France: On the Brink Of Financial Disaster
There is an old Parisian song where the lyric goes something like this:” J’ai deux amours, mon pays et Paris”. I have two loves my country and Paris. That about summarizes my sentiment about the country that I grew up in – Toulouse, France, I love it for it gave me and my family –safety, security and a joie de vivre. But much of that sentiment is quickly disappearing as I visited my nephews this summer.
Paris had changed.
It had aged. Not in the way that cities normally transmute into a blurriness of excessive pedestrians or vehicles crawling upon vehicles .
I sat on at a café on Boulevard Montparnasse watching the endless line of clochards begging for one more euro. This time it was not the intermittent beggar asking for another centime for his Beaujolais. What I was witnessing were elder men and women shabbily dressed, pandering for the next meal. It reminded me of early memories that I had run away from- of the homeless men and women looking for food and shelter after World War II.
But there were no Nazi prisoners of war eating next to me at the Displaced Persons Camp. They were ordinary French citizens trying to eke out a meager existence on sustenance that had disappeared in some bureaucratic bureau.
The roads from the Charles De Gaulle Airport were pocked with holes that had long been condemned into a vehicular pit of annoyance. And on the walls alongside the highway into Paris, the graffiti in French and Arabic were no longer the hint of some avant-garde art movement. The graffiti was a clear statement of neglect by the city to even attempt to wipe away the words of desecration or the Anarchic symbols of defiance.
The French, young and old, complained to me about their pension, whether it would or would not be there. But no mention was made of Hollande’s announcement that the rich would be taxed by 70% if they made over a million dollars. The absence of discussion on this point was very clear to me. No one but no one, including doctors, lawyers, software engineers or businessmen, could conceivably think of ever making one million dollars a year legally. My nephews, both talented software executives in Fortune 500 companies, could not conceivably think of exiting France with their incredible unique talents and come to the United States to embark on an entrepreneurial venture. It was too risky. They had the security of their jobs. The certainty of their pensions and the four to six weeks of vacation promised them, year in, year out. So as a serial entrepreneur, I explained to them that the beauty and uniqueness of my adopted country, America, was that one could fail and start again and again , without any social stigma. But those words, as well as my Franglish, fell on deaf but appreciative ears. Above all else, the French can be truly polite.
On October 9, 2012 President Francoise Hollande announced that he wanted to reduce France’s budget deficit while dealing with rising labor costs and increasing unemployment as well as a growth rate of .2%. So, I decided to write this blog as a warning to my family and friends in France that your country is headed for a major economic crisis, approaching that of a complete economic collapse. Perhaps, I may exaggerate a bit but Hollande’s government faces several major challenges.
The first is that the average hourly labor cost of France is 34.2 Euros [44.37$] versus that of the more productive, efficient German laborer who makes only 30.1 Euros.
At the same time, the unemployment rate is rising to 10.1% --the highest rate in 13 years. The key sectors of the French economy – automobile manufacturing , construction, and retail have shrunken significantly. Hundreds of thousand workers will have to be fired in order reduce the high costs of labor. Like Spain and Italy, both in the throes of economic chaos, France will enter into a period of economic disarray that will force the French labor unions to strike and oppose Hollande’s inevitable implementation of a severe austerity program. I suspect that the most radical of the labor unions –the General Confederation of Labor and the Workers’ Force, will call for massive strikes and riots.
On September 30th, 40,000 workers and sympathizers went to the street in what most connoisseurs of French demonstrations consider ‘quite mild’. But I can assure the French, after having witnessed scores of riots , bombings - that this is only a prelude to what will be a major confrontation between the brave Gendarmes and the irresistible forces of the disgruntled workers. I still remember the riots on the Left Bank when the students took over the Sorbonne and burnt books. It was not a pleasant sight at all. Much blood was spent and many bodies were mangled in some distorted form of defiance.
The Greens [the subordinate partners of the French Government] and the leftist factions of the Socialist Party to which some of my family members still belong will undoubtedly challenge the EU document for a French Austerity Plan signed by President Sarkozy and German Chancellor Angela Merkel.
In summary, France is financially in terrible shape. It may not realize it yet, much like it did not really believe the Germans would invade France. But this time, unfortunately, France has been usurped by German economic prowess. What Germany could not achieve through military conquest in two major world wars with France, it will achieve through an economy that is more dynamic, more efficient and more productive.
Once again, France has failed to live up to it’s vainglorious past. It has fallen into a state of economic somnambulism from which it may never awaken.
The thirty –five hour work week and the six week vacations did not work. It simply stalled the moment of truth—France is- and will always be-- lazy, complacent and delusional about a history that was never theirs- and a future that will never be within their children's reach.