After 20 years of band-aid solutions, the root causes of France’s problems will have to be addressed

In many areas, successive French governments have chosen band-aid solutions rather than actually dealing with the country’s problems. France is now running out of available band-aid solutions and will have to move on to real cures. We show that this concerns: The deterioration in the structure of jobs, due in particular to the decline in manufacturing employment. Rather than trying to restore industry and prevent a decline in the quality of jobs, the choice was made to lower unskilled labour costs to make it easier to turn skilled (manufacturing) jobs into low-skilled jobs and thus prevent an increase in unemployment; France’s abnormally low employment rate relative to other countries, with all the resulting consequences for the income level and tax revenues. Rather than conducting policies to lift the employment rate (increase in skills, tax reform), the choice was made to prop up income through public transfer payments; France’s acceptance of very high income inequality before redistributive policies. Rather than conducting policies that would reduce inequality (reform of the education and vocational training systems, raising the quality of jobs), the choice was made to reduce income inequality after redistribution, through large-scale redistributive policies, and to allow very high inequality before redistribution to persist; The tolerance of inefficient, low-productivity government. Rather than improving the efficiency of government by introducing productivity targets, reducing bureaucracy and making public sector jobs more attractive, the choice was made to finance this inefficient government by hiking the tax burden and with public debt; France’s lack of response to the deterioration of the school system and declining skills among children, particularly in science subjects, and the tolerance of the consequences of this deterioration (intergenerational inequality, scarcity of engineers and technicians), rather than looking to examples of countries with high-performing school systems; The continued belief that France is an attractive destination for companies based on a theoretical measure of attractiveness (cuts in certain taxes, research aid, some labour market reforms, etc.), when in reality companies are invest ing outside France, foreign trade is deteriorating, as is the quality of the economy (unsophisticated services replacing industry, etc.); The lack of correction of the fundamental cause behind rising real estate prices, namely insufficient construction, and the correction of rising real estate prices through government support; France is now running out of band-aid solutions: it is no longer possible to reduce social contributions further; to increase public transfer payments, redistributive policies and the tax burden further; to fail to stabilise the public debt ratio; to let industry hollow out and foreign trade deteriorate. In a world of resurgent scarcit y and therefore higher real interest rates , and where other countries have chosen different paths, these band-aid solutions will no longer work and France will have to address its underlying problems.