The New York Times ran two stories within two days about two very different nations. One story noted that France was an unhappy place in danger of electing an extremist, Marie Le Pen, as President. But the author found the plight of the country puzzling, noting that France has wonderful infrastructure compared to the United States and continued to have a culture second to none. He puts its misery down to the French fixation on the losses of past glories.
Another story focuses on the very different mood in New Zealand. People are happy there and many foreigners want to immigrate. The prime reasons given are its isolation from the rest of the troubled world and its social tolerance, as demonstrated by its legalization of same-sex marriage and acceptance of refugees. The photo accompanying the story shows Sikh men in colorful turbans against some pleasant New Zealand scenery.
The two stories show the weaknesses of the analytic powers of our elite media and its indifference to economic freedom. The best explanation of France’s stagnant misery and New Zealand dynamic happiness can be found in the The Heritage Foundation’s Index of Economic Freedom. New Zealand ranks No. 3 and France No. 72 of the 160 nations surveyed in the economic liberty they permits citizens. Given that most nations ranked below France are developing nations, New Zealand and France inhabit pretty different economic universes among developed nations.
Albert Camus adored swimming in the Mediterranean Sea. It would be fascinating to know how this great philosopher, who was acutely aware of France’s complicated relationship with the Arab world, would have reacted to the burkini ban on the French Riviera.
I am going to Paris this weekend, because the OECD invited me to present on law and technology. A visit to the city of lights should be a delight, but sadly it looks like mine will be darkened by national strikes. Unions are trying to pressure the Socialist government to drop mild reforms to French labor laws that would make it somewhat less expensive to discharge workers. Currently, workers who are not on short-term contracts have close to life tenure. The absurdity of this regime was underscored just this week, when a French labor tribunal held that a bank wrongly discharged a worker who had caused it billions of dollars of losses through illegal trades!
The sturm und drang about moving France ever so incrementally toward a free market shows the continuing importance of a nation’s founding principles. Our revolution and Constitution embedded principles of classical liberalism in the DNA of America. In contrast, the French Revolution created an enduring political norm demanding substantive equality, not merely equality under law. It is worth looking at the consequences of these different principles, because the renewed focus on inequality in the United States is fundamentally an attempt to make our core political concern be equality rather than liberty.
Both California and New York have passed minimum wage legislation that will prevent in relatively short order their citizens from working for less than fifteen dollars an hour. The New York bill will double the minimum wage. The California bill will increase the minimum wage by fifty percent. Even in a political climate growing increasing hostile to liberty such legislation stands out as an egregiously irresponsible and ignorant intrusion on freedom.
We hear a lot about “denialists” when it comes to climate change, but these enactments represent a massive denial about basic truths of economics. When a commodity—in this case labor—becomes substantially more expensive, people will buy less of it. The result of these laws will more unemployment for the least able among us.
Does anyone doubt that if newspapers, including those who editorialize in favor of such increases, were required by the government to double their subscription price that they would sell substantially fewer newspapers? Or if the government decreed that salaries of tenured professors must be go up by half, that colleges would substitute other kinds of instructional tools for tenured professors?
Taxi drivers in France rioted yesterday to prevent Uber from competing with them. They attacked vehicles on the mere suspicion that they were working for that company. They broke windows on cars carrying tourists. It was a kind of economic terrorism. Even a left-liberal rock star was upset!
France is one of the most heavily regulated and centralized states in the Western world. But Uber represents the new forces of decentralizing competition that it may ultimately be powerless to block. While the French government appeared to take the side of the violent strikers today, it will have difficulty in stopping this kind of competition without deploying coercion unacceptable in a democratic society.
Uber is essentially an app that connects people who want to make a mutually beneficial transaction. Other apps will connect those who want to make other transactions—for plumbing, gardening or housework. These services will be less expensive than current services, whose cost is inflated by regulations, not least of which are those designed to protect incumbents.
‘Why can’t a woman be more like a man?’ asked Professor Henry Higgins in My Fair Lady, expecting no proper answer. In another context, that of economics, he might have asked ‘Why can’t one country be like another?’
I thought of Henry Higgins as I read a letter recently in the Financial Times. It was written by an Irish civil servant in praise of German efforts to save their weaker brethren of the European Union.
President Obama would like to legalize the vast majority of immigrants who came into this nation illegally. Indeed, his commitment is so strong that he appears to be considering suspending deportation and giving work authorization to a large number of them this fall. But the President’s immigration policy is in tension with his economic policy. Labor market restrictions and other burdens on companies – imposed and proposed – make it less likely that these immigrants, most of whom are relatively unskilled, will be able to find steady work. As a result, they are less likely to be assimilated into American society—a harmful result not only for immigrants but also for the rest of us.
For instance, raising the minimum wage makes it harder for the least skilled workers to find jobs, particularly in age when it is increasingly possible to substitute technology for unskilled labor. The President’s advocacy of a much higher national minimum wage is especially harmful. Many of the immigrants live in low cost jurisdictions, like Texas, where the distorting effects of a high minimum wage are the likely to be greatest. The disproportionate effect on low-cost-of-living states is no accident. The President was elected largely by states with higher costs of living, where the additional costs often stem from onerous regulations. These states want a national minimum wage to stem competition from lower cost jurisdictions.