Dear Colleague:

Infertile France will soon learn that protests won't fund government
services.

Steven W. Mosher
President

PRI Weekly Briefing
28 April 2006
Vol. 8 / No. 17


Sustainability of the French Social Model
By Joseph A. D'Agostino


Environmentalists like to talk about sustainability, the conduction of
agriculture and other activities so they may continue generation after
generation, without destroying the resources on which they depend.  A
farming method that exhausts the soil over 25 years, rendering the land
sterile for future generations, is irresponsible, they say.  Though much
of what environmentalists claim is unsustainable actually isn't, the
central point is a valid one for anyone who cares deeply about the future
of his community, his nation, and mankind itself.  Just as man can now
destroy global civilization in 20 minutes via nuclear holocaust, he can
now destroy global civilization via other, more insidious methods.

One such method is one generation's refusal to create the next.  Current
Western people are destroying Western Civilization by having fewer
children than necessary to replace the population.  It's funny how much
thought, press, and attention are paid to hypothetical methods of
destruction of our civilization-terrorism, epidemic, nuclear war, global
warming-but so little paid to one that is actually and indisputably
happening.  No demographer claims the Western birthrate is not below
replacement level.  And few people believe that most immigrant families in
Europe are assimilating well.

Such an important self-destructive trend requires adjustment.  Social
models built on the supposition that the ratio of workers to retirees will
remain constant must be readjusted when it is learned that instead, fewer
workers will have to support far more retirees.  Our own projected $80
trillion debt for Social Security and Medicare is due in large part to
this change.  Western Europe and Japan are much worse off than we are, yet
have hardly begun to make adjustments for their aging futures-just like
America.

Just as President Bush's call for desperately-needed Social Security
reform went unheeded last year, French Prime Minister Dominique de
Villepin's call earlier this year for the first major reform of France's
labor laws in decades fell on deaf ears, or rather fell on angry ears.
Students and others took to the streets, shutting down large sections of
cities and disrupting daily life for millions of French citizens.  De
Villepin, after initially swearing to pass some version of his reform
proposal, gave in to mob rule.

What got the young people so upset?  A proposal to allow employers to fire
workers under 26 years old up to two years after they are first hired.
The proposal's supporters believed that a probationary period for new
workers would encourage employers to hire more young people, whose
unemployment rate is almost 25% in France (overall unemployment is at
almost 10%, not too great either).  Rioting Muslim youths last year may
have prompted De Villepin to act.  In some immigrant areas, the
unemployment rate for young people is 50%, and French employers are
especially reluctant to hire those of foreign extraction under current
French labor law, which make firing anyone very difficult.

The young people protesting De Villepin's idea could see the writing on
the wall: They were expected to pay for the social benefits enjoyed by
their parents and grandparents without receiving these benefits
themselves.  They knew De Villepin's labor market reform was just the
beginning.  They are like the young men Churchill saw protesting for
pacifism before World War II.  "Poor boys," he said.  "They are going to
die."

England's pacifists could not intimidate Hitler out of starting his war,
and France's protesters cannot produce the many billions of francs-euros
now--it would take to preserve the vaunted French social model for
themselves.  The French social model is going to die.

In 2004, the comprehensive French social security system's deficit hit
Euro 13.2 billion (about $16.7 billion in today's dollars), and all four
divisions of the system lost money for the first time since its creation
in 1945.  France, like most nations in Western Europe, has all kinds of
protections for her people, from lots of welfare for the able-bodied
unemployed to socialist health care to generous pensions, not to mention a
legally mandated minimum of five weeks of vacation a year and a 35-hour
workweek.  The retirement age is 60.  This massive nanny state cannot
survive the coming demographic winter, even though an exceptionally large
number of immigrants has raised France's fertility rate tremendously.

According to the United Nations Population Division (UNDP), the proportion
of Frenchmen over 60 (retirement age) will go from 21% today to 33% in
2050.  That means more than a 50% jump in the already enormous and
deficit-provoking cost of taking care of French retirees.  At the same
time, those just entering or about to enter the workforce (those aged
15-24) will decline from 12.7% of the population to 11%--even with all the
Muslim immigrants.  France's birthrate is about 1.8 children per woman,
below the replacement rate of 2.1.  Subtracting the fecundity of
immigrants, France's birthrate would be only around 1.2, the same as in
Italy and Spain.

Of course, much could be done to improve the stability of the French
social system.  The retirement age could be raised to 70.  Welfare for the
able-bodied could be cut.  Health care could be privatized while
maintaining universal coverage through government subsidies.  Vacation
time could be reduced.  And more taxpayers could be created by decreasing
the 25% youth unemployment rate, thus lessening the French debt load now
so that more money can be borrowed later when it's really needed.

But far from preparing for the coming crunch, the French government can't
even loosen up the labor market just a little.  Even American federal
bureaucrats don't get tenure until three years into the job.  And public
debt in France has been on the steady increase for years, rather than
decreasing during these relatively fat years in anticipation of lean ones
(sound familiar?).  The New York Times reported March 28, "'It is a
collective failure of the French system,' said Louis Chauvel, a
sociologist who studies generational change.  'You earn more doing nothing
in retirement at the age of 60 to 65 than working full-time at the age of
35.  And we have organized society so there is no room for new entrants.'"

France will need lots of new entrants soon.  Immigrants aren't working
out.  Instead, they proclaim their hatred for their adoptive country.
There is another solution: The French could start having lots of children,
who would then enter the workforce in 20 years or so-about when the big
crunch will come.

It's that, or the end of the French's beloved social model.  You can't
live on borrowed time forever.  It's not sustainable.


Joseph A. D'Agostino is Vice President for Communications at the
Population Research Institute.


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