France in Crisis: Welfare, Inequality and Globalization since 1980 (review)

With unemployment hovering around ten percent (much of it long-term and structural unemployment), one of the lowest workforce participation rates in Europe, low rates of GDP growth, a rising threat of under funded pensions, and huge deficits (both as a percentage of GDP and in real terms), France is certainly in crisis. Most observers relate this crisis to globalization. On one hand, free-market economists attribute these difficulties to the French resistance to globalization; on the other hand, to left-leaning economic commentators, France's refusal to give up its unique culture and stable, protected work environment is being attacked by the globalization movement spearheaded by Americans. However, Timothy B. Smith's contentious France in Crisis refuses to accept globalization as the cause of the French crisis. Instead, Smith focuses his argument on the failures of France's own domestic economic policy and shows how often it has not lived up to its progressive rhetoric of solidarité. Moreover, Smith's argument refuses this dichotomy (either American instability and low unemployment or French stability and high unemployment) in order to show how certain economies (Sweden and the Netherlands, for example) have managed to reduce unemployment while still maintaining a progressive, stabilizing social structure.

Written in a crisp and lively style (reminiscent of The Economist) and rigorously argued, Smith combines intellectual history, public policy, cultural analysis, and economics in order to illustrate how France's current economic difficulties are the result of a socioeconomic system that has become a welfare state for those already on the inside (who tend to be white males born between 1940 and 1960) at the expense, both in terms of high taxes and high unemployment, of those on the outside (who tend to be the young, females, and immigrants). Moreover, he attacks the French myth that state spending is responsible for French prosperity, by illustrating that the thirty-year boom (les trente glorieuses) was a period marked by very low government spending.

Smith pinpoints the origins of France's economic woes in the organization of the modern French benefit system during the 1920s—rather than organizing a system of benefits universally, benefits developed out of professional associations. Consequently, the French state became "corporalized" with these intermediary bodies meting out benefits instead of universal benefits coming from the government. There were and are several consequences of this process: first, these benefits originally went to the highest classes of French society, meaning that as lower income professional associations obtained benefits they were often excessively costly; second, while their pensions are meant to be self-sustaining they have often not met their obligations and the French government has had to make up the short falls costing them billions of euros; third, these professional organizations have built-in perks on top of their pension systems; finally, these inordinately strong "corps" have successfully blocked any reforms that would make the system more egalitarian and flexible.

The professional organizations are not solely to blame for the current quagmire. One of the book's most effective chapters centers on the Mitterrand presidency and its misunderstandings of economics: most notably, its monetary policies (nicknamed "Sado-monetarism") that limited future job expansion. Smith is also careful to point out that the right often cohabited and collaborated with this mismanagement and financial irresponsibility. Elsewhere, Lionel Jospin is criticized both for his "quick-fix" economic policies (most notably the 35 hour work week) and his failure to honestly discuss the sources of the problem. Throughout the book, Smith is careful with his explanations of the more complicated economic concepts without interrupting the argument.

While Smith eschews a chronological approach for a thematic one with mixed results (the text sometimes seems a bit repetitive), the thematic approach works quite well in the chapter analyzing the negative effects of this mismanagement on the outsiders. He is particularly adept at critiquing France's regressive and substantial payroll and sales taxes, which place an inordinate burden on the young and the poor. Moreover, he dismantles...