President Macron spoke to the French nation today (12/10/18). He apologized a little for his figurative distance from the rank-and-file. Then he tried to buy some off the yellow vests off with other people’s money. The national minimum monthly wage will rise by about US$113; overtime will not be taxed anymore. You are not going to believe the next appeasement measure he announced. I have a hard time believing it myself but I read it and heard it from several sources. President Macron decreed a significant Christmas bonus for public servants and ordered (I think) private employers to follow suite. The bonus will also be tax-free. I have no idea what effects these measures will have. I suspect the weather has more influence on the yellow vests’ behavior.
The movement began, as most Americans know by now, as a protest against a new extra tax on diesel fuel. It was presented a little breathlessly as a way to save the planet. This is significant in several ways. First, it suggests that a large fraction of the French people do not believe in climate change (like me) or do not care about it. Second, it demonstrates that Mr Macron, probably along with the political class in general, have lost touch with much of their electorate for not realizing the these perceptions. Third, it shows sheer incompetence if not cynicism. Any average thinking person in France could have warned Mr Macron that a tax on diesel is one of the most regressive taxes possible. The transport of ordinary goods in France relies largely on diesel-powered trucks. A tax on diesel proportionately (proportionately) hits the poor more than the prosperous. Perhaps the government thought that those affected were too stupid or too passive to protest.
The government has reversed its decision on the diesel tax but it’s too late. It seems to me the diesel tax was simply a case of the straw that broke the camel back. Fifty years ago, the French gave themselves a wonderful cradle-to-grave summer camp. It’s a real good one, I must say, including a sort of winter camp of free ski vacations for children. (Would I make this up?) This was based on the original idea that “the rich” could be taxed into paying for summer camp. (Sounds familiar?) After two generations, the bills are finally coming due. The definition of “the rich” has been going down fast. Indirect (and therefore regressive) taxes are everywhere. The increase in the tax on diesel was just one of the latest.
The providential and fun state has other consequences. The main one is that it is implicitly anti-business. It protects employees almost completely against being laid off. It’s solicitous of their leisure with a 34 hour week and many many vacations and holidays. French governing circles have become used to celebrating GDP growth rates so low they are considered shameful in America. I think it’s rigorously true that in the past twenty years, unemployment has never gone below 8%. It’s normally been closer to 9% and even 10%. It’s 20% if you are young. I am guessing (guessing) that it’s 40% and up if you are young and your name is Mohammed.
There is worse. In a pattern that will seem familiar to many Americans, there is a big well-being divide between the capital, Paris proper, and the rest of France. Parisians live in a low-density city with good public transport and many employment opportunities. Housing prices and rents are high in Paris, as you might expect. In nearly all of the rest of France, there are few jobs, spotty services. (I am told it’s not uncommon to have to drive 2 hours each way to consult a specialist); hospitals are good but far and few. Many of those charming villages you see from the freeway have not had schools for many years. Housing in the hinterland is cheap. Of course, this is enough to cause people of low means to be stuck where they are.
It’s difficult for foreign reporters to understand the yellow vests movement, for a small reason and for a big one. First, it does seem to be originally a genuine grassroot movement. Accordingly, it has no leaders and not authorized spokespersons. Second, and much more importantly, in my lifetime the very conceptual vocabulary of market economies has vanished from the public discourse. The yellow vests interviewed on television do not know how to express what hurts them. When ordinary French men and women, and what passes for their intellectual elites, discuss, or even think, about economic problems the only tools they have at their disposal is the pseudo-Marxist vocabulary of those who got their Marxism from Cliff Notes (if that). I think there is only one small French group (on Facebook) that is able to evade this conceptual tyranny. In France, thinking in terms of vaguely socialist terms has ceased to be a choice. It’s now a monolithic social and intellectual reality.
I don’t see how even a more determined and more talented political leader than Mr Macron can tell the great mass of the French people: Summer camp is over; everybody go home and learn to make do with less free stuff. Then, re-learn work.
With all this, France is a functioning democracy. The French elected Macron after six years of disastrous “Socialist” Party rule. Perhaps, as has been the case before, the French people -with their historical inability to reform- will be the canary in the mine for everyone else: The big generous state based on taxation is bad for you or for your children. Just ask the French.