In an article dedicated to the French economy, Timothy Taylor makes some interesting comments on the “mystery” that is France, one of the richest countries in the world, where you can breathe opulence as soon as you arrive there. Everything is beautiful and harmonious, its city centres are very old and well-cared for, and in many places the houses are still built in the same regional style as centuries ago. As Unamuno said in one of his best poems, France is “The office of good taste.”
But all this implies a degree of interventionism which has its consequences. As Timothy says at the end of his article, those who live well in France live well, but that’s not everyone: unemployment is high, particularly amongst young people, thanks to laws which prevent the labour market from being more dynamic. This is reflected in public spending figures which account for 57% of GDP and a high level of public debt. What saves France is its huge Administration which functions, with a very tolerable level of corruption. The public services are also tolerably efficient, but very expensive to maintain. Taylor provides very illustrative graphics, and not just for France. Spain is also well reflected in them.
Firstly we can see the inverse relationship between a company being free to hire and job stability. The harder it is to fire people, it’s blatantly obvious that job insecurity increases, as can be seen in the graphic. France (along with Spain) is one of the countries with the most employment protection and insecurity.
See how mediocre Spain’s labour reform is. All it has done is to create more job insecurity. Another graphic which is very illustrative is related to another kind of “protection”, the minimum wage. The higher the minimum wage, the higher the jobless rate.
In the next graphic, the unemployment rate in France, which has increased its minimum wage.
As the author says, this doesn’t mean that France is about to go under and fall behind Spain in terms of welfare (as Zapatero predicted). But there is a social cost to pay for so much interventionism and public spending, taxes and debt.