July 5, 2022

Finance & Economy

Let's Talk About Investment

Wonking out: France’s economy is having a good pandemic

Table of Contents

The Federal Reserve building in Washington on Sept. 17, 2019. There’s a good chance that in retrospect we’ll view economic management over the past two years of the coronavirus pandemic as a policy triumph, despite the inflation spike, Paul Krugman writes. [T.J. Kirkpatrick/The New York Times]

I have written about America’s surprising success in limiting the economic damage from COVID-19. Compared with expectations and compared with our handling of the 2008 financial crisis, we’ve done remarkably well. But other countries have also done well, in some cases and by some measures better. In fact, among major advanced economies, the star performer of the pandemic era, arguably, is … France.

France? For as long as I can remember, U.S. media coverage of the French economy has been relentlessly negative.

Back in 1997, The New York Times’ Roger Cohen described France as “America’s favorite European basket case” (although he had the good grace to make fun of his own premature pessimism 16 years later). Indeed, in the ’90s we were told that France was too culturally stagnant to keep up with modern technology; another 1997 article was titled “Why the French Hate the Internet.” (France currently has higher broadband penetration than we do.) During the 2010-13 euro crisis, I constantly read assertions that France was next in line to join the afflicted economies of Southern Europe — “France is in Free Fall,” asserted an editor at Fortune.

The data never actually supported this negativism. What was really going on, I believe, was that business and economic discourse in the United States is strongly shaped by conservative ideology — and given that ideology, France, with its huge social expenditure, high taxes and extensive economic regulation, should have been a basket case. So reporting about France seized on every negative development as a sign that the long-awaited disaster was finally arriving.

But it never did show up. Instead, the French economy just kept on plugging along. True, gross domestic product per capita is about a quarter lower in France than it is here. But that mainly reflects a combination of earlier retirement and, above all, shorter working hours — because the French, unlike Americans, actually take vacations. That is, somewhat lower GDP mainly reflects a choice rather than a problem.

And while the French work less than we do, they’re more likely than Americans to be employed during their prime working years. That’s probably not the story you’ve heard; my sense is that many Americans still imagine that France suffers from mass unemployment, a vision that had some truth to it 25 years ago but has long been out of date.

And prime-age employment is where France has done astonishingly well during the pandemic. Many economists use the employed percentage of adults ages 25-54 as a gauge of labor market conditions. This ratio plunged in the United States during the worst of the COVID-19 slump; it has since recovered strongly but is still below pre-pandemic levels, even though other indicators suggest a very tight labor market — one of the divergences that have economists talking about a Great Resignation of workers unwilling or unable to return to the labor force. France, however, not only managed to avoid a huge plunge in employment but has also surpassed its pre-pandemic level.

How did it do that? When the pandemic forced economies into a temporary lockdown, Europe, France included, and the United States took divergent routes toward supporting workers’ incomes. We offered enhanced unemployment benefits; France offered subsidies to employers to keep furloughed workers on the payroll. At this point it seems clear that the European solution was better, because it kept workers connected to their employers and made it easier to bring them back once vaccines were available.

Oh, and while the French have their anti-vaxxers, they don’t have as much political clout as their U.S. counterparts, so the country has done better at getting shots in arms.

France also has universal child care, which reopened relatively early in the pandemic, as did schools — freeing parents, largely mothers, to return to work.

I don’t want to romanticize the French economy or French society, both of which have plenty of problems. And liberals who like to imagine that we could neutralize the anger of the white working class by raising wages and strengthening the social safety net should know that France, whose policies are to the left of U.S. progressives’ wildest dreams, has its own ugly white nationalist movement, albeit not as powerful as ours.

Still, at a time when Republicans denounce as destructive “socialism” any effort to make America less unequal, it’s worth knowing that the economy of France — which isn’t socialist but comes far closer to socialism than anything Democrats might propose — is doing pretty well.

[This article originally appeared in The New York Times.]