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Home Publications Blogs Beat the Press The Washington Post Doesn't Like French Socialists

The Washington Post Doesn't Like French Socialists

Thursday, 17 January 2013 06:12

That is what readers of an article on the state of the French economy must have concluded. The piece paints a very dire picture of France's economy, comparing it unfavorable with Spain, which is praised for instituting severe austerity measures.

While Spain's austerity measures have succeeded in raising its unemployment rate to more than 25 percent, the highest in Europe, they have not brought about growth. Its economy shrank this year and is projected by the IMF to shrink by another 1.3 percent next year. France's economy is projected to grow by 0.4 percent. In fact, the IMF projects that France's growth will modestly outpace Spain's through the remainder of its forecast period (2014-2017) as well.

In short, given the evidence on their relative economic performances it is unlikely that anyone in France would envy Spain, unless of course they viewed unemployment as an end in itself.

Comments (10)Add Comment
written by foosion, January 17, 2013 7:10
Of course unemployment is not only an end in itself; it's also a means of holding down labor costs.
VSP do not like the French
written by Jennifer, January 17, 2013 8:05
It is interesting how much of this article is basically speculation. Some companies are moving to Spain, costs are cheaper there (25% unemployment will do that) and France is at risk of "falling behind". There were no actual numbers, because if there were it would be a different story. So even based on the all-important growth numbers France is doing better and it's employment is higher. I would guess France also benefits from not having protests and random strikes over austerity measures.
don't forget Greece and Spain had further to fall
written by pete, January 17, 2013 9:28
As Krugman pointed out, wages in Greece and Spain far outpaced productivity during the boom, hence they had further to fall. One prescription was to inflate them down, the Keynesian method. The other is to wean them down through painful unemployment. Since they were in the Eurozone, relative country inflation was not an option. Some suggested they quit the Euro and become like Argentina...default rather than inflate....oops..how's that working out!
written by JSeydl, January 17, 2013 10:32
Some suggested they quit the Euro and become like Argentina...default rather than inflate....oops..how's that working out!

pete, the pain would have ended a long time ago if countries like Greece and Spain were truly allowed to pull an Argentina-style default/devaluation.
written by watermelonpunch, January 17, 2013 2:55
Some people at, and readers of, the Washington Post, may indeed view high unemployment in France as favourable within itself.
I can think of a few reasons why. The reasons are either a) crazy, or b) disturbing, but I don't doubt that there are "logical" reasons.
written by pete, January 17, 2013 4:28
well, like Argentina, they would not be allowed to borrow in Drachma and Pesos, would have to borrow in Euros and Dollars, like before....and probably like Argentina now, they would be a mess...either way, as Krugman said, gotta get wages down to productivity, and that is the issue. The debt is only half the problem.
written by S.D. Jeffries, January 17, 2013 7:42
Krugman, Baker, DeLong all have written about productivity and unemployment. Companies are reporting higher productivity, but the unemployment rate is not rising proportionately. There are many speculations about why this is happening, from a skills mismatch to structural unemployment to immigration visas to technology advances. Whatever it is, it doesn't bode well for labor.
written by Calgacus, January 18, 2013 12:45
Pete: Keynes is not about inflation. Not about lowering wages. That is a complete misreading. And if a country can afford the wages it pays its workers, how much they have grown recently is besides the point. If the USA rewarded labor as well as 40 odd years ago - wages would go up dramatically, probably higher than productivity. So what? The financial sector, the banksters & the rich have been grabbing far more than their laughable contributions to productivity for 4 decades, because they can.

Argentina is working out quite well, especially comparatively. What on earth leads you to say it is not?
well, like Argentina, they would not be allowed to borrow in Drachma and Pesos, would have to borrow in Euros and Dollars, like before.

That is completely the opposite of the truth. Default in dollars, and then it is harder to borrow dollars. This is a really, really good thing. Issuing foreign-denominated debt is almost always insane. Being barred from doing something insane is a tremendous benefit to Argentina or any other country. If people don't want to save in drachmas or pesos, then the government has to tax more. Can't buy stuff on credit, have to pay for imports with exports. That's life. Works a lot better than austerity.
written by sherparick, January 18, 2013 8:44
Argentina has significant issues (the Government playing games with official inflation statistics), but it does enjoy economic growth and relatively low unemployment, thanks to its floating exchange rate.

Again, for the folks at the WaPo, high unemployment, declining real wages, the eliminations of social insurance and economic security programs, and the consequential immiseration of the masses are features, not bugs, in their vision of neoliberal economics.

Taking their lectures of living within mmy means to heart, I no longer can afford the luxury of subscribing or buying the Post at newstands.
don't shoot the messenger
written by pete, January 18, 2013 3:12
Krugman made a good argument that Greek wages were too high...made sense to me. I guess you are saying he was wrong?

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Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.