France’s Ghetto Economy

The youngsters who are ravaging France realize that they don’t have a future. That is why they are burning cars. But how many French politicians realize that their beloved “social model” is partly to blame?

Poor second-generation immigrants in France have no economic prospects for two main reasons. First, the economy is growing far too slowly. As in most of continental Europe, economic performance has been enormously disappointing over the last two decades. But France managed to do even worse than its neighbors.

During the period from 1980 to 2000, only two OECD countries, Germany and Greece, recorded slower growth in income per capita than France. But Germany had to go endure the huge costs and trauma of re-unification with East Germany. Greece was hurt by the wars in the Balkans. What’s France’s excuse?

Second, whatever growth there is in France does not trickle down to the poor. Many young second-generation immigrants are virtually excluded from the labor market. Average unemployment has been stuck at around 10% for several years – one of the highest rates in the OECD. But the unemployment rate is more than double among the young. And it reaches 40% and over amongst those who drop out of school in the banlieues, which have become no-go zones of hopelessness.