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.