French Lessons

31^st March 2006

The Malta Independent - Friday Wisdom

France is a nation afraid and divided. What has been hidden underneath the surface for several decades suddenly erupted in near volcanic terms over the last 12 months. This is forcing on the French to conduct a painful soul searching exercise to discover their identity whilst learning to live with their divisions.

Until very recently France was a champion of European integration project called EU that it tended to dominate through cosy entendre with the Germans. Their enthusiasm for the EU started to wane as the mega enlargement of 2004 towards the eastern and southern boundaries of Europe has effectively shifted the balance of power in a way that the French feel no longer in control. President Chirac’s admonition to the new Eastern States that in the run-up to the Iraq war they lost a golden opportunity to remain silent is symbolic of the French frustration at dilution of their control inside the EU.

Contradictions are challenging the French identity. How can they remain a champion of the EU if they reject through a referendum the Constitutional Treaty needed to maintain efficiency in an enlarged EU? How can they pretend to compete and win in the globalisation challenge if its traditional identity remains invested in the authority of the State that continues to use all the tricks in the book to prohibit foreign interests from acquiring French companies as was the case with Sanofi, Gas de France, Danone etc.?

These contradictions are not only restricted to France’s external relations but are also evident internally. French society continues to resist change whenever their government takes comparatively modest steps to change the status quo that is making the country inflexible and uncompetitive. French farmers occasionally take to the street whenever their gravy train from EU funding is challenged. Immigrant communities protest violently for feeling discriminated by the mainstream of society. And now students are emulating their 1968 predecessors in protesting against loosening of employment protection for young people aimed to promote easier hiring and firing mechanism to reduce the high unemployment amongst the under 26.

If we are to take any lessons from the French we need to admit that we also harbour the same divisions that at some stage could explode. We have the same divisions between the post-war baby boomers, reasonably prosperous with secure health and pension rights, and the younger generation who is being told that we cannot afford the same benefits that their parents awarded themselves.

We have the same divisions in our employment sector between those cosseted in public sector employments with solid job guarantees and grossly out-dated work practices and those employed in the private sector who have to compete against forces of global competition and be exposed to job losses without proper compensation in spite of efficiency levels well exceeding those prevailing in the public sector.

We also have divisions of our own that are getting more and more serious by the day. Those who work hard for their money and earn it to the last drop of their blood through hard work and dedication have to pay a fiscal contribution quickly reaching a maximum of 35cents for every additional lira of earning. Those who enjoy unearned income through their wealth at worst pay a withholding rate of 15 cents per lira but very often get away with tax free substantial earnings on stock exchange capital gains where quick millions are being made every week.

On this national day, being the 27^th anniversary of the closure of the military base, it is proper to reflect what sort of society we want to leave as a legacy for our children. When we closed the military base we pledged to earn our own living by being competitive in the world without relying on our defence values.

This pledge can only be sustained if we maintain and up-grade our competitiveness. We cannot do this the French way by trying to preserve the status quo. The French have the muscle to do it for some time although in the end the French government efforts to close the door on globalisation will be as futile as those of the students on the streets. We do not even have such muscle. When the French go against the rules they are tolerated and occasionally they even try to re-write the rules their way as in case of the monetary union. When we break the rules rest assured we will have the book thrown at us.

French lessons suggest that the best legacy we can leave to our children is not money in the bank, out-priced property or equity values that could well be transferring wealth from future generation to current consumption if ever the price bubble explodes; the best legacy is a vibrant competitive economy that excels on its natural and developed competences.

This cannot be achieved if we continue to build a society of divisions where energies are wasted in guarding what some have against intrusion by those who don’t have.