Comparing France and US Systems: NYT Opinionators Wear Blinkers
by Jean-Louis Gassée
France is once again confirming its reputation as an almost ungovernable country. From a distance, President Macron’s drive to rationalize the country’s pension system seems both overdue and judicious. And yet the country once again convulses.
As you may or may not know — or care — France is undergoing its biggest strike since the 1995 workers action that paralyzed the country for two December weeks. The current revolt, which started on December 5th, is probably the broadest ever, a muti-constituent work action that comprises railroad, metro, and bus employees, air-traffic controllers, teachers, healthcare workers, and civil servants… We also see a smattering of the now smaller Yellow Vest movement and the so-called Black Blocks, anarchists or nihilists who use demonstrations as an opportunity to destroy property.
The forces have united because President Macron’s government intends to do what they said they would do: Rationalize France’s byzantine pension systems (note the plural) with their multitude of exceptions and special cases. Some of the “inequalities” are justified: The full pension retirement age for a career police officer is earlier than for a worker at the Cultural Affairs office. Other special cases are obsolete: One no longer shovels coal into the belly of a steam locomotive. Others still are unfair tricks such as giving a soon-to-retire individual a fake promotion and a big raise for the six months preceding their retirement date. Gratitude? No, just a device to influence the amount of the pension because it’s based on the last six months’ compensation. Nice — if you belong to the right union or service corps.
One crucial parameter of the government’s efforts and the strikers concerns is how pensions are funded. Most pensions in France, especially at the lower end of the income scale, are not “capitalized”, they’re not (hopefully) wise investments of workers’ monthly savings to be returned with interest during the workers’ golden years. Instead, today’s payroll deductions and employer contributions are pooled and immediately distributed to pay today’s retirees’ pensions. — according to arcane rules and walled groups.
This worked during the epoch following World War II that the French wistfully call Les Trente Glorieuses, The Thirty Wonder Years. Natality exploded, the economy grew, and there was little unemployment. In many sectors, jobs went begging — I know, I joined the work force in 1964 (as recounted in 50 Years In Tech. Part 0: The Psychosocial Moratorium) and could always find the next job when bored or fired from the previous one. For a while, there were more workers than retirees, the “age pyramid” pointed up. But now it points down, the Trente Glorieuses workers retire in growing numbers as natality falls below the rate of 2.07 child per woman needed to maintain the population number. The weight of more people drawing pensions is placed on the shoulders of a decreasing number of workers.
Hence the need to rationalize the system. Hence the concerns some pensions might shrink. Hence the broad and possibly long-lasting general strike we watch intently as we worry for the Old Country’s health and cohesion.
We’re not alone watching France’s big strike. In a piece titled America Doesn’t Need France’s Economy, NY Times conservative opinionator Bret Stephens found an opportunity to ding France’s expensive and, in places, ineffective social system. In particular, Mr, Stephens has nothing good to say about the country’s Wealth Tax. On that count, I think he’s right, the ISF, as it was called, did little to replenish French government’s coffers, it had bizarre exceptions (for example, works of art didn’t count) and pushed people and business to take their assets elsewhere. The ISF is now largely corrected, something the NY Times writer doesn’t note.
Stephens’ real point, of course, is a reflection on the US presidential campaign and proposals by Elizabeth Warren and Bernie Sanders to tax billionaires: It didn’t work in France, it won’t work here. He’s right. Billionaires have accountants, lawyers, lobbyists and the Citizens United Supreme Court case working in their favor. There’s no way we’ll see a US Wealth Tax in the near future. No need to rant about it.
Stephens goes on to criticize France’s overstretched healthcare system. Right again, the generous system is underfunded and misses workers everywhere at every layer, orderlies, nurses, internists, surgeons, anesthetists… Certainly, the hallways of Hôpital Saint-Louis in Paris don’t look like Stanford’s Oncology building — there’s no grand piano in the lobby. The lines may be longer, but everyone gets taken care of and there are no money problems. No one goes bankrupt for having cancer at age 40.
Paradoxically, perhaps, the French system is stretched because the government instituted conservative policies that Stephens would probably have found praiseworthy. After decades of spending much more than it took, the French system (called Sécurité Sociale, not to be confused with Social Security) has recently tightened its belt and nearly balanced its books…at the cost of worker and customer discomfort.
Allow me a tangent here. Unlike in the US where conservative-in-name-only politicians can run huge deficits, France, as an EU member, must keep its deficit around 3%. France cannot finance itself by printing banknotes at will. My own guess is that Macron will solve his social crisis by pleading with the EU to increase the French deficit above the currently allowed rate, sort of paying his way out of the problem.
The Stephens piece was brought to me by a learned friend who also pointed to a December 5th David Brooks opinion piece titled I Was Once a Socialist. Then I Saw How It Worked. Just like his conservative colleague, David Brooks believes in the superiority of the capitalist, free market system and points to the inefficiencies of socialism — even in the lukewarm versions practiced in Western Europe. But, like too many comfortable conservatives, he blindly chooses not to see we’re no longer in a free market economy, we’re in a Winner Take All system where the unshakeable wealth of companies and individuals exerts control over the political and regulatory systems in ways that limit freedom and threaten the physical and emotional well-being of the “commoners”.
This isn’t a fun train of thought. On both sides of the two cultures I cherish, I see anger and resistance to reality. In some cases, we know — or think we know — what to do. But we can’t get there. Culture, habits of the heart and mind, keeps winning.
To finish on a brighter note: Next Saturday, Brigitte and I will celebrate our 40th anniversary with our children, and then fly to Paris for three weeks. Monday Notes may or may not come out as we watch the general strike scene in Paris and hope for snow to walk the grounds of Chambord or Chenonceau.
— JLG@mondaynote.com
