Sunday, February 01, 2009

France will survive

A few months ago, nobody would have believed that Nicolas Sarkozy would be praising the economic system of France that he believes strangles free enterprise and modernization in the country. Mais, l'impensable s'est produit. France is suddenly in a good position to weather the economic storms that are shaking the western world.

Pourquois? Well, first off, France has a huge social safety net. A third of the average French salary goes to pump up the second largest social welfare system in the EU, after Sweden. People gripe about it, and yet, ''Cela lisse la consommation et amortit les chocs", says economist Mathilde Lemoine.

Secondly, the French economy is still largely agricultural, and so better able to absorb a downturn than an economy rooted in industrial production. Germany will be in more trouble. France hardly developed its industry.

Third is the lack of a budget deficit; now, with its extra money, ''le gouvernement amortit le choc de la crise.'' [To be honest, I think I'd rather go through the shock than the high taxes.]

Lastly, the French banks have serious troubles, but nothing like what's going on in places like Great Britain. By comparison, the French portfolio is much more diversified. I'm not entirely sure the reasons for that.

To be honest, the standard of living in France has its advantages and its disadvantages. Outside of Paris, you don't see a lot of rich French; but you can also live cheaply in most other parts of the country. Where I think there is an advantage is that, in most parts of the country, people are already okay with scrimping and saving. It's not the end of all life on earth, like it is elsewhere. I'd like to see that attitude get exported, although probably it'll be the high tax rates that catch on.

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