Monday, February 26, 2007

The irresistible force meets another immovable object

In the predecessor to this post, I wrote about French laziness meeting the requirements of the socialist welfare state. Specifically, the French back in May 2005 protested losing a paid holiday, even though the government would collect their wages to put into a slush fund for elderly people. "So there are limits to the French people's love of the welfare state," I noted, "when it threatens to limit their indolence."

Well, now Airbus wants to increase its workweek to 40 hours "without compensation" (meaning no overtime), and you know how well that will go over in France. Airbus has to cut costs somehow, whether it's selling off plants, reducing pay (especially overtime), or improving productivity. No amount of the French government "priming the pump" will help here, because the subsidies only encouraged Airbus to avoid streamlining operations, and moreover, subsidies come from taxes.

It's the same old game of protectionism: tax others to keep your industry alive, and true to Bastiat's parable of the broken window, claim that the redistribution promotes economic growth. It's bad enough that a government taxes someone $1 to subsidize a $2 item, claiming that the item costs only $1, but it's far worse when the person will never buy the item. That person, then, is coerced into paying for part of a product he never wanted and will never get, so that others will have it at a cheaper price.

Der Spiegel recently had an interesting analysis of the French national government's interference in commerce, and not just its Airbus dealing. But the writer misses the mark by crediting France's continental dominance during Louis XIV's reign to Jean-Baptist Colbert's anti-laissez-faire policies. In fact, the dominance came from military strength, not economic success. Colbert was a mercantilist, and while mercantilism can be incredibly successful for a while (witness Spain in the 16th century), collapse is inevitable once the colonies' wealth is exhausted. Instead of developing colonial trade that would create a mighty economic force, both Spain and France merely seized their colonies' wealth to fund military dominance that never lasts.

France is doing the same thing today by pumping money into domestic industries, but with no more colonial wealth to fund the mercantilism, it hasn't any hope of success (which before was short-lived at best). Chirac has recently made overtures to former French colonies in Africa, fearing that France might lose the trade that it's managed to keep alive since their colonies became independent. But things just aren't the same anymore, right, Jacque? After all, there's no more using the military to take the wealth back home -- France has to actually trade by offering something of value in return.

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