À la Gloire de L'économie Française
10:55 AM, Jan 20, 2012 • By IKE BRANNON
What's interesting to economists isn't so much the difference in the two economies between 1960 and 2011 but rather between the time when France reached "first world" status and had to go our route to improve the lot of its people and today. By all measures, France was not successful at this stage of development. After exceeding 80 percent of the U.S per-capita income in the late 1970s, the next three decades saw the French and U.S. standards of living diverge, and today the per capita income of France is scarcely 70 percent of that in the United States. That wide and growing between current U.S. and French per-capita income is worth exploring.
What happened? Upon reaching the ranks of the developed economies, the exigencies of the welfare state began to get in the way, with union strictures, high minimum wages, and an oppressive regulatory state pulling down economic growth. Unemployment in France has been high for decades—with youth unemployment hovering around 20 percent for a generation—with stagnant incomes and economic growth as a result.
The punitively high minimum wage may be the most damaging policy in France's panoply of growth-killing policies, since it makes getting a job on the first rung of the career ladder all the more difficult for those without the means or ability to go to college. The gravy job for high schoolers when I was in high school in Peoria 30 years ago was grocery store bagboy. In France, these jobs don't exist--Carrefour and its competitors can't afford to pay $12 an hour to someone bagging groceries, so customers do it themselves. Those who don’t learn the ins and outs of the workaday world at a young age often miss the lesson entirely, and suffer the rest of their lives as a result.
The French (and their enthusiasts on the Times editorial page) may reassure themselves by noting that while the French are poorer, at least they have a more egalitarian distribution of income across society. That may be; if we confiscated the income of everyone in the top one percent of the United States, the average income in the U.S. would fall by eighteen percent, and we would have a more egalitarian income distribution as well. Would that lead the Times and the Occupy crowd to declare victory? Why would that be superior to what we have today?
Economic growth may not be the answer to all that ails the United States, but it is a necessary component in any plan to reduce the massive government deficit, address the looming state pension crises, and achieve a better standard of living for people at the bottom rung of society. To pretend otherwise is the province of dilettante journalists.
Ike Brannon is Director of Economic Studies at the American Action Forum.