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'France is in need of a dose of Thatcherism'
The two Iron Ladies. Could France do with some of Maggie's secret economic remedy?

'France is in need of a dose of Thatcherism'

Ben McPartland · 9 Apr 2013, 16:24

Published: 09 Apr 2013 16:24 GMT+02:00

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With France suffering from an ailing economy, rising unemployment and weekly strikes by trade unions protesting job cuts and austerity measures, parallels have been drawn with Thatcher’s Britain of the early 80s.

France may not quite be the “sick man of Europe” as Britain was labelled back then, but its worrying economic situation and outlook did earn it the title last year of “the ticking time bomb at the heart of Europe” from the Economist magazine.

Thatcher’s death has added fuel to a debate in France over whether the country needs the same liberal economic remedies that Thatcher prescribed for Britain, to help reboot the ailing economy.

Many political and economic commentators are quick to highlight what they say were the destructive effects her liberal market policies on working class Britain, but others stress that France could do with something similar to haul it out of the mire.

Tomasz Michalski, Professor of Economics at Paris’s prestigious HEC business school is one of those who believes France needs to take heed of the Dame de Fer.

“France could definitely do with a dose of Thatcherism. The country has maxed out on state spending and has maxed out on debt. It needs a change of thinking to get back to reality and realize that there are market-based economies that are generating wealth. Many people forget that.

"You just have to look at a recent report by the London School of Economics which showed that up until 1980 the UK was growing at a much slower rate than both Germany and France, but after Thatcher came to power that all switched around, with France having the slowest growth rate of the three, and Britain the fastest.

“Whereas Britain was encouraging privatization and making labour laws more flexible, the exact opposite was happening in France, where Mitterrand was re-nationalizing big companies, which then had to be re-privatized later, because it didn’t work. They stiffened the labour market laws until we ended up with a 35 hour week.

“The private sector is currently being crowded out in France because around 58 percent of France’s GDP is swallowed up by state spending in national and regional governments. The public sector is taking up too much responsibility.

“France is in need of the product market competition that Thatcher introduced in the UK. You need to have competitive markets because if you don’t you will have high prices, high costs, less profitability and therefore you will be less competitive. Here you have monopolization all across the board, whether its hotels, banks, supermarkets - you name it.

“There was recently a tender put out for delivering trucks to the French army but because it was not won by a state firm, the tender was scrapped.

“In terms of reducing the power of the unions - yes, France could do with doing this too. Although membership is not actually that high here, they do carry a lot of clout. The problem with the labour unions in France is that they protect those in jobs, but there are lots of young people out there who cannot get jobs.

"France has ended up with a two-tier labour system, those with a CDI (permanent contract) and those without one. Those who have one, sit on them and benefit from the protections and those on the outside are stuck there.

“In France all sides need to give something up so these reforms can be implemented without the violence that was seen in Britain under Thatcher.

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“Recently in France, you have seen ministers threaten investors with nationalization because they said they intended to close down a factory. It’s not even like the situation with the miners in Britain, which was a case of the state versus the workers.

"These are private matters for the private sector and the French government is trying to prevent them from making HR decisions. It's not even a need to break the unions, it’s just a need to let the private sector be.

“The difference between the UK then and France now is that the economic situation in Britain made it ripe for a change and perfect for Thatcherism and it allowed her to do what she did. It was really the sick man of Europe.

"France is lagging behind and is ready for a major overhaul.  There will be a time maybe in two to three years and it may not come under this government, but I think it is needed.

“There is a Chinese saying that if you can’t avoid it, just accept it.”

Ben McPartland (ben.mcpartland@thelocal.com)

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