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04/02/2006

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Here is Richard Posner's post on the economics of national cultures.

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Ken

What about international culture? Or its momentum? Couldn't you say that the French lawmakers, influenced by globalization-friendly trends and the perceived progress of liberalization, are also making decisions based on habit and culture? (Or perhaps more precisely, failing to make decisions and instead following popular international trends?)

ben

Ken

Would another way to phrase this be that the French government is following the path of least resistance? Of course, saying that just shifts the question to why present action has the least resistance.

But keeping up with the Joneses is a real phenomenon among governments. Here in New Zealand there has been an increasing proposensity for market regulators to look to overseas benchmarks, highlight where NZ is lagging, infer some sort of market failure, and regulate. For NZ regulators, the path of least resistance is increasingly doing whatever it is that countries who enjoy more success than us in a particular area are doing, rather than engaging in the (often) harder task of thinking things out from first principles. Benchmarking has become a habit.

Posner said, "French are, in short, culturally distinct." Perhaps the French are liberalizing the market in spite of an international trend rather than because of it.

Larry

While I like your argument in general, the lack of productivity suggestions from American auto workers could have a different explanation than job tenure fears. They are much stupider than Japanese auto workers.

Paco

Dear Judge Posner,

With your most recent entries, Becker and you have once again amply demonstrated the wide reach of economic logic. I only question one thing. You state at the end of your first paragraph that the French are 'culturally distinct'. Is this not a tautology, in that all cultures at a lower level of abstraction are 'distinct' to a certain degree?

Perhaps it would be more accurate to say that the French are more 'pesky' (or prefer more leisure to income) than other peoples.

Also, I wonder what you make of Professor Laurence Friedman's 'convergence thesis'? According to Friedman, cultures are 'converging' more and more due to the global movement of ideas, goods, and services.

Paco

Dear Judge Posner,

With your most recent entries, Becker and you have once again amply demonstrated the wide reach of economic logic. I only question one thing. You state at the end of your first paragraph that the French are 'culturally distinct'. Is this not a tautology, in that all cultures at a lower level of abstraction are 'distinct' to a certain degree?

Perhaps it would be more accurate to say that the French are more 'pesky' (or prefer more leisure to income) than other peoples.

Also, I wonder what you make of Professor Laurence Friedman's 'convergence thesis'? According to Friedman, cultures are 'converging' more and more due to the global movement of ideas, goods, and services.

Arun Khanna

A key element of the economics of national culture is the long lagged economic effect. This can explain why France with its cultural barriers is still doing well in per capita income levels but not so well in per capita income growth rates.

anaxanagorenas

Paco,

Conditional or unconditional beta-convergence?

Patrick

Isn't the simple solution that those who are protesting are overwhelmingly those who will get jobs and therefore those whose privileges are under attack?

Step 1: Pass a law that says that all people employed for more than three months are automatically employed for life if not on a specific class of contract subject to specific case-by-case exemption from the local government authority.
Step 2: Pass a law that makes it illegal to fire lifetime employees without (strong) cause or imminent insolvency (with its own dire consequences)
Step 3: Pass a law substantially mitigating operation of the first and second law by introducing a general exception to the first that does not attract the second with respect of a specific class.
Step 4: Specific class protests.

Nothing distinct about it.

Robert Love

This is an excellent post, but I take issue with one of its propositions: "The country can afford high unemployment and a short work week for those who are employed because it has the most productive workforce in the world, though in part this is an artifact of high unemployment--the unproductive workers aren't employed."

While high unemployment is a fact, I am not sure that I agree with what you claim is the upshot of that--that "the unproductive workers aren't employed." I live in France and my experience has been that the workers here are terribly inefficient, especially in the services industry. I live in a fairly affluent section of Paris, and it was still very difficult to get internet service in a reasonable time (it took weeks). Moreover, the responsiveness to problems I've had with that service and various other services (cell phones and electricity for instance) has been quite slow. When settling a problem with one of these companies, one usually has to make two phone calls where one would do, due to lack of reliability on the part of the service representative. Also, systems management at places like universities, government offices, and the airport are sub-par by US standards. It often seems that the result you get out of any particular encounter entirely depends on the particular person you are speaking to and not company policy, leaving one with the unsatisfied by the inconsistencies and lack of integrity of man workers here.

In short, I figured that these inefficiencies resulted from the fact that workers were lazy on account of not being able to be fired with ease. What's the incentive to work hard once one has a job after all?

With this in mind, I wonder exactly how France can have "the most productive workforce in the world." I have heard this before, and I am sure that you have some support for the statement, but I am not convinced. It just seems odd in light of the fact that any person I know who has spent time in both countries agrees with me that France is much less efficient than the US, especially in industries involving services and logisitical challenges.

robert

A change in the direction of a society's culture can only come about by a change in its philosophy. And that change can only be made by a society's intellectuals. Intellectuals set in motion the ideas that will be prominent in a particular culture and most then accept these ideas by default.
Europe's Enlightenment thinkers have given way to post-modern, deconstructionist intellectuals advocating, among other things, statism over capitalism (read "Anti-Americanism"), collectivism over individualism, and mysticism/faith over reason. A society that accepts these ideas as definitive of its culture cannot, in the long run, succeeed.
France, Europe and the intellectual elites of America are indicative of this philosophical malaise. The result has been (and continues to be) poitical correctness, multiculturalism, the expansion of the welfare state, etc.
Given the above, is it any wonder that France--and, to a similar extent, most of Europe--is experiencing problems? And how long until America, whose public intellectuals are of the same stripe, win out over leftover Enlightenment ideas?
French cultural problems are a symptom of a much larger disease and a clarion call to everyone.

robert

"And how long until..." was to read "And how long until the ideas of America's public intellectuals, who are of the same stripe, win out over leftover Enlightenment ideas?"

Jose

Hi,

I think the puzzle, from the point of view of economic theory, is that France is simultaneously a rich country, most people enjoys plenty of leisure, it has a generous welfare system, and a rigid labor market (that is, a lot of labor stability). In few words, paradise on earth.

I agree with Posner: why a country will want to change their beliefs and culture when the outcome can be so good?

The only reason is if France is mortaging its future.

It follows that: or France will become a poor country soon, or labor market rigidity/flexibility is not an important determinant of productivity and wealth.

Will reality check come? Economists should be able to predict when labor market rigidity will make France a poor country. If this will happen in the far future or the probability is low (given current laws) then it may be optimal not to change.

N.E.Hatfield

The Economics of National Cultures? Is "Globalization" really nothing more than a euphemism for Asian Mercantilism and Capitalism's exploitation of Labor on an international scale? Didn't Orwell remind the world of what happens when a national culture is overcome by monolithic economic forces such as are overwhelming the world today?

Steve Sailer

In explaining different levels of rioting, please don't overlook the simple appeal of tradition.

Unlike in America, street fighting has an admired past in France, and thus it's more admired in the present, as well. And thus it's more common there than here.

Several days of street fighting preceded the liberation of Paris in 1944, and over 1,000 died in the urban uprising that brought the new patriot king to the throne in 1830 (an event similar to the Glorious Revolution in England in 1688). There are also more contentious episodes of street fighting in French history, such as the Paris Commune of 1870-71, that are admired by at least a swath of French opinion today. It's safe to say that political change in French history is accompanied by the erecting of barricades in the streets of Paris, while political upheavals in England have traditionally been accompanied by battles in Ireland.

If you want to see the impact of tradition, look at the amazing riots in South Korea. That country, by the way, in direct contrast to France, might be the hardest working country on earth, yet it also has the most slam-bang and best organized riots on earth. South Korea has a huge conscript riot police but they make no effort to quell riots. Their mission is not to stop riots but to do battle with the rioters. Apparently, well organized communal violence is an old Korean tradition.

For a striking picture of a highly regimented South Korean riot from the Riot Porn blog, see http://isteve.blogspot.com/2005/11/riot-porn.html

Shine

Mr.Posner,would you mind saying something about the exchange rate of RMB? Do you think U.S common consumers will stand with guys who claim to burden pressure on China?You know if that occurs ,cheap merchandises made in China will disappear in the market.

Shine

Mr.Posner,would you mind saying something about the exchange rate of RMB? Do you think U.S common consumers will stand with guys who claim to burden pressure on China?You know if that occurs ,cheap merchandises made in China will disappear in the market.

Bastiat

Someone took issue with (or was confused by) Prof. Posner's observation that:

"[France] can afford high unemployment and a short work week for those who are employed because it has the most productive workforce in the world, though in part this is an artifact of high unemployment--the unproductive workers aren't employed."

I recall a McKinsey Global Institute study within the past couple years that observed that France had the highest national productivity and yet, industry by industry, its productivity was generally well below that of the U.S. (on the order of 10-20 percent below U.S. levels in many cases.)

This is possible because a great number of service industries, employing a material percentage of the workforce, exist in the U.S. but not in France because of French market rigidities and high labor costs. These service sectors have relatively low labor productivity; accordingly, they depress U.S. aggregate labor productivity compared with France. These sectors also tend to employ the least skilled; hence Posner's comment.

Jose noted that Posner's paradox indicates that France is "paradise on earth." It certainly is for graduates of the Sorbonne and INSEAD and for many French lucky enough to be employed. For the inhabitants of the housing estates in the banlieues that ring most large French cities, however, life is as it has been for those on the outside of India's closed labor shops for decades: grim and hopeless.

Finally, one factor exacerbating the French unrest that neither Posner nor Becker mentioned in their current posts is institutional failure. The Financial Times this morning has an interesting article on the subject. France has had 26 governments during the past 25 years. Its presidential powers are unchecked; its prime minister is unaccountable to voters; its parliament is weak.

Whereas the U.K. had a stable (if Draconian) government under Thatcher that liberalized its stagnant and riven economy through the '80s, France has no such short-term stability that enables such reform.

The French may riot because of their "peskiness." They may also riot because their democratic institutions are structurally unsound.

N.E.Hatfield

Ahh... Dear friends, we will not go quietly into the night.

Voltaire

Bastiat

In that case please read an enlightening book until dawn occurs for you...

Exactly how can 200 self-sufficient economies be more efficient and productive than a single integrated one? Minnesota should obviously insulate its economy and Scandinavian collective values from the reckless laissez faire of Texas.

Or not. Government, whether in a U.S. state or a sovereign nation, retains ultimate power over the rules of trade within its boundaries.

Anyway, as economies evolve they tilt toward services, most of which are produced and consumed locally. Eliminiating trade barriers has no effect on this trend.

As for Orwell, he warned of the danger of fascism arising from state control of commerce. And the "exploitation of labor?" Yawn. People work in conditions that you consider exploitative because their next best alternative is even worse. Stifling economic development and trade simply entrenches the conditions you claim to deplore.

Arun Khanna

Hatfield said: Ahh... Dear friends, we will not go quietly into the night. Voltaire


It's not where you go to hide in the night that bothers us. It's just that even in the morn after Communism's collapse, you are still a bother.

anon

"While I like your argument in general, the lack of productivity suggestions from American auto workers could have a different explanation than job tenure fears. They are much stupider than Japanese auto workers."

You have to look at management. It is not just the workers. The workers at GM did not decide to put so much into SUVs around year 2005 (see Hummer). Management came up with production plans and forecasts. Management planned and executed acquisitions. Management allocated the R&D, engineering and design budgets. Management is responsible for the performance of the autos.

Stephen van Beek

The comments of Mr Becker speak of the paucity of imagination and the fertility of psychological fascism that fuels modern capitalism and its kept poodles.

The arrogant assumption that all are to be the same is the fiat of the Borg Queen herself: "Resistance is futile" You will be assimilated!"

In fact, resistance is essential to the survival of all independent cultures. Those committed to the notion of a life one actually experiences as a person, rather than fulfillng the role obligations of a 'consumer', create more 'wealth' in the sense of human values than any dreary economist bent on reducing individuals to a production statistic in a model of mere monetary values, is capable of perceiving.

notaspambot

It seems to me that when launching into explanations of culture via the rational-actor model, some explanation ought to be given of why you have chosen those tools and neglected the approaches of disciplines that have taken "cultural" issues as a more primary focus, such as sociology, social psychology, and anthropology. Why assume that a preference-satisfaction model is the best explanation for all forms of human behavior?

Wicks Cherrycoke

Reading Posner's comments on how France's rate of productivity is skewed by the country's high unemployment rate -- in that only the most productive workers have the jobs -- it strikes me not only that the "Anglo-American" and "French" models differ in how the most productive workers are rewarded, but that how the French tolerate a form of inequality and, indeed, hold it as a badge of the alleged superiority of their system.

In the "Anglo-American" model, both the productive and the unproductive have jobs, but the rewards for the former are higher and increasing more rapidly. This results in inequality in earnings. Under the French model, the productive are rewarded by having jobs at all. Earnings for those who have jobs are less "unequal" than the "Anglo-American" model. But that overlooks the fact that the less productive simply do not get jobs in the first place. Thus, the inequality is found in who gets jobs, not in pay.

Here in the USA this would be objectionable. The French tolerate this, and view it as somehow superior to the "Anglo-American" model. Yet you can very easily say that the efforts of the productive to protect their privileged positions under French employment law is every bit as "selfish" and "self interested" as capitalists are supposed to be.

Anonymous

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