It Doesn't Add Up: France And The Bonfire Of Good Intentions

Recent developments in France signal a dramatic and troubling disconnect between what western countries say they want and, and the efforts and sacrifices they are willing to make.

France is a rich advanced economy, with relatively low income inequality and a very extensive welfare state. Like most of Europe, it has enjoyed robust growth over the last couple of years, with GDP expanding 2.3% in 2017 (on a par with Germany) and declining unemployment. Per capita income is 10% higher than before the 2009 recession. These are the good days.

Yet a proposed tax increase of 6.5 euro cents per liter on diesel and 4 euro cents per liter on gasoline triggered a month of violent riots.

The media pointed out that France already has the highest tax revenue among the rich OECD nations: in 2017 it edged ahead of Denmark with 46.2%. True, but this is not news: France held the second-highest-taxed nation title since 2011 and its tax revenue ratio has averaged 43% for the last thirty years. This is the economic model the French voters chose and supported for the last several decades—and still do.

We say we want to help the refugees, the immigrants, the world’s poor. We say we want to fight climate change. Close to 750 million people still live below the poverty line—a poor country’s poverty line, less than $1.90 a day. Almost half of the world population—3.4 billion people—“still struggles to meet basic needs”, according to the World Bank, getting by on less than $5.50 a day. And fighting climate change costs money.

We say we want to solve these big problems.

But we also want to keep and expand our welfare state, even as it throttles economic growth. We refuse reforms. We want subsidies, lower taxes, universal basic income.

It doesn’t add up.