Wednesday, August 20, 2008

Are The French Really That Lazy?

What does your typical frenchman look like?

He might be short and dark-haired. He may be wearing a
beret and holding his baguette. He probably reeks of garlic and cheese. He's sipping a glass of red as he sits by the Seine.

But I certainly can't imagine him working! Or can I?

According to many OECD productivity reports, the French are consistently one of the most productive nations in the West. The French 'output per hour worked' is identical to their American counterparts. All of this is good news, no?

Well I don't think so.


The first thing I thought when I saw the data was: so what?
France has a brutal tax regime - a mean tax rate of about 50% - meaning that about half of all productive activity is funnelled away from the productive people, and given to the unproductive, the unemployed and the state. France may be a productive nation of workers, but any benefits are quickly removed by the iron fist of government. Productivity in this case doesn't translate into higher quality of life.

Secondly, a quick glance at France's unemployment figures will tell you more about France's labour force than any other statistic. An unemployment rate of about 7.5% does not a happy country make. Many measures, like the minimum wage for instance, ensure unproductive workers don't get jobs in the first place.

An enormous public sector doesn't help the situation either.

Finally, something must be said about France's infamous 35-hour working week. Under the law, no Frenchman can work more than 35 hours in a single week.
This is an example of the
Lump of Labour Fallacy. The reasoning behind it is that it forces employers to hire more employees, thus reducing unemployment. This assumes that there is a fixed amount of work to be done. This is the fallacy. There isn't a fixed 'lump' of work to be done. It would be fair to assume that French people desire an infinite number of goods, services and croissants, so the amount of work that can be done is also infinite.

A 35-hour workweek ensures that desire for croissants, baguettes and cheese goes unfulfilled.

Are The French Really That Lazy? The answer: both yes, and no.




7 comments:

John W said...
This comment has been removed by the author.
raffestl said...

Indeed the waste of human capital occasioned by the choking of the labour market by the government is even more cruel when we look at this statistic.
Things are getting better though: Sarkozy (nifty as always) managed to overpass the 35h without provoking a national strike: first by allowing the firm to choose the amount of extra time they want to use, and secondly by detaxing these extra-hours.
So now not only are the 35h a trick to keep the socialists happy; but labour taxing is effectively lower.
Attaboy Nico!!

John W said...

You think the French can consume an infinite amount of goods?

That doesn't seem to be working out to good for America with obesity reaching almost epidemic proportions.

If the whole goal of economics is infinite goods where every person has 5 cars, 4 houses and are 100 lbs overweight we have bigger problems than a 35 hr workweek.

20000miles said...

John,

Yes, our desires for goods and services are for all intents and purposes - infinite.

When we satisfy our basic desires for food, clothes and shelter, we desire goods like cars, music lessons, antique furniture. When luxury goods become available for the masses, everybody will purchase them. That's why today, the common man is better off than any King throughout history.

Our kids will have a standard of living we could only imagine.

Unknown said...

What about demand deficient unemployment? Isn't that what's going on in France and Germany? In fact part of why credit was so easily available during the Celtic Tiger years was banks here could get loans off German banks because there was an unusually high level of saving in the economy there- people were choosing to save their earnings rather than spend them on goods and services.

20000miles said...

I never thought I would have anything Keynesian written here ;)

Isn't demand deficient unemployment a symptom of a recession, not a functioning economy. I tend to go with the classics and Austrians on this one, the price of labour is above the market clearing level, and there are LOADS of 'sticky' factors (govt., unions) keeping them there.

Germany doesn't have a minimum wage though...so you may have a point. But Germany could be an example of 'structural' or 'location specific' unemployment. Berlin has 20% unemployment, while cities in the West are more akin to 4-5%.

I'm not sure what an "unusually high savings rate" is, and as those savings are going to be invested or spent anyway, so I don't see the problem. Consumption doesn't drive the economy.

Even my Macroeconomics textbook (aka Keynesian Brainwashing Kit) states somewhere that the savings rates in the West are far below optimum long-run levels.

Unknown said...

what i meant by unusually high savings rate is that there's supposed to be a lot of money not circulating through the economy- middle aged and elderly people with alot of money in the bank (or even big wads of cash in mattresses) who don't bother investing or spending it. To me it seems that demand for goods and services can't be infinite and growth of demand depends on the level of innovation in the economy (i.e the development of new products and services that people actually want) and I think this could perhaps be a factor in sluggish growth in some countries- France seems to me to be a less consumerist society than many others in the west- they're certainly quick to point out how their way of life differs from that of 'les Anglo-Saxons'.. I just don't agree that people always want more and more and more...of course your 'sticky factors' are gonna stifle the innovation which drives the economy but I think in the absence of any sticky factors it is conceivable that there may not be sufficient demand of 'croissants, baguettes and cheese' to keep the whole workforce working 40 hours a week