Zakaria on Sarkozy

clipped from www.newsweek.com

If he succeeds, it could be the beginning of the biggest turnaround in Europe since Margaret Thatcher revived Britain in the 1980s.

Contrary to caricature, the French economy does not need a complete overhaul. It has many highly competitive aspects. Labor productivity is as high as in the United States, the health-care system is excellent and cost-effective and French infrastructure—from high-speed rail to broadband—is unparalleled. But the cancer eating away at the economy is a set of laws coddling French workers, which makes hiring and firing arduous, and pensions and benefits hugely expensive. (This is why France has a chronically high unemployment rate, currently 8.7 percent, which is 50 percent higher than the average for the industrialized nations.) If France fixed its problems with labor flexibility, it could be catapulted forward by higher growth and lower unemployment, which would make the whole system much more sustainable.

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Published in: on November 25, 2007 at 10:35 pm  Leave a Comment  

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