Is France Doing Better Than The U.S.?

Marseille, France.  Why does it appear France is bouncing back more quickly from the recession than the United States?

France has long been known for having an economy that suffered from too much government interference, too-high taxes and destructive union activity. Yet it grew 1.4 percent in the second quarter of 2009, while the U.S. economy continued to decline.

The United States and Britain have had the largest "stimulus" programs of the major economies (as measured by increases in government spending and deficits relative to gross domestic product) and yet they are not moving toward recovery as rapidly as most other countries that had far smaller stimulus programs or none.

Many, including yours truly, have argued that the big increases in government spending were more likely to cause, rather than cure, problems, just as such policies led to a much longer period of decline during the Great Depression of the 1930s.

Despite doing better than the United States and the United Kingdom at the moment, France is still far from being a poster child for good economic policy.

Its economic growth rate has lagged behind those of the United States, the United Kingdom, Ireland and many other European countries for most of the past three decades, largely because it did not make the economic reforms the others did. There seems, however, to be a growing awareness among the French that they can do better.

In recent years, a number of pro-free-market think tanks and taxpayer associations have been formed in France, and their effectiveness and impact clearly are increasing. These groups include Institut Economique Molinari, the Institute for Economic Studies-Europe, Institut de Formation Politique, Contribuables Associés (French Taxpayers Association), etc.

In part because of their efforts, France has sharply reduced its corporate income-tax rate so it is lower than the U.S. rate. France also has been reducing its individual tax rates so that many Frenchmen now pay a lower maximum tax rate than do the taxpayers of New York, California and many other states.

If the tax-rate increases proposed by the Obama administration and the Democrat Congress are passed into law, all upper-income Americans will be paying higher personal tax rates than the wealthy in France.

France vs. the U.S.
  U.S. France
GDP Per Capital (PPP basis, US Dollars):

     1970

     2007  
 

  4,998

45,489
 

  3,596

32,686
2008 Economic Freedom of the World Ranking 10 46
Total Government Spending as a Percent of GDP:         
2009
 


45.2
 

52.9
Total Government Debt as a
Percent of GDP:


     2007

     2010
 

36.9

60.1


63.9

83.9
Budget Deficit:

     1993

     2009
 

3.8

13.7


6.4

8.2
Maximum Marginal Personal
Tax Rate:


     1988

     2008

     2011 (proposed for the U.S.)
 


28% to 40%*

35% to 46%*

46% to 58%*
 

52%

40%
Corporate Tax Rate (2009)
39.1% 34.43%

However - the economic reforms in France have not been sufficient to keep large numbers of wealthy French from moving much of their savings and investment to other countries.

Rather than make their tax laws sufficiently competitive to keep their capital at home, the French have been on a crusade to force other countries to raise their tax rates and engage in widespread tax information sharing.

These bad habits have been picked up by many in the U.S. Congress as it pushes for legislation to discourage the free movement of capital along with the destruction of financial privacy. The result will be slower economic growth throughout the world, less job creation and more economic misery.

Next door to France is a neighbor that does a far better job in managing its economy -- Switzerland.

Even though, unlike France, it has few natural resources, Switzerland has maintained a sound currency for decades, along with relatively low tax rates and government spending, yet has managed to deliver a far higher quality of government services than the French and much higher real incomes for its citizens.

Naturellement, rather than emulate the Swiss, many in France try to pressure the Swiss to engage in counterproductive economic and banking policies.

This past week, the French think tank the Institute for Economic Studies-Europe (IES) hosted the sixth annual European Resource Bank meeting in Marseille, which brought together two dozen free-market organizations from European countries for a discussion of how they can make all of their institutions more effective and influential.

Speakers included a number of leading European and American economists and think-tank leaders as well as Vaclav Klaus, president of the Czech Republic, who is also a noted economist.

The current French economic model continues to be far less attractive than economic models in Asia, other European Union states and Switzerland. However, thanks to such groups as the IES, there is good reason to believe that in future years, the French will modify their model so it becomes more, rather than less, attractive.

Additional considerations

@Blueglasnost @KO

 

Thank you kindly for the good words. The ratio and nature of the French Muslims alone would cause me to prefer the US over France. But there are other important US advantages too: free speech, firearms ownership, relatively free enterprise, relatively weak communism. Also, taxes and cost of living are still much lower, particularly in states like Texas or Nevada. In writing of the French advantage I was looking therefore beyond the present to the next 3.4 -7.5 years of the Obama presidency, which may turn into a permanent socialist regime, without the French icing, once the Amnesty passes.

 

And that brings another French advantage to mind: the chauvinism, however suppressed from above. French people have retained a kind of egoistic toughness that most American have shed already in the 50s, due to lives that have been too good for too long. The common American is far too soft, too naïve, to devoid of any knowledge of history, too detached from and confused about his native culture and language. There is no way that the French people would allow Spanish to supplant their native language, or agree to subsidize schooling in languages other than French.

 

Also, the French would have been far wiser to stealth tactics such as fooled milquetoast middle-of-the-spectrum Americans to be blinded by Hope/ Change and vote for an obvious black racemonger socialist and then be shocked six months later that it was Saul Alinsky who was sitting in the Oval Office. An Obama-type might have won in France too, but at least not because the indigenous middle class has so many naïve fools but because the voters are genuine leftists.

 

For a similar reason I differ from Mr. Blueglasnost’s assessment of the relative efficacy of French and American foreign aid. French foreign aid is an instrument for furthering the national interest of France: it solidifies la Francophonie.  American foreign aid buys mostly a kick in the pants for America. It’s delusional naivete.

 

Finally, one other comparison. In the US, the government lies, grossly, all the time, in matters big and small. Therefore in comparing the rates of unemployment, one should know that Shadowstats.com estimates the current rate of unemployment at 20.6%, not the 9% that the govt. discloses. I am not sure whether Mr. Blueglasnost refers to a French unemployment rate of 10% or a 7%. In either case, it appears to be much lower than currently in the U.S. But the question is, to what extent the French government lies too.

At least in this respect I am more optimistic about America. It’s still easier to expose government lies in the US than in France, though who knows for how much longer.

 

 

 

 

@ Mr Seiyo (1/2)

And that advantage alone, viz. Muslim demographics, would entice me into emigrating to the U.S. (or, at least, parts of it) or Australia whose character is far less brainwashed. Unlike the U.S., France has got no First Amendment, hence the limitation of freedom of speech that has taken place in recent years to my deepest dismay. Also, the French are viscerally socialist in their instincts, usually favour a sprawling welfare state, even if it necessarily entails intolerable taxation, and would brand anyone pushing for firearms ownership a prankster or an insane man. Somehow I cannot but think Mr Messiah will not last long, his contenders have shown they are not asleep and do not lie prone on their bellies while being stroked, limited ‘reform’ like ‘Obamacare’ already arouses wide opposition and rekindles the Republican flame. France actually is a permanent socialist regime where well-nigh 50% of GDP levied in taxes for ever-dwindling returns.

However, it is fairly true that the French are somewhat more touchy than the Americans concerning language issues but it is more the doing of a failed educational system rather than anything else; the overwhelming majority of native French would be quite unable to sustain a conversation in English (I had to teach myself to these ends). But it is true efforts are made in order to foster and promote the French language all over the world, yet, in essence, the Francophonie remains little more than a sinister joke as Molière’s language loses ground to the benefit of Shakespeare’s. If I cannot imagine a foreign language being directly subsidised by our government, I am filled with some forebodings as to the sequel to our history, for there is another dangerous, potentially lethal thing about the French character: universalism, the belief that everyone everywhere can be assimilated and naturally longs to join our civilization, of course nothing could be further from the truth, yet millions of aliens have been imported to our shores, and the outcome seems obvious. There is widespread ignorance as to French history amongst our very people, Charles Martel has long been forgotten (while Joan of Arc still endures), needless to try and discuss Lepanto, Vienna or Belgrade, these are unknown struggled, led by European forebears who are constantly reviled for their intolerance in an amazing display of anachronism. None the less, I concede, Mr Seiyo, you have a point as far as the French language is concerned, but such an asset will be swept away as millions of Muslims become tens of millions, once it is done France will be Iran’s sister republic and its official language will be Arabic.

And, as you justly pointed out, French voters would not (perhaps) be tempted by underhand tactics, which would not prevent them from voting for socialists owing to their genuine leftist allegiances. Mrs Royal rallied huge support for her shallow—if not hollow—campaign, and I can tell the French are no more enlightened than most of their neighbours in that they would cast their ballots for brainless, clueless candidates just because they feel they could benefit from an increase of allowances regardless of the dire state of our public finances. The French people would relinquish every self-esteem if that allowed it more generous pensions or more holidays, it would even wilfully sacrifice the future of its children if that meant more comfort for the current generations. The 1968 spirit endures, and most French were spawned on by its atmosphere, which propels the country beyond repair. Only a tremendous shock, trying events could touch off some reaction and even that might not be sufficient to pull the country off its slumber. The French may have not indulged in the ‘hope/change’ rant, but that would not preclude them from voting for a person whose catchword was ‘La France Présidente’ (France as President), which is no better. And, again, as you said, we have got countless hordes of leftists. A showdown, possibly of an aggressive nature, is unavoidable.

@ Mr Seiyo (2/2)

Concerning unemployment rates I referred to a rate of over 10%, which is an official figure, thus underrating the situation, if you added up the ‘disabled’ and similar categories, forsooth, the total would easily rise up to 15%. Yes, that is admittedly lower than the figure you cited, however, I would like to point out the recent decrease in unemployment was the doing of generous pensions (the official age of retirement is 60, as we have got state-run public schemes concerning pensions) and a surge in the number of baby boomers turning 60 due to demographic effects. Structural reforms are still badly needed to bring our labour market to terms with reality, as it is inflexible and desperately frozen. Our present government is, rather awkwardly if not entirely uselessly, grappling with such issues, but would not consider obvious answers, as almost a half of people on the RMI (a variant of the dole) are foreigners. For more than three decades, we have been endowed with cowardly governments that would not acknowledge that issue. True, (legal) immigration has slowed down, but we still have to put up with illegal aliens in the hundreds of thousands, and have to cope with significantly higher birth rates on the part of Muslim and African women (even official statistics point at the discrepancy with natives or denizens of European descent), which will eventually turn France into the Islamic People’s Republic of France (for communists and jihadists get on well, as it happens). Grossly said, France is nearly doomed and has begun, in Enoch Powell's terms, to heap up its own funeral pyre. I do not reckon it is the case for the U.S. or other Western countries yet. America (though not economically at present), Australia and some Scandinavian nations seem in much better shape.

Yes, but...

I concur with both Mr Seiyo and Mr Rahn on the points argued, however, being myself a Frenchman, I would like to point out other elements of the big picture.

1. Our public debt is far more important, as a share of GDP, than that of the U.S. (although that might not last long considering the present spending spree in America), roughly 75%, but the figure easily climbs to 110% if one takes into account state liabilities for public schemes encompassing pensions for our civil servants. Nor are the prospects overly bright owing to our overrelying on tourism, I would say they are as bleak as in most European countries, if not worse due to the Muslim factor. As Kapitein Andre justly noted, French banks were, as a general rule, much more frivolous in acquiring derivatives sold by U.S. banks as part of their securitisation programme, yet ours are not the soundest banks in the West (Canadian banks actually are, closely followed by their Australian counterparts).

2. We have been unable to create a decent labour market, even in 'thriving' times, unemployment hovers at more than 7% (and has been doing so for three decades). Even though America is due to overtake us shortly, the general trend clearly is in favour of the U.S.. The increase in the number of unemployed (now over 10%) has generated a significantly heavier burden for the public, and is threatening, in the long run, to bankrupt the nation (more than it is, that is). Do not forget the safety net provided by our all-too-munificent welfare state is pricy and someday the next generation, that is mine, will be asked to foot the bill. France's resilience may be inspiring at the moment but as a matter of fact it is little short of a gaudy phantasm, which our 'economists' keep bloating about.

3. Our deficit--along with that of Germany and, to some extent, that of Britain--has been regularly faring over the average of EU states, and most of the time over that of America (notwithstanding current-account deficits). The truth is there is no developed economy in Europe, outside Germany, that can still boast an industrial power whatsoever.

4. We also have our own burdens; although we do not contribute as significantly as the U.S. to nonsensical entities the like of the UNO, we still shower our previous African colonies with lavish subsidies (0.41% of our GDP, twice as much as the U.S. as a share of national wealth). Besides, our country is not lagging behind in terms of surrealistic allowances, bestowing huge sums upon Third World families (free healthcare, free housing, not to mention allowances once some 2+ children are sirred). Our own state still figures France is an international power, deluding itself by engaging into expensive nuclear programmes as well as nurturing military basis hither and thither (for instance, Saint-Pierre de Miquelon) and expensive territories overseas (accounting for billions of deficit alone).

 

We shall soon see whether the French system holds or proves to be a mirage. As Mr Seiyo mentioned, we have got our own pressing matters, not least hordes of Muslim colonisers who are fed welfare, and gradually take root to general indifference. As I passed by a library today, I could see an entire shelf devoted to Islam considering Ramadan has just begun. The French are sheep and cattle, they cannot be trusted, even our most esteemed General De Gaulle openly acknowledged it. If recovery and some take-off are to arise, they will take place in other strongholds of Western civilization. We may hold a momentary advantage over the U.S. but it is likely not to last.

 

Be that as it may, I am looking forward to your next article, Mr Seiyo, seeing as I am an eager reader of these.  

US v. France

May I point out that the situation in the US, Muslim demographics excepted, is far worse than in France, for the following reasons:

1. Most people, even famous economists, compare tax rates without comparing what you get for your taxes. You get far more value for the high taxes in France than you get in the US, in areas like mass transportation, education, healthcare, culture etc. So as of 2011 we are looking at the US as a socialist democracy a la France, with higher tax rates and far lower value received by the taxpayer. Instead the value in the US is received by the non-taxpayer, including perhaps 25% of the population of Mexico.

2. France, far less than the U.S., has fallen into the sulf-dug hole of the global economy. The US has gutted most of its industries, practically all of its artisanal manufacturing, and exported them to China etc. What it got in return were the shipping of millions of well-paying jobs overseas that will not be coming back, and replacement of quality, exportable American products with inferior quality but cheaper imported products.  France  has acted far more wisely and with much bigger long-term benefits.

3. France conducts itself by realpolitik. It does what's good for the national interest of France. The US is mired in a messianic complex that seems to be permanently grafted onto Washington DC no matter which party is in power. From nation building to guarding foreign borders while leaving one's own open, to maintaining 130+ military bases around the world, to exporting democracy, to showering money on the UN and on the Third World with no reciprocal bnenefits rendered  -- there is no end to America's self-gutting idiocy, costing trillions of the taxpayer's dollars. France is so much shrewder and more parsimonious in its international politics, it's embarrassing.

  

Americans not dead yet

There are signs of life in the grassroots opposition to Obamacare, which is generating scrutiny of all things Obama. Let everyone pitch in! The ways Mr. Seiyo counts in which the French have done better than we are quite significant. Maybe we can eventually get rid of Republican liberalism along with Democratic liberalism.

Thanks, Mr. Seiyo, for your most recent article. We all look forward to the next.

Liberalization or Conservatism?

"Why does it appear France is bouncing back more quickly from the recession than the United States?"

 

I understand that this was due to conservative French banks being far more restrictive with lending credit and participating in derivatives than their Anglo-American counterparts.  However, I recall Canada's banking system being rated the best among industrialized economies.