Sunday, March 20, 2011

On the Nature and Future of Government.

One of the most significant differences between France and the U.S. is the view of GOVERNMENT.

In fact, the difference of meaning of the word 'government' itself is very telling : in French the word "gouvernement" usually refers to the group of ministers and is closer to the American use of the word "administration" (le gouvernement Sarkozy Vs. the Obama administration) whereas the French use "l'état" to refer to the role of the administrative state. (The French usage is actually etymologically closer to the Greek meanig of 'govern': "to steer or pilot a ship, direct".).
But if you want to have any conversation with a French person on the "role of government" this will not suffice. There is the official meaning of the word and then there is its trickier cultural meaning.

The meaning of the word “état” in France is so particular that it doesn’t translate. It defines the country and is at the core of its identity. “L’état” has not only guaranteed stability and common good (a very important concept in France) in the last few centuries in France, but it actually created modern France out of a much divided culture (For instance, the northern langue d'oil was enforced over the langue d'oc by "l'état".)
Most countries favored federalism to accommodate the populations, but the French solution was centralization. It is thus part of the French identity and it is a concept entirely alien to Americans (and to most non-French people).

This may partly explain why government spending is such a delicate topic in France and why the French are very depressed about the current climate which calls for a diminishing role of government because of financial pressure. They feel that it is not just their way of life that's under attack but their very identity
This may also partly explain why government spending has also been constantly a greater percentage of the GDP in France than in most other nations, and definitely more than in the United-States :

On the other hand, if you look at government spending PER PERSON, you get a different picture :
This week's Economist has a special reports called "Taming Leviathan" - a metaphor that would hardly be used in a French magazine. Their main argument is that the "monstrous" state must and can be made more efficient. The problem with of a "debate about the nature of government" is that it is culturally biased - whether you are French, Chinese or American, your view will be tainted by your cultural and social-economic background.

As always with The Economist, they have some excellent points - one of which is that "the state’s growth has been encouraged by the right as well as the left, by favour-seeking companies as well as public-sector unions, by voters as well as bureaucrats.".
I would ad that despite right-wing propaganda, the increase in government spending is the result of leftist politicians - "in America a Republican, George Bush, pushed up spending more than any president since Lyndon Johnson". Where was the Tea Party then?
[Interesting point as well about the Tea-Party is that despite their radical rhetoric, "their first budget proposal did not touch defence or the [even] three great entitlement programmes, Medicare, Medicaid and Social Security".]

The same is true in Europe - those on the left want more spending for health and safety, while those on the right want more spending for the war on drugs, crime and closed-circuit cameras. So the "monster' is really a creature of both the right and the left, and of popular demand:

Globalisation, for instance, has increased many people’s reliance on the state: greater job insecurity among the middle classes has increased the calls for bigger safety nets, and the greater inequality that comes with bigger markets has made voters keener on redistribution. Or look at the threat of terrorism, to which the knee-jerk response on America’s right was to build up the government in Washington.

On of my disagreements with their analysis is their assumption that "with a few small exceptions, government [productivity] lags behind the private sector". This may be true, but hard to prove because there is no way to precisely measure productivity.
How do you measure the productivity of nurse, a cop or a teacher? Good luck with that.
(Education being what I know best, I have written a few posts on the topic)

Another way to look at it, is to see well the social transfers work. For instance, the cost of social transfers in France is 19% of GDP and 16% of GDP in the U.S. yet The Economist fails to look at the "efficiency" of those social transfers.
One indication is INCOME INEQUALITY and a comparison between France and the U.S. can be useful.

OECD Source here and here.
- The average income of the richest 10% is the highest level in the OECD whereas the poorest 10% of the US citizens have an income about 20% lower than the average for OECD countries.

- The richest 10% of the French population has an income about the same as the OECD average. Similarly, the middle class have an income level similar to the OECD average whereas the poorest 10% of the French population have an income about 25% higher than the average for OECD countries.

To be fair, there are signs that things may be changing for the worse in France; Particularly worrisome is the increased inequality in French education (see here for instance).

This being said, I agree that government spending cannot increase especially under the pressure of abysmal deficits. (Look at Greece for a scary illustration!)

The Economist ends its reports on possible solutions that may be interesting for further debate :
  • improving management by using technology (the Internet can a great tool that works well for the administrative processes)
  • making government accountable at the local level (and yes, public services may work better at city level)
  • simplifying the tax code. (Good luck with that one!)
  • less power for vested interests (what the French call "privileges" of particular groups)
  • redirecting social programs at the truly needy.
  • too many regulations (maybe so when it comes to, say, European chesses, but not necessarily true when it comes to the banking industry)
  • getting rid of some industrial and agricultural subsidies.(I would partly agree - I would add that the role of government should be more focused the essential functions of government such as education, defense, police, justice, health...)
  • and I would add one more thing - stopping the tax-cuts for the richest in America (the Bush tax-cuts are "the single largest cause of America's structural deficit", but surprisingly -or conveniently- The Economist seems to forget about it.)
What is certain is that people want to have their cake and eat it too - thanks to its ballot initiative, California is the closest thing to direct democracy and the result is that "they have made government worse, protecting bits of spending yet refusing to pay for it." (see article here). Unfortunately I am afraid this may be a universal truth and that deep down WE MAY ALL BE CALIFORNIAN.
In this respect it would be nice to have some good political leadership for a change with politicians with guts and with voters willing to hear the truth.

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