The French economy is a mess but what this article alludes to as well is that it is running down its capital so that, at some stage not too far off, the true horrors of its deterioration will finally be fully exposed. It’s titled, Down and out: the French flee a nation in despair. This is the choicest morsel but it is a generally meaty article worth the read:
What went wrong, says Régniez, was a bill passed by the then socialist Lionel Jospin government reducing the working week to 35 hours. “Where our competitors, especially the Germans, saw the need to keep prices and costs down, France spent money she couldn’t afford.” The entire system, he explains, tilted fatally to the side of salary hikes, perks and a lowering of retirement age, in the face of every observable demographic trend. Investment slowed down in the private sector, and almost stopped in the public one. “Each year, France has missed out on four GDP points of capital investment. By now, after a decade-and-a-half, we are not only lagging behind, it’s not certain we can make up for it. It would cost a 4.5 per cent hike in VAT, and other significant hikes in payroll taxes. That, quite simply, is not realistic.”
Even France’s vaunted infrastructures – those trains, roads, telecoms cables, the once ultra-performing electrical grid, the nuclear plants, the delayed 4G network – have taken a severe hit.
A French businessman who moved to London last year and asked not to be quoted by name, “because my tax audit would be even more retaliatory than what I’m currently being subjected to”, compares July’s Brétigny train crash, France’s worst rail disaster in a quarter of a century that killed six and injured 100, to the Paddington and Potters Bar derailments. “The rolling stock is ageing, the tracks are in a constant state of disrepair, even the TGVs now have regular delays because of catenary failure.”
The ageing rolling stock, a metaphor for the entire crumbling stock of productive capital that is being neither updated nor replaced. It’s the story of everywhere right now and it is hard to see how it can be unwound given the institutional obstacles in place. The contrast with the UK is quite astounding because who would have thought that England would, of all things, become one of the strong economies of Europe. Everyone needs a decade of Thatcherism once every ten years.
[Picked up at Smalldeadanimals]