The Latest French Riots--Posner

There is a considerable irony in the latest French riots, which are mainly by high school, college, and university students protesting a new law that allows employers to fire employees (without cause) during their first two years of employment, if the employee is under 26 years of age. The law, which has not yet gone into effect and will not if the government caves in to the rioters and their supporters (including public-employee unions, especially in transportation), is a response in part to a previous round of more serious riots, by French Muslims of mainly North African origin protesting their economic situation, which includes an astronomical unemployment rate particularly among the young. (Becker and I blogged about those riots on November 13 of last year.) The overall unemployment rate of the under-26 population in France is in excess of 20 percent, which is greater than that of the adult population as a whole (the corresponding rate for the United States is about 10 percent). The reason is that once hired, an employee can be fired only with great difficulty. Employers are naturally reluctant to hire people, mainly young, many of whom haven’t worked before (or if they have, it can only have been for a short time), because the likelihood that they will do a good job is difficult to assess unless they have a record of prior employment. The youth unemployment rate is even higher among Muslims in France, and they are among the rioters, which makes no sense in terms of their economic self-interest. That ethnic French youth should be rioting against a law that would help the Muslims is perhaps surprising given the liberal ideology of most young people in France, yet may be, I will suggest, an expression of rational self-interest. The youth unemployment rate is largely an artefact of French law. If employers were free to fire employees without cause, as under "employment at will," the most common form of employment contract in the U.S. private sector, they would be much more willing to take a chance on hiring workers without a record of satisfactory performance. Tenuring just-hired workers may be good for those people lucky enough to land a job (though average wages will decline because the expected productivity of a worker will be lower than if he could be fired easily), but like other labor protections it is bad for the marginal workers, such as the Muslims who rioted the last time, and for the economy as a whole. It is part of a complex of unwise laws in Europe that are contributing to Europe’s economic stagnation. The rioting by the non-Muslim students may be rational. For if they are the most likely to land jobs under a legal regime in which a newly hired worker cannot be fired in his or her first two years of employment, they may be harmed by the new law. This cost-benefit analysis of rioting assumes that the cost to the students of rioting is low, but it does appear to be, since apparently they are not being expelled or suspended from school. Even the widespread public support of the students may be rational, if that support is concentrated among workers who have tenured jobs and fear that if the new law, though limited to the under-26 work force, goes into effect and is successful in reducing unemployment, it will be the start of a slippery slope leading eventually to free labor markets on the U.S. and British model. What is particularly difficult to explain from a rational-choice perspective is the widespread public condonation of riots and strikes as methods of forestalling legislative changes. If the public strongly opposes a law, it is much more efficent for that opposition to be expressed in a parliamentary vote to rescind the law than in riots and work stoppages that cause widespread inconvenience and other costs. The inference, assuming the French people are as rational and well informed as other European peoples--which seems the sensible assumption when one consider the high level of education in France, the nation’s wealth, and the many French contributions to science and culture--is that their political system is not functioning properly; and indeed that seems to be the case. Although the new law is, according to public opinion polls, opposed by 68 percent of the population, it was, of course, duly enacted by the French legislature. Although representative democracy does not automatically translate popular majorities into laws, because of the operation of interest groups and the fact that intensity of preference or aversion is not captured in simple majoritarianism, it would be unusual in the United States for a law opposed by more than two-thirds of the population to pass, though a counterexample is the impeachment of President Clinton by a Republican-dominated House of Representatives. It was opposed by about two-thirds of the U.S. population--but of course Clinton was acquitted by the Senate. A great country can have a lousy government. (Our government is not doing so well these days.) The design of the French government may be unsound. Ordinarily in a parliamentary system, the head of the government is a member of parliament, that is, an elected official; in a presidential system, too, the head of the government is an elected official. But in France, the president, who is elected, appoints the prime minister. The current prime minister, de Villepin, has never held elective office, and this is a considerable weakness from the standpoint of ability to gauge public opinion and assuage public anxieties, and more broadly from the standpoint of perceived legitimacy in a democratic society. France has a long history of rioting, but so do many other countries (including the United States), which have outgrown it as their governments stabilized. It seems more likely that the French propensity to riot is rooted in problems of government design than in a peculiarly French proclivity for rioting. But this is a tentative suggestion. For there do appear to be French cultural peculiarities, such as the effort to prevent changes in the French language and resistance to the use of English at academic and other conferences, and to foreign takeovers of French companies, that may be related not to the riots as such but to the intensity with which the French resist globalization and its concomitants, which include competition. The new law that has provoked the riots is designed to make labor markets slightly more competitive.

Comments

[Sylvain Galineau]

To this day, a large and vocal number of people in France refuse to understand that 'protecting jobs' only preserves those that already exist, at great cost to everyone else. If it is hard and expensive to fire, it is hard and expensive to hire. The collective attitude to labor markets and the economy is often very much a zero-sum one; witness the 35-hour week, rooted in the concept of a fixed quantity of work. Sure, most people will admit that was a mistake in private. But try and change it and today's demonstrations will seem like wet firecrackers.

The high cost of employment also explains another French phenomenon : the inflation of credentials required to apply for many jobs. Since giving people a try is potentially so risky and expensive, employers require a form of insurance. Diplomas from prestigious schools and universities are essentially used for this purpose. With painful consequences : many graduates end up doing work that is far below their abilities; those less qualified but able to do these tasks fall back on other jobs, displacing others to other occupations etc.

In the end, an increasinly larger army of demanding graduates competes for the 'safe' but diminishing number of jobs that are still being created while the less academically endowed make do with the rest. As for those with no academic baggage...

Which makes it rather ironic to hear students complain of the discrimination and 'two-speed' job market this legislation would create. It's been around for more than 20 years. Thanks to work 'protection' legislation, temp work is a national industry.

In the meantime, thousands of french students in the UK, Ireland and elsewhere happily compete for the very kind of jobs and contracts their colleagues back home demonstrate against.

[Pat L]

I found Wes' comments on discrimination interesting. Media coverage of the riots in the U.S. doesn't seem to have placed much emphasis on the fact that the proposed labor law discriminates against young people. Self interest is a powerful motivating factor for the student rioters, but I think that it was a combination of self interest and indignation over the age issue that really pushed the students to carry things to such an extreme. The government may have hoped that the age cap would limit the political fallout from the law, but as Judge Posner points out older tenured workers were rational enough to see that this was likely to be a first step toward full liberalization of the labor market. They probably also calculated that the best chance of stopping the law was to take to the streets with the students immediately. So the government gained nothing tactically through its divide and conquer policy but lost the moral high ground.

[Half Sigma]

Protection from being fired is obviously seen as a benefit by the vast majority of French otherwise the law wouldn't be there in the first place.

So French young are rightfully angry that a benefit is being taken away from them that applies to everyone else. After all, if the law is so bad why isn't everyone's protection being eliminated?

[Nick, Paris]

A key point to note is that for very many French people "social questions" and "economics' are two incommensurate paradigms. So it is considered normal to propose a social model without saying how it will work or be financed. One can be 100% against all reforms of employment law, with no obligation to propose alternatives or to explain how it should work economically. My key problem with the current socialist party is that they make no economic statements whatsoever, and I would dearly love to understand how their social model will fit into a worldwide free-economy. I have had many discussions with friends ranging from middle-of-the-road socialists, through union organisers to extreme-left revolutionaries, none of whom understand why I keep wanting to bring economics into a discussion of "justice", "rights", "liberty", "freedom" etc. For the more extreme amongst them, everything comes down to "la lutte" (the struggle) against "them" (the government, the evil capitalist, the police, the fascists, the anti-drink/drive lobby, the speed radar on the roads...).

As for rioting, perhaps it should be consider it as the "continuation of protest by other means" :). A friend who was a militant Trotskyist in her youth said she used to go to a protest most Saturdays, the way other teenagers went to the cinema or hung around in the park. Many people consider that protesting is a normal reaction to anything and everything. Worse, they consider it a valid, meaningful ACTION - as though protesting one's disagreement were a positive act and actually doing something. Rioting is a natural extension of constant protesting in a culture where violent protest has become the norm.

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