[Via Right-Thinking]
The French riots should be a wake-up call, but not for pouring billions of euros into the banlieues, as measures announced today by Prime Minister Dominique de Villepin would do. A visionary leader would seize the chance to dismantle an economic system that is eating its young.An obvious place to start would be to overturn labor laws that strangle private enterprise. The minimum wage is so high that it often exceeds the potential productivity gains of hiring a new worker, according to the Organization for Economic Co-operation and Development's 2005 Economic Survey of France. In other words, even if a prospective employee would increase your company's income by only, say, 1,000 euros a month, you would have to pay him more than that. (The minimum wage is 1,197 euros a month. Spread over four 35-hour weeks, that works out to 8.55 euros, or $10, an hour.)
Enterprise is hampered in other ways too. Companies that can't fire people are ultracautious about hiring. A complicated tax structure means that even the smallest firms must devote resources to tax accounting. Excessive licensing requirements in many professions keep out competition.
Red tape doesn't just hamstring economic growth. It also lends itself to racist implementation. The more bureaucratic gatekeepers job-seekers have to appease, the more likely it is that someone will sooner or later reject Mohammed in favor of Pierre. While French politicians lament the harshness of capitalism, the so-called Anglo-Saxon model is what allows American immigrant families to leap from corner grocery store to the Ivy League in a single generation.
Removing the government's stranglehold on the economy, though, would eventually threaten France's elaborate social welfare system, which is not so much a safety net as a downy mattress complete with breakfast in bed. The portion of the French electorate that benefits from guaranteed short hours, six-week summer holidays, and early retirement has shown time and again that it is willing to vote against mathematics. These people would choose to keep paying themselves benefits until the ambitious have all left for London and the rioters have reached the Arc de Triomphe.
It's times like this that strong leaders need to step in and do unpopular things. Among his new measures, de Villepin announced tax breaks for businesses that locate in a "ZUS"—a "sensitive urban zone." That sounds like a good idea, but without fundamental labor reform, I doubt it will go far enough.
And these are the people who have the nerve to accuse us of racism, elitism and corruption?
Posted by insomnomaniac at November 10, 2005 12:24 AM