Magazine article Newsweek

A New French Revolution

Magazine article Newsweek

A New French Revolution

Article excerpt

Byline: Fareed Zakaria

This could be the start of Europe's biggest turnaround since Thatcher revived Britain.

You can measure the change in France by the use of prefixes. Ten years ago, the French railed against American "hyperpower." They played the role of world-weary critics, sitting on the sidelines and issuing ironic commentaries on American vigor, assertiveness and action. Today the French use the same prefix to describe their "hyperpresident," Nicolas Sarkozy, a man who has intrigued all of France with his vigor, assertiveness and action. He even appears to be triumphing in his most significant challenge yet, facing down the country's striking transport unions. 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. Generations of French would still be able to take their long lunches and longer vacations.

Sarkozy has chosen his battle wisely. The reforms he is proposing are popular because their target -- France's railway-union workers -- enjoy benefits that make other French citizens roll their eyes. Retirement benefits can begin at 50. They were granted by the government in an age of steam locomotives, when life expectancy was much lower and the work -- shoveling coal into engine boilers -- more dangerous. Other civil servants believe that this battle is symbolic. If Sarkozy can break this particular union, it could unleash a flood of further reforms. They are right.

The unions have won several times before. People now forget but Jacques Chirac, that most old-fashioned of French politicians, came into office in 1995 determined to fix the French economy along many of the same lines that Sarkozy is proposing. Three of his prime ministers pushed forward such plans -- Alain Juppe in 1995, Jean-Pierre Raffarin in 2003 and Dominique de Villepin in 2005. …

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