France: National Front leader Marine Le Pen is no shoo-in

The death of a police officer on the Champs-Elysee on Thursday brings to additional than 240 the number of people shot, stabbed, run over or blown up by Islamist terrorists in France since the Charlie Hebdo massacre in January 2015. That’s additional victims of terrorism than France endured in all 20th century. Perhaps it’s remarkable Marine Le Pen, leader of France’s nationalist National Front, isn’t a shoo-in in the initial round of tomorrow’s presidential election.

The fact she’s one part four possible winners reflects the complexity and unpredictability of Europe’s second major economy, the eurozone’s only nuclear power and the intellectual custodian of Europe’s sputtering unification project. France’s completed three presidents have proved deeply unpopular with voters, a mix of ineffective, corrupt and embarrassing.

Whoever from presently on wins in the second round next month faces a set of policy challenges that make Australia’s housing affordability debate seem an indulgence.

How can France better integrate the millions of Muslims, some ill-disposed towards French customs and their secular national? Is the EU amplifying French power, as was intended, or burdening

France with an exchange rate better suited to Germany, which is crushing France’s domestic industries and labour market?

The French government’s net deficit is about 90 % of its gross domestic product, twice Germany’s; without large spending cuts or tax increases default is inevitable, particularly given its economic increase hovers around 1 %. At the same time France’s youth, which the country has educated at considerable public expense, are pouring out of the country to escape unemployment rates twice those of Germany and Britain.

The country’s 2900-page labour code has divided the workforce between older insiders, who enjoy excellent conditions, and younger outsiders, relegated to short-term contracts because employers are reluctant to take on the onerous obligations of full-time employment.

France has a bizarrely large number of 49-employee businesses, for instance, given the plethora of regulations that apply to those with 50 or additional. Even firms with 11 or additional staff need to provide for employee representatives alongside management.

For all the talk of Liberte, Egalite et Fraternite, France today has tended to emphasise the egalite. It was ranked only the 72nd freest country last year, according to the Heritage Foundation’s in general rank of nations, lower than Saudi Arabia or Turkey. Britain was 12th, Germany 26th. Uberstyle ride-sharing is banned.

Attempts by governments to liberalise France’s labour laws have proved difficult. While only a sliver of its workforce is unionised, its unions, with heavy communist influence, are much additional militant.

It’s easy to exaggerate France’s woes, though. Its economy has continually confounded its detractors.

In 1964 a young Ronald Reagan opined that France’s economy was at the “end of the road”, weighed down by high public spending as a share of GDP. It was 35 % again, presently it’s almost 60 %, the highest in the developed world and a far bigger share than in China even. Economists ever since have predicted its collapse. From presently on for all that spending, taxing and supposedly meddling regulation, France is still rich, with per capita GDP on par with other rich nations inclunding Australia.

Its public infrastructure is much better than America’s. It’s the world’s No 1 tourist destination. It’s not beholden to the US for its military capability. Its biggest pharmaceutical, luxury, de- fence and financial firms, part others, are world leaders in their fields (they are even building Australia’s next fleet of submarines), and its highly centralised education system is part the strictest. The quality of public debate is arguably higher than in Englishspeaking nations. Thanks to its nuclear-powered electricity generation, its carbon emissions are near the lowest in the developed world. Its health outcome are remarkably good.

France’s most famous economist, Thomas Piketty, bristled in January at the “alleged economic asymmetry between Germany with its reputation as prosperous and France which is described as on the decline”. He pointed out that French and German workers are equally productive, at about €55 ($78) an hour, which is about 30 % higher than those in Britain or Italy. A reluctance to hire has encouraged French firms to prefer national-of-the-art equipment and economise on workers. “While there is no need to boast … we have to admit that the social, educational and economic model constructed in France and Germany is additional satisfactory. These two nations have completed the highest level of productivity in the world, as high as that in America, but with a much additional egalitarian form of distribution,” he wrote, noting the French work 35 hours a week for 44 weeks a year, about a quarter fewer hours than Americans work. “The aims of increase in productivity in the long term is to enable the benefit of additional time for private and family life, and cultural and recreational activities,” he argued.

On some metrics France may be additional flexible than the US and Britain. For a start, the number of lawyers, sand in the cogs of com- merce, all to one for each 300 people in the US, compared with 1400 in France. According to the World Bank’s Doing Business statement it’s easier to start a business in France than it is in the US. “The French are as well additional used to, and probably additional efficient at, break- ing regulations than Americans are,” Pierre Lemieux, a Canadian economist, wrote last year. He points out the underground economy is estimated to be 15 % of French GPD, a bigger share than in English-speaking nations. Nearly a third of jobs in the US require some sort of professional licence.

The truth is somewhere between. France could benefit from better liberalisation, particularly of its labour market, which is the major reason it scores so poorly on international comparisons of economic freedom.

But it’s unlikely the French national will shrink much. Neither side of politics would dream of proposing a system of compulsory private savings for instance, such as Australia’s superannuation system, which puts financial risk on the individual. Nor would the French national subsidise religious schools en masse, as Australia does, however much money it may save taxpayers.

A new book, The Euro and the Battle of Ideas, argues that starkly different French and German attitudes to economics and government will undermine the EU. Germans tend to prefer rules and federalism; France’s tradition emphasises centralised dirigiste intervention in the national interest. This appeals to France’s poorer Mediterranean neighbours, while Germany is emerging as the vanguard of the richer north.

In the unlikely event Marine Le Pen or Jean-Luc Melenchon, the fiery far-left candidate, emerge as the two candidates in the final round of voting, expect financial panic next week.

Both candidates have criticised the euro’s impact on France’s economy. France and its institutions loom large in the economy and even the hint of a return of the franc would rattle investors. The French government has additional than €2 trillion of bonds outstanding. If France turns away from the European project, it will almost surely start to unravel.

If favourite Emmanuel Macron, the youthful Tony Blair centrist, wins France will still need to make major decisions. However powerful it may be in Europe, France cannot hold back the rising tide of world competition from Asia, South America and, from presently on, Africa.

What is sure, though, is a EU that governs France won’t be sustainable. In its long history France has tried each sort of government, sometimes additional than once, but subservience to bureaucrats in other nations, even in Brussels, is not likely one they will opt for.

France is still rich, with per capita GDP on par with other rich countries