Political Paralysis: France and New Zealand
On the eve of the French revolution in 1789, Louis XV1's finance minister told the king he thought the nobility's privileges so entrenched that France had become ungovernable. Countries can get that way. Germany in the 1920s; Britain in the 1970s and New Zealand by 1984 are cases where economic problems had become so complex that drastic changes were required. In earlier times France and Germany's "solutions" made matters worse. Having just holidayed in France, I can't help feeling that history might repeat itself. New Zealand is re-entering the phase too.
By the 1970s and 1980s most democracies had arrived at a situation where socialist controls and excessive union privileges had slowed growth and produced sclerotic, indebted economies. Changes were accepted, albeit reluctantly. Regulations were removed, bureaucracies trimmed, debt reduced and inflation reined in. Result? New jobs appeared and growth gradually returned. France didn't experience this process. It hasn't balanced a budget since 1980. People pretend to work while the union aristocracy that rules modern France ensures workers are generously paid. Working hours have been pared back, and the two-hour siesta that occurs at any point between midday and 3.30pm makes business difficult. Many multi-million dollar supermarkets open for as little as eight hours per day, closing for the siesta. Everywhere, customer service is hopeless. Three shop assistants gather around one customer while a queue forms to the door. On a visit to the gloriously re-decorated Versailles two weeks ago, 2,000 people queued in the baking sun while three fiddled inside issuing tickets. France's productivity figures are amongst the worst in the world. Its wine is over-priced and excess vines are being extracted. As in New Zealand, many of the brightest and best young people are emigrating. Many French go to London, some even to Auckland.
New Zealand has seldom been able to pass the costs of inefficiency to others. The French, however, have perfected the art. The Common Market has been their instrument. They fashioned Europe's Common Agricultural Policy with themselves as the principal beneficiaries. Huge subsidies pour in from the rest of Europe to pay French farmers to keep the price of farm goods low, undercutting developing countries' chances for selling their goods on the world market. A constant French chorus of "non" to proposals for change means that reform moves glacially. For example, most modern governments have funded decades of expanding demand for tertiary education with a mixture of state and private funding. Not France. The new president has run into a wall of opposition to his reforms that don't even contemplate tuition fees. They are unthinkable, yet university pay is now so low they can't hire good staff. Not surprisingly, solving France's budget deficit is as far away as ever. But the policy of expecting everyone else to lend to compensate for French inefficiency is running into trouble. Nicolas Sarkosy was firmly told two weeks ago by Germany's Angela Merkel that the European Union expected France to honour its promise to balance its budget by 2010. These days France, not Turkey, is the sick man of Europe.
Everywhere in the world there are people who believe in fairy gold. Modern union movements seem to have been reared on it. Instead of being the cutting edge of progress they sometimes were, most unions have become aristocratic reactionaries, always fighting measures that could lift growth, improve productivity, create jobs and boost unionists' wages. Governments that accede too readily to union demands ultimately damage workers' standards of living and give the unemployed only benefits, not jobs. Sarkosy talks change, but one of his closest friends recently said he thought France couldn't change "or it will break".
New Zealand proved it was possible to re-jig the economy to restore growth that is fundamental to higher living standards. But, having done so, we then adopted MMP. It has stultified the political process. Public servants devise policy options that politicians discard because there isn't a parliamentary majority. Policy outcomes now evolve from inter-party posturing rather than an acceptance of what will work best for New Zealanders. It's not much different from the French in 1789, or modern-day France. Our bureaucracy has ballooned out, union power has increased, growth has subsided, and our productivity figures are the worst for decades. We still operate more efficiently than France, which is just as well: we don't have the EU as a fairy godmother. But there is no mistaking that while reforms are needed here, New Zealand's present parliament is so finely balanced as to make us almost ungovernable. Assuming, of course, that ministers actually want to lift living standards, which I now doubt.