The French Employment Fiasco
Americans can only be mystified by the protests that rocked France and led to a cave in by the government, writes Llewellyn H. Rockwell, Jr.. A small economic reform that would have meant the start of much-need liberalization has been repealed. So we are back to the present system, under which there is no fraternity or equality much less liberty. Permanent employment, moreover, is completely incompatible with productivity in a dynamic market setting. FULL ARTICLE
Comments (36)
Sort of. Permanent employment is compatible with high productivity in a dynamic market setting, but in a bad way - with the same old levels of production but higher unemployment. A better objective would be, permanent availability of employment rather than permanence of any particular work. But it's a quite understandable reaction of the French to want that in preference to the alternative, which is the worst of both worlds: impermanence of employment, and little new work to get into, with the same poor sort of high productivity with low labour inputs rather than high production outputs. It's a tourniquet tactic, of course, valuable only for buying time and with long term damage, but a lot better than the alternative on offer which
Published: April 11, 2006 9:23 AM
There is a large difference between govt mandated permanant jobs and job security negotiated by labor unions.
Why did GM accept contracts that cost them several thousand dollars per car for retirement benefits? They apparently over estimated American loyalty towards bad designs badly execuited.
Published: April 11, 2006 9:33 AM
I totally agree with article by Llewellyn H. Rockwell, Jr., except with one point.
He does not distinguish between unemployment rate and time length of unemployment.
I think that the acute problem lies in the time length of unemployment instead of unemployment rate. Only free labor contrats, i.e. real labor contrats between employers and employed can manage time length and solve the problem.
See my article "l'enrayeur enrayé" - "the obstructed obstructor" - upon http://georgeslane.tooblog.fr/?Le-retour-de-la-societe-civile/p14
Published: April 11, 2006 10:21 AM
It's very curious what's happening in France.
I suspect many employed French know reforms are needed, but they are not willing to politically support these reforms because it threatens their job security. They're already employed, so they don't view the reforms as benefitting them.
At some point however, they will want to retire. How they expect to retire comfortably within an economy that is on the brink of collapse, I don't know.
Published: April 11, 2006 10:49 AM
This is a rehash of the same old story about the relationship between government and the individual. That is that the false government forced sense of security is worse, in France's case MUCH WORSE, than no security at all.
As long as the French citizens and those of the US believe that the every caring, omnipotent and omnipresent matriarch, the state, can by magic make jobs perpetual and make wealth creation eternal then France and the US are doomed to perpetual sluggishness.
Published: April 11, 2006 10:56 AM
The problem with theory and practice..... illusion and reality.
In theory we work for rational people who recognize our worth. In theory we work in a society where our savings aren't eroded by central bank overprinting of currency. In theory every individual is equal before the law.....HA (if war crimes haven't been committed in the last 15 years by American leaders, I'm the Pope). In theory my employer will hire the best qualified (hopefully me, since I have the qualifications) instead of his wife's high school drop out nephew. In theory the wealthy don't buy the elected representatives. In theory our elected representatives are ethical, principled individuals who seek to extend liberty for their contituents and their society. In theory people aren't driven by primal instincts (learned behavior that predates Ayn Rand and Mises by millenia to say the least) to accumulate goods for security, primal instincts to reward family or tribal members for protection, to attack, kill or shun those who are different from them. In theory I can trust my elected government. In theory the powers that be, whether in law, medicine, business, politics, journalism and even religion recognise their own shortcomings and failings (whether in themselves or in their collegues) and will speak the truth when required instead of protecting their own.
You speak of the French protestors of the law changes as ignorant peasants. On the contrary they know you and yours only too well.
Don't take me as a great defender of these people. I read Atlas Shrugged for the first time when I was eleven years old. Since then I have at the very least reread it atwo dozen times. It riveted me and showed me what humanity could be. But as I have grown older I recognise that perhaps it doesn't deal with the entire picture.
There is one statement from Atlas Shrugged that I ABSOLUTELY disagree with. It is "Do not remind me that it only pertains only to this life on earth. I am concerned with no other. Neither are you." (Page 946 Atlas Shrugged 35th Anniversary Edition paperback)
Well sorry, I do believe that we are immortal beings. Our purpose I can not say, but I have my personal suspicions. :) One of my suspicions is that love and compassion learned by us all and taken to heart would make us all better and happier entities.
But metaphysics to the side. The illusion that this WARPED capitalism (more like an oligarchic facism) based on western (mainly American) definitions is the best thing for unemployed young Europeans, disillisioned South Americans and especially the fast growing Muslim world is utter rubbish. They know that in the end they are all dead. For you to say "SACRIFICE" (please reread Atlas Shrugged on this p 944 to 946) so that in the end they or their "grandchildren" will prosper in some utopian world in the far future is CRAP.
The reality is money and power is looking to maximize their profit through globization (mainly because the really poor in this world are so grateful to be paid anything at all for their labors) and amass more wealth that they would not need if they had faith in their own self made banking system which looks to destroy their own accumulations. Stupid, Stupid people.
The rich and powerful are on their own treadmill. The disenfranchised understand this instinctually so don't blame them when they fight for the crumbs that can get.
For you to pass judgement on the French youth I would first suggest you look to your own house first.
Published: April 11, 2006 11:04 AM
I personally found the backward logic used by the protesters to be, while tragic -as it stops free market reforms- also amusing.
Here
is one of them demonstrating his brilliant thinking:
""We are here for our children. We are very worried about what will happen to them," said Philippe Decrulle, a demonstrator in Paris.
"My son is 23, and he has no job. That is normal in France," he told the Associated Press news agency. "
So, because his son under the current system have no job, he attacks a reform of that system that would increase the chance of getting a job.
Published: April 11, 2006 11:17 AM
Michael Blanchard has nailed it. At the present moment, there are more apparent beneficiaries of the present system than those who truly understand harm it does and will continue to do. As a result, there is complete inertia. I don't think such things will ever be resolved by incremental political change. The system will have to undergo catastropic collapse first.
Published: April 11, 2006 11:28 AM
I've noticed that people have an extremely difficult time understanding that the harder someone is to fire, the more reluctant people will be to hire them in the first place. They simply assume that any mandated employment benefit will be added on top of existing benefits, and employment decisions will be unaffected. (Similar "reasoning" is used in the whole, "no, you don't pay that part of the SS tax -- the employer pays!".)
I've tried to defeat this thinking by comparing it to a grocery store. That is, how would your shopping pattern change if once you shopped at one store, you had to continue to buy all your food there for five years? I then point out that the employer is in exactly the same position. Of course, that doesn't work because they'll respond with something like "people aren't potatoes". (!)
Does anyone know a better way to explain the concept? Or should I just give up on such people?
Published: April 11, 2006 11:41 AM
Lew Rockwell is very right on unemployment in France. Excellent article! In the end, politics reflects the hearts of the people and, guess what, the French do believe in violence as a way of life. They are a violent people with a smooth tongue to sing the virtues of Liberty... They had one of the worst figures of history (Napoleon) and still have their nicest streets by the names of his generals (imagine a Goering Strasse in Berlin!). They steal through the State and when the State does not deliver (or when spring is coming) they go to the streets to get an extra something. The demonstrators could also have shown some respect for democracy; my understanding was that the labor law that triggered the uproar had already been voted by Parliament. What about winning some elections to change the laws? But that's a little beyond the current local culture. This French tumult proves right so many contentions made by Bastiat in The Law.
This is another way to say that there is very very little probability for change any time soon over there. Let's wait peacefully for the "catastrophic collapse".
By the way, I am glad I left France a few years ago but I am sorry that the US and Canada are on their ways to become as bad as France. What a disappoint the US has been for me! Better then France for sure but... This is getting off-topic here. Anyway, it is always good to read a nice article and thank you to the Mises Institute.
Published: April 11, 2006 12:16 PM
This was a terrible law horribly planned and horribly executed. There has already been for some time a similar law on the books called "Contrat Nouvel Embauche" that is just like CPE except instead of being age-restricted, it is restricted to small businesses.
The youth were right to go out into the streets. What can you make of a law that specifically discriminates against (or for) young people? It means the old folks are trying to screw the young folks. If it really were a good law, they would have made it apply to everyone (there are plenty of unemployed experienced workers as well). The message was thus: we keep our privileges, you work where you're told.
Combine that with some political backstabbing inside the government and you have what you had.
Published: April 11, 2006 12:51 PM
Why doesn't France just pass a law mandating that businesses hire everybody? That would solve the unemployment problem forever, with prosperity right around the corner.
If they passed a law that states that when you go out on a date with a girl, you have to marry her & can never ever get divorced, many fewer people would ever go on dates. Lonely single people would riot to keep this law intact, because they're entitled to true love as a basic right.
Published: April 11, 2006 1:27 PM
You cannot reform by discrimination. The only way to even cut back on socialism is to cause everyone equal pain. There was not even any immediate benefit to retirees or existing employees, so it was a case of the big, bad, government being mean to a few young people (insert sympathetic picture here).
I am entirely in favor of such a reform, but it is counterproductive to try to introduce it nonuniformly. Either everyone has the (false) right or no one should have it. And stupid tactics will manage to lose the most righteous cause, and worse, tarnish the cause with the folly.
So which other almost powerless group will they choose to hurt next - but not really make any progress against the impending socialist bankruptcy?
Any argument for or against the near permanent status for a 27 year old applies to a 25 year old or a 23 year old. Hence you can't eliminate a socialist benefit on the margin.
What if they instead proposed that 45-47 year olds could be fired at will, but those outside the range would have permanent employment. The 20-somethings might not protest but it would be considered unfair.
Considering their birth dearth, perhaps they should make only men eligible for permanent employment, so women would more likely want to marry and be supported. This would be a far more sensible "gradual approach", but would probably bring even greater cries of "discrimination!".
Published: April 11, 2006 1:36 PM
So, since some people are prohibited from entering at-will employment contracts, all people must be prohibited from entering at-will employment contracts? To me, that sounds like letting the perfect be the enemy of the good.
Published: April 11, 2006 2:02 PM
Tz and others, yes of course it would have been better had they proposed to liberalize employment laws for everyone, but that was not what the protestors demanded. It wasn't the discrimination they opposed and virtually none demanded that employers were given right to hire and fire people of all ages. They instead demanded that anyone of all ages who gets a job once should have the absolute right to keep it as long as he or she wants.
Ironically, one of the reasons de Villepin proposed that it would only apply to those under 26 was that it was considered politically impossible to extend this to everyone. Now he have
learned that it was is impossible with any reform.
The other main reason why it was only for those under 26 is that they have a far higher unemployment rate (23%) than for those older than 26 (9%).
Given the fact that this would have made young people far more attractive for employers, it is actually not so clear that the discrimination is positive or negative. While it may be negative for those youths who would have gotten a job anyway, it is positive for those who would have gotten a job thanks to this liberalization.
Published: April 11, 2006 3:39 PM
It's OK. When everything turns sour the French can always have a war or revolution to satiate emotions (and kill off the excess labour). That'll sort it!
Sione
Published: April 11, 2006 3:42 PM
Stefan Karlsson: That's a really good point. It reminds me of how in apartheid South Africa, they "racistly" had laws that set a higher minimum wage for whites than blacks. In reality of course, the lower the min. wage, the better, so that actually helped the group they wanted to hurt! Guess it's a case of stupidity counteracting the effects of malice. ;-)
Published: April 11, 2006 4:28 PM
This survey result sheds a little light on the attitudes in France regarding free market economics:
"In a 22-country survey published in January, France was the only nation disagreeing with the premise that the best system is "the free-market economy." In the poll, conducted by the University of Maryland, only 36 percent of French respondents agreed, compared with 65 percent in Germany, 66 percent in Britain, 71 percent in the United States and 74 percent in China."
This is quoted from: http://tinyurl.com/gaw3f
Published: April 11, 2006 11:38 PM
This is just another example of vulgar libertarianism. Lew Rockwell is an apologist for the state capital class that opresses the masses. You guys should sign the petition of solidary with these opressed workers over at Brad Spangler's blog:
here
Rod Long and Bob Murphy have already signed it.
Published: April 12, 2006 8:34 AM
Monseiur,
You are right that reform probably needs to be applied more widely (and the students probably right that this particular target was both tactically and strategically unsound) and the favourite would be the encouragement of "entrepreneurship" but I am afraid that your support of the CNE as a good place to start reform appears to be simply a convenient "surrender monkey" bashing tool as propagated by the anglo-press and your own subliminal prejudice.
It thus displays an intellectually (and physical) laziness (you have not even bothered to "google" french employment law), that should justify your sacking without reason!!
http://www.expatica.com/source/site_article.asp?subchannel_id=25&story_id=28704&name=Coming+to+terms%3A+French+job+contracts
Published: April 12, 2006 9:41 AM
Steve, I don't see Bob Murphy's signature on that post. And I don't understand the argument. Yeah, French gov. is overseers, etc. How does this *particular* market liberalization decrease liberty?
Published: April 12, 2006 10:47 AM
Lew Rockwell is an apologist for the state capital class that opresses the masses...
As opposed to a State socialist class that does not oppress the masses???
Published: April 12, 2006 6:08 PM
Just because the French employers have the option to sack workers under 26 or whatever years of age does not actually mean they HAVE to exercise the option.
My opinion is that employers should be free to employ who ever they want , whenever they want for as long as they want.
If people have a problem with companies that do exercise the option to fire people - then Stop Buying their products or services!
Consumers have more power than they realise when they make a purchase decision. Boycotting businesses who's practices you dont agree with is much better way to voice ones opinion than marching in the streets and becoming part of a media circus.
Cheers
Published: April 13, 2006 5:46 AM
I agree with Mr. Rockwell on many issues but not on this one. The real thrust of this conflict is not that it is about liberalisation, flexibility of labor markets etc. Such partial liberalisations ultimately and indirectly always lead to reinforcing the status quo. The real thrust of this conflict is that it is a generational conflict. André Glucksmann got it right in "Tout le monde en parle"... The very idea that the young, in virtue of the simple fact that they are young, should take on a disproportionately greater share of the uncertainties inherent in economic life, is really disgusting.
Published: April 14, 2006 5:32 AM
Ludwig, your point is a good one, and probably accounts for the political failure of the reform. But you do grant that the change would have meant an increase in liberty overall, right? Should it not be favored on those grounds alone? Reform can't always come in the best or most fair sequence of steps. It seems to me that we need to support every step towards freedom even if it leaves burdens that disportionately fall on other groups. No?
Published: April 14, 2006 7:41 AM
Well, I am not sure that is true... You could assert: "More liberty is better than less, and that is that..." I am not sure that is true unless at the same time something like Hayek´s Rule of Law principle is implemented. Laws should be general and equally applicable to all... "Being young" is just no valid criterion for discriminating against people, and of course it just reinforces already existing inequalities in power relations. Why should it be easier to fire a young person, that is, a person who, at the margin, may be a better performer? Someone made a comparison with Napoleon sending to war whole young generations as "chair à canon". The analogy is not very close, but it tells something about one generation deciding upon another generation´s fate (and of course also about the imperfections of democracy).
Published: April 14, 2006 8:41 AM
I see your point, but the liberty in question here is the employer's. The employer is being granted a greater degree of liberality in hiring and firing decisions, right? Even if this liberality is incomplete or just begun or selectively applied and even inspired by cartelist impulses, it still seems like a step in the right direction. I admit that I've never understood why the Rule of Law, equitably applied, should be considered a good thing if the law is a bad one.
I guess you could make a strategic exception if deny some liberty today would certainly result in a more complete liberty tomorrow but that's a risky proposition. At the same time, the discriminatory implications of this policy, if implemented, might even inspire a political movement to broader the reform to apply to everyone. But such are strategic calls that require more information about time and place that I have.
Published: April 14, 2006 9:43 AM
Ludwig, are you considering the effects of the law? If it passes, there is far less risk associated with hiring younger people. It *helps* the young overcome the adverse selection problems in "getting a foot in the door" to building up experience. It is not "discrimination" to pass a law that *benefits* them. I am under 25 (barely), and I can 100% guarantee you that if US labor regulation were anything like Frances, I would be protesting *for* this law or any similar one. It was hard at my age to get someone to take a chance on me even with impressive credentials, and this is America. Imagine what it's like in France!
Published: April 14, 2006 10:00 AM
Lew Rockwell is right about the French labour market, but France is not alone in such stupidity.
About a year or so ago I heard a BBC interview with a German guy whose small business had failed. The interview took place at a local welfare office where the guy was collecting the dole: He complained bitterly about the fact that while he was unemployed, he still had an employee who he had not been able to fire.
Published: April 14, 2006 10:32 AM
The problem of the existing law is compounded by the exemption made for temporary employement, a classification that applies only if a person is tossed out and NOT rehired after a certain period of time. This is a sort of compulsory firing, so making it voluntary would seem to be a good step. But, again, you can't actually tell too much about these situations by reading stories or looking through the law. You have to be on the ground in the country in question to fully understand the legal framework and its relationship to existing market conditions. In the end, I think Lew's point is that if young people saw an advantage to it, they would have supported it--it was not only ideological blindness that drove the protests--and that advantage can only be seen in a vibrant and unregulated marketplace. So there must be much more and much broader liberalization. On that, Ludwig, I think there can be wide agreement.
Published: April 14, 2006 10:53 AM
Let it be clearly understood that I am totally in favour of flexible labour markets, the freedom of entrepreneurs to hire and fire etc.
But let me add a few hints: (1) given the degree of state involvement in the French economy, we are here not (or not primarily) talking about free market entrepreneurs; if one really wants to liberalize it should be done on a much grander scale; (2) I am not sure the French youth is at all so desperate about finding jobs; I even doubt that, at least among those with "impressive credentials", there is any serious unemployment problem at all. I have no statistics at hand here, but in fact, among people with qualifications, this so-called "unemployment problem" seems much less serious than is often suggested. If you grant that anyway there are going to be any formal, legal rules at all (France will not be transformed in a libertarian society tomorrow), then I indeed think that once people have a job one can make a case that the same formal rules should apply equally to all. But I agree that freedom of contract should be given much larger play.
I have not followed this matter in very great detail, but from what I have heard, I get the impression that the intergenerational aspect of the conflict is underestimated. This impression is shared by at least a few other commentators.
Published: April 14, 2006 11:03 AM
There was again a debate this morning on the French television and several participants made exactly the same critical points as I made: the French have a tendency to "compartmentalize" society, that is, not to apply laws generally, the law is only directed at the young, does not even apply to all enterprises etc. There is a sort of "who-goes-first-problem" here. If you want broad liberal reforms, it is unlikely you can reform everything at once, and some groups will have to go first... But why not let most privileged groups in society give the example?
Published: April 18, 2006 7:19 AM
There was again a debate this morning on the French television and several participants made exactly the same critical points as I made: the French have a tendency to "compartmentalize" society, that is, not to apply laws generally, the law is only directed at the young, does not even apply to all enterprises etc. There is a sort of "who-goes-first-problem" here. If you want broad liberal reforms, it is unlikely you can reform everything at once, and some groups will have to go first... But why not let most privileged groups in society give the example?
Published: April 18, 2006 7:19 AM
Ludwig, I'm sure you are right that there is a strong generational conflict here but why is there not evidence of this in the way the political pressure groups line up? Why wouldn't the unions actually FAVOR this law as a way of cartelization the privileges of older workers, in the same way that the US unions support minimum wage laws?
So far as I can tell, the unions were the main protesting group against permitting greater liberality in hiring and firing of young workers. Is it because they saw it as the first step toward broader liberalization?
In general, it does seem that libertarians have done too little work on the transition problem: how to make liberalization most consistent with justice and practicality. It does seem that liberalization did not take the right course in Russia and East Germany or even Poland. But what have we learned from these experiences that can help Western welfare states go from here to there?
Published: April 18, 2006 8:56 AM
I imagine the law has been rejected on the basis of divergent, even opposite motives, even within union circles. A similar situation has been observed with respect to the European Constitution; it was rejected by some who thought it much too liberal, by others because they thought it far from sufficiently liberal... Unions might reject it because somehow it tends to reduce their immediate influence, but also because they reject the underlying philosophy that an employer will only hire someone if she is assured she can easily fire that person; the latter idea is contested even among employers´ ranks...
(When I referred to "privileged groups" I was not thinking exclusively about labour union members.)
What you can say with some confidence is that partial liberalizations will put the groups subjected to it (in a first phase) in a more precarious position, while they have no assurance other groups will follow suit... I guess that is only one rationale behind the liberal policy-making principle that laws should, to the extent possible, be general...
Published: April 18, 2006 9:31 AM
One can conceive of such a "who-goes-first-problem" as a prisoner´s dilemma.
Published: April 18, 2006 10:16 AM