The "French Model" (2) : the Downside...
- More endemic unemployment
A generally disappointing macroeconomic performance, with low growth and high
One reason why French workers are more productive per hour than Americans is that firms employ so few of them. Many make widespread use of rotating interns and temps. France’s jobless rate (8.6%) may now be the same as America’s (8.5%). But, unlike America’s, it never falls much below 8% even in good times.
The Colbertist engineering culture is on the whole much better at devising and managing big planned projects than it is at dealing with bottom-up ideas and uncertain markets. France lacks start-ups, and its small firms have difficulty growing.
In reality, France has two-tier higher education: its world-class grandes écoles cater to a tiny elite, and its broadly second-rate universities fail the masses. Tuition at universities is free. There is no undergraduate selection at entry.
As for the state as regulator, it may have protected the French economy from extreme volatility, but that goes for the upside too.
A more stable economy in a recession also means a less dynamic, less innovative economy in good times. For all its positive elements, the French model has not yet not incorporated enough flexibility, leaving it with the task of ensuring solidarity, but not the dynamic growth needed to sustain it in the long run.