Sugarcoating Socialism the French Way

The American left embraces a romantic myth of the superiority of French socialism, to impress upon mushy minds that the corporatist state envisioned by Obama would be a good thing.

At one point in the 1995 remake of the classic film Sabrina, the title character (played by a very French-looking Julia Ormond) lectures Linus Larrabee (Harrison Ford) on the virtues of French work habits. "They work as hard as we do," she says. "They just know when to quit." The film goes on to dramatize these points as Linus is transformed from a miserably neurotic, soulless American businessman into a pleasure-seeking, Moroccan food-loving lapsed capitalist and Wall Street dropout. By the end of the film, Linus has become a "complete" human being: an American male in the prime of his work-life who has traded American capitalism and work itself for the more relaxed attitudes of French society. He can now devote his most productive years to counting the bridges of Paris, lounging in cafés, and doodling in his journal.

The American left has always cherished a similar myth: the myth of the superiority of European socialism. John Kerry and Barack Obama, and their many supporters, have spent decades attempting to reshape America in the image of France. Now, with the passage of Obamacare and increased federal control of the financial, automotive, and energy sectors of the economy, they are close to succeeding. With the passage of just a few more pieces of legislation -- cap-and-trade and the nationalization of 401(k) accounts among them -- the transformation of America into a European-style welfare state will be all but complete.

The problem with this transformation is that it will soon lead to a French-style standard of living as well. Taking into account higher taxes and inflation, French per capita GDP is $32,679 versus $46,381 for the U.S. (2009 IMF figures). Ranked by purchasing power, France comes in at #21, while the United States is first among major economies. The reasons are not hard to find. It is certain that the French do not work as many hours as do Americans, and it is doubtful whether they work as hard. National workplace regulations make it difficult to fire incompetent or lazy workers. As a result of overregulation, French industry is slow to adapt and innovate. While unionized workers enjoy full benefits, early retirement, and guaranteed annual vacations of five weeks, France as a whole pays the price of significantly lower growth rates than America.

There is, unfortunately, one area in which the U.S. already resembles France all too closely. As in the USA, France has piled up increasing amounts of unfunded liabilities in its retirement schemes. President Sarkozy has proposed reasonable reforms that would ensure adequate funding of government-run pensions. An obvious solution for a country in which workers retire at age 60 is to gradually raise the retirement age to at least 65, a level comparable to that of other developed countries. Union response to this proposal has been to schedule a nationwide walkout on May 27. As in Greece, it appears that French workers would rather wave their little red flags and shut down the economy than negotiate a practical means of funding their own retirements.

Perhaps this is because they "know when to quit." Unfortunately, their knowing when to quit -- that is, at age 60, with full benefits regardless of years of service -- has bankrupted the pension funds that must support workers for an extra five to seven years beyond those in comparable economies. The result is that France's pension funding is now deeply in debt -- a debt level that is projected to reach $127 billion by 2050. Predictably, unions have called for more taxes on the rich and, implicitly, for increasing the national debt. In return, they offer little or nothing in the way of compromise.

By rejecting reforms, French unions are jeopardizing even the low standard of living that they now enjoy. Absent real reform, the French standard of living -- and that of several other Europeans countries -- will continue to fall relative to the U.S., and it will fall even farther relative to the world's developing countries. In the next four years, it seems likely that the Chinese currency will appreciate within the range of 15-20% versus the dollar. If the euro falls another 15% against the dollar, which is not unlikely, the economies represented by the euro will have declined in nominal terms 30% against that of China. The Chinese middle class will be both more numerous and better off than that of Europe.

Regardless of exactly what the future brings for Europe, and for France in particular, the damage of socialist welfare schemes, bloated public-sector employment, and intransigent unions is clear. Long ago, the French made a devil's bargain that ensured a social safety net in return for a lower overall standard of living. In this country, Democrats are intent on enacting precisely the same kind of cradle-to-grave welfare system. European-style socialism is the goal of the Obama administration, just as it has been that of the American left for decades. With the support of SEIU and other unions, Obama plans to regulate, control, and unionize every sector of the private economy. The result will be a workplace and an economy that resemble those of France.

If the French wish to live under the thumb of a corporatist state dominated by federal bureaucracies and powerful national unions, that is their business. The result of French corporatism will be continued high unemployment, rising national debt, and declining purchasing power. Most Americans, however, do not want French-style corporatism, and it should not be imposed on them by the small cadre of political elitists temporarily in charge in Washington.

Dr. Jeffrey Folks taught for thirty years in universities in Europe, America, and Japan. He has published many books and articles on American culture and politics.