Public Versus Private France

President Jacques Chirac's re-election incited a sigh of relief across France that is echoing around the world. But the scare Jean-Marie Le Pen threw into French politics will be for nought if the political class in Britain slips back into its old hauteur and complacency.

France has always been a nation of sharp divisions. Once its divide marked the chasm between Left and Right. Today it marks the economy's division between its public and private sectors. Premier Lionel Jospin, who was humiliated by Le Pen in being denied a place in the final presidential run-off, had presided over a strong economy, with many new jobs created, more leisure due to the 35-hour week, and some liberal reforms such as privatization on a scale hitherto unseen in France.

But despite all that, unemployment remained stubbornly high and a pervasive insecurity had set in. Jospin's program failed to diminish these twin ills primarily because French society is divided between a large public sector and a dynamic private sector, much of which is increasingly being driven outside the country because of high taxation and endless bureaucracy. Businesses that remain must bear the costs France's leviathan public sector.

The fact that France has experienced high unemployment for over two decades, no matter who holds the reigns of power, is a clear sign that French economic policy is amiss. French unemployed are well off compared to their international counterparts, but the system is costly and inefficient and has shortcomings. Social benefits, for example, are paid only for a limited amount of time; they are then replaced by a minimum living allowance, which represents an exclusion from society.