French competitiveness

Shock treatment

Even before Louis Gallois has published an economic report into competitiveness, the French government seems to want to bury it

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Wilhelm Röpke

I read that the pact for competitiveness includes:

20 billions in tax cuts over 3 years. But the only employees will be considered, in that programme, who earn up to the 2.5 times of the French minimum wage. The minimum wage (Smic) is at € 1425.67.
So corporate taxes or income taxes - depending on the legal form of the company - are cut.

All that is surprising because Mr Hollande has always spoken about growth and did not mentioned that there is a problem with French industry. On November 6th Hr Hollande acknowledged that there is a supply-side problem in France concerning cots.

By using the term "growth" he understood a debt-back growth programme mostly financed through higher taxes on the rich and economy. Insofar, this announcement, is an u-turn par excellence.

Let us hope that France will get back on track soon.


France has been headed downward for 200 years and their socialist tendencies will make that decline even more so. The country is a prime example of failure. They have run out of other peoples' money and their government debt and banks are garbage.


In the mean time, Obama has won a landslide, despite polls

Remarkable his 90% win in Washington DC. I wonder really if this has any deeper meaning.

Obama's win is a victory against the type of State imagined by the Republicans, and which I believe is often shared by many of the posters here.

The best review I've read (before the elections) was the New York Times op-ed endorsing Obama.

What does this mean for Europe? Do Obama policies reflect those of the European Commission? Of Germany? Of France?

Is this hope I feel? In a way, yes.

the people have won!

Take that S&P (Moody's, Fitch...), JP Morgan, Goldman Sachs! Your unelected CEOs cannot dictate the policies of a nation, no matter how hard you try to sabotage them, and their monetary policies!

This is a lesson for all of us.

If anyone can tell me where I went wrong in my reasoning, please be my guest.

la.výritý in reply to Super-pedrolx2

Obama has won, but make no mistake, Obama's victory was not a landslide. Actually I would say (what I've tried to explain to viva already several month ago) America's "new reality" has won against a (now) fictitious white "high noon/lone cowboy" mentality which has formed this country for over 200 years.

This "new reality" is that of the emerging new American electorate, which is changing our politics profoundly and will remake them fundamentally in decades to come.

As already in 2008, last night Obama was the immediate beneficiary of that transformation. We could observe this "new reality" last night on the floor - not from a TV riser high above the hall - when the old/new president delivered his speech. There was the "Obama coalition" in all its rainbow glory: black and white, yellow and brown, and - most of all - strikingly youthful.

This contrasted with the crowds at the Romney events we'd watched over the weekend and for months before, which were among the most homogeneously "old" ultra-Caucasian I've seen at public gatherings anywhere in America . . . but at Klan gatherings.

sikko6 in reply to la.výritý

THE problem Obama must face is that he must make deals with THE GERMAN Republican guy Boehner in the congress! I don't think Boehner will budge to black president because he will think Obama is not legitimate as the chapter 11 specialist Donald Trump thinks!

What do ya say about that?

la.výritý in reply to sikko6

This is probably the wrong blog discussing political events in America. But since this seems to be a 'burning issue', also in Europe, I'll throw in my two cents worth.

First of all: I know you like to be provocative, but to emphasize on Boehner's German background in the context of the president's color of skin is out of place here, sikko. German-Americans don't have a history of being racist, rather the opposite is true. A majority of them supported human rights issues; no matter if their background is Lutheran or Catholic (Boehner, e.g., is Catholic). Many of them might be 'conservative' in a European sense, but I haven't met one single German-American who sympathized, e.g., with the Klan.

Having to govern 'against' the House is a problem but it could be worse. Easily Obama could have been confronted with a Senate dominated by the Republicans as well. This chance for the GOP was gambled away by two Republican 'idiots': Todd Akin of Missouri and Richard Mourdock of Indiana. Both, Akin and Mourdock, stand for a kind of political ballast the party is unnecessarily carrying along, which will drown them again if they can't get rid of it soon.

The current situation on the budget is such: Already before this election several Senate Republicans have been in on ways to restructure the tax code, and several of them have made clear they would accept higher tax revenue as part of a deal. If the Senate cuts a deal with president Obama, House Republicans could be left in the awkward position of accepting an arrangement they didn’t help writing; worse, they had no say in.

This is probably the reason why John Boehner yesterday signaled openness to the inclusion of new tax revenue in a legislative package to address the so-called "fiscal cliff" as long as proceeds are linked to entitlement reform and spending cuts.

Across the political divides it is for this country no longer a question whether or not the deficit needs be cut, but rather who is going to pay for averting this (otherwise) "fiscal cliff".

Super-pedrolx2 in reply to la.výritý

I agree with you... I do thikn tough that Obama won by a very large margin at least in terms of Electoral Colleges. It is un undeniable fact. Maybe it wasn't a landslide, but it wasn't a close call as some were preaching either. So allow me.
The Republican Party needs to rethink itself. Those comments on rape, etc just do not find an echo among the younger generations. Rightfully so in my opinion. How can anyone defend rape just so they can defend anti-abortion laws? It's just not right!

sikko6 in reply to la.výritý

What they don't understand is that politicians cannot fix ailing US economy. Only fascist governments a la France think so. It's what people have to create business and wealth. Not fascist governments. Countries with fascist giovernments always suffer from chronic economic malaise. Just look at France, Spain, South Korea, etc. If you analyse these economies, you will learn lots of lessons.


Why Hollende is whining about auto? What's wrong with him?
German and British auto industry is enjoying healthy business thank to Asia. Read this;

I think Italy's mojo car companies like Ferrari and Lamborghini also enjoy the same boom. It appears only french companies have trouble. Let's congratulate fascist government policies that ruined french motor industry.



The french farse on Hyundai cars reveals how french politicians are out of touch and mindless. They think like selfish PIGS. 90% Hyundai cars sold in france are manufactured in EU countries such as Slovakia. How EU can benefit from punishing EU member countries with high tariff? Hyundai is one of few bright spots on Slovakian economy. Why Slovakians will pay subsidies for french peasants?

The rest 10% can come from anywhere Korea, China, India, etc. Does france want to start trade war with such countries? I like to see that. I want to see how much french companies will suffer as a result! I will love that!

sikko6 in reply to Marie Clear

Fascist racism of your mind.
The truth is that fascism is not compatible with modern globalisation and free trade.
French car industry is kaput. Hollende will destroy Peugeot with the looming bailout.

sikko6 in reply to Marie Clear

BTW, if french cannot sell cosmetics and ladies' handbacks to Asian countries, france will go down the way of Spain and Greece, because fascist government ruined heavy industry and mittelstands. French economy is more than fascist economy. It's more close to communism with 65% GDP coming from public sectors. That's why french economy going towards greece. Cleaners don't understand!


Gallois' proposals are already dead in the water less than 12 hours after they were presented. Another waste of taxpayer money. How do you expect a tax and spend nation since the 70's to change it's ways in a matter of years or for that matter, months. Just keep feeding socialist as well as all French Government's agenda (the opium of the people). Chirac sat on his butt during his last mandate and Sarkozy. Well Sarkozy, he talked a lot but really never had what it takes to change the French society as he promised. As for Mitterrand, well, money was just growing on trees in France during his time.


The policy of austerity and absolute commitment to the fiscal discipline imposed on the eurozone states, seems to fail completely. Not only does not give any sign of hope for the future, but neither improves the economies of the states, but worsens them instead. Unemployment in Greece and Spain has broken every record while the picture even in the most developed countries does not seem to improve.


‘BUT, you could do like many foreign bosses, not listening to the TE sirenes, and bet on France ingineers, that have the reputation of being skilfull and hardworkers:’ [Marie Clear]

The front page headlines of ‘Le Figaro’ this morning read thus, Marie-Opaque:

‘Gallois’ 20 measures to boost competitiveness’ – ‘Competitiveness: the strengths and weaknesses of France’. A piece called ‘Décryptage’ [uncoding] – all sorts of weird and wonderful journalism gets called ‘analysis’ in France – starts off enticingly: ‘L'Hexagone a trouvé son hexamètre: com-pé-ti-ti-vi-té.’ [France has found her hexameter: com-pe-tit-iv-it-y] That’s clear enough.

gangster economist

I am looking to enter the french market with a business venture. I am concerned with the information in this article. Will the current competitive situation e.g. lower competitive rating, high government spending, increasingly high trade deficit and especially the fact that the Netherlands exports more than France somehow negatively effect a new business venture entering the french market?

If you have to ask about doing business in France on a blog like this and haven't researched beforehand you really need to get a 9-5 job.

Stop smoking dope and come back to planet earth. Amsterdam coffee shops are still open to foreigners. Go to Holland. Stay out of southern Europe!

But if you do decide to open up shop in France, I suggest you hire someone like Marie Clear for your communication department.

Things can only get worse in my opinion because the left already think they have done enough for business when what they have done should only be the start. Take it from me, as a foreigner I am looking to take as much investment out of France as possible right now.

France is a lost cause as long as the political elite are too gutless to tell everyone the truth that unless they do something now they are next inline for the financial markets after they are finished with Italy and Spain.

I have been in this nest for over 20 years and I saw this coming back then. Funnily enough Marie Clear I got the same response from people back then and look what has happened.

I want France to pull itself out of this mess, but unless it wants to face the reality of the situation that the pigeons (us entrepreneurs )cannot keep funding the ballooning public deficit and remain competitive on a global basis. By the way I know what I am talking about as I employ 40 people in France and export over 80% of what we manufacture, so you really can't afford to loose a bad element like me.


I'd like to comment on the use of the OECD stats on workweeks in the EU that people like to pull as an argument to explain economic malaise within a country. Or more specifically the argument in general, used to paint a people as either lazy or profiteers. It might not be completely on topic but it's a recurring theme in most topics concerning the European economic situation, so I'll just write it down here.

The workweek in itself does not a complete equation make. Include the relative size of the labor force and it will be. What you'll see is that the countries with the "laziest" populations, respectively Denmark and the Netherlands, have the lowest unemployment numbers ergo the greatest labor participation rate. Greece and Spain, countries whose workweeks are much longer on average have staggering unemployment numbers.

What does this tell us? That there are a lot of part time workers in the Netherlands / Denmark (and tolerance thereof), few in Spain and barely any in Greece. You're either employed fulltime or without a job and it doesn't seem like there are enough jobs to go around. IMO looking at these statistics tells you, if anything, that the existence of part time jobs makes for a much more productive population overall as it allows for a greater labor participation rate - and that's what matters. Southern European nations would do good to try and increase their labor participation rates, who works more on average doesn't mean anything.


The French don't let go of their nice cushy 35hr-workweek (in Germany ~40hrs), and they won't let the retirement age rise from 60 or 62 yrs (in Germany, it is stepwise lifted to 67yrs until 2027).

Also, the French won't reduce the huge public sector, which is as a share of the total workforce close to the one in Greece. And thus on medium and long term as unfinanceable as the Greek one.

No matter how much more money the French let the businesses keep, and how high they increase VAT and fuel tax and so on, the country won't become competitive as long as they don't radically change the above mentioned luxuries.

shaun39 in reply to VerySeriousSam

You're right on retirement age, but wrong on working hours.

The average German worker works 63 hours/ year less than the average French worker:

And the average Dutch worker works 97 hours/year less than the French (or almost 2 hours less per week). France also achieves greater gender equality and higher female participation in the workforce.

While it isn't all bad, you're absolutely correct that the public sector must shrink, retirement age must rise in line with life expectancy, taxation must be simplified and lots of private sector deregulation is required for France to improve fiscal sustainability without compromising productivity.

Marie Clear in reply to VerySeriousSam


German propaganda as usual:

oh and the french working hour is the most productive in the world

cuz you know your Hartz IV program workers aren't relly motivated, hey €5 per hour doesn't make it

la.výritý in reply to Marie Clear

MC: "... the french working hour is the most productive in the world".

TE: "French public spending, at 56% of GDP, is ten percentage points higher than in Germany".

Question: How do you measure "productivity" when it comes to public spending?

Answer: By measuring the amount of public taxes frittered away per hour.

la.výritý in reply to shaun39

shaun39: "The average German worker works 63 hours/ year less than the average French worker. And the average Dutch worker works 97 hours/year less than the French (or almost 2 hours less per week)."

... But GDP per capita is the same in Germany ($44,111/ 2011) as in France ($44,007 /2011).

Hence, the German working hour is much more productive than the working hour of the French. Why, then, can MC claim that "the french working hour is the most productive in the world"?

shaun39 in reply to la.výritý

You're comparing GDP/ head of population, and average hours worked per working person. The denominators are different there - so you can't get GDP per hour worked from that ratio alone.

France has a higher life expectancy than Germany, and a much higher fertility rate - so more kids and more old people. France also has a much lower average retirement age. As a result of all that, the working share of the French population is much lower than in Germany. France also has a very large share of adults excluded from the workforce (on permanent welfare) - much higher than in Germany (even while Germany has ex-communist workers to deal with).

So, on net, French workers do achieve a higher GDP per hour worked than the Germans (though if you exclude the ex-communist East Germans, West Germans do rather better than the French). Some of that is due to suppression of potential workers, with a high minimum wage and generous welfare which prevent less skilled people from working (lifting average GDP per worker).

On GDP per hour worked, MC (who are they - what's the abbreviation?) are just wrong. Here are the 2011 numbers (source: OECD):

Country GDP Hours (billion) GDP/hour
Italy $2.027 tr 43.894 $46.18
UK $2.415 tr 47.362 $50.99
Germany $3.297 tr 57.986 $56.86
US $15.011 tr 248.811 $60.33
Finland $0.256 tr 4.181 $61.23
France $2.561 tr 39.664 $64.57
Netherlands $0.772 tr 11.956 $64.57
Sweden $0.521 tr 7.567 $68.85
Denmark $0.306 tr 4.285 $71.41
Ireland $0.201 tr 2.807 $71.61
Switzerland $0.600 tr 7.509 $79.90

The trouble is that Hollande seems to be moving France further in Italy's direction, rather than fixing the structural problems of the French economy.

France really needs to move in the direction of the Netherlands, Ireland and the Scandinavian countries: liberalising the economy (privatise & deregulate), lifting retirement ages & cutting civil service pay, whilst also maintaining high levels of income redistribution and a comprehensive welfare state.

shaun39 in reply to shaun39

Annoyingly, whitespace has been removed above. Here's the table in a human readable form:

Country-----GDP----------Hours (billion)-----GDP/hour
Italy-------$2.027 tr----43.894--------------$46.18
UK----------$2.415 tr----47.362--------------$50.99
Germany-----$3.297 tr----57.986--------------$56.86
US----------$15.011 tr---248.811-------------$60.33
Finland-----$0.256 tr----4.181---------------$61.23
France------$2.561 tr----39.664--------------$64.57
Netherlands-$0.772 tr----11.956--------------$64.57
Sweden------$0.521 tr----7.567---------------$68.85
Denmark-----$0.306 tr----4.285---------------$71.41
Ireland-----$0.201 tr----2.807---------------$71.61
Switzerland-$0.600 tr----7.509---------------$79.90

Marie Clear in reply to shaun39

no, the same average retirement, 61/62, as in both countries the enterprises aren't enclined to hire elders, because they aren't enough productive, or their wages are too high
We don't want that our workers become poor like German's, where more than 20% live in poverty, who will become then the basis of extremism when the economy will crash (and it will, there's no referrence when a surpluse economy lasted years)
These are the neo-liberals' and banksters diktats

shaun39 in reply to Marie Clear

There is a big bit of truth in that Ireland, Switzerland and Luxembourg are tax havens, with GDP exaggerated by European firms shifting their profits & value added to these jurisdictions through transfer pricing. GDP then is somewhat exaggerated.

This effect is one of the reasons that higher French tax rates will almost certainly result in a reduction of measured French GDP and falling tax revenue. It isn't so much that productive activity will stop; more that accountants will make increased use of pricing & structures that shift value added to lower tax places.

All that notwithstanding, wages are still far higher in Ireland, Switzerland and the Netherlands. And wages are higher because underlying productivity really is much higher.

That has many reasons, one of them being the lower tax on capital (which makes it easier for firms to raise investment finance, resulting in more good productivity-boosting investment); another being the greater ease with which new businesses can be established (ordinary people can start a business and fill a niche when they see one); another being that there are fewer subsidies/ supports preserving loss making industries in structural decline.

Marie Clear in reply to shaun39

you're dreaming on a cloud, Ireland is at mercy of our taxes to stay sustainable

Like I told you earlier, we should step out of EZ/EU, these problems didn't exist when we were a sovereign state

shaun39 in reply to Marie Clear

Retirement ages:

And realistically, you've got to look at this whenever you think about retirement ages:

If people are living 12 years longer than in 1960, surely state retirement ages should by 8 or 9 years higher than in 1960? Now, if we accept a larger tax burden on young people, we can have a more generous split, increasing the retirement age by less. But the size of France's fiscal deficit, combined with the lump of baby boomers starting to retire in the next years, say that it is fiscally necessary for the French retirement age to rise now.

It would be nice if everyone could retire at 60 - but then who will create the value that pays the pensions, finances the national debt and supports essential investment in education and infrastructure?

Life expectancy in France rises by 3 months for every year that passes. That's fantastic! So we need to move beyond the land of honey and unicorns and recognise that rising life expectancy means more years of work.

Otherwise, France would ultimately face what Greece is going through. I don't believe that will happen - French business leaders, civil servants and politicians are too good to let that happen. But the sooner public finances are fixed (unaffordable promises are shifted to something more realistic), the less the toll that will be taken on ordinary people.

la.výritý in reply to shaun39

And now look at that!

Among the top 7 countries with the highest GDP per worked hour are actually 3 that needed meanwhile support from EFSF or ECB (Italy). If Belgium is added, with public debt of over 100% of GDP, then there are 4 problem countries out of 7 countries with the highest GDP per hour in 2005.

What these 4 (now) problem countries have in common is that their GDP was boosted by high government spending and/or exorbitant debt, while those countries that are asked now to support the former (Finland, Germany, Austria) all had a very moderate GDP per hour in 2005. There must be a linkage between public spending as percentage of GDP, GDP per hour and overall indebtedness of a country.

Rank Country GDP per hour 2005

Here is the link:

Marie Clear in reply to shaun39

what your Forbes scenario doesn't tell, is that the French retire after 40 years of work (until 2010) and now after 41/42 years of work, so if you started to ork after your university curriculum, that means that the delay is prolongated, exemple, if you got your grades at 25, then your could retire at 65 until 2010, now it will be 66/67

besides, read my link

which isn't the case for Germany, and probably UK too, whereas, such 40/42 years of ork aren't requested, but 35 years

Besides we aren't a aging country, unlike Germany

shaun39 in reply to Marie Clear

The whole of Europe is ageing rapidly.

France, like the UK, Ireland and the Scandinavian countries, is helped by having high fertility rates (so France probably doesn't need retirement ages at 67 rising to 70 like Germany is phasing in).

However, French citizens are still living 3 months longer for every year that passes. If you want to have the same number of years of retirement as your parents, you should expect to retire 6 years later than your parents.

If you want a longer retirement than your parents, that's possible - but it needs to be funded, with higher tax levels, reductions in other areas of spending, cutting pension levels... or (by far the best) lifting retirement ages enough, and setting aside the additional tax revenue raised from older would-be-retired workers to cover higher pension costs.

Those are the only alternatives. That's a good thing though! We're living longer, and we're much healthier & fit for longer than any previous generation! In a very real sense, we are richer as human beings. But to preserve a certain level of material living standards, we have to spend a bit of that extra time working.

shaun39 in reply to la.výritý

Today, Denmark, Norway, Switzerland, Ireland, Sweden, Finland and Luxembourg are the top countries for GDP/ hour worked. And all have extremely low public debt levels.

In any case, it doesn't make much sense to look for a connection there.

GDP per hour worked is generally a very good indicator of productivity, which is the ultimate goal of economics (increasing the value of an hour of human time; expanding the realm of prosperity and human freedom; eliminating material want through diminishing marginal returns).

For the most part, that's the dominant association you'll see - highly productive, technologically advanced market economies have high GDP/hour worked ratios.

However, yes, GDP per hour worked can be influenced by government policy: it will tend to be reduced by a low rate of unemployment; it will tend to be reduced where even less skilled workers can easily find work; it will tend to be reduced where workers are free to work as many hours as they wish.

And, as you point out, GDP/hour will be inflated during times when international capital is flowing into a country (whether for government borrowing or a private sector investment bubble); and it will also be inflated by shifts which monetise barter arrangements (e.g. increasing mothers' participation in the workforce & purchase of commercial childcare, or tendency to purchase cleaners rather than do the work outside the market).

la.výritý in reply to Marie Clear

Wikipedia is meanwhile used as source even by The Economist staff.

However, when Wikipedia uses statistics it always gives the source. In this case the data of the list came from the Center for International Comparisons at the University of Pennsylvania (CICUP) which also produces the comparison standard Penn World Table (PWT), for the US government. PWT is considered the most scientific comparison method; it employs detailed price indexes within each country for different output categories relative to those of the common-currency country, regardless of whether the output is traded internationally (say, computers) or not (say, haircuts). In so doing, it thereby "corrects" GDP to better approximate purchasing power parity.

In the presented list (GDP per hour 2005) nominal GDP is converted to "real GDP" (in PWT meaning PPP-corrected GDP) by using an index based on price sets of 2005, giving 2005 international dollar. Work is measured as hours worked by employees in 2005. Therefore the PWT method is more precise and sophisticated than any other existing method.

shaun39 in reply to la.výritý

If you want up to date (2011) PPP GDP/ hour worked figures from in indisputably reputable source, here they are:

Rank order:
PPP GDP/ hour --- country
$81.50 Norway
$78.90 Luxembourg
$66.40 Ireland
$60.30 United States
$59.80 Netherlands
$59.20 Belgium
$57.70 France
$55.30 Germany
$53.20 Denmark
$51.70 Switzerland
$51.60 Sweden
$51.40 Austria
$49.10 Finland
$48.60 Australia
$48.10 Spain
$46.90 United Kingdom
$46.20 Canada
$45.60 Italy
$39.80 Japan
$35.90 Slovenia
$33.90 Greece
$33.00 Slovakia
$30.60 Czech Republic
$28.30 South Korea
$28.10 Turkey
$26.80 Hungary
$26.20 Poland

The thing is, even this is one of the very most reputable sources and the PPP conversions seem in the right ballpark, there are some rank orders that seem extremely odd (e.g. Spain-UK, Canada-UK, Canada-Spain, Australia-Germany, Slovakia-Greece, etc.

How robust the OECD methodology is here. Perhaps Spain's position is temporary - GDP/hour worked is high because the less skilled 25% of the population didn't have legal work in 2011! And Sweden/ Denmark obviously have very high workforce participation, very high average retirement ages and relatively long working hours, and they're hit harshly by PPP conversion factors - reducing hourly GDP as measured here.

Make of it what you will :D

shaun39 in reply to Marie Clear

In Germany, the normal retirement age is already 67 today (though early retirement is available from 65, at a reduced rate).

In France, normal state retirement age will rise to 67 at least by 2023 (by 2023, life expectancy in France will have risen by around 2.8 years to 84.2. You can't pluck an extra 3 years of income plus healthcare costs from thin air). As people live much longer and consume much more, they must also work a little longer.

All of the structural deficit in France today can be directly attributed to rising life expectancy and associated unfunded pension and healthcare costs - so some additional rise in retirement age is probably needed to compensate for that recent lapse in adjusting to what is fiscally necessary in the long run.


Whatever the policies of today's politicians, further tax rises from today's levels, cuts in pension levels and cuts to education or health budgets are politically impossible.

So as life expectancies continue to rise, and as there as we begin a big upsurge in new retirements in the next 5 years (more of that accumulated pension liability coming home to roost), it will quickly become apparent that higher state retirement ages are urgently necessary (and that these will have to be phased in more rapidly than planned at present).

shaun39 in reply to Marie Clear

* oh, and don't worry - I don't mean to pick on France. Almost all developed countries which have been successful in rapidly lifting life expectancy have this "problem". And many have their head in the sand every bit as much as France does.

It isn't really a problem - our cultures just have to adapt to a world in which people don't die until they're approaching 90. And a world in which most people are in very good health right into their 80s.

The US, despite it's horrific health and welfare system, is similarly facing horrendous unsustainable deficits as lives get ever longer, and will need to shift both to structurally higher federal tax rates and to substantially higher retirement ages.

Japan faces a similar situation - its people have been saving crazily for retirement, but buying government bonds to do so. Government, in its wisdom, already spent that money - so when Japanese savings rates start to fall, the government won't be able to refinance and will have to default quite suddenly on much of that debt (while simultaneously having to cut a primary deficit and meet rising pension & welfare costs). In preparation for that pension default, the Japanese government really should be working to shift retirement age expectations upwards, and get more women into work.

The UK is thoroughly screwed, with higher government debt than France (as of the end of this year), a much higher fiscal deficit than France and much lower private pension savings than France. The only plus is that the UK has a high home ownership rate, and perhaps (if you count it as a plus) that UK life expectancy is a couple of years less (in combination with a higher average retirement age - which also rises faster - that means less fiscal strain). But productivity is generally quite low in the UK, and has performed poorly in the past decade (a decade which coincided with rapid growth of the state, incidentally). Britain will have to work to become more like Ireland and the Netherlands (and I support Scottish independence, because I believe there is much stronger political will to resolve the UK's structural problems here in Scotland).


Yes - France does have a very high GDP/ hour worked. As people work longer (and so the population surges), it will be necessary to work just a few more hours then so that lifetime income grows at least in line with life expectancy.

la.výritý in reply to shaun39

PPP conversion factors are incorrect figures because they compare baskets of goods and services which often aren't comparable from country to country or between cultures.

I see this here in the US, where gasoline is still relatively cheap compared to many countries in Europe. Still, the families here spend much more of their disposable income on personal transport than in Europe. Thus, the high liter-price of gasoline is far over-weighted in Europe's ppp, and the cheap price of public transport under-weighted.

Similar is true for health care. Health-care costs are a big part of any American family's expenditures, yet, when using the PPP methodology these huge expenditures are hopelessly under-weighted.

Therefore, I believe that the most straight-forward method is still the best: simply using 'nominal' GDP and dividing it by the population figure. This doesn't account for price differences, but isn't at the mercy of statisticians either.

Anyway, what those figures (GDP/hour-worked) seem to show us is that the "GDP" of a country with continuously high budget deficits (this is also true for the USA) isn't worth the paper it is printed on.

shaun39 in reply to la.výritý

Yeah you're right - there isn't really a sound methodology for PPP adjustments. The consumption bundles used are never really comparable (not close to comparable) across nations. Nominal numbers are good in that they accurately reflect the value of economic output in terms of tradable goods (though we then have the problem, in that productivity of non-tradable sectors does vary enormously, as do land & property prices, etc).

But even then, as you point out, GDP is inflated by:
(1) large fiscal deficits - government spending is valued in GDP at price, so while additional government spending is debt financed, and where that new debt does not entirely crowd out private activity, that fiscal deficit temporarily inflates GDP

(2) large current account deficits - net borrowing from overseas increases demand in an economy by the amount borrowed. Some of that demand is leaked on imports, but much of it supports retail markups and general non-tradable-sector activity in the economy that's borrowing from overseas. A reduction in the current account deficit will inevitably mean some loss of GDP (or a lower rate of GDP growth during throughout the correction), and a real wage adjustment in the non-tradable sector.

(3) a very high investment share of GDP - the stock of available investment which is profitable at given marginal finance investment finance cost (bond yield) to firms, is typically a modest share of GDP in the long run (10% to 20% of additional investment annually). If the investment share of GDP rises much above this sustainable long run level, then additional capital stocks created will be recorded in book value and added to GDP. But years of very high investment will tend to be followed by years of very low investment, as capital stocks have become excessive and returns on capital have fallen (that can be anything, from housing to container ships to over-capacity in car manufacturing plants). And so the additional value which could be added through a very high investment share of GDP actually exaggerates the long run trend GDP (or productivity, or underlying output potential) of the country.

Greece just happens to have the most awesome politicians, who oversaw a massive investment boom, massive fiscal deficit and massive current account deficit all at once - which probably means that measured GDP in Greece, before the recession, was exaggerated by 15% or more. Greece was mismanaged, and had it coming. Now, however, we can confidently say that Greece is performing below capacity, though still needs price adjustments, reform, a recapitalised financial sector, a deleveraging of private sector firms & consumers and restructuring of public finances for output to recover somewhat.

shaun39 in reply to Marie Clear

NO what?

It's fact. Retirement at 67 is being phased in. In Germany, that means that retirement at 67 is already an option, with incentive (a higher pension) for those opting to retire at 67 rather than 65.

65 is preserved as an optional early retirement age, rising to 66 in a few years (when the "normal" retirement age will be lifted to 68), then to 67 in 2029 (by which time the "normal" retirement age will by 69).

Or that's the plan. Germany's finances are alright and state pensions are not generous - so this might work. Time will tell.

shaun39 in reply to Marie Clear

Averages are always dragged down by people with savings & private pensions (in every country). What matters more for public finances is the age of eligibility for state pensions (though extra tax income from wealthier people working longer matters too).

The minimum state pension in Germany is 58% of the average wage, compared to 60% in France - so the actual levels are very similar.

It's great to take little jobs in old age - everyone should do it (though more for social engagement than for cash, and preferably doing some consultancy work, community work or childcare rather than paper rounds).

The ones collecting beer bottles are either Polish (no offence intended - just that recent migrants are the ones without welfare support), or old bums funding their own alcohol addictions.

Look at the stats - Germany actually has *much less* inequality than France (a gini 27.0 against 32.7 in France).

shaun39 in reply to Marie Clear

I honestly don't want to retire until my health makes it necessary - I hate the idea of being idle.

And I resent paying for other fit and healthy people to sit about doing nothing, just because they've passed an age threshold. If that age threshold rises in line with life expectancy, then I'm content - at least then we can escape an upwards ratcheting of tax rates (or cuts to education & science). But I'm determined that we shouldn't let public pensions grow faster than productivity growth in the wider economy (which would mean ever larger shares of GDP needed to sustain pensions).

All that has nothing much to do with Europe - pensions are a national decision (so no idea why you're dragging "your Europe" into it). Rising life expectancies are great, but they are starting to hit public finances in every developed country, and public pension promises must adjust to remain realistic & fundable.


I really don't see why you have an axe to grind. There seems to be lots of emotion and refusal to accept reality in your posts. Would be interesting to hear the motivation behind it. Or, equally great if you proposed some alternative solution to life expectancy which rises faster than labour productivity.

el pulpo in reply to Marie Clear

That's OK, but what is your plan? Dismantle the whole Eurozone and reintroducing national currencies? Separate them into North- and South Euro? In which one will France be then?
You hopefully know that the world doesn't end at European borders. There are emerging countries working to achieve a life standard like the Europeans have. What is your strategy to keep that standard of life?

la.výritý in reply to Marie Clear

MC, this again is 'blind' French propaganda to make the German system look like "Uganda" in order to make the deficit-financed (soon to be bankrupt) French system look like a solution, which it is surely not - long-term.

First of all the so called "Mini Jobs" are always 'side jobs'. Nobody works in such mini job expecting to to live from it, neither during work-life nor upon retirement. Those jobs won't pay the rent.

Thus, it's not so much the mini-jobber's problem, rather that of the taxpayer. Legal "Grundsicherung" (basic security at old age) stands currently at EUR688/month (USD881/m) in Germany. Thus nobody there has to live from his "mini-job pension".

markus92 in reply to VerySeriousSam

You're wrong on retirement age. 62 years is the age when a French worker can legally retire. However he/she will get his full pension only if he worked at least 42 years during his career. Which means that you must have started to work at 20 years without any unemployed semesters in order to be able to retire at 62 years with a full pension. Unemployment and study periods are not taken into account in the calculation of the accumulated years. Which explains why, in the coming years, most people in France will in fact retire at 65 or 67 years in order to receive a full pension.

la.výritý in reply to Marie Clear

MC: ". . . elders with a small pension have to take little jobs, such delivering papers, picking the empty bottles . . . how could we accept your conditions for our society".

As I've said earlier, as in most countries, in Germany "pension entitlements" are acquired in a point system throughout one's working-life. If one doesn't pay into the pension scheme - or only 20 Euros a month - he can't expect a monthly outpayment of 1000 Euros.

However, if he/she lives in Germany, he/she is entitled to receive as minimum the "Basic Social Security at Old Age", which is called in German "Grundsicherung im Alter". This "Grundsicherung" stands currently at EUR688 per month (USD881) upon reaching pension age.

Health Care is free for recipients of "Grundsicherung". Furthermore they receive extra payments to help on heating bills and for necessary new household acquisitions. These benefits are bestowed upon 'allottees', independent of their formerly-acquired pension points - e.g. those who were prior mini-jobbers.

We in the West have to get used to the thought that neither "God" nor some kind of "master-race-mania" has privileged us to live a life better than our fellow humans in Africa or South America . . . unless it's performance-based.

I know this is hard to swallow for those who are used to believing in their master-race birthrights . . . but fact is the world gives a ‘damn’ about past European privileges. The conditions for 'your' society are meanwhile set somewhere else in this 'small', globalized world.

I don't believe the ancient Greeks, the ancient Egyptians or the ancient Chinese chose voluntarily to lose their once elevated standing within the human race . . . they rather had to relinquish it against their will.

The very same happens now . . . simply in reverse direction.

Super-pedrolx2 in reply to shaun39


Do you think that more flexible job markets in Scandinavia, Britain, etc in comparison with Spain, Portugal, Greece can account for at least in part the huge disparity in unemployment we witness today. For instance. We read that 50% of Greeks aged 17-30 are unemployed. But it is normal in Greece that you don't work until the age of 30!(using Greece as an example)

Also you seem to believe in austerity. Do you truly believe a country such as France could withstand a fiscal shock just as the one we are witnessing in other nations without compromising the social fabric? And I always fail to nderstand the need to cut public servant wages. We are talking about Doctors, Nurses, Teachers, aren't we? The type of professions any state should have I believe. What about cutting on what is truly needed such as red tape?

la.výritý in reply to Marie Clear

" . . . we aren't a aging country".

True. However, the relatively higher birth rate in France is mainly due to the high birth rates of Muslim women. Some sources even claim that Maghrebian-French women average up 8.1 children, while the birthrate of non-Muslim woman in France is only at European average of 1.8 children.

This figures are rough estimates and statistically not validated, since the French government doesn’t collect statistics by religion. However polls show that about a third of all newborn in France have Muslim parents.

France will become a 'Maghrebian province' within Europe by the year 2048, sources estimate.

shaun39 in reply to Super-pedrolx2

No - I'm not really in favour of fiscal shocks. France is in a position where it can and should take its time cutting the deficit (but that requires credible commitments to the right policies today).

Yes, I'd agree that flexible job markets (more hire & fire), removing red tape, facilitating very easy startup of new businesses, facilitating easy capital markets for small businesses, etc are all crucial for economic success and productivity - far more so than the size of the state (as Scandinavia demonstrates well).

In France especially however, public employees include countless administrators, planning officials, train drivers, ticket inspectors, maintenance workers, etc. Nobody wants anybody's wages to be cut - professionals or not. But it's important to realise (1) that all of these groups have had years of annual pay increase far above inflation, far faster than in the private sector and without the additional revenue to support it and (2) that in order to pay these workers good wages long term, the state's fiscal position must be sustainable.

As we've seen in Greece, pay cuts are bad for morale. Many of the supposed jobs of French public employees however are already made obsolete by technology (and that will increasingly be the case). Retraining & reallocation of existing workers is necessary, as is privatisation of many functions (especially those which could take advantage of productivity enhancing technologies), etc.

The public payroll must be brought under control - it doesn't have to fall much, but it must stop growing so much faster than inflation.


Most importantly for long run credibility of finances, the state must default on public pensions today. At minimum, that means lifting retirement age for public employees to 65, and then increasing that qualification age automatically with life expectancy. Shifting from final salary to career average salary based pensions, and capping public pensions at 110% of the median wage, would both help make the system more equitable too (rich people can afford to buy their own private pensions - and accept the associated risks without public subsidy).


All eminently sensible ideas, however selling them to the French Socialists who a priori believe that capitalism is the devil is unlikely.


On lifting productivity:

France must play to its strengths (a state which is very efficient in managing and deploying super-sized projects, e.g. nuclear, Minitel, a complete & nearly-viable high speed rail system)

- actually build a new wave of nuclear power plants. At scale, and without legal incursions or planning delays, this guarantees low-marginal-cost electricity for business. This is big front-loaded capital investment, and enormously profitable at today's low long term yields. Market heavily to bring additional industrial investment alongside nuclear investment - e.g. data centres.

- hold engineering competitions for road-to-vehicle power transmission. Then deploy the best solution across highways and major roads. Again, this is a large upfront investment - and something that, if successful, could be rolled out across Europe (and worldwide). Some early consultancy work with Renault would give a little bit of soft-protectionism (first mover opportunity) - a classic for French populists.

- move all government online - all of it. A nice big national bureaucratic project, to automate most administrative procedures and mundane communications.

- build online court systems - with online evidence submissions, pleas, testimonies, judgements, etc. Complete transparency, greater efficiency, reduced cost, and far greater scalability to changing case volumes.

- extend ubiquitous open wireless internet across all French towns, cities and trains. There's a nice investment project - upfront (good use of cheap bond finance to lift demand during recession) - that can put effective bureaucrats to good use.

Those are all areas where France's institutions and economy could lead the world, and make a large contribution to productivity, competitiveness and living standards.


Aside from that, France does desperately need to lift private sector productivity, and reduce levels of workforce exclusion. First priority has to be to reduce perverse distortions caused by the tax system:

- corporation taxes need to be brought down in line with Germany & UK, to reduce to cost of investment finance and maintain private sector productivity

- reduced VAT rates should be eliminated - universal cold food subsidies are inefficient. Broadening the base is far better than lifting marginal rates (and also serves to reduce negative distortions).

- employment regulation absolutely must be simplified. Adopt Scandinavian flexicurity - protect workers rather than jobs (income replacement, paid retraining + encouragement to re-employment elsewhere). But free employers to hire & fire (to a far greater extent - changing technologies and shifting markets require firms to regularly shift skill sets and restructure).

- much of the gains from a more efficient state can reasonably be ploughed into socialist objectives, e.g. free full-day childcare for all mothers (expanding potential workforce and improving incentives to work). But some of those gains really need to be returned to the private sector directly, with lower marginal tax rates.

- unpopular, but there must be greater pay restraint in the public sector. Too many of the best French minds are sunk into the civil service, which deprives the private sector of the talent it needs to lift productivity domestically and compete globally (doesn't help tax bills either).

- major education reform - in the Dutch or German direction. Also major focus on English language education from young age (not only for the middle class).

- as unpopular as it is, state retirement ages must rise to European norms, and then in line with life expectancy. A larger productive population means more GDP, more tax revenue and far fewer unfunded liabilities - all of which help to bring down marginal tax rates from extreme levels, and reduce distortions where they are most acute.


There - that's intentionally framed as a programme that socialists could probably tolerate. Hollande, please adopt it. Please!

Marie Clear in reply to shaun39

so sorry, your dream isn't our dream

anyway it will not get real since Germany is pulling the trigger for Cyprus and greece, the euro will get kaput, so no need to comply to the banksters and their lackeys

el pulpo in reply to shaun39

Hollande is a fool, you shouldn't expect serious changes!

"Carmaker PSA Peugeot Citroen has secured a 7bn euros ($9bn; £5.7bn) state guarantee for its finance division, Banque PSA Finance.
In return, the French government wants the carmaker to scale back its plan to cut 8,000 jobs and close a factory" BBC

In the present situation PSA is losing €200,000,000 every month! Instead of saving 8,000 jobs they will see a loss of 200,000 jobs at PSA and further a loss of their guarantee.

"The French ultimatum was prompted by a proposal to trim farm subsidies - jealously guarded by Paris as the top recipient of such payments - as part of a compromise from the Cypriot EU presidency to cut the 2014-2020 budget by more than 50 billion euros." business-standard

agriculture subsidises = 40% of the whole EU budget, but only a share of 1.5% of European GNP!

Hollande et al. are kaputt in their heads!

shaun39 in reply to Marie Clear

My dream, is higher productivity and living standards, reduced inequality and greater human freedom. Surely you agree with that?

The rest of my post is just the set of policies I think can best achieve greater prosperity. Tools (potentially contentious tools) rather than dreams. Means to achieving objectives that all decent people ought to share.

You can argue on particular policies - buy if we have different underlying objectives (e.g. if you think national power projection or rainforests matter more than people; or if you only care about one narrow special interest group) then I guess we won't get anywhere.

Cutters. in reply to el pulpo

There is little point trying to talk sense with shaun39, he is a statist, a €Uro crazy, total fanatic with an illiberal agenda.

The Socialists in France are doing what Socialists always do, looking for a scape goat and taking liberties away to pay for the state, killing it.

France is heading the same direction as Italy and Spain, it has old protectionists at the helm that care nothing about what is good for business.

shaun39 in reply to el pulpo

Agreed on all points there (slander and defamation isn't useful, but your criticism of policies and principles is bang on the mark). Can only hope that Hollande will learn from his repeated failures and do something good...

(Or, more promising, that the ministers responsible for the most disastrous policies are undermined and struck off, being replaced by liberal reformers/ more centrist politicians.)

shaun39 in reply to Cutters.

I would never defend illiberal policies or protectionism - and you know it.

It's important to be both pragmatic and ambitious though - institutional and societal changes are always incremental. France is a centralised state with capacities for rolling out scalable infrastructure rapidly. Decentralisation and liberalisation would be a long run structural improvement (and good for human freedom), but France should still exploit its existing capacities to the full in a time of crisis (e.g. with new nuclear or road-to-vehicle power transmission).

You're right on protectionism - Hollande's government has been screaming at the EU to lift tariffs on Korean car imports, but the Commission has thankfully slammed it down. (The socialists are simply wrong - the EU's exports to Korea have more than doubled since free trade in 2010, the bilateral deficit has fallen and free trade has undoubtedly improved employment, wage and real income prospects both in the EU and in South Korea.)

Plazidus in reply to shaun39

Shaun, please go to the Elysee palace, boot out the incumbent, and implement your eminently sensible propositions. When 'Bild Zeitung' asks if France is about to become the new Greece, it's not a moment too soon.

quantamoi in reply to shaun39

thanks, shaun39, for taking the time to write something interesting and not just an emotional caricature like most posts. it is too bad that so many use this blog to rant and rave to vent their frustations instead of trying to share informative ideas.

Marie Clear in reply to Plazidus

we know for whom Bild zeitung is praising for !

Hey, the Merkin and her german corporations are afraid that Hollande will make her integration project fail

Who is dreaming of Berlin as a Gauleiter in France?

you? may-be !

Marie Clear in reply to shaun39

and who did that in the commission? Karel De Gucht, a flamish that drives a german car, not a Volkwagen, but a big Mercedes tank ! and why he refused that france could control the Korean imports?
Because he doesn't want to anger his car providers, the Germans who have interests that the asian markets stil stay wide open to their products !
I tell ya, France should opt out EZ and EU like Britain wants, EU/EZ is aiming at conforting Berlin interesets

shaun39 in reply to Marie Clear

Because there are very large net gains from free trade between developed countries - for French workers just as for the rest of us.

Import of Korean cars just helps to accelerate a restructuring that's happening anyway - modern car manufacturing doesn't need production or assembly workers (robots do that). Rather, it needs engineers, designers, logistics and quality marketing.

A majority of manufacturing workers will inevitably have to find service sector (or engineering & information work) jobs. Can't fight automation.

And with a restructured automotive sector, France can and should be a world leader (fashion, design, engineering for efficient manufacture and marketing of high quality vehicles). Efforts at delaying a proper restructuring only destroy value, weaken the French skills base and damage the French competitive position.

Slamming protectionist tariffs on the exports of fellow liberal democracies is neither acceptable diplomacy, nor would it do anything for French workers, business or consumers.

We can, should and are in the progress of negotiating similar deep trade integration with Canada and Japan - massive markets and opportunities for French business and workers. Just think - with access to cheaper capital equipment and opportunities to export to larger rich markets, many French businesses will be able to lift productivity and wages.

Hollande's government are out of line on this - a moment to be glad that the EU is actually preserving free trade and a more stable business investment environment, where it seems that the present French government would want to re-live the great depression by putting up trade barriers in the midst of a financial crisis.

el pulpo in reply to Marie Clear

These are only two examples to see that Hollande is completely in the denial of reality. Just take a look at the car sales and the tremendous overcapacities and tell me how PSA should be saved when they're not allowed to restructure their business. In the end they will go bust.
France is in a serious situation. Unfortunately, really unfortunately I don't see any changes in their policy.

So, who should manage to get a brain?

el pulpo in reply to emmafinney

3y. ago we had the cash-for-clunkers program for the car industry (PSA benefited by far) and now we see the result -> too big capacities and decreasing demand.
PSA as well as all the other car manufacturers have to adjust their businesses to the actual situation or there will be less in the future. That's the way how the market deals with companies who prevent to face reality.

emmafinney in reply to el pulpo

First tell us when Palin, Cain, Sanataroium and Bachmann were leaders of the USA?

Has your desperate wish that they had indeed being leaders of the USA have anything to do with Germany having a certain leader called Hitler?

Poor pulpo didn't the German educational system teach you that it was Europe that produced facism, nazism & communism? And there is a reason why this happened.

How many neo nazis- NPD are sitting in your regional parliaments in Germany today. I gather Saxony parliament has quite a few of them.

el pulpo in reply to emmafinney

I have no clue why you're asking me about Palin and all the others being leaders of the US. Haven't written anything like that!
Look, the difference between us is that I know about the claims and political direction of these people you mentioned and the political situation in the US in general.
Obviously you don't in the terms of Europe and maybe the rest of the world. The fact, that you have mentioned the NPD shows that very well. Just compare the political landscape in Europe and you'll realize that the NPD is nothing more than a "kindergarten" party. But I help you in bashing German policies more accurately. I would have felt much more ashamed if you would have mentioned why German politicians failed to prohibit this party: Most of accused members of the NPD were undercover agents of the secret service!
So please, more efforts and passion when bashing the Germans, emma!

And yes, our educational systems is really devastated! That's why other countries adopt this weak system and of course that's why the US tries to attract German scientists and engineers...

"it was Europe that produced facism, nazism & communism?"
Well, Europe produced facism, nazism and the US perfected it as we have seen in the last decades on how they deal with countries who don't want to share their oil for free or on how to manage a concentration camp like Guatanamo and other secret prisons. It is always pretty easy the cherrypick uncomfortable facts about any nation...

However, let's get back to topic. Is there anything wrong in my argumentation relating the French administration?

emmafinney in reply to el pulpo

Poor Pulpo don't you have a free press in Germany.

Iraqi's democratically elected leaders gave the major Iraqi oil contracts to the Chinese. The Europeans landed like vultures on Iraq to get the oil contracts for themselves but the Chinese beat them to it. LoL

And poor Pulpo is the German press feeding you lies that Iraq's Saddam was another Poland. Sorry but the reality is Iraq had attacked Kuwait and Iran plus Saddam gassed the kurds thanks to German companies who built his poison gas factories. So sorry but the USA can never perfect Germany's murderous rampage attacking and invading countries that had done nothing.

Poor pulpo has the German press been feeding you lies that 6 million innocent men, women & children were murdered and sent to gas ovens in Guatanamo.

Poor thing. Sorry but the USA can never beat Germany when it comes to concentration camps.

Oh my all those Germans voting for neo nazis to parliaments. The rest of the world has noticed the enduring appeal of facisim in its birthplace.

flowfall in reply to emmafinney


Looks pretty desperate, Emma. Do you really need to fetch Hitler out of his grave to justify Guantanamo? LoL.

flowfall in reply to emmafinney


I got news for you:

There has never been a neonazi party in the German parliament, the Bundestag.

Currently the neonazi party, the NPD, has seats in 2 out of 16 German regional parliaments.

Altogether the neonazis in these two parliaments got 140,000 votes.
Germany is a country of 80,000,000 people. 62,000,000 of them entitled to vote.

el pulpo in reply to Marie Clear

cash for clunkers program: share of car manufacturers in %

Volkswagen 20,87
Opel 10,44
Škoda 8,59
Fiat 7,68
Ford 6,90
Toyota 4,83
Dacia 4,67
Peugeot 4,26
Renault 3,85
Hyundai 3,59
others 24,33

I don't know why you're pointing to Opel. As I have written before, overcapacities are a problem of the whole industry. The question is how the manufactures deal with it. Just compare VW with the PSA strategy and you'll see the problem...
...and this is not a question of nationality.

Karoshi888 in reply to flowfall

Flowfall, sshhhhhssht.

You CANNOT just drop in and challenge "facts" that have been "exposed" by our favorite troll in years of community college research (and some months as a community college dropout thereafter).

However, the way "it" is avoiding a facts-based exchange and switches over to off-topic groundless accusations is actually quite a naziesque tactic, wouldn't you say?

I know from my own experience: it must be terrible to be "exposed" by an individual with such a high reputation.

And now quit laughing.

And for Ms. Trolley: post my link too. A bit show-off if I do it myself. Thanks.

flowfall in reply to Karoshi888

Sshhhhhhhssht, I knooow!

But don't be to harsh on whoever is behind the Queen of trolls. Whenever she "exposes" something you can be sure that numbers and facts have asked too much of her.

What a pity she does not realize that posting "ours links" will indeed expose a lot about her sick and malicious propaganda.

emmafinney in reply to Karoshi888

One click of your comment history below will show that you have been stalking me around these Economist blogs.

Whats even more creepy is that even Forlana has accused you of stalking her. This habit of yours stalking women is getting creepier by the minute.

PS: Now quick run and report my comments to get them deleted. You don't want your creepy stalking exposed do you?

But remember many people would have read my comments before you get them deleted and would know it is all true when they click on the link for Karoshi's comment history above

emmafinney in reply to flowfall

flowfall is karoshi is Josh.

Must be so desperate to create so many new monikers to stalk me around.

Do you want me to post those links from the New York times about Germany that drive you crazy with rage?

Karoshi888 in reply to flowfall

Quite an exposure festival announcement. I do look forward to it. Makes people wanna read more from Ms. Trolley and join the debate if the first thing that comes in response are wild and exotic accusations.

And to our inevitable friend: Oh and please send those links from the last millennium, would you? Thank you!

Sad thing that newspapers in the US go bankrupt one after another, so we should treasure their achievements of the past, whether we agree with the content or not. One needs to maximize the use of the recently limited archives available.


As an American, this whole thing about "national compacts with unions" is simply.... bizarre. It is a tribute to the hardworking French people that the French economy works at all. But it is no surprise it is wracked with unemployment, strife, and stagnation. The French wouldn't know liberte if it hit them on the head.

Marie Clear in reply to pabanker

but our unemployeds are all registred, while in the so called virtuous countries, they disappear from the stats after a few months, when they don't get their check anymore, and or when they get older, it's how germany writes off 100 000 ot them each year

Marie Clear

and though, if it wasn't for the euro, the EZ fical integration, wanted by Germany wouldn't be a topic

What your sort of people want is that France working people get poorer, that our elders will have to take little jobs and requesting charity helps like Germans do !

oh that the big serfdom dream, against which our ancestors fought, that the today finance oligarchy wants to generalise

If people weren't so addcited to their confort, they would just reject these neo-liberal rules again !

shaun39 in reply to Marie Clear

No - we want France to enjoy higher productivity, and higher incomes and living standards for all. And many of us want France to be a more egalitarian place too - closer to the Netherlands, say (which has much lower inequality, much less unemployment, higher average wages and wider access to education).

Higher productivity requires:
- that all citizens can easily establish new businesses where they see opportunities for value creation
- only a minimal number of pages of laws and regulation for your business - so that ordinary people can understand and compete, without having to hire lawyers, accountants and administrators.
- that standards of education are high - including English, presentation skills, communication skills, web development skills and other areas where France seems (from the outside) to have particular shortage
- that government is efficient in its use of resources, not competing to intensely with private companies in employment of talented workers for example
- that tax rates are not so excessive as to make otherwise good investments non-viable
- that tax and regulations don't cause too many inefficient distortions (e.g. the difference in VAT for supermarket vs restaurant food)


Working people can only enjoy rising wages, if there are many profitable businesses competing, with annually rising productivity, all competing to hire workers and pay their taxes. That should be the goal.

Aside from that, we also need fiscal sustainability - if the French government makes material promises that it doesn't have the revenue to fulfil, then the world will eventually fall apart. Retirement at 60 is fine, so long as the French government is bringing in budget surpluses now to pay for rising liabilities. Since that's not the case, retirement ages really have to rise (to avoid a near-future budget crisis). Surely, avoiding economic collapse and maintaining opportunities for young people, is more important than unaffordable promises for retirement at 60 rather than 67?

Even retiring at 67, that still gives a retired life expectancy from birth of 15 years (or a retired life from date of retirement expectancy of almost 20 years). Asking able bodied people to contribute a few more years, given that they have more time of leisure than any previous generation (2 decades!), is hardly an unreasonable request (the alternative would be to cut pension amounts, cut other areas of public spending, or somehow raise more tax revenue without undermining opportunities for young people).


Until France is visibly merely a larger Greece it seems unlikely that the French will take any notice of rational economic prescriptions. After living off German subsidies for 50+ years it is unlikely that fiscal reality will be a welcome visitor in any French home or gathering of politicians. Thus by remaining in denial, the French will inexorably make their situation worse until such time that it becomes so evident that denial begins to crumble. But by then, of course, France will be destitute. Before then, its best people and companies will have departed for more hospitable destinations. Perhaps Hollande should consult with Putin to discover ever-more reliable ways of driving out human capital from one's country?

shaun39 in reply to CA-Oxonian

While you'd be right in arguing the need for extensive liberal reform, you're wrong in comparing France to Greece:

- France has high domestic savings, and is not exposed to outside creditors (like the UK, US, Spain or Greece). So there is no potential for capital flight or a debt crisis any time soon.

- energy competitiveness: France has some of the world's cheapest electricity for industrial users (thanks to the world's best nuclear programme).

- moderately high productivity in general. France has many very profitable firms, a large capital stock and high incomes. That might deteriorate under bad government, but it won't vanish overnight.

- France isn't receiving subsidies from other nations. It's actually a net contributor to the EU budget, and one of the larger contributors to bailout support for Ireland, Portugal and Greece.

France won't die overnight.


The socialists are however likely to leave France a poorer place than at the time of the election. Maybe that isn't a bad thing - a more liberal government is likely to succeed them, perhaps with a genuine mandate for solving problems (reducing union influence/ lifting retirement ages/ shrinking the state a little/ improving education/ deregulating labour/ etc).

Ulenspiegel in reply to shaun39

OK, could it be that your correlation of cheap energy with competitive industry does not work?

Cheap energy leads to structures and behaviour that chokes or prevents improvements.

If you check the competitive index you find that coutries with traditionally high energy prices are the most competitive, while those with low energy prices lost ground.

Replacing the old nuclear power plants in France will be a very expensive operation considering the price of the last reactor generation, maybe a shift to a higher percentage of wind energy is for France the economically better solution.

shaun39 in reply to Ulenspiegel

Most of the countries in the world with the cheapest energy are actually the most productive (Switzerland, Norway, Sweden, Finland, the US, Canada, Australia, ).

Fact is:
- energy a large determinant in the cost of construction (which is very important for the cost of everything else).
- energy is a large component in the cost of personal transport (which determines whether poorer people even have access to labour and product markets, and networking/ science/ entrepreneurship opportunities).
- energy is a large component in freight haulage, with the potential to add bigger mark-ups to the prices faced by consumers (hurting the poorest most)

So cost of energy matters for GDP. And cheap energy is one of France's greatest strengths (though it needs so much more!). While energy is unimportant for R&D, finance, marketing, design, engineering or assembly (so there are plenty of high value added opportunities in places with expensive energy too), the cost of energy is crucial for data centres, semiconductor production, metalwork, carbon composite manufacture, etc (which is why German industry is exempt from feed-in-tariffs).

For France right now, the question is how to expand demand right now (when it's depressed), through additional borrowing for any investment expected to yield non-negative real returns (long term real rates are only a shade above zero). For France with its profitable nuclear industry and world's best safety record (though not for other countries), new nuclear is one of the answers.

Marie Clear in reply to Ulenspiegel

don't worry, even Hollande is aware that wind mills and solar pannels wouldn't make it like Merkin believes they will, of course, she is lying, hey, isn't Germany a 40% Gasprom northern pipe shareholders?

emmafinney in reply to Ulenspiegel

For the past decade the USA has consistently come out in the top 3 for competitivness and has very low energy costs compared to Europe.

Germany's hysterical policy regarding the phasing out of nuclear energy is going to cost it dearly. The timing is so bad when Germany's debt is skyrocketing over 2.7 trillion euros and with its economy slowing down.

Ulenspiegel in reply to emmafinney

Top three of competitiveness, you should get actual data. :-)


Again, you should check the hard numbers or stop smoking, it must be an amzing stuff.

Ulenspiegel in reply to shaun39

Productive per unit energy are many of your given examples not, of course. I think you underestimate the influence of increasing energy costs in the next years.

"Cheap" energy has led to interesting constructions in many contries which hurt, France is a good example: Despite 60 nuclear reactors they have problem to provide enough energy in winter, why? The replacement of these reactors will cost in the next decades how much? With 5000 EUR/kw (7500 FLH) for nuclear you have a price of ? per kWh? In contrast, wind would give with 1200 EUR/kW with >2500FLH? Go figure! Nuclear is not chaep with current designs!

Ulenspiegel in reply to Marie Clear

It is a save bet that wind will replace a lot of nuclear in France if France is not able to decrease the price of their latest reactor designs, you have only to check the combination of price per kW and FLH, that is simple maths:
5000 EUR/kW with 7500 FLH loses of course against
1200 EUR/kw with 3000 FLH
40% reneables (PV, wind) cause absolutely no problems and, therefore, this is the level we very likely see in future in France.

Ulenspiegel in reply to Ulenspiegel

I should have make the problem more clear:

1) Do you have any indication that the French EdF has enough money or makes enough money to replace the current reactors with new designs? We are talking about 200-300 billion EUR for 60 reactors. Is the current price for French electricity sustainable or severly distorted?

2) If you have to replace old reactors with the new French design (~5000 EUR/kW), what is the minimum price for electricity? What would be the price for the alternaive wind power?

3) With a very limited market for their nukes, how can the EdF reduce the reactor prices?

la.výritý in reply to emmafinney

You keep comparing a country with almost 'unlimited' natural resources per capita, the USA, with an overcrowded country that lacks almost all commodities and natural resources, Germany, it needs to be and stay a major industrial player.

Fact is that (almost) nobody wants nuclear power plants at his doorstep if he can avoid it. Considering the Fukushima fall-out in densely populated Japan, General Electric CEO Jeffrey Immelt caused a quite stir among nuke-supporters in August, when he told the Financial Times that it's "hard to justify nuclear anymore" in light of low natural gas prices (in the US).

Such honest remark is even more astonishing since Immelt's GE sells all manner of nuclear power equipment, including whole nuclear plants. I tend to believe that Immelt's comment holds a lot of weight under these circumstance.

To develop alternative energy resources - if a country is not in America's lucky position to have natural gas resources in abundance - is a protracted process. No matter what the current energy situation might be for a given country, it cannot start early enough with developing alternative energy models ... to be prepared for the day X.

Only in the wake of the Fukushima nuclear catastrophe, Japan turned its attention to renewable energies. But they quickly found out that such technologies, however, will take many years to develop.

Marie Clear in reply to Ulenspiegel

France reactors are amortized, and her nuclear electricity prices are the lowest in Europe, while Wind mills and solar pannels are costing much more to the taxes payers, plus they need state subsidies to fonction

Marie Clear in reply to la.výritý

it's not Fukushima catastrophe that motivated the US and or UK reluctance for nuclear energy, it's its heavy investment costs, that no private investor can bear, as investments returns don't come in short terms (first because a nuclear site construction lasts almost 10 years, second, because you can't charge expensives bills on customers , none would be able to pay)


As long as France continues the practice inherited from the de gaulle's fascist government, French competitiveness will be a joke!


The French government is eating 55% of GDP, this is where the real problem rises from. The Swedes and Denmark get away with it by have more of an open market, and have one that is mature. France has to except that the government has to disengage and cut a lot of red tape, all unprobable from a socialist government, or they will be looking at being the next Spain.

" The word you hear again and again these days in the City is that France is on borrowed time. Nobody knows when that shoe will drop, but the economy will almost certainly crash into recession over the winter, if it has not already. It will then remain stuck in perma-slump, much like Italy.

The housing bubble will deflate a lot further (unlike Italy, which never had a housing bubble)

And remember, France no longer has its own currency and sovereign monetary control levers. It is at the mercy of others." @ 14.51:


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