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July 29, 2005

Krugman: The French Live Better

Okay, it's Liberal Day here at Ace of Spades, but Paul Krugman makes a few good points in comparing the American and French views about economics and competition.

First things first: given all the bad-mouthing the French receive, you may be surprised that I describe their society as "productive." Yet according to the Organization for Economic Cooperation and Development, productivity in France - G.D.P. per hour worked - is actually a bit higher than in the United States.

It's true that France's G.D.P. per person is well below that of the United States. But that's because French workers spend more time with their families.

O.K., I'm oversimplifying a bit.

[But the] point is that to the extent that the French have less income than we do, it's mainly a matter of choice. And to see the consequences of that choice, let's ask how the situation of a typical middle-class family in France compares with that of its American counterpart.

The French family, without question, has lower disposable income. This translates into lower personal consumption: a smaller car, a smaller house, less eating out.

But there are compensations for this lower level of consumption. Because French schools are good across the country, the French family doesn't have to worry as much about getting its children into a good school district. Nor does the French family, with guaranteed access to excellent health care, have to worry about losing health insurance or being driven into bankruptcy by medical bills.

Perhaps even more important, however, the members of that French family are compensated for their lower income with much more time together. Fully employed French workers average about seven weeks of paid vacation a year. In America, that figure is less than four.

So which society has made the better choice?

I've been looking at a new study of international differences in working hours by Alberto Alesina and Edward Glaeser, at Harvard, and Bruce Sacerdote, at Dartmouth. The study's main point is that differences in government regulations, rather than culture (or taxes), explain why Europeans work less than Americans.

But the study also suggests that in this case, government regulations actually allow people to make a desirable tradeoff - to modestly lower income in return for more time with friends and family - the kind of deal an individual would find hard to negotiate. The authors write: "It is hard to obtain more vacation for yourself from your employer and even harder, if you do, to coordinate with all your friends to get the same deal and go on vacation together."

Just sayin'. There's nothing inherently wonderful about the short vacation times Americans get. It would be nice if we could all collectively bargain for more; I doubt any except the most driven individuals would balk at taking a couple of more weeks off per year. Or even shortening the work week to thirty seven and a half hours.

Yes, this is, to some degree, a form of socialism. It's artificially creating rules which disfavor the more-driven in order to keep the less-driven from experiencing the full competitive disadvantage they'd suffer were the workweek as long as one decided to work, or vacation time as brief or nonexistent as one chose.

To some extent it's not so much state-mandated socialism as tradition. Anyone who's tried to eat or buy stuff in Europe in the late afternoon knows shopkeepers and such tend to take a few hours off mid-day. It's an inconvenience for the buyer, of course, but it can't help but be a boon to the shopkeeper.

I don't know. Not sure what my point is here, except, perhaps, to get ripped further by Fat Kid.

Forget The Facts: Quite frankly, I expected that Krugman's "facts" would be exposed as sham.

I don't put a lot of stock in them.

I'm more citing this for the general proposition -- there's not necessarily anything economically or competitively magical about two weeks of vacation per year. I suppose productivity might suffer some if people had three or four weeks vacation average; then again, many of the top wage-earners in the country take off more than that, so perhaps, they being very smart and very productive, know that a bit of me-time can actually make for better workers.


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posted by Ace at 03:32 PM

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