If wine, cheese and great museums weren’t reasons enough to like France, one should appreciate their willingness to continually demonstrate what happens to an economy when you ignore fundamental economic principles. Since a big part of the study of economics is observing the cause/effect relationships of various economic initiatives, its important that countries be open acting as economic guinea pigs, something that requires a society being willing to tank their economies in the pursuit of illusive ideals. Since the United States and most 1st world countries are typically unwilling to derail their economies pursuing ideas that any 1st year economic student will tell you will fail, it’s great that the French have no such hesitations. This gives us a front row seat to see what was once a great and powerful economy slowly grind itself to a halt as it burdens its economy with one silly rule after another.

The most recent example of this has to do with the 35 hour French work week. In 1999 the French Socialist government instituted a 35 hour work week in the hopes of stimulating employment. The (French Socialist) theory being that the less you allowed people to work the more workers that companies would need to hire. What they failed to take into account was that the declining per capital productivity would be a drag on the French economy. The slower the economy the less hiring businesses need to do. The result is that unemployment has remained high 10%, per capital productivity has dropped 4.3%, while this year’s growth is expected to be an anemic 2.5%. Compare this to the UK and U.S. where per capita productivity as increased (5% UK and 6% US) and where both economies are growing much faster than in France (the U.S.’s economy grew at 4.3% last year).

And how is this lesson being received in France? Over 77% of French respondents said they still don’t want to work over 35 hours a week even if it means that an increasing number of them will be on the doll working zero hours per week. Vive La France!

This entry was posted on Saturday, February 26th, 2005 at 9:32 pm by Insider and is filed under France, We Taunt You, Brilliant, but uncategorizable. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.