The NYT Doesn't Like the French Welfare State

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Sunday, 25 August 2013 16:15

Earlier this year the NYT gained considerable notoriety for claiming the Danish welfare state was on its last legs. While the article included several stories that made this point, the data refused to cooperate. By almost any measure Denmark's economy looks considerably stronger than the U.S. economy.

Having struck out in its effort to push its Danish welfare state scare story, it now appears to be turning its attention to France. An article in today's paper, which was headlined "a proud nation ponders how to halt its slow decline," told readers:

"Today, however, Europe is talking about “the French question”: can the Socialist government of President François Hollande pull France out of its slow decline and prevent it from slipping permanently into Europe’s second tier?

"At stake is whether a social democratic system that for decades prided itself on being the model for providing a stable and high standard of living for its citizens can survive the combination of globalization, an aging population and the acute fiscal shocks of recent years.

"Those close to Mr. Hollande say that he is largely aware of what must be done to cut government spending and reduce regulations weighing down the economy, and is carefully gauging the political winds. But what appears to be missing is the will; ..."

None of these assertions are backed up by any evidence. For example, "Europe" is clearly not talking about the "the French question." Unnamed individuals who the NYT views as important may be talking about the French question, but this is most definitely not a major topic of conversation for people across the continent. What the article is revealing is an agenda that a small group of people, presumably most of whom are wealthy and powerful, have for France.

In the same vein it later tells readers;

"There is a broad consensus that real social and structural renovation can be carried out only by the left."

It never reveals who is part of this "broad consensus." Obviously the consensus does not include the vast majority of French people who clearly do not want to see major changes to French society.

While France undoubtedly has problems, it is not clear that they are more severe than those facing other countries, like the United States. For example, while its overall employment to population ratio is somewhat lower than in the United States, this is entirely due to the fact that younger people and older people are less likely to work in France than in the United States. Its employment rate for prime age workers is actually 5 percentage points higher than in the United States.

FRED Graph

The piece goes on to assert that France can no longer afford its generous social model in the current globalized economy.

"But in a more competitive world economy, the question is not whether the French social model is a good one, but whether the French can continue to afford it. Based on current trends, the answer is clearly no, not without significant structural changes — in pensions, in taxes, in social benefits, in work rules and in expectations."

The piece produces no real evidence to support this assertion. An examination of France's current account, the most obvious market test of its competitiveness suggests that France is not doing too poorly. It has a current account deficit of less than 2.5 percent of GDP. This compares to a deficit of more than 3.5 percent in GDP in the United States. France's exports are also seriously depressed at the moment because the European Central Bank and European Union are forcing a severe recession on several of the country's major trading partners (Greece, Spain, and Italy). If France's trading partners are ever allowed to resume normal growth, this will have the effect of reducing its current account deficit.

The article does some serious straw grasping in trying to build its case, telling readers:

"Large French companies compete globally; there are more French companies in the Fortune 500 than any other European country. But the bulk of their employees are abroad, ..."

It would hardly be surprising that a large French company would have most of its workers outside of France. This is true of many large U.S. companies as well and the United States is a much larger country than France.

The piece even bemoans the fact that France's economy appears to be picking up, which it obviously considers bad news from the standpoint of advancing its agenda for France:

"The turning of the business cycle could actually be a further impediment in that sense, because as the European economy slowly mends, the French temptation will be to hope that modest economic growth will again mask, like a tranquilizer, the underlying problems."

There is a very interesting story here. Obviously wealthy and powerful people want to overhaul France's welfare state. Unfortunately this piece is written from the standpoint of an advocate of their position rather than the standpoint of a neutral reporter.