The Free Market 18, no. 1 (January 2000)
Jean-Claude Castex is surrounded by miracles, or at least the quest for miracles. As the official feutier, or tender of religious candles, at Lourdes, the spot in France where the Virgin Mary appeared in a grotto to a poor miller’s daughter in the nineteenth century, Castex sees, on average, some 14,000 pilgrims heading his way each day.
And now, on top of that, Castex is lucky enough to find himself on the receiving end of yet another miracle, this one more economic: a law passed by the socialist-led government in France that guarantees him less hours on the job with no cut in pay, an idea that he sees as nothing short of divine.
“We used to work 39 hours a week,” Castex explained to the Los Angeles Times. “Now we will work 34. I love walking in the mountains and hunting for mushrooms.” Francis Dehaine, the manager of the $22.5 million budget at Lourdes, also sees nothing but good coming from the new law. “The more we reduced the time worked, the better the assistance we could give our visitors,” he says. “We’ve been able to hire 32 more people.” As a footnote, the new law doesn’t apply to priests; at Lourdes, they work 45 hours a week, saying four Masses a day. What’s behind this new less-work-for-the-same-pay legislation is the 11.4 percent unemployment rate in France, a jobless rate that’s been steadily expanded by the piling on of excessive labor regulations, government-mandated benefits and overblown taxation. The miracle here, if we’re to believe the French socialists, is that an unemployment crisis that’s been caused by too many government regulations will now be solved by yet another regulation.
The problem, of course, is that while less work for the same pay sounds wonderful, it’s most likely to simply produce higher labor costs per unit, more inflation, less competitiveness in the international market and even higher levels of unemployment. What the French socialists are attempting to do is repeal the Law of Demand, the elementary principle from Economics 101 that says we generally buy less of something when the price goes up. In effect, with this share-the-work scheme to cut unemployment, the French bureaucrats are saying that employers will hire more workers as their price is increased. It’s like telling GM that they’ll sell more cars if they just jack up their prices.
To sweeten the package for French companies, the socialists in government are dishing out some big subsidies to the nation’s capitalist employers, something not unlike Pittsburgh’s current model for economic development. Nouvelles Frontieres, a small company that organizes vacation packages, is getting a $2 million gift from the French taxpayers. The president of the company, Jacques Maillot, while only too happy to pocket his fair share of corporate welfare, condemns the law as “idiotic and useless.” On its own, he says, Nouvelles Frontieres would have created the 104 new jobs that he’s now being rewarded for. At Lourdes, a $670,000 government check will help cover the cost of Castex’s replacement while he’s off collecting mushrooms. “The cost of the new hires at Lourdes is more or less going to be compensated for by the aid I get from the state,” says Dehaine.
Not everyone, of course, is 100 percent happy with the new law. At Renault’s Cleon factory, the communist-aligned CGT union ordered a strike because management, in order to meet production requirements under the new mandate, wanted employees to work eight Saturdays a year. Others see Big Brother running out of control. A new squad of government labor inspectors, to insure full compliance, is being sent out to workplaces to make sure no one is spending too much time on the job. Last month, the top executive of a company that makes military radar equipment was found guilty and fined for encouraging managers to put in overtime. Others see the likelihood of less take-home pay. The government, previously promising the 35-hour week wouldn’t mean new taxes, has now announced that, in part to compensate for business subsidies, it will have to raise more than $5 billion in new revenue next year. Special levies on excess profits and on industries that pollute are being considered.
There’s growing concern, too, that the government is weakening France’s competitive position in Europe. “This is a decision of a political nature that deliberately ignores economic realities,” charges Bernard Boisson, counselor at the Movement of French Enterprises, the country’s main Paris-based business lobby. “It’s even graver, we think, because France is the only country to put this program in place, with no other European country doing likewise.” Patrick Artus, research director at the Caisse des Depots et Consignations, a government-affiliated investment institution, believes the socialists’ legislation is foolhardy and could produce a supreme irony: the net loss of up to 200,000 jobs.
The lesson? It takes divine intervention to make a miracle; government intervention just makes a mess of things.
Ralph R. Reiland teaches economics at Robert Morris College.
