Only a morality of responsible individualism—in France, America, and in all countries—will bring both peace and prosperity.
Edward Hudgins is research director at the Heartland Institute and former director of advocacy and senior scholar at The Atlas Society.