In the midst of a discussion about expanding the role of government to enhance social protections, a delegate arose and cited France as an example of government intervention into the economy run amok. The delegate cited France’s slow GNP growth and overall sluggish economy.
Indeed France’s unemployment rate is about 5 percent higher than the U.S. However, French productivity has exceeded the U.S.’s from 1985 through 2010. But these economic numbers, which are routinely used to determine the health of an economy, miss the mark. The measure of success of any economy isn’t how much wealth it has or even how much it creates. The measure of a successful economy must be the welfare of the people who are served by the economy.
For example if you lived in France you would:
- Pay 26.8 percent more in taxes and live 2 years longer
- Earn 26 percent less in income and be 46.6 percent less likely to live in poverty
- Consume 46.4 percent less electricity and be 43.1 percent less likely to die in infancy
- Live in a country with the highest rated health care in the world according to WHO versus the U.S. ranked at 37th.
- Have a 35 hour work week.
- Live in a country with per capita carbon emissions 4 times lower than the U.S.
- Be able to eat the best bread in the world (Vive le croissant!)
It’s difficult to square the circle when a country has a high unemployment rate and less poverty. Or higher taxes and the same economic productivity. Perhaps the answer lies in economic equality.
In much maligned France, the top 1 percent control 10 percent of national income. In the U.S, the top 1 percent garnish twice as much at 22 percent. Thus, a national economy can grow without providing benefits to the bottom 50 percent of income earners which represent a majority of the population.
According Piketty and others, one primary driver for this concentration in wealth globally, including the U.S., is the privatization of capital from the public sector into the private sector. This is the exact opposite of the “crowding argument” we hear from Republicans who claim money in the public sector stifles innovation and reduces growth because it crowds out private capital.
Imagine life in modern America if the U.S. had France’s tax structure or even our own tax structure under Ike. Instead of making huge debt payments to Wall Street, we would be investing in high speed rail (the French TGV is still an engineering marvel), quality education (with wonderful school lunches), the best health care in the world, and eating too much yogurt.
As we are seeing as the Facebook scandal unfolds, private corporations, even high-tech ones, seek to maximize earnings for their shareholders who are in essence the 1 percent. Unfortunately, there is always a transfer of costs to the public sector in terms of pollution, concentration of wealth, or as in this case loss of privacy. The public sector, except when it gives money away to the 1 percent, invests in the commons, better transportation systems, better education system, better health care systems, and in this case, more healthy food. All of which reduces costs for both the private and public sectors. Perhaps that’s the source of French productivity?
This version of the French paradox is higher taxes, higher unemployment, higher productivity, less poverty, a stronger middle class. and longer lifespans with a higher quality of life.
NOTE: No Oregon winegrower was harmed in producing this post.