Sunday, May 06, 2007

Sarko vs. Sego

France picks its new president today. Voting started yesterday in territories abroad and for expatriates. Today the mainland goes to the polls. The estimated turnout for the election is around 80-85%. Sarkozy, the candidate on the right leads Royal by nearly ten percentage points in the most recent polls. So, it looks like Sarkozy will be the next French president. If you have kept an eye on this, you have likely done so through the US press. They seem overly slanted towards Sarkozy, given he is touted as the American-style president. But, apart from his own personal likes and dislikes, there's a deeper meaning for France.

SuperFrenchie has reprinted an essay by Mark Weisbrot discussing the first round of the elections. Mark's take - and I think he's spot on - is that the narrative Sarkozy has successfully played out is that France is suffering economically and psychologically. The American media has gleefully played up this narrative. But it is true only if one assumes a number of dubious starting premises, and these premises happen to be taken right out of the American-style globalization-booster playbook. And I think this opens a very enlightening window on the general normative premises of globalization.

Rather than the standard debate about the tension between developing countries needing to restructure their financial, labor, and trade institutions if they want to compete in the global economy versus the damage that entails to traditional ways of life, local values, culturally-ingrained practices, and identity, perhaps the debate should be placed elsewhere. That is, if the evidence shows that globalization is corrosive of what people perceive to be valuable, and if there is good evidence that this corrosion plays out in the empirical terms of running towards a lower common denominator in terms of social goods, then we have to ask again the question of what globalization - economic liberalization, that is - is good for.

That question, and this is the "American style," is not asked. And France, with Sarkozy, will turn in the direction of the blind assumption. This won't be easy in France because there is too much of the population that is aware of the dynamics of labor in the global market, of the sacrifices demanded of citizens in the name of an abstract idealized global market, and of the serious drawbacks of liberalization. It's an ideology. The reason we don't often discuss it in the US is because it is American ideology - we can't even see it. We do things, rather, like blame immigrants for our labor woes. France, of course, is undergoing that phase and this prepares the way for a Sarkozy who can then talk up the French "malaise."

Here's Weisbrot:

The general theme that has propelled Sarkozy into the lead is that the French economy is somehow “stuck” and needs to be reformed to be more like ours. It is also widely believed that France needs to be made more “competitive” in the global economy, since competition is tougher now in a more globalized world.

New York Times columnist Thomas Friedman has been the most popular proponent of the idea that French workers must lower their living standards because of the global economy. “All of the forces of globalization [are] eating away at Europe’s welfare states,” he writes . . . “French voters are trying to preserve a 35-hour work week in a world where Indian engineers are ready to work a 35-hour day.” For Friedman and most of the pundits, this is impossible.

It is important to understand that there is no economic logic to the argument that the citizens of any rich country need to reduce their living standards or government programs because of economic progress in developing countries. Once a developed country has reached a certain level of productivity, there is no economic reason for its residents to take a pay or benefit cut, or work more hours, because other countries are catching up to their level. That productivity, which is based on the country’s collective knowledge, skills, capital stock, and organization of the economy, is still there, and in fact it increases every year. To the extent that international competition is being used by special interests to push down the living standards of French or German or U.S. workers - and it is - it just means that the rules for international commerce are being written by the wrong people. It is a problem of limited democracy and lack of representation for the majority, not a problem that is inherent to economic progress.

Another mistake that is commonly made in this debate is to compare France’s income or GDP per person to the U.S., by which France lags: $30,693 for France versus $43,144 for the U.S. (these are adjusted for purchasing power parity). But this is not a fair comparison, because the French do not work nearly as many hours as we do in the United States. Economists do not say that one person is worse off than another if she has less income simply due to working fewer hours. A better indicator of economic welfare in such a comparison is therefore productivity, which is as high or higher in France as it is in the United States.

Now for some arithmetic regarding France’s notoriously high unemployment rate among young people, which shaped politics there and influenced world opinion during the youth riots in 2005. The standard measure of unemployment puts the unemployed in the numerator, and unemployed plus employed in the denominator (u/u+e). By this measure, French males age 15-24 have an unemployment rate of 20.8 percent, as compared to 11.8 percent for the US. But this difference is mainly because in France, there are proportionately many more young males who are not in the labor force - because more are in school, and because young people in France do not work part time while they are in school, as much as they do in the United States. Those who are not in the labor force are not counted in either the numerator or the denominator of the unemployment rate.

A better comparison then is to look at the number of unemployed divided by the population of those in the age group 15-24. By this measure, the U.S. comes in at 8.3 percent and France at 8.6 percent. Both countries have a serious unemployment problem among youth, and in both countries it is highly concentrated among racial/ethnic minorities. But the problem is not much worse in France than it is in the United States.

Sarkozy proposes making it easier for employers to fire workers, cutting taxes (including inheritance taxes), pushing back against the 35 hour work week, and other measures that will favor upper-income groups and owners of corporations. These measures will certainly redistribute income upward, as we have been doing in the United States over the last 30 years. But once again, there is little or no economic evidence that these measures will increase employment or economic growth....


MT said...

For some reason, what I read about Sarko in the New Yorker made me imagine him as like Newt Gingrich. Perhaps needless to say, for me that counts as a scary thought.

Ian said...

"They seem overly slanted towards Sarkozy, given he is touted as the American-style president."

Why would anybody want an American style president? Surely one is too many.

helmut said...

Yeah, but the French are mostly critical of the idea of an "American-style president." Sarkozy's election has to do with other things. The American bit just gets lots of play in the US media because they can only think of how things reflect on them (as long as its at least superficially positive).