The American Spectator

Another Perspective

The students are rioting in Paris, again, and the streets of Dublin are quiet. The dissimilarity flows from the differences in the way the economic systems are run in France and Ireland.

In France's overly-planned, overly-socialist economy, the unemployment rate has hovered around 10 percent for decades, more than double the current rate of unemployment in the United States.

For France's younger workers, the jobless rate stands at 23 percent, the highest in Europe. In the areas most severely hit by rioting over the past several weeks, unemployment rates are running in excess of 50 percent.

And there's nothing on the horizon that forecasts an improvement. Last year, the French economy expanded by a skimpy 1.4 percent.

Ireland, in contrast, ranked by the conservative Heritage Foundation in Washington as the world's fifth freest economy, kicked off this year with the lowest unemployment rate in the European Union, 4.3 percent, a rate that's defined as "full employment" in Economics-101.

Pursuing an Irish form of Reaganomics, Ireland deregulated the economy, flashed a green light to entrepreneurship, and cut the corporate tax rate from 16 percent to 12.5 percent, well under the European Union's average of 30 percent. The result was a markedly pro-business environment that generated a flood of investment, a jump in job creation, an expansion of incomes, and, overall, an economy that nearly doubled its size in the past decade.

"Ireland's success should be attributed to an increasing reliance on free markets," explains Benjamin Powell, a social policy analyst at the Mercatus Center in Arlington, Virginia. "Over the past 10 years, Ireland has catapulted from Europe's economic backwater to the forefront of European economies."

The numbers tell the story. "In 1987, the Irish Republic's per capita income hovered at 63 percent of the United Kingdom's," writes Powell. "Today, Ireland's $25,500 per capita income bests the United Kingdom's per capita average by $3,200." More broadly, the average income per capita in Ireland is now 122 percent of the European Union's average.

In France, similarly, the numbers are telling. The guaranteed and artificially high minimum wage currently stands at 86 percent of the nation's average salary of white collar employees, discouraging job creation and creating a disincentive for productivity and upward mobility.

For those able to find a job, the French mandated work week is 35 hours, except during the mandated five weeks per year of paid vacation.

"French labor laws are among Europe's strictest," reports Christopher Sultan in Der Spiegel. "Practically every dismissal ends up before a labor court." The idea is security, the notion that employment will be maximized if no one can get fired. In fact, the effect is the opposite. If employers can't fire, they're less likely to hire, and especially less likely to hire from the ranks of the most disadvantaged and inexperienced.

In a milieu that's doing its best to strangle the private sector with red tape, confiscatory taxation, and litigation, it's not surprising that the French economy operates with 23 percent of its labor force working for the government, a malfunctioning and sponging assemblage of six million "public servants" who outnumber the combined number of French shopkeepers, business owners, and self-employed tradesmen, i.e., carpenters, plumbers, etc., by four to one.

The result? "If France were a U.S. state, it would rank as the fifth poorest, just ahead of Arkansas," reports Sam Batkins, a research associate at the Center for Individual Freedom.

What appears to be insufficiently taught in French universities is the historical fact that no nation has ever regulated, litigated, or taxed itself into prosperity. What the French students are rioting about is a new government decree that permits first-time job holders, up to the age of 26, to be let go without reason or severance during their first two years of employment, thereby lessening risks for employers and increasing incentives to expand hiring.

At last count, nearly a million people have taken to the streets, student blockades have completely or partially closed most of France's public universities, cars and shops have been set afire, police have been tear gassed and pelted with rocks, the largest French trade unions have threatened a general strike, hundreds of protesters have been hospitalized or jailed, and President Jacques Chirac has warned about the dangers of "Anglo-Saxon capitalism."

Says Frenchman Patrick Chamorel, a scholar at the Hoover Institution: "What's the difference between Cuba and France? Cuba doesn't have strikes."

topics:
Trade, Economics, Business, Environment, Law, European Union, Unions