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France revolts against economic reason
Gerard Jackson
Much of the hostile commentary about the recent student riots in France misses the point. The underlying theme is that these students are callous opportunists who are violently protesting the prospect of new laws that would loosen the labour markets out of a selfish desire to preserve jobs for themselves at the expense of less educated competitors.
This explanation credits the rioters with far more intelligence and economic acumen then they are ever likely to acquire. It also ignores the fact that a university degree is no longer a guarantee of job in France and has not been for some time. (The best jobs are the preserve of graduates from the elite and very expensive grandes écoles).
That on 18 and 19 March an estimated 1million people took to the streets in protest against freer labour markets certainly suggests that it is not only students who strongly oppose the proposed legislation. An opinion poll showing that 68 per cent of the French public are against the youth jobs proposals strongly suggests that opposition is not confined to a bunch of spoiled student brats.
We have a dreadful situation where nearly 70 per cent of the French public apparently believe that there are no economic laws; that free labour markets lead to lower living standards and exploited labour, despite the fact that this prejudice stands refuted by history. Although unemployment among those under the age of 26 averages 23 per cent it rises as high as 50 per cent in the immigrant ghettos. And yet the French public seems unable to make the connection between these terrible rates of unemployment and labour market costs imposed by the state.
Ludwig von Mises warned that Democracy “cannot prevent majorities from falling victim to erroneous ideas and from adopting inappropriate policies which not only fail to realize the ends aimed at but result in disaster”. The situation in France certainly bears out that observation.
But before the rest of us smugly congratulate ourselves on our superior knowledge of history and understanding of economics let us not forget that our own minimum wage laws and regulatory structure are based on the same ignorance and prejudices that motivate French anti-market sentiments. Right now Australian unions and their media and intellectual allies are strenuously fighting against government attempts to further free the country’s heavily regulated labour markets.
They too preach that the “Anglo-Saxon” model, as the French scornfully call it, exploits labour and lowers wages. Like their French counterparts they remain impervious to economic reason and the facts of history. So why are so many people ignorant of basic economic laws and the consequences of defying them? Why do so many believe that the state can literally legislate for higher living standards in the face of overwhelming historical evidence to the contrary?
Naturally, there is a certain amount of self-deception here. Those who benefit from such interventionist legislation are not likely to admit, even to themselves, that their good fortune has been bought at the expense of unemployment and lower living standards for others.
Nevertheless, such self-deception could only flourish in an environment dominated by economic illiteracy. Mises believed that “nothing can be more important to every intelligent man than economics. His own fate and that of his progeny is at stake”. In a situation in which only a very few care to “familiarise themselves with the teachings of economics” then economic fallacies are bound to emerge and eventually take hold of public opinion, especially when promoted by cynical politicians and market-hating ideologues.
For decades French statists from nearly all political parties have been indoctrinating the public with the idea that market-based economics is the road to exploitation and misery. Should anyone now be surprised that 68 per cent of the public now believe there is something immoral about labour market reform?
Last week the University of Maryland’s Program on International Policy Attitudes released the results of a poll they the conducted in 20 countries. The question asked was: “The free enterprise system and free market economy is the best system on which to base the future of the world”. In America 71 per cent said yes, for Germany it was 70 per cent, India was also 70 per cent. China came out with a remarkable 74 per cent. The French response, however, was the lowest of all at 36 per cent.
You defy the market at your peril. France is now paying the price for her defiance. Mises thought that economics “concerns everybody and everything”. In the absence of genuine economic knowledge and leadership it is therefore inevitable that quacks, socialists and statists will in time prevail.
This is why the Liberal Party has failed dismally to persuade the Australian public that free labour markets are to be welcomed and not feared. The Party has absolutely no understanding whatever of the vital role that economic education should have played in its policy proposals.
Although the revolt against economic reason is not as deeply embedded in Australia and the US as it is in France, it has still taken root. Unlike the US, unfortunately, very little is being done in Australia to eradicate the presence of this toxic weed.
All quotes are from Ludwig von Mises’ Human Action, Henry Regnery Company, Chicago, 1963 edition.
Gerard Jackson is Brookes’ economics editor
BrookesNews.Com
Monday 27 March 2006