More on what the EU Referendum in France is telling us:
The French “no” highlights a basic challenge for France. French voters liked the added leverage that they got as being part of the EU, but now that it might threaten what the French perceive as their God given right to high pay low productivity, all of a sudden it doesn’t look so good.

What the French need to learn, but refuse to understand, is that their economic fate is already sealed. The no vote just confirmed it.

Much like pilots unions in the U.S. that believe they can strike their way out of a problem caused in part by high wages and benefits, the French seem to believe that keeping their traditional social protections will save them from the plight caused by their stagnant economies. Their biggest fear is that further EU unity could bring American or British free market reforms into their countries. Oh, non!

Let’s think about this. England’s unemployment is under 5% and the U.S. rate is just 5.2%. Meanwhile the French have an unemployment rate of 10.2%, just under Germany’s 10.5%. In both countries there is an additional 5% of the workforce over and above U.S./British rates that is not producing any goods/services which can either be exported or used to reduce imports. Instead, these idle workers are on the dole and like pre-reform U.S. welfare, many are not in a particular rush to get back to work even if there were jobs.

Furthermore, the French somehow believe that they can single handedly turn the tide on global competition by voting it away. As if China, India, Vietnam and other developing nations are going to be adversely affected by a referendum. I have not read any stories of Chinese factories all of a sudden being implementing French-style laziness or German-style bureaucracy and over-taxation just because French voters wish they would.

None of this is new and it is likely that not much will change. But if my name were Jacques or Jean-Pierre, I would be studying English, Hindu or Chinese because that is where your future lies.

Technorati Tags: Europe, France

This entry was posted on Tuesday, May 31st, 2005 at 11:04 pm by Insider and is filed under I knew I'd use my Econ major, 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.