Even though the Pantheon in Paris is covered up for refurbishment, it is impossible not to be amazed by the majesty of it. It is where France goes to bury its great men. The roll-call of the dead is impressive, from Napoleon to Victor Hugo. Interestingly, it was right in the middle of the French Revolution when the French were killing quite a few of their great men and wouldn’t have been that keen on such traditionalist, religious ceremonies such as burials.
Indeed, the legacy of the revolution and the subsequent role of Napoleon is everywhere in this part of the city. Just to the back of the Pantheon, opposite a lovely cafe called La Methode, is the Ecole Polytechnique. This is the finest university in France, the breeding ground for the next generation of French technocrats – and it encapsulates much that is good and bad about this wonderful country.
In La Methode, the students sitting around me are members of this gilded elite. Indeed, the very name of the cafe could well be applied to the Ecole Polytechnique. It too is driven by a method, a series of ways of ”doing things and ways of looking at the world.
I have studied and worked with graduates of this place and can reveal that the education, while top-notch academically, is not conducive to independent thinking, risk taking or flexibility.
This very inflexibility is arguably the biggest problem in France at the moment. With well over three million unemployed, a large current account deficit, a massive state sector and a population which is ageing, France is in a bit of a bind.
Added to the fact that the state simply has to prune itself back is the fear that France appears to be a country incapable of changing itself.
The trade unions are extremely powerful and have, until now at least, stymied any moves to reform the way the country works. I witnessed this first-hand myself while working as the French economist for UBS in the mid-1990s. The then prime minister, Edouard Balladur, tried with his finance minister Alain Juppe to bring in modest reforms to the way the train workers’ pensions were to be calculated. There was uproar. National strikes were called. Everyone, and I mean everyone, downed tools. Juppe backed down and later resigned.
Fast-forward to today and it is unlikely, with Francois Hollande’s attentions clearly elsewhere, that the lovestruck and least popular French president ever has the credibility to take on any vested interests. You get the impression that France is just happy to drift along, pretending to be a little Germany, terrified that anyone will cop on to what it actually is: a big Italy.
In the EU, only Italy has recorded slower economic growth in the past 25 years. France’s budget deficit is bigger than Italy’s, and its current account deficit is the largest in the eurozone.
The propaganda, which starts at the Ecole Polytecnique, is that France is Germany’s equal and an essential political counterweight to the Germans’ economic muscle. But to be a counterweight, you need to be, at the very least, economically credible.
This is not the case. Since the creation of the euro in 1999, France’s GDP per head has risen by just 0.8 per cent a year. In Germany, growth per head has been almost double that. This is a phenomenal disparity for countries with similar standards of living and aspirations.
Not only is France not producing so much, it is costing much more to produce much less. French unit labour costs were below Germany’s when I was working on the French economy. Now French unit labour costs are higher. And in 1999, French exports were worth almost 60 per cent of Germany’s. Today, total French exports are less than 40 per cent of total German exports.
As a result of this poor economic performance, the unemployment rate in France is near 11 per cent, a 16-year high; whereas in Germany it is just over 5 per cent, a 20-year low.
The latest economic data all suggest that while much of the EU economy will grow a small bit this year, France is heading for recession.
These are serious days for the Fifth Republic. Talking to French people, you get a sense that the country is in an ongoing crisis which is structural. Unlike Ireland, France didn’t have a boom/bust, credit-driven bubble which went wallop. Its predicament is more one of a lack of any real direction, demanding a re-thinking of its whole economic model. At the moment, the current account deficit is a reflection of the fact that France can’t afford its brilliant welfare state. The budget deficit is financed effortlessly because the world believes that France is at the centre of the European project and it simply could never have a current account financing crisis.
I am not sure about this. Italy and Spain, two huge economies in difficulty, both had near-death experiences in the financial markets last year. Could this happen in France? It has to be a possibility.
Over the years, many people – particularly English economists in the City of London – have been predicting the demise of France, which has not happened. English xenophobia towards France is a long-held prejudice which goes back centuries, and this mutual dislike colours the judgments of both the French and the English towards each other.
But when you are here in Paris, and you look at the performance of France in the past 20 years, it’s hard not to conclude that something has to give.
For the time being, France continues to punch above its weight, and its extraordinary history and culture reinforce that this was a very significant country. But you can’t help concluding with the words of that giant of French literature, Marcel Proust, that many in the French elite are simply longing for the past – A la Recherche du Temps Perdu.
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Are we to draw the conclusion then that the Euro single currency experiment has failed? And that the only country it has benefitted is Germany who have profitted massively from its introduction and continued control?
Continuing this article’s theme of economic and social decay, here’s an interesting piece from The Guardian by Aditya Chakrabortty:
“The Enfield Experiment: London’s fortunes distilled into a single borough”
http://www.theguardian.com/cities/2014/feb/03/enfield-experiment-london-cities-economy
Perhaps the French cockerel should stop posturing on the EU stage and stop trying to live on German money. I have every respect for the people of France, but they really need a wake-up call like that experienced by Ireland.
So should the French start printing money like the failed captalism projects in the US and the UK?, the only thing holding the US and UK together are ultra low interest rates and lots of money that was printed, at least the French system has the people at heart and not just the top earning 10 percent like in the UK and US, its healthcare, transport and services are far better then the US and UK will ever be, I am not saying they are perfect but I would rather live in France then the vast majority of 1st world… Read more »
+1
Although France has all kinds of problems, you can forget about an honest appraisal of that country on this thread. Most of the posters on this thread love ‘the Anglosphere’ and are sceptical of the eurozone, with a special dislike for France, just as the English have successfully indoctrinated them to think. Never mind Italy or Spain, it’s France that needs the ‘wake up call’, blah, blah, blah.
Eireannach
Nice to hear from you. I don’t think it is fair to say Anglosphere. I do find the Europhilia of the Irish elite hard to take, but gong back to the Anglo world isn’t an option.
Best
D
France is Different . Nothing can change the ‘quelle suprise’ it evokes and the awe it produces and the rich life it practices and their closeness to nature we consume at the table . Their philosophy is unmatched and they practice it with precision. Their Time is their own and our time is theirs too because many more ~Irish are employed by them even in Ireland under the tutelage of their French presence that we do not even detect . Cyril Roux ( Regulator of Central Bank ) has been a patron of La Method and has honed its craftsmanship… Read more »
It is interesting the emphasis that France places on the seeding and refinement of the “leadership”. Because the leaadership has been getting less able for the tasks encountered with every year since De Gaulle was in charge. Les Trentes Glorieuses (spelling ?) are over. France misses them. But has not yet grasped why they ended. There has been an intellectual malaise since De Gaulle. And it gets worse and worse. Chirac stumbled. Then Sarkozy promised everything, and instead went around Europe insulting his neighbours. Now Hollande is in power. Hollande has a lot of things on his mind. His decisions… Read more »
Heard/saw David in Paris on Friday, hopefully he got some insight into what allows France to tick. Many of the more +ve comments here apply. The basic tenet of French politics, despite the capitalistic sirens of the EU/EZ, is the understanding that the state has a role to play in the management of a country. This does not mean sub-contract everything but, broadly, to provide the infrastructure. Cf the TGV, the Nuclear Power, the Payage motorways (now subcontracted following Sarkozy, but subject to a monopoly investigation), etc. Remember also that France has a number of very successful international companies, many… Read more »
Just wondering if anybody read ‘The Turnaround Challenge’ (published Christmas) and if so what do you reckon of the book’s proposal for a viable economic future?
Ahem! France does not only bury its great ‘men’ at the Pantheon, Marie Curie was re-interred there in recent years along with Pierre.
It got a lot of news because Madam Curie’s coffin was expected to be highly radioactive, but in fact wasn’t – it turns out that it was radiation from the X-ray work she did in WWI that killed her, not radioactivity. So scientists get it wrong too!
CO’R
The world is in total economic contest, whether the EU is integrated into a Federal state, and the cotest is between cities and regions within the Federalised EU, or if we revert to nation states, where the prospect of standing armies is added into the mix of economic contest between regions and states.
It cannot be any other way with a global population of 7bn, all wanting a decent standard of living, even as the planet’s store of natural resources dwindles.
There is no other outcome this century.
Excellent article, thank you! One minor correction – Napoleon isn’t entombed in the Pantheon, but rather a couple of kilometres away at L’Hôtel national des Invalides.
Hi, “In the EU, only Italy has recorded slower economic growth in the past 25 years. France’s budget deficit is bigger than Italy’s, and its current account deficit is the largest in the euro zone” When I read this the thought occurred to me that as Tony Brogan has pointed out the money supply and economy have to grow to keep to whole thing from going wallop. Maybe the solution will have to be heterodox in that it will have to provide an answer whilst the economy is contracting. It isn’t possible to have infinite expansion in a finite planet.… Read more »
‘But you can’t help concluding with the words of that giant of French literature, Marcel Proust, that many in the French elite are simply longing for the past – A la Recherche du Temps Perdu.’ AUSSI MOI. I want a lifestyle, where like my Dad’s generation, I get up out of bed (in a 4 bed semi with front and back gardens) at 8am, arrive at work at 9am, go home for lunch where a hot meal is landed on the table in front of me as I sit down, get back to work at 2pm, finish up work at… Read more »
“Over the years, many people – particularly English economists in the City of London – have been predicting the demise of France, which has not happened. English xenophobia towards France is a long-held prejudice which goes back centuries, and this mutual dislike colours the judgments of both the French and the English towards each other.” Does this explain the huge concessions in agriculture given by Britain to France for the UK to gain access to the EU. THe commonwealth trade was devastated. French agriculture was behind the times and 35-40 % of the population involved. The industrial state of britain… Read more »
Last week the French Government issued a decree to pay compensation to victims of flooding in France where an Act of God damage occurred .
Irish government have only offered €6oo euros compo from a humanitarian fund .
This same Irish Government compensated the bond holders more than 100% and paid them fat salaries too .
Here in Brittany, we want one thing : move away from the Centralised Ultrajacobinist French. They killed our Breton language, mocked our Breton culture, destroy pour economy by over centralization,forced farming production and now they’re trying to tax all our products with their stupid eco taxes.
If it wasn’t for our benedou ruz/red caps/bonnets rouges they would stampeed us to the ground.
Don’t little cry on France, they’d eat you alive.
David – in “Follow the Money” (the VietNAMA chapter) you describe the European decision making and administrative elite. The same model of leadership is directing France towards underperformance. It is based on what might sometimes be called “bounded rationality”. The decisions are appear all perfectly rational (even if theya re defiend by irrational, and often flawed assumptions). This is exactly what we see in France. It is all based on assumptions of central authority always being right – and the people merely needing to be “instructed” on the need for them to obey for their own good. In the context… Read more »
US centic here and not French but no rennaisance evident but a renewal of declining US output and demand
http://www.truthingold.blogspot.ca/2014/02/january-auto-sales-did-step-function.html
This could be the first of many economic wars to be fought globally in tne 21st cenuary. The British with their sterling, Yanks with their dollar, Germans with their euro, Japs and their yen……… Chinese renimbi….. And just like the world wars of the previous centuary, there are those who will profit from the turmoil……rating agencies and their crystal balls (or brass some might say), bond traders, hedge funds, vulture capital etc. etc. Super computers rigging the share prices with billions of trades per second, which can mean the nuclear option for some well meaning but vunerable companies! Derivitaves, credit… Read more »
Revoke all debt by declaring bankruptcy
http://dollarvigilante.com/blog/2014/2/5/us-towns-declaring-bankruptcy-are-the-lucky-ones.html
The nation, I mean, not individuals.
Tax authorities in France are looking to claim as much as €1bn from internet giant Google, according to Le Point magazine. The levy would amount to a record for a redressement fiscale, said Le Point claiming government and parliamentary sources. This refers to the tax office charging unpaid taxes plus, usually, additional penalty payments which may vary depending on whether the taxpayer is thought to have deliberately underdeclared or not.
Tony, here what happened in November, a bigger meeting was held in Carhaix, some concession were gained, but I think the projected picture of France is as far as looking for a leprechaun. Pure imagination, the state is far from its auto proclaimed “human rights”. It didn’t even tolerated any other languages than French.
Economically the same intellectuel carcan exists it won’t change.
http://www.aljazeera.com/video/europe/2013/11/french-protest-against-proposed-transport-tax-2013113392514925.html