“Inflation is the windy updraft the falling man often mistakes as a force more powerful than gravity”
Brett Stephens in As Goes France
Still, the mystery of France is how a nation can witness what happens to countries that live beyond their means and yet insist on living beyond its means. France’s debt-to-GDP ratio will rise to 90% this year from 59% a decade ago. It spends more of its GDP on welfare payments (28.4%) than any other state in the developed world. It has an employment rate of 62.8%, as compared to Germany’s 76.5% or Switzerland’s 82.9%.
These sorts of statistics may have been obscure before the economic crisis, when politics could still be the art of not making choices. Today you would need earplugs, a helmet and a burqa for the message not to get through. Nations, like people, cannot spend too much more than they make; otherwise they can lose their creditworthiness and go broke. Competition in a global economy is a reality, not an option. Wealth cannot be transferred if transfers also destroy wealth. Rich people can always take their money (and their tax payments) elsewhere. The “trade-off” between work and leisure is ultimately a choice between wealth and poverty.
Now the French have stared all this in the face and said: Ça n’a rien à voir avec nous. It has nothing to do with us.
No candidate in the contest has suggested the country ought to attract foreign investment or nurture its native entrepreneurs. No candidate seems to think a tax cut—whether on consumers, producers or wage-earners—might be a good idea. Is France capable of nurturing a Steve Jobs or a Mark Zuckerberg? The idea seems to have crossed none of the candidates’ minds.
And how will France get out of its debts? Not through a more productive private sector and a more frugal public one, but in a flood of ever-cheaper currency, courtesy of a pliant ECB. That’s something on which both Mr. Sarkozy and Mr. Hollande firmly agree. Inflation is the windy updraft the falling man often mistakes as a force more powerful than gravity.
The U.S. differs from France in having a much more robust distrust of the state’s power and its claims to wisdom, and an equally powerful faith in the regenerative powers of the free market. Federalism also creates opportunities for policy experiment—on school choice, for instance, or lower taxes—not always available to the French.
Yet Americans should also take note that we aren’t so different from France, either: in our debt-to-GDP ratio, our employment rate, our credit rating. Above all, both in France and in America there’s a belief that, as exceptional nations, we are impervious to the forces that make other nations fall. It’s the conceit that, sooner or later, brings every great nation crashing to earth.