TCS Daily


Hit the Road, Jacques

By Sylvain Charat - August 18, 2004 12:00 AM

"Can any individual be happy when he is continually conscious of not being his own man?" asked Albert Jay Nock in 1935 in his classic book Our Enemy, The State. The answer seems obvious especially after the collapse of the various forms of collectivism in the second half of the 20th century. Yet today, if free and open societies are being built thanks to free trade and globalization, a new type of dirigisme appears. Its symptoms can be observed in some European countries, but the most advanced case is France. Even if this democracy is quite well integrated in the global system, it has over the last decades rebuilt a state monopoly which can be felt in daily life.

Existing in this daily life is the best way to understand what this new dirigisme means. Take, as an example, Jacques, an average Frenchman. He has always known the French way of life, going abroad for vacation only, thinking that French society is superior to other western systems even if he does not know how life is managed elsewhere. Let's follow him in his daily life in 21st century-France.

As an employee, Jacques works 35 hours per week. To do otherwise would break the law. The thinking behind this law was that with employees working fewer hours, a company would have to hire more people. The logic behind this lies in a purely communist philosophy that work is painful and unbearable and therefore can not be - must not be? - created: it must be shared. Theoretically Jacques could work overtime, but the law makes it very expensive for companies to pay this, and at the same time, too expensive to hire more people. Besides the fact the 35-hour week resulted in a bill of €15.9 billion in the private sector in 2003, and €8 billion in the public sector in 2004, the law does not make more jobs available, reduces productivity, and Jacques cannot work more to earn more.

Jacques' health insurance is paid for by the state monopoly. Article 1 of the bill presently debated in the Parliament confirms the state's role in covering citizens with a compulsory and universal health insurance. The state thus keeps its sovereignty by making laws on the financial management of health coverage and on deciding which medicine shall be reimbursed. Jacques does not complain about this since he has never known anything else. Health care appears to be free because Jacques does pay if he goes to the hospital and he is always reimbursed if he goes to the doctor.

But the reality of this system is that the state takes a contribution on wages and increases it regularly in order to finance the system. At the same time, it covers less and less and has a deficit of €14 billion. The bill which has just been adopted by the National Assembly is the 17th of its kind since 1975. No lessons are learned from past failures; there is only a persistent will to preserve what does not work efficiently. The parliament keeps the illusion that this time dirigisme will be efficient through the use of high tech. But dirigisme, even with technology, remains inefficient. Trapped in a health system which is sinking, Jacques can not do much.

When Jacques stops working, he will receive a state pension. The system is based on repartition: the state takes contributions from workers' wages to pay pensions to retirees. This system was set up in 1945, based on a "pact between generations" through a repartition system. There are several pension organizations, managed by unions, but it is the parliament which controls the rules of management of each pension system. Therefore there is no personal control on how long one can work and how much one can contribute.

This repartition pension system may have worked as long there were more workers than retirees. But if now there is 1 person out of 5 who is retired (over 60 years-old), by 2040 they will be 3 out of 5. This increase will begin in 2006, baby-boomers becoming papa-boomers. If nothing is changed, the deficit will be around €50 billion by 2020, growing to €100 billion by 2040. The government reacted with the 2003 pension reform, which preserves the system set up in 1945 in spite of the demographic figures; the monopoly must remain intact. Thinking that growth would be regularly around 3 percent and that unemployment would lower in coming years, the government hopes the financial needs of pensions have not significantly changed. Actually, the governmental reform covers around 10 percent of the financial needs. Indeed, Jacques is not sure to receive anything when he retires.

If Jacques wants to watch TV, cook his pasta, and heat his house, he needs electricity and gas. These are also state-controlled, embodied in two companies, EDF (Electricité de France) and GDF (Gaz de France) -- which by the way are the two main sources of revenues for the Communist unions. The European Union claims it wants competition and the opening of the electric and gas markets in France. But there is still a long, long way before an open and free market exists in France. Under the last reform of EDF presented by the government, the state would retain 70 percent ownership of the company. And out of the 30 percent of opened capital, half was reserved to employees, the other 15 percent would have actually been put on the market. The government injects €500 millions in EDF's capital. The electricity transportation network named EDF Transportation will be sold... to the Caisse des Dépôts, a public financial organization. Then, last but not least, this pseudo reform intends to increase the wage of employees. But the monopoly will be preserved, in spite of the EU's pressures. Thus Jacques will always have a monopoly in front of him, a monopoly that warns that in case of competition, they shall increase their price by 15 percent, a new way of threatening people.

Jacques often travels by rail. Railroads are as vital to France as planes are to the United States. But they are also state controlled by SNCF. It is as if there were only one airline belonging the federal government allowed to fly in the US. And it is expensive. Nobody ever explained to Jacques why a monopolistic state company has a huge deficit it can not pay, €41 billion in 2003, even if it increases its prices every year, as this year 2004, by 3 to 6 percent.

Concerning school for his children, Jacques is denied any right to choose. The governing principle is that of zoning by sectors: French children are obliged to attend a state school in their neighborhood, and admittance is mainly defined by geographical criteria. The public school system is locked. But so is the private school system. Indeed, Jacques may choose, if he has enough money, a private school, but almost all of them are "under contract" (99 percent of private schools plus a tiny private sector without public endorsement). In other words, the private schools may be considered equivalent to state schools in the sense that their teachers have the same status, and the curriculum is the same.

Jacques' France is daily France, in which he actually has no choice. What separates his society from Communist regimes is that France's political system works as a democracy, and therefore he is free to do what he wants. But in this democracy, a new paradigm is being set up in which the seeds of state control are being sowed in daily life and in the law, in a sort of "Communist-Light" system which tries to survives in the midst of a free market world.

This dirigiste temptation is a real and serious trend which threatens the development of progress, social justice and the free market. It threatens even more since it grows in a democratic context, making it more insidious. French society shows this new dirigisme for which free market, free trade and individual choice are no longer options to revitalize the society. French political leaders seem unwilling to understand the new world realities, hiding themselves in a sort of socialistic dream world. And they wish to be a model for the European Union.

But things can change and the trend can be reversed. Indeed, France appears to be a fascinating new battlefield for ideas since a real free and open society is still to be built there.

Sylvain Charat is director of policy studies in the think tank Eurolibnetwork in Paris.


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