France is Falling
It is said that those who do not know history are doomed to repeat it. World War II shed great insight as to what can happen when power is given to the wrong people. This transference of power led to great tragedy and millions upon millions of deaths. Man has promised to never let something like that happen again. Due to the atrocities that took place, man learned valuable lessons and has ceased to travel down that path since. Similar historical lessons can be learned when dealing with our nation's economy. France offers advice to the rest of the world through their strict regulation of the labor market.
The unemployment rate in France has not been seen below 7% for thirty years, and many acclaim this to be the fault of strict regulatory influence over the product and labor market. The cost of labor has been set high in France, and this marks a direct correlation to the lack of competition seen in France. When big firms are forced to pay higher wages that they do not see as fit, they are collaterally forced to cut back their workforce. Yet if there are also restrictions on hiring and firing, firms become absolutely strangled, and competition among firms gradually plateaus. This has helped put France in a perilous economic situation.
France has a number of issues that are degrading its economy other than its restricted labor market. However reform has been just about forced on Mr. Hollande (President of France), and this is only because it is so badly needed. It is important to note what other countries are doing and learn from their successions and failures in addition to our own. Updates will be made on this blog as I follow the upcoming reforms and deregulation to be made to France's labor market. Will it lead to prosperity and growth ala The Airline Deregulation Act of 1978? Time will tell.
*** What are some industries of any country, of any sector, that are regulated and prospering?
No comments:
Post a Comment