Appearances can be deceiving. I saw an article with a blaring headline that warmed my heart: “France’s Sarkozy Eyes Welfare Rethink, Fraud Clampdown.”
Could it be, I thought, that the political elite finally realized that the welfare state was the wrong model? Had they finally realized, as demonstrated by these cartoons, that it was foolish to bribe more and more people to ride in the wagon while raping and pillaging the shrinking number of taxpayers pulling the wagon?
I remembered that the French increased the retirement age to 62 last year, so perhaps that tiny step was the beginning of broader reforms to shrink the burden of government.
These were the thoughts that flashed through my mind as I clicked on the Reuters story, and the first few sentences got me even more excited.
President Nicolas Sarkozy branded welfare fraud a “betrayal” of national principles on Tuesday and said France needed to rethink the way its benefit system was financed in order to ease the burden on employers. The financing of the welfare system, one of the world’s most generous, has become a hot issue ahead of a presidential election next April due to worries about the health of public finances and a parliamentary report pointing to billions of euros being lost every year because of fraud.
But then my dreams of a French renaissance were dashed on the rocks of reality when I discovered that “welfare fraud” in France occurs when taxpayers don’t pay enough, not when able-bodied people have their snouts in the public trough.
“We must have no tolerance for cheaters and fraudsters,” Sarkozy told supporters in the southeastern city of Bordeaux. “Cheating — and I mean stealing from the social security system — is stealing from each and every one of us, and each and every one of you.” …The parliamentary report, published earlier this year, estimated the French state loses 20 billion euros ($27 billion)per year to welfare fraud, much of it due to employers failing to pay social fees for their workers.
In other words, oppressed French businesses and workers are the welfare cheats. To the French political class, welfare fraud occurs not when undeserving people suck at the public teat, but instead occurs when employers and employees resort to the shadow economy to protect jobs.
So what can we learn from this?
Well, we can safely assume that the great 19th-century French economist Frederic Bastiat is rolling over in his grave. Classical liberalism is not enjoying a rebirth in France.
More important, we can probably conclude that France is past the tipping point of fiscal suicide. If you have any French government bonds, sell them now. If you don’t believe me, look at this graphic from the New York Times.
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Once you get into that state, various vicious cycles kick in. Ask the average Frenchman in the street and you’ll get an answer along the lines:
“Look, here in France the welfare state gives out quite a bit of help and in spite of that things are still tough. Can you imagine what would happen to me if the welfare state were withdrawn? I need more welfare state, not less”.
Who is going to withdraw from the trough first, in exchange to an ascending prosperity path that will start bearing fruit in five years? It’s never going to happen. Hence French decline against a backdrop of three billion people who are ascending in personal freedom is all but guaranteed.
What Americans don’t understand is that once you get past the event horizon on the road to mandatory collectivism things stop being rational. Alas, that point has passed for America too. Save some dramatic event America is already past the point of no return in following France; into a descending spiral of economic distress, triggering ever more flattening of the effort/reward curve.
To illustrate your point, the two successive austerity plans in France have enacted about 25 Bns Euros of new taxes, and less than 2 Bns in spending cuts. Fiscal suicide is an accurate wording.
The humanity……
Just in case anyone is wondering why they have had multiple revolutions and 15 constitutions in the time that we have had just one.
We’re not doing our part in killing off the politicians. Instead we just turn them out and make them work for a living.
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