I love The Economist. It’s so smug and so uniform in its outlook, as though all the articles were written by that same, reassuringly ‘authoritative’ hand. This morning, though, on reading the piece about France’s infuriating proclivity towards statism, Back in the Driving Seat: The Return of Dirigisme, I detected a touch of self-doubt.
A devotee, as you would expect, of Anglo-Saxon, free market capitalism, the author of the piece could not help but acknowledge that France’s bizarre economic model, with its record of shameless statism, conservative banking and lavish public spending, has left her far better equipped to deal with the financial crisis than her more observant partners in the global economy.
The French economy is used to high unemployment, which is currently pushing 8.3%. America, whose unemployment rate in February was 8.1%, is not. The social consequences of joblessness in France (where the poor have access to decent schools, health care and welfare) and in the United States, are not the same at all.
France is constantly being rapped on the knuckles for her high public spending. Two years ago, this accounted for 52% of her GDP, compared with 45% in Britain. I have long been puzzled by the argument that it is permissible to encourage massive personal borrowing (the average owed today by every adult in Britain, including mortgages, is £30,450) and be so censorious of state borrowing. Now, of course the French budget deficit (running this year at 5.5% of her GDP) is well below that of Britain (7.2%) and America (12%).
Now, all you Anglo Saxon capitalists out there, could we please see a little more humility?
Thanks for that, Lucy. An interesting perspective.
I suspect that the G20 meeting might turn into a blood bath. While Gordon Brown may have shown some humility this week by almost apologising, he appears to be used to being “top dog” and dictating to the cabinet. At the G20 he will be just one in a whole pack of hounds, all fighting their own corner with an element of protectionism.
There are signs of recovery this week in the UK in some areas. Some geographic locations have reported house price increases. (But wasn’t it over-inflated house prices and too much lending that led to much of the economic problem?) But, in terms of the credit markets opening up again, I have seen TV ads for “switch your mortgage to us”. Not seen them in a long while. Debenhams has announced the creation of over 1,000 jobs. John Lewis announced a smaller, but still a bonus for its share-owning staff. And to meet market demand, their Waitrose stores are sourcing cheaper products and carrying cheaper ranges. (Many have been scaling down to Aldi, Lidl and Asda.)
However, where I live, complete plants are closing down. In another region I have a friend working for a company that is still profit-making, but all staff are on a four day week until further notice. And I am now in month nine of finding employment to get back to work, after a planned break that has gone on and on… (Which explains my interest in the economy.) To remain optimistic, I keep reminding myself that if the economy has contracted by 5%, 95% of it is still there. Oh well, back to the job search!
I’m going to translate this wise remark:
“The first will be the last” and vice versa. When times are hard, everything, and its opposite, can be true. (But not for long).”
Very true. Thank you, Vero. L.
“Les premiers seront les derniers” et vice versa. Quand les temps sont turbulents, tout, comme son contraire, peut être vrai. (Mais pas longtemps.)
I love living in Paris.
As an ex-capitalist (and I am) and still recovering, couldn’t enjoy your article more. I wonder what President Bruni will be doing to change things (for the better or worse)? I’m afraid that the answer may be the later. I hope that France and Germany (all of the EU) really face the reality of the economic climate – everyone is fragile and nearer to collapse than some assume. I believe that Sarko is in that ostrich group. Let’s hope not.
Again – great blog.