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17 February 2008

The French and the US - social security vs. efficiency?

Due to the political makeup of my extended family, the fact that many of them are French or live in France and our collective passion for politics, I often find myself debating the positives (or otherwise) of the American and European styles of social security.

Long before Michael Moore's famous comparison between the French health care system and the American - the French welfare system was the whipping boy of pro-American style economies. After all, the Americans love to hate the French, so they have to find a way of diminishing their, otherwise apparent, achievements.

Basic claims, from defenders of the American welfare system, range from "But everyone knows the Europeans can't afford their welfare system" to "but you know the French are going broke don't you". I was on the lookout, recently, for statistics and/or information from reputable sources that would refute such assumptions, without simply saying "go on, prove it".

So, I was very happy to hear this quote, today on Radio National, from Princeton Professor of Economics, Paul Krugman:

"So we say, Well, American equality is essential to our productivity, and then you compare it with France, which has much less and is much more generous a social welfare state, and it turns out that the French problem is they screwed up their retirement policy. It's not something cosmic , it's not a basic fundamental flaw of trying to have a more equal society. And they have health care, that is as good as or better than ours, and it covers everybody at 65% of the cost of the US system. In many ways they do better, but of course everybody knows that we're at the cutting edge of technology. So just look at the future, except it ain't true. Turns out that broadband is now more widely available and faster in France than it is in the United States. We're actually losing that edge too. So the whole notion that the US have done so wonderfully and that justifies all of the brutality of our society, is just based on ignorance.

I think a lot of political rhetoric in the United States depends on the notion that Americans have no idea what life is actually like in other countries."

Well! What else can I say? There it is, from a Princeton Professor of Economics none-the-less.

He has a lot of other very interesting points to make about the death of the middle class since the 1970s. The only point I disagree with him on is - he says the phenomenon is "unique to the United States" and that "the closest thing you can see this unequalisation that's taken place in the United States is in Britain during the Thatcher years". I would like to invite professor Krugman to investigate the progress of wealth distribution across Australia, over the last decade, and ask him if he can see the same process here as well.

Before I let this one go, there's one other quote from him that I would like to point out:

"... prime age working years in France, 25-54; 80% of French adults between the age of 25 and 54 are working, which is exactly the same as the United States. So if your vision is that there are huge numbers of unemployed French people, with no employment for middle-aged French people and with no job prospects, it's just not true. They're exactly as likely to be working as we are."

For a full transcript of his whole talk on how the New Deal society has been dismantled in America, and the reasons for it, see here - or for the full audio, see here.

Don't believe the hype.

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