The second "
Nearly a laugh, but really a cry" award goes to the French rioters from this past week or so: students initially, now joined by labor union members, and others on strike.
Background: French Prime Minister Dominique de Villepin recently pushed through a new piece of legislation, the Contract for First Employment (CPE), which would let companies dismiss workers under 26 without cause during their first two years on the job. The idea is that this law is giving employers an incentive to take chances on young employees, since if they are bums or if the business is facing tough times, they can layoff such workers. This is an important reform because overall unemployment in France is nearly 10% (for comparison, about twice that of the US), but unemployment for younger workers is 23%. With less risk in hiring them, businesses will tend to hire more young workers.
To simplify the analysis... Assuming that the number of workers hired who wouldn't have otherwise been hired is greater than the number fired who wouldn't have otherwise been fired, then the unemployment rate will go down -- both overall and for the younger workers. Further, the economy will grow (a little faster than otherwise) because more people are actually working, producing value, rather than relying on the welfare state.
So why the protests? Union and student leaders say it will create a generation of "throwaway workers". Another line I saw from multiple sources was "Critics feel it will eat into job protections and leave youths even more vulnerable." And then there is this beauty from
Bloomberg:
"The CPE puts the young in a discriminatory position in regards to the rest of the workforce," said Lorette Dubois, 17, a student at the Lycee Condorcet high school, near Paris's Gare Saint Lazare station. "You can't get a house, start a family, buy a car. You could be fired at any moment. It's humiliating."
And then there was this, also from the Bloomberg piece:
"The stubbornness of Dominique de Villepin is very worrying for our country," former Socialist Finance Minister Dominique Strauss-Kahn said on LCI television today. "He must scrap his plan and start from scratch with what the Socialists are proposing, that is vocational training and a policy promoting economic
growth."
My view: When this story first broke, with just the students rioting, my first reaction was "Yawn... the French are rioting again. It must be [fill in any day of the week]." And indeed, many TV and online reports on these most recent riots did note the "culture of protest" that the French are kinda proud of in an odd way. But when it went beyond middle-class students protesting to include rioting, and when the unions and people in various professions joined in by going on strike, it became a bit more interesting to me.
First, the quotes above... "throwaway workers"? Huh? Employers in the US don't create generations of throwaway workers. This makes no sense: it is costly to hire and train someone - very costly. Once you do, you hope they will be productive, innovative employees. It is only with regret that you must let them go -- typically because either they aren't doing a good job or because the business as a whole isn't doing well and needs to downsize to cut costs.
And the paranoid 17-year old: "You can't get a house, start a family, buy a car. You could be fired at any moment. It's humiliating." Really? Millions of Americans live with the reality of at-will employment, where they could let go pretty much at any time. I'm one of them. It is incentive to work hard, be productive, think of new ideas, help your colleagues, and do your part to see that your business succeeds. I have a house, a car, etc. Millions like me have those things and have families too. "Humiliating"? Hardly. Rather, its a matter of not demanding the unearned. We don't have a right to a job. Period.
And the Socialist leader proposing vocational training -- how will that help? Does France suffer a shortage of skilled labor to meet the demands of a thriving economy, with employers desperate to fill open positions? If so, then vocational training might help...but I haven't heard that in the recent stories. On the contrary, I've heard employers need to have the risks of hiring new employees lowered, especially people with a lack of a proven work record -- like young people and immigrants, and most of all, young immigrants. And this law would do exactly that.
And a Socialist with "a policy promoting economic growth"... that is just too easy. Must... resist... urge... to state the obvious.
For some good analyses of this, see entries by the esteemed judge Richard Posner and the nobel-prize winning economist Gary Becker. For more commentary, see Thomas Sowell. Basically, the simplified story seems to be this:
- In October and November, France had massive riots, by mostly second-generation immigrant youths. The reasons were complicated, but one included massive unemployment (I think I read something like 40%).
- The French PM pushes this legislation to try and help the unemployment for youths in general in France.
- The middle-class, well-educated youths (esp. those about to graduate from college and enter the workforce) were likely going to get jobs anyway. In France, if you get a job, then you are unlikely to lose it. So these folks like this arrangement.
- The people least likely to get jobs -- immigrant youths and others with relatively little education or prospects -- are clearly helped by this law, since the risk in giving them a try as workers is lessened. They weren't likely to be hired anyway, so the fear of being let go within two years is of little concern. So this is why they don't seem to be the primary demonstrators/rioters this time around.
- The unionists and other demonstrators/rioters come into the picture because they see the slippery slope: if you can let young people go within 2 years of being hired, and this lowers unemployment for that group (which it of course will), then there will be a push to incrementally broaden the scope of this reform to lower the overall unemployment for the country, to improve GDP, and to do all the other wonderful things that free-market capitalism can provide. But they are scared of the change that this would mean: some people would get let go and, at least for a while, be looking for new work.
One other gem here was that in response to the PM's invitation to discuss the matter, most major unions want the measure withdrawn before any talks begin. A little cart-before-the-horse action tossed into the mix. Gotta love it.
This is all deserving of my "Nearly a laugh, but really a cry" award because the proposed law is so minor a change, so minor a step in the right direction, it is laughable. The fact that students will not only demonstrate against this, but actually resort to violence, and that others around the country will go on strike, rather than take this very mild economic medicine to slightly improve their sick economy... it is really sad to see (but not particularly surprising, I must admit). And these college student rioters -- these are the ones who are about to graduate? Apparently Econ 101 is not a required course over there.
And lastly... how does this rioting against a reform that will help those who need it most -- those who don't have a job and don't have good chances to get a job (the uneducated, immigrants, et al.) -- how does this square with the standard "progressive" views of the left? Helping the poor, the "underpriveledged", and so on? If there was a font for indicating a rhetorical question, I would have used it for the these last two.
Labels: economics, international
