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France faces the future


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I am an ex-banker so I'm bound to have a different perspective than

most; still, some of you might want to ask themselves why many

(including the French) have a different view of reality than what

reliable data keeps telling us.

Let's look at the figures. Certainly, the ECONOMIST and the FINANCIAL

TIMES are not objectively pro-French model, and the OECD has never been

accused of being biased. Their figures are one of the business world's

most widely accepted bibles. So the figures stand, and are macro enough

to tell a general truth. Indeed, French business is thriving...

For example, let's look at the CAC 40 -- an indicator of the Paris

Stock Exchange; it went up from 3000 in 2003 to 5100+ today.

Interestingly, although the CAC 40 is composed of French companies,

about

45% of their shares are owned by foreign investors, mostly

American funds (acquired during the last 20 years in a long series of

provatizations of formerly state-owned companies). This tells us that

(a) French business is indeed thriving, it is not an illusion; and (b)

the world business community thinks so too and is more than eager and

willing to grab French assets. If that is not a sign of confidence --

"put your money where your mouth IS NOT" in this case -- I don't know

what is!

So why would the street (as it were) believe differently?

The answer lies largely on anecdotal data / personal experience,

usually gathered from the media and among the class of people one is

familiar with (friends, relatives, business relations). If one is more

likely to belong to a less economically favored class, one has a view

of society very different from that of a wealthier person, of course.

An interesting experiment that I would suggest is to find an identical

class of people in America or in England, and ask them how they feel. I

suspect the answer would be equally gloomy (whether such an outlook is

justified or not is besides the point, for the purpose of this

discussion).

Again, I do not wish to paint an excessively rosy picture of France;

the only points I'm trying to make are: (a) ignore the common

misconception that France is doing badly because, in fact, it's doing

just as well as, and sometimes better than, the other EU countries; and

(b) more arguably, than it is better poised to face an impending "Great

Depression" than the US and UK economies.

(a) is pretty much a fact; (b) is highly debatable, another discussion entirely; time will tell.
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[quote user="SaligoBay"]

  This forum (not run by French people)

is the only place I've seen anyone trying to say that France doesn't

have an unemployment problem.

[/quote]

If we're going to discuss this seriously, one must really make an effort to be more precise.

No one here has claimed that France does not have an unemployment problem.

At best, one might have inferred from the stats posted that France has an unemployment problem that is reasonably similar (a little worse, not very much worse, depending on countries) to that of its neighbors, which is a vastly different thing.

One might argue that France has chosen to have more unemployment in

exchange for better working conditions for those who are employed.

One might also conclude that the French are more sensitive to the

unemployment problem, OR alternatively, that the non-French are more

insensitive to it.

Finally, what was specificially discussed (by me, at least) was the

employment of the 15-to-24-year-olds in the EU as a ration of the

overall youth population. That is a quantifiable figure.

The unemployment rate for the under 24s in France has often been quoted by the media as being around 23%.

My my OECD/INSEE sources quote the rate of employment, the

proportion of 15-to-24 youth that actually  work, at only 30.4% in

2004! Not good at first sight, especially against 55.4% in the UK!

Note that it is 27.6% in Italy and only 21.7% in Poland, the darling of "reformers" but no one writes editorials about it.

But you

have to remember that the unemployment rate is always calculated as the ratio of unemployed

to active population (i.e. those working or seeking work).

Now, using that traditional ratio, French unemployment among the youth drops to

8.1%, against 7.6% in the UK. A very different picture.

I would explain the high overall French figure by the fact that a lot

of French youths are

students, and unlike in America, for example, they do not need to work

to pay for their studies. For instance, in the UK, 42% of youth have to

work while being students; in France that % is only 6.8% (and 1% in

Italy! gadzooks!). That is bound to impact the overall statistic.

What conclusions can one draw from this: (a) that the media through

ignorance or incompetence generally follows a narrative that is simple

to understand (and colorful to write about, lazy frogs, etc.) yet

misleading; (b) the ones in the know (bankers etc) are not fooled but

the streets are.

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It is notable that those outside France most vocally clamouring for

"reform" are generally also those who would benefit from, for example,

wholesale privatisation of those considerable assets that remain in

state hands. For many institutions, these assets provide the best hope

for generating significant fees in coming years from their disposal to

the market and from the subsequent flurry of M&A activity.

Objectively, I'd agree that the French economy is in pretty good

shape.  It retains a broad activity base and has not become solely

driven by consumer spending, as has happened elsewhere. Unemployment is

headed down, albeit slowly; interest rates are low and growth is steady

if not spectacular.

As far as optimism goes...the three artisans we've had doing stuff for

us over the last couple of months have full books for pretty much the

whole year. Hardly a huge sample I'll grant, but it cheered me up.

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Well, what a lively and most interesting thread this has turned out to be! [:D]

Nice to debate a serious issue, in an adult manner, without one of two juveniles falling out of their prams!

Hastobe: Whilst I do disagree with some aspects of your posts, I do not think that it would be in the general interest of the forum to take this much further. Delighted to exchange perspectives (and stats!) by PM, to save forum bandwidth and I am sure that we can exchange much useful and interesting data.

One small point that has relevance to most joining in here, I hope.

NIC: Employer's: 2005-06:

First £94 free: then 12.8% Average Gross annual £ 23,400  Therefore most Employer's NIC = 9.1% not 12.8% !

(NSO: 2005 Wages Stats)

2003 (last Year Available). Source OECD:

Tax on Income and Profits as % of GDP:

UK: 12.9%

France: 10.2%

Ireland: 12%

USA: 10.9%

Germany: 9.9%

Total Tax Revenue as a % of GDP:

UK : 35.3%

France: 44.2%

Ireland: 30%

USA: 25.4%

Germany: 36.2%

Most Holy:

I do agree with most of your post: there is a sort of economic envy, which causes many analysts to rubbish France and it is anecdotal rather than factually based. France does have a solid manufacturing base and also, vibrant activities in technology (SGS-Thompson e.g.) The UK has virtually none. These oft repeated economic myths, also make idiots feel better: almost a sort of fiscal keeping up with the Jones's!

My own analysis and view of the forward UK eoncomy is dire! Despite the continued spin from Brown and Blair and their coterie of idiots. Just the realities of Balance of Trade Defecit, Unsecure and Sub Prime consumer debt; mortgage debt; ever-growing PSBR and core government debt, to name but a few!

PatF: Yes: French Agri-Industry. In 1957 when France joined the EEC (Treaty of Rome) circa 90% of the TOTAL French workforce were engaged in agriculture: now it is less than 10%!

jond. Yes, France apparently controls consumer borrowing, by insisting debt is "Affordable". If a bank lends you too much, then they cannot, in theory enforce the over-lending recovery process in court. Applies to mortgages and other commercial debt. According to Credit Agricole.

 

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[quote user="Gluestick"]

I do agree

with most of your post: there is a sort of economic envy, which causes

many analysts to rubbish France and it is anecdotal rather than

factually based.

[/quote]

Actually, my own experience is that the real pros, the MONOPOLY men

with money bags, are not fooled at all; the media and the public might

be, but they're not, they know pretty much what France is worth; what

they do NOT like is the "message" that -- unwittingly -- France has

come to embody, which is its stand in the age-old conflict between

labor and capital.

Too much "common wisdom" nowadays equate labor with costs, which are

"bad" and must be reduced, in order to maximize profits, that will go

and enrich a minority. The price paid by society overall for such a

transfer of wealth is never taken into account.

For better or worse, the French -- I'm not even sure most realize that

is what they're doing -- "smell" that transfer of wealth -- the French

economic elites would certainly be happy to do to France what their

counterparts have done elsewhere -- and fight desperately to block it.

Despite the propaganda you hear and read about, there's nothing

intrinsically unavoidable about such a transfer of wealth from the

middle to the upper classes. Let us remember that even a Hight Priest

of Capitalism such as Henry Ford though that the Middle Class should be

driving the economy. Mr Ford would likely be appalled by the economic

picture in the US today.

I'll spare you the data but in the last decade, the middle classes has seen its wages (and wealth) stagnate, while the rich

have indulged in an orgy of consumption that makes it appear that the

country's economy is doing great.

But that orgy of consumption is not

sustainable, especially if it is paid by debt. If you take out debt,

GDP growth looks less perky. On most cases GDP Grown less Net Borrowing is actually negative.

These are problems that go beyond France and, differently but not unlike the 1920s, threaten all of our societies.

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[quote user="Most Holy"][quote user="Gluestick"]

I do agree

with most of your post: there is a sort of economic envy, which causes

many analysts to rubbish France and it is anecdotal rather than

factually based.

[/quote]

Actually, my own experience is that the real pros, the MONOPOLY men

with money bags, are not fooled at all; the media and the public might

be, but they're not, they know pretty much what France is worth; what

they do NOT like is the "message" that -- unwittingly -- France has

come to embody, which is its stand in the age-old conflict between

labor and capital.

Too much "common wisdom" nowadays equate labor with costs, which are

"bad" and must be reduced, in order to maximize profits, that will go

and enrich a minority. The price paid by society overall for such a

transfer of wealth is never taken into account.

[/quote]

...and that "efficiency" is measured only in terms of money. The idea

that an "efficient" employer is one who provides livelihoods for a

large number of present and past employees whilst not necessarily

making a profit is seen as old fashioned and, in the 21st century,

undesirable. Soviet style collectivistion is a not good thing, but

unbriddled free markets are not either. France's middle ground, as MH

says, is most undesirable for those who make their bread from juggling

other people's money around.

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Wow, well, I for one am a bit shocked and disappointed as well, I guess mob rules well in France.

I too have to agree with Deby, SB and Hastobe and also have to admit that I personally believe that Socialism just doesn't work. I can't argue on the grounds of statistics and I am not quite 50+ yet but if it was easier to start a business in France, my husband and I would be coming over to live permanently sooner rather than later.

As I have mentioned on here before, we do plan on retiring in rural France one day once we are able to secure our future here in the UK. Shame, because we will not be employing anyone or contributing to the French economy but will continue to contribute to the UK economy. Surly we are not the only ones that the system encourages to do nothing and contribute nothing.

Having said all of that, I believe that the laid back way of life and of course the history and beautiful countryside is what attracts many here, it is wonderful for retirement.

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[quote user="WJT"]

Wow, well, I for one am a bit shocked and disappointed as well, I guess mob rules well in France.

I too have to agree with Deby, SB and Hastobe and also have to admit

that I personally believe that Socialism just doesn't work.

[/quote]

Regarding your first point, I read somewhere that in a recent poll, 80%

if the French disapproved of the CPE. It doesn't seem untoward for a

government elected with a dubious mandate (Chirac/Le Pen) to withdraw a

law passed by a minority of MPs (51 vs 23 on a Sunday night). 

Right now, in the U.S., 66% of Americans are against the Iraq War; yet

the Government continues steadfastly its failed policies. Of the two, I

think the French Government is the wiser.

As to "Socialism doesn't work," it depends how you define

"socialism".  Certainly, the totalitarian travesty that was the

USSR didn't work, in the long-term. Is China today more or less

Socialist than, say, Sweden or Denmark? Is China an economic miracle or

not? Are you saying that our friends the Danes and the Swedes have been

living in abject failures since the War?  What about the NHS in

the UK? Total and  EDF in France? Airbus?  In America,

certain industries such as Boeing, the major airlines, the entire

aerospace industry, only survive because of Government help...

Such labels can be quite meaningless, like the word "liberal" which has one meaning in the US and another in France.

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As regards to the riots versus democracy issue; doesn't this just encourage groups to join mobs and do whatever is necessary to disrupt the country and perhaps even including violence to get their way? I would be very surprised if there will now ever be a politician in France to make an unpopular necessary decision.

In my humble opinion in regards to polls in France or in the US as was mentioned, they change as the wind blows. I for one would not want my government to make important decisions based on them and that would include the loudest and most disruptive group at the time.

Good point Most Holy, but still have to put my resources in the UK not France. But as I said will reap all of my rewards in a country that I could not work in or contribute to. Just my experience.

 

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[quote user="Pangur"]

Interesting article here on "declinology" in France  http://www.guardian.co.uk/france/story/0,,1741731,00.html  A similar article appeared in Le Monde a few weeks ago.  [/quote]

Thank you, Pangur, it is interesting, as are the readers' comments after it.

For anyone who doesn't like the Grauniad, fear not, the article is by a French journalist from the Libération.

Must look into the claim in one comment about the high percentage (was it 30%) of French jobs being in the arms manufacturing industry.

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[quote user="SaligoBay"]

Must look into the

claim in one comment about the high percentage (was it 30%) of French

jobs being in the arms manufacturing industry.

[/quote]

So there are some statistics you think worth paying some attention to then?

"Arms industry" can be broadly defined by the mischevious as anyone

working in ship building and aerospace, plus large chunks of

information technology, biomedical research and the nuclear power

industry, all of which France has in spades.

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[quote user="jond"][quote user="SaligoBay"]

Must look into the claim in one comment about the high percentage (was it 30%) of French jobs being in the arms manufacturing industry.

[/quote]

So there are some statistics you think worth paying some attention to then?

[/quote]

No need to be smart!  Isn't it worth looking into, to see if it's true or not?  Not all of us know everything.  Yet.

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[quote user="WJT"]

Good point Most Holy, but still have to put my

resources in the UK not France. But as I said will reap all of my

rewards in a country that I could not work in or contribute to. Just my

experience.

 [/quote]

I completely agree with you - my point was never to put down the UK

though I am very "bearish" about the US economy (another discussion),

only to point out that gap between France and the UK wasn't as wide as

occasionally perceived.

There are many features, including employment, where the UK, at a

price, is better off than France, indisputably; there are others, such

as energy, where it is (IMHO) on shakier grounds (another discussion as

well).

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[quote user="Most Holy"][there are others, such as energy, where it is (IMHO) on shakier grounds (another discussion as well).
[/quote]

Are you a fan of nuclear energy, MostHoly?   France has been going headlong for nuclear since the 70s.  Have the French people been lied to about nuclear energy, or do they just not care?   Or have they protested and the govt has gone ahead anyway.

It's interesting that electricity (overall, including the abonnement) is so expensive in France.

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[quote user="Gluestick"]

Hastobe: Whilst I do disagree with some

aspects of your posts, I do not think that it would be in the general

interest of the forum to take this much further. Delighted to exchange

perspectives (and stats!) by PM, to save forum bandwidth and I am sure

that we can exchange much useful and interesting data.

[/quote]

I agree - I was in two minds whether to post all that on the forum but

last time I said something in a post and didn't follow up I got shouted

at!  Thought the mods would delete if it was TMI. [:)]

Hastobe

 

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[quote user="SaligoBay"]

[quote user="Most Holy"][there are others, such as energy, where it is (IMHO) on shakier grounds (another discussion as well).

[/quote]

It's interesting that electricity (overall, including the abonnement) is so expensive in France.

[/quote]

Is it so expensive? Compared to where? I've never seen any sensible

comparison. I did once try to compare my EDF bill with London

Electricity rates (try and find the prices on their website - they

really don't want to tell you) and concluded that I would be paying

about 60% more in the UK. But we're on Tempo, so it might not have been

entirely fair.

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[quote user="SaligoBay"]

It's interesting that electricity (overall, including the abonnement) is so expensive in France.

[/quote]

According to NUS Consulting (NUSINC.COM - a professional cost management and recovery company

specializing in solutions to reduce electricity, gas, oil, petroleum costs)

(via the old reliable ECONOMIST), I found a table that spells out

energy costs in Europe. (I don't know how to post images so I'll type

it out):

First, the price of electricity expressed in Euro Cents / KWH in April

2005, for the supply of 1000 KW for a business with a monthly usage of

450 KKWH (excluding VAT):

- France: the graph bar looks like it's near 5.2

- Britain: 6.3

- Netherlands: 7

- Belgium: almost 8

Only Finland and Sweden have prices below below France; Italy, Spain, Denmark, etc. are all more expensive.

Now, the prices of natural gas taken in September 2005 for an annual supply of 2.9 MKWH, (excluding VAT):

- France, Belgium and Britain are about the same, around 2.8 cents,

though I understand there was a sharp increase in the UK recently;

Spain, Finland are below that; the most expensive country is Denmark

with 8 cents.

As a rule, countries with political control over their energy policies

(France, Germany, Spain, in particular) deliver better prices to their

citizenry.

More than 3/4 of France's electricity is generated by nuclear power; is

that a good thing or a bad thing? I don't know. I think it depends on

who you talk to and what factors are taken into consideration.

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More than 3/4 of France's electricity is generated by nuclear power; is that a good thing or a bad thing? I don't know. I think it depends on who you talk to and what factors are taken into consideration.

 

It does mean they are virtually self sufficient in their energy needs, which in todays climate (no pun intended) means so much.

The UK for most of my life has been self sufficient in energy, but with the closure of the coal mines, the wasteful dash for gas, decommissioning of older nuclear stations and lack of investment in new generating capacity, we as a nation are heading for trouble. Many of the big old coal fired stations will be life expired soon and the only option is surely nuclear.

We now import gas, coal and i assume heavy fuel oil, all of which leaves us wide open to a host of nasty scenarios.

 

Bedders   

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