NCPA - National Center for Policy Analysis


November 14, 2005

France's big state mentality clearly creates and worsens many of the conditions that have led to the kind of social desperation we're seeing in Paris, says Johnny Munkhammer, director of Timbro, an economic think tank based in Sweden.

A regulated labor market creates unemployment, says Munkhammer:

  • Those without jobs do not feel secure, but neither do those with jobs; they know how hard it would be to find another one.
  • The young people in Western Europe -- often with many years of education -- can't find work and lose the hope for the future.

The high taxes required to support the model do not simply reduce people's opportunities to run their own lives, they also put a brake on growth, he explains:

  • Economic activity is low and living standards stagnant; and in several places they are deteriorating.
  • Small businesses must pay high taxes and are extremely regulated, so that way to a better life is also shut for many.

The anti-social effects of the model hit immigrants harder, he says:

  • Regulated housing markets produce ghetto-like suburbs.
  • Since hiring always involves a risk for the employer, a regulated and unionized labor market excludes immigrants; they are deprived of their opportunities to compete.

Reforms that take France away from this model could solve much. With low taxes, a free labor market and fewer regulations for companies, the situation could change. France could have new jobs and increased prosperity. And it could give immigrants the chance to integrate into society and work, says Munkhammer.

Source: Johnny Munkhammer, "Burn, Social Model, Burn," Tech Central Station, November 11, 2005.

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