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Contested Liberalization: Historical Legacies and Contemporary Conflict in France

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Why has France been uniquely resistant to economic liberalization, and how can understanding its postwar legacies help reformers navigate the challenges of modern policy changes?

Image courtesy of interviewee. December 5, 2024

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This video discusses the contested nature of economic liberalization in France, highlighting how it occurs in a more controversial context compared to other advanced European political economies like the Nordic countries, Germany, and the Netherlands. The author identifies four main facets of this contestation:

1. **Public Opposition**: French liberal reforms often provoke mass protests and strikes. The Yellow Vest protests in 2018 are cited as a prominent example, leading to significant government concessions by President Emmanuel Macron, including spending billions to address the protesters' demands.

2. **Electoral Backlashes**: Liberal policies can result in significant electoral setbacks for governments, as seen in Macron's coalition losing seats in the National Assembly due to discontent with reforms like reduced unemployment benefits and raised retirement age.

3. **Internal Government Contestation**: The implementation of liberal reforms can be challenged by different factions within the government. Notably, Macron has taken measures to restrict foreign acquisitions, showing a complex relationship with liberal economic principles.

4. **Institutional and Policy Legacies**: France's historical status model, which favored state intervention and protectionism, contributes to the political difficulty in liberalizing the economy. This video discusses how legacies related to party politics, institutional concentration of power, and past policies complicate reform efforts and lead to public backlash.

The author notes that France has the highest level of welfare spending among OECD countries but struggles with budget deficits and public debt. Attempts at liberalization are often met with resistance due to concerns over fairness and social justice. The author argues that successful liberal reform would require more engagement with stakeholders, negotiation, and equitable distribution of reform impacts to avoid public unrest.

This video concludes that effective and fair economic liberalization in France is complicated by enduring institutional and political dynamics from its historical economic model, suggesting that lessons from other European countries that have successfully navigated such reforms may be applicable to France's challenges.

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Here are five key points derived from the video on economic liberalization in France:

1. **Resistance to Liberal Reforms**: Economic liberalization in France faces significant contestation, manifested through mass protests, strikes, and electoral backlash. Major reforms, notably under President Emmanuel Macron, have sparked substantial public dissent, as seen in the Yellow Vest protests of 2018, which forced the government to retreat from several proposed changes.

2. **Political and Institutional Legacies**: France's post-war status model, which emphasized state control and intervention, continues to influence contemporary economic policies. The political landscape, characterized by a blend of statism and nationalism across both left and right parties, makes liberal economic reforms challenging. Additionally, the concentrated power of the presidency creates a dynamic where unpopular reforms lead to concentrated blame and public protest.

3. **Policy Challenges**: The transition from the status model has resulted in a "social anesthesia state," characterized by generous welfare and labor market policies aimed at compensating those affected by economic shifts. However, this has led to high spending without adequate financial resources for new liberal reforms, resulting in persistent budget deficits and one of the most expensive welfare states among OECD countries.

4. **Comparative Analysis with Other Countries**: France ranks lower in liberalization indices compared to Nordic countries, Germany, and the Netherlands. The lack of successful reforms in France contrasts sharply with other European nations that have negotiated reforms with opposition parties and trade unions, leading to more sustainable outcomes.

5. **Recommendations for Effective Reform**: The video suggests that French reformers should engage in negotiations with key stakeholders, including political opposition and trade unions, rather than pursuing unilateral reforms. This approach could facilitate more equitable distribution of the costs and benefits of liberalization, making reforms more acceptable to the public, as demonstrated by successful reform attempts in countries like Sweden.

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Here are some key quotes extracted from the video discussing economic liberalization in France:

1. "Economic liberalization is contested in multiple ways in France and to a much greater extent than in other advanced European political economies."

2. "First, liberalizing reforms are generally met with mass demonstrations and strikes."

3. "The event that actually led me to write this book was the So-called Yellow Vest protests in 2018 against the liberal economic orientation of French President Emmanuel Macron."

4. "French governments have also seen their capacity to govern compromised as a result of electoral backlashes against liberal reforms."

5. "The elections saw Emmanuel Macron's coalition lose nearly 100 seats in the National Assembly... Much of the hostility to Macron stemmed from unpopular liberal economic reforms."

6. "Liberalization in France is sometimes contested within the government itself, directly challenging liberal economic principles."

7. "France ranks as significantly less liberal than the Nordic countries, Germany, and the Netherlands."

8. "The party political legacy... has as much statism and nationalism in its economic DNA as liberalism."

9. "The French approach... works in the exact opposite way... I call the French approach 'skinny politics.'"

10. "With concentrated power comes concentrated blame, leaving the government alone on the front line to face opponents of reform."

11. "France found itself with the most expensive welfare state in the world... yet despite having the highest level of tax revenues in the OECD, France has not balanced a budget since the 1970s."

12. "The problem for liberal reformers today is that the cash-strapped social anesthesia state has little money to spend on other things."

13. "Reforming without resources... is a recipe to force the government to withdraw painful liberal reforms."

14. "The most important change that French reformers could undertake is to stop making liberal policies in a technocratic bubble."

15. "Governments have made concessions, but by doing so, they’ve also been able to make far-reaching reforms."

16. "Even in cash-strapped France, there are ways to make liberalizing reforms more equitable."

These quotes capture the critical themes and key arguments of the video regarding the challenges and dynamics of economic liberalization in France.

X-TIMESTAMP-MAP=LOCAL:00:00:00.000,MPEGTS:90000

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Economic liberalization is contested in multiple ways in

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France and to a much greater extent than in other advanced

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European political economies.

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Notably the Nordic countries, Germany and the Netherlands,

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and specifically liberalization is contested in four ways.

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First, liberalizing reforms are generally met

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with mass demonstrations and strikes.

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Now, sometimes the French government manages to prevail,

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but in a non negligible number of cases,

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the government has been forced

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to retreat from its proposed liberal reforms.

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The event that actually led me

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to write this book was the So-called Yellow Vest protests in

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2018 against the liberal economic orientation

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of French President Emanuel Mahal.

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These yellow vest protests eventually forced Mahal

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to retreat from many of his proposed changes

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and to spend some 20 billion euros to address some

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of the yellow vest demands.

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Second French governments have also seen their capacity

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to govern compromised as a result

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of electoral backlashes against liberal reforms.

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Last summer's legislative elections in France

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offer a case in point.

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The elections saw Emanuel

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OL's coalition lose nearly 100 seats in the National

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Assembly and left the legislature without any kind

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of coherent governing majority.

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Much of the hostility to Al stemmed from unpopular liberal

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economic reforms, no,

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most notably reductions in unemployment benefits

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and an increase in the minimum retirement age from 62 to 64.

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The third liberalization in France

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is sometimes contested within the government itself

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by the government with French leaders launching initiatives

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that directly challenge liberal economic principles.

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For example, president Mol,

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arguably the most economically liberal president

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of the Fifth Republic, has imposed a variety

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of restrictions on foreign acquisitions of French companies,

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nor were all of these restrictions in strategic industries.

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In 2021,

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McCall's government prevented a friendly takeover

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of a French supermarket chain of all things

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by a Canadian supermarket, invoking the need

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to protect quote, national food security.

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Fourth, moving from the particular to the general

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across a variety of indices of fiscal policy,

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labor market policy,

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and competition in product markets, France consistently

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Ranks as significantly less liberal than the Nordic

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countries, Germany and the, and the Netherlands.

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Now, let me be clear that I'm not claiming

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that France never liberalize that shows,

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but rather that liberal liberal reforms are politically

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parlous and subjected to contestation in a number of ways

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to situate, the historical legacies.

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In the post-war period, France embraced a status

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or dye economic model much like that of Japan

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or the East Asian tigers with ambitious sectoral industrial

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policies, a state that picked winners

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and the favoring of business over labor

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in the late 1970s and early eighties.

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However, for a variety of economic

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and political reasons,

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the French status model entered into crisis.

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Starting in 1983, successive governments of left

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and right alike began dismantling the status industrial

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policy system, a process that was largely completed

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by the early 1990s.

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However, my book shows that three legacies

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of the post-war status model party, political,

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institutional, and policy have contributed

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to the contestation of economic liberalization even decades

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after the dismantling of the dear model itself.

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Now, one legacy contributing to the contestation

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of economic liberalization is party political.

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In France, the post-war status model was largely developed

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and administered by parties of the right,

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most notably the Galles party

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who long dominated post-war politics.

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As a result, the right in France has as much statism

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and nationalism in its economic DDNA as liberalism.

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Now we're used to parties of the left opposing

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economic liberalization, but the French left is not alone.

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French parties of the right are often ambivalent

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as well to take.

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But the latest example,

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even a self-styled market reformer like President Al

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did not hesitate to promise to

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spend whatever it takes to protect workers

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and companies from the economic effects of the covid crisis.

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And it's hard to imagine a less liberal

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economic slogan than a pledge to spend whatever it takes.

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A second legacy contributing to the contestation

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of economic liberalization is institutional.

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The status model was built around an extreme concentration

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of power in the state

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and in particular the presidency with political parties

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and interest groups, more or less marginalized.

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Now, this strategy worked pretty well

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during the post-war boom period

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when governments were launching popular new programs that

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expanded social benefits.

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However, it's less well suited to a liberal economic

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and social agenda when governments are seeking to impose

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unpopular spending and benefit cuts.

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Most European governments have navigated this challenge

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by negotiating reforms with opposition parties

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or the trade unions so as

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to make all the major stakeholders equally complicit

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and unpopular changes, leaving no major force

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to mobilize protestors against the changes.

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The top down French approach by contrast works in the exact

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opposite way I call the French approach skinny politics

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because French governments seek

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to enact major reforms without involving any other

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stakeholders on the basis of the narrowest

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or skinniest coalitions.

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The symbol of this skinny

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politics approach is Article 49.3

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of the French Constitution, which allows the government

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to enact laws without,

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without holding a vote on the law itself, as long

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as the opposition does not successfully propose

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and pass a vote of no confidence.

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Since the 2022, presidential

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and legislative elections, m Hall's,

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prime ministers have used Article 49 3 roughly once

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a month, the highest rate of any time in the history

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of the Fifth Republic, most notably

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to pass the controversial pension reform

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that raised the minimum age from 62 to 64.

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Now, the problem of skinny politics is that

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with concentrated power comes concentrated blame,

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leaving the government alone on the front line

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to face opponents of reform and freeing opposition parties

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and unions to encourage the protestors.

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Indeed, the lack of opportunity

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for input into the legislative process almost compels

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opponents to take to the streets.

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Since this is the only way of potentially re resisting

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or at least reshaping government reforms.

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A third legacy fueling the contestation

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of liberal economic reforms is a policy legacy.

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France's turn away from the status model was heavily

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compensated in order to prevent strikes and violence.

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French governments massively expanded

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social and labor market

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Policies to protect, compensate,

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and demobilize the victims

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and potential opponents of the break with the status model.

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Among the most important such policies were early retirement

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programs in heavy industry that allowed French companies

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to close factories

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and reduce staffing without actually having to fire anyone.

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Instead, redundant workers, many as young as 50, received

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generous pensions and were eased into

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a comfortable retirement.

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Another important instrument was the creation

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of a guaranteed minimum income for adults over the age

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of 25, which acts as a safety net for the jobless

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who have either exhausted their unemployment benefits

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or did not qualify

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for unemployment insurance in the first place.

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I've termed this shift in French policy,

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a movement from the JE state

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to the social anesthesia state that is a state

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that uses generous social

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and labor market policies to pacify, demobilize,

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anesthetize potential opponents of the break

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with the dear JE industrial policy model.

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With the growth of the social anesthesia state.

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However, France found itself with,

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with the most expensive welfare state in the world,

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France spends more as a share of GDP than even

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countries like Sweden or Denmark.

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And the problem for liberal reformers today is

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that the cash strapped social anesthesia state has little

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money to spend on other things of particular importance.

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Governments have little money to spend on new forms

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of compensation

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or side payments

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that might make liberal reforms more acceptable

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to the affected population.

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And yet, reforming without resources,

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without side payments is a recipe

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for putting protestors in the streets as protestors seek

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to force the government to withdraw painful liberal reforms

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or at least to offer some kind of partial compensation.

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So to summarize,

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France's status industrial policy model may have been

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dismantled decades ago, but the party political institu

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and policy legacies of that model continue

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to make economic liberalization

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a politically powerless contested process.

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Today, France has the most expensive welfare state

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of any OECD country.

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It has the highest level of spending,

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and it has the highest level of taxation.

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Yet despite having the highest level

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of tax revenues in the OECD,

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France has not balanced a budget since the 1970s.

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That is before President McCall was even born.

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Now, despite McCall's image as a liberal reformer

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and his pledge when he was elected president in 2017,

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that he would get France public finances in order,

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McCall has presided over a shocking deterioration

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of French public finances.

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It turns out that spending whatever it takes is not

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necessarily a recipe for deficit reduction

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and al's free spending ways have continued

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beyond the covid epidemic.

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In particular, he spent tens of billions

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of euros keeping energy prices artificially low in the runup

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to the 2022 presidential election,

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and al also committed 50 billion euros

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to building a new generation of as yet unproven

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and not functioning well.

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Nuclear energy plants.

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Now, in contrast to other European countries,

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France has not reduced its public debt

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or budget deficits since the end of the covid crisis.

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So it's not just the effects of covid.

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French public debt has risen to over 110%

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of GDP, which is the third highest figure in Europe,

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exceeded only by Italy and Greece.

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And France's projected 2024 budget deficit

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at 6.1% of GDP is the highest in Europe

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and double the maximum allowed under

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European monetary Union rules.

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So as a result of this decidedly on liberal management

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of public finances, the French state now has

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to pay a higher rate of interest to borrow on bond markets

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than such countries as Spain, Portugal,

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and get this even Greece.

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Think the main parallel between France on the one hand

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and East Asia and Latin America on the other hand, is

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that in all of these places, there was some kind

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of state led model of economic development,

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whether the East Asian developmental state

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or Latin American import substitution in industrialization

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or ISI,

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moreover, the period of rapid economic growth

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and rising living standards occurred during the heyday

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of these various status models leading to popular

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and often elite fondness for status solutions

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and a corresponding wariness of liberal economic reform.

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And this wariness was often accentuated by the fact

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that initial rounds of economic liberalization such

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as they occurred did not usher in a new era of prosperity

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for the most part, but rather were often associated

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with economic crisis.

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Now, in terms of institutions, I think

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that the French constitution has generally given governments

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a greater capacity

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to take unilateral action over the objections

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of minority parties

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and interest groups than most governments in East Asia

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and to some degree Latin America.

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Now, this might seem like an advantage

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for French liberal reformers, but as I mentioned

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before, when it comes to painful,

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controversial liberal reforms,

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concentrated power brings concentrated accountability

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and encourages contestation in the streets in an effort

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to make the government change its course.

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I think the clearest exemplar, say in Latin America

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of these problems, is Argentina, where, both,

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unhappiness with the peronist round

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of liberalization in the nineties

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and, major, debt crisis

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and currency crisis, in the early two thousands led

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to street protests

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that toppled three different governments

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in a six month period.

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Now, turning to the party political arena,

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east Asian countries look a lot like France.

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There was a dominant conservative movement

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during the golden age of state led development so

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that parties of the right, the presumed natural parties

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of economic liberalization tend

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to be more conflicted about liberalization than their

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counterparts elsewhere in the world.

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In Latin America, by contrast,

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ISI policies took place primarily under populist

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governments that did not identify clearly

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with either the right or the left.

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Consequently, in Latin America, there's been a space

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for mainstream conservative parties to emerge

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to distinct from the populist parties,

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and these mainstream conservative parties are more

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comfortable pursuing conventional liberal economic reform.

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So the terrain for liberal reform in Latin America while

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challenging as,

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certainly the Argentine case reveals it's still probably

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more favorable than in France

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or East Asia, where conservative parties are deeply

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ambivalent about the wisdom of such reforms themselves.

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I think that the most important change that French,

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French reformers could undertake is to stop making liberal

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policies in a technocratic bubble of the president

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and five of his, advisors

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who all attended the same elite schools

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and then ran trying to ram those policies down the throats

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of a hostile French pop public.

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The government instead should negotiate

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with key stakeholders such as opposition parties

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and the trade unions.

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The government may be forced

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to move more slowly than it would like

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and to make concessions,

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but once an agreement is reached, it's much more likely

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to be successfully implemented than if none

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of the stakeholders are involved,

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and they instead take to the streets

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to get the government to listen.

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One of the reasons why northern European countries like

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Sweden, Denmark, Germany,

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and the Netherlands have been able to reform their systems

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of, social protection

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and labor markets, is

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that governments there have negotiated reforms

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with the political opposition and or the social partners.

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Governments have made concessions,

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but by doing so, they've also been able

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to make far reaching reforms To give one illustration,

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it took a whopping 15 years of negotiations

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for Sweden to overhaul its pension system,

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but the result of that reform was a points-based system

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that treats all retirees in the same way,

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and that is financially sustainable

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and adjusts automatically in the face of economic

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or demographic shocks.

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The Swedish pension system has become a model

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for reformers everywhere

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and international financial institutions

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and a model for France

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and for Al himself, yet the French pension system,

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despite six to eight different rounds

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of attempted reform over the past 30 years,

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the French pension system remains consistently in the red

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and continues to privilege certain c categories

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of pensioners in ways that are difficult to justify.

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So sure, the Swedish pension reform took 15 years

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to negotiate, but it was enacted a quarter century ago

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in 1998.

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More than 25 years later, France is still chasing

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that Swedish pension model.

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Now, a second related recommendation is

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that the French government devote more energy

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to pursuing an equitable distribution of the costs

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and benefits of liberal reform.

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One of the reasons why I advocate a process of reform

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grounded in negotiation is that it's more likely

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to yield some kinds of side payments or, compensation

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or adjustments that address the fairness issue.

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Even in cash strapped France, there are ways

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to make liberalizing reforms more equitable.

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For example, cuts to pension benefits

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for the general population could be accompanied

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by improved benefits

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for historically disadvantaged groups such

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as low wage workers, workers who've experienced long periods

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of unemployment,

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or women who stayed at home to raise the children.

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Similarly, labor market reforms designed

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to pressure the unemployed to seek jobs could be accompanied

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by higher and longer lasting unemployment benefits for those

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who genuinely cannot find any job.

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Now, these kinds of give

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and take deals would still save money and boost employment,

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but they would do so in ways that are protective

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of the disadvantaged.

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In other words, the pursuit of economic liberalization

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need not and should not take place at the expense

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of fairness and social justice

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and agenda of punishing the poor.

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And vulnerable is not just morally objectionable,

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but as the French case shows, it's also a recipe

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for contestation.

Challenges to Economic Liberalization in France

00:00:00 - Economic liberalization is contested in multiple ways in France and to a much greater extent than in other advanced European political economies. Notably the Nordic countries, Germany and the Netherlands, and specifically liberalization is contested in four ways. First, liberalizing reforms are generally met with mass demonstrations and strikes. Now, sometimes the French government manages to prevail,

00:00:33 - the government has been forced to retreat from its proposed liberal reforms. The event that actually led me to write this book was the So-called Yellow Vest protests in 2018 against the liberal economic orientation of French President Emanuel Mahal. These yellow vest protests eventually forced Mahal to retreat from many of his proposed changes

00:01:05 - of the yellow vest demands. Second French governments have also seen their capacity to govern compromised as a result of electoral backlashes against liberal reforms. Last summer's legislative elections in France offer a case in point. The elections saw Emanuel OL's coalition lose nearly 100 seats in the National

Challenges of Liberal Economic Reforms in France

00:01:35 - of coherent governing majority. Much of the hostility to Al stemmed from unpopular liberal economic reforms, no, most notably reductions in unemployment benefits and an increase in the minimum retirement age from 62 to 64. The third liberalization in France is sometimes contested within the government itself

00:02:05 - that directly challenge liberal economic principles. For example, president Mol, arguably the most economically liberal president of the Fifth Republic, has imposed a variety of restrictions on foreign acquisitions of French companies, nor were all of these restrictions in strategic industries. In 2021, McCall's government prevented a friendly takeover

00:02:38 - by a Canadian supermarket, invoking the need to protect quote, national food security. Fourth, moving from the particular to the general across a variety of indices of fiscal policy, labor market policy, and competition in product markets, France consistently Ranks as significantly less liberal than the Nordic countries, Germany and the, and the Netherlands.

Enduring Legacies: Contesting Economic Liberalization in France

00:03:07 - that France never liberalize that shows, but rather that liberal liberal reforms are politically parlous and subjected to contestation in a number of ways to situate, the historical legacies. In the post-war period, France embraced a status or dye economic model much like that of Japan or the East Asian tigers with ambitious sectoral industrial

00:03:41 - and the favoring of business over labor in the late 1970s and early eighties. However, for a variety of economic and political reasons, the French status model entered into crisis. Starting in 1983, successive governments of left and right alike began dismantling the status industrial policy system, a process that was largely completed

00:04:11 - However, my book shows that three legacies of the post-war status model party, political, institutional, and policy have contributed to the contestation of economic liberalization even decades after the dismantling of the dear model itself. Now, one legacy contributing to the contestation of economic liberalization is party political.

Statism and Nationalism in French Economic Politics

00:04:44 - and administered by parties of the right, most notably the Galles party who long dominated post-war politics. As a result, the right in France has as much statism and nationalism in its economic DDNA as liberalism. Now we're used to parties of the left opposing economic liberalization, but the French left is not alone.

00:05:14 - as well to take. But the latest example, even a self-styled market reformer like President Al did not hesitate to promise to spend whatever it takes to protect workers and companies from the economic effects of the covid crisis. And it's hard to imagine a less liberal economic slogan than a pledge to spend whatever it takes.

00:05:46 - of economic liberalization is institutional. The status model was built around an extreme concentration of power in the state and in particular the presidency with political parties and interest groups, more or less marginalized. Now, this strategy worked pretty well during the post-war boom period when governments were launching popular new programs that

Challenges of Liberal Reform: The French 'Skinny Politics' Approach

00:06:14 - However, it's less well suited to a liberal economic and social agenda when governments are seeking to impose unpopular spending and benefit cuts. Most European governments have navigated this challenge by negotiating reforms with opposition parties or the trade unions so as to make all the major stakeholders equally complicit and unpopular changes, leaving no major force

00:06:48 - The top down French approach by contrast works in the exact opposite way I call the French approach skinny politics because French governments seek to enact major reforms without involving any other stakeholders on the basis of the narrowest or skinniest coalitions. The symbol of this skinny politics approach is Article 49.3

00:07:20 - to enact laws without, without holding a vote on the law itself, as long as the opposition does not successfully propose and pass a vote of no confidence. Since the 2022, presidential and legislative elections, m Hall's, prime ministers have used Article 49 3 roughly once a month, the highest rate of any time in the history

Challenges of Reform: Political Blame and Economic Legacy in France

00:07:49 - to pass the controversial pension reform that raised the minimum age from 62 to 64. Now, the problem of skinny politics is that with concentrated power comes concentrated blame, leaving the government alone on the front line to face opponents of reform and freeing opposition parties and unions to encourage the protestors. Indeed, the lack of opportunity

00:08:23 - opponents to take to the streets. Since this is the only way of potentially re resisting or at least reshaping government reforms. A third legacy fueling the contestation of liberal economic reforms is a policy legacy. France's turn away from the status model was heavily compensated in order to prevent strikes and violence.

00:08:53 - social and labor market Policies to protect, compensate, and demobilize the victims and potential opponents of the break with the status model. Among the most important such policies were early retirement programs in heavy industry that allowed French companies to close factories and reduce staffing without actually having to fire anyone. Instead, redundant workers, many as young as 50, received

France's Social Anesthesia State: Welfare Policies and Reform Challenges

00:09:26 - a comfortable retirement. Another important instrument was the creation of a guaranteed minimum income for adults over the age of 25, which acts as a safety net for the jobless who have either exhausted their unemployment benefits or did not qualify for unemployment insurance in the first place. I've termed this shift in French policy, a movement from the JE state

00:09:59 - that uses generous social and labor market policies to pacify, demobilize, anesthetize potential opponents of the break with the dear JE industrial policy model. With the growth of the social anesthesia state. However, France found itself with, with the most expensive welfare state in the world, France spends more as a share of GDP than even

00:10:30 - And the problem for liberal reformers today is that the cash strapped social anesthesia state has little money to spend on other things of particular importance. Governments have little money to spend on new forms of compensation or side payments that might make liberal reforms more acceptable to the affected population. And yet, reforming without resources, without side payments is a recipe

Challenges of Economic Liberalization in France

00:11:05 - to force the government to withdraw painful liberal reforms or at least to offer some kind of partial compensation. So to summarize, France's status industrial policy model may have been dismantled decades ago, but the party political institu and policy legacies of that model continue to make economic liberalization

00:11:35 - Today, France has the most expensive welfare state of any OECD country. It has the highest level of spending, and it has the highest level of taxation. Yet despite having the highest level of tax revenues in the OECD, France has not balanced a budget since the 1970s. That is before President McCall was even born. Now, despite McCall's image as a liberal reformer

00:12:10 - that he would get France public finances in order, McCall has presided over a shocking deterioration of French public finances. It turns out that spending whatever it takes is not necessarily a recipe for deficit reduction and al's free spending ways have continued beyond the covid epidemic.

France's Economic Challenges Post-COVID

00:12:39 - of euros keeping energy prices artificially low in the runup to the 2022 presidential election, and al also committed 50 billion euros to building a new generation of as yet unproven and not functioning well. Nuclear energy plants. Now, in contrast to other European countries, France has not reduced its public debt or budget deficits since the end of the covid crisis.

00:13:13 - French public debt has risen to over 110% of GDP, which is the third highest figure in Europe, exceeded only by Italy and Greece. And France's projected 2024 budget deficit at 6.1% of GDP is the highest in Europe and double the maximum allowed under European monetary Union rules.

00:13:45 - of public finances, the French state now has to pay a higher rate of interest to borrow on bond markets than such countries as Spain, Portugal, and get this even Greece. Think the main parallel between France on the one hand and East Asia and Latin America on the other hand, is that in all of these places, there was some kind of state led model of economic development,

Challenges of Economic Liberalization in France and Beyond

00:14:16 - or Latin American import substitution in industrialization or ISI, moreover, the period of rapid economic growth and rising living standards occurred during the heyday of these various status models leading to popular and often elite fondness for status solutions and a corresponding wariness of liberal economic reform.

00:14:48 - that initial rounds of economic liberalization such as they occurred did not usher in a new era of prosperity for the most part, but rather were often associated with economic crisis. Now, in terms of institutions, I think that the French constitution has generally given governments a greater capacity to take unilateral action over the objections

00:15:16 - and interest groups than most governments in East Asia and to some degree Latin America. Now, this might seem like an advantage for French liberal reformers, but as I mentioned before, when it comes to painful, controversial liberal reforms, concentrated power brings concentrated accountability and encourages contestation in the streets in an effort to make the government change its course.

Political Dynamics of Economic Liberalization in Argentina and Beyond

00:15:48 - of these problems, is Argentina, where, both, unhappiness with the peronist round of liberalization in the nineties and, major, debt crisis and currency crisis, in the early two thousands led to street protests that toppled three different governments in a six month period. Now, turning to the party political arena, east Asian countries look a lot like France.

00:16:19 - during the golden age of state led development so that parties of the right, the presumed natural parties of economic liberalization tend to be more conflicted about liberalization than their counterparts elsewhere in the world. In Latin America, by contrast, ISI policies took place primarily under populist governments that did not identify clearly

00:16:50 - Consequently, in Latin America, there's been a space for mainstream conservative parties to emerge to distinct from the populist parties, and these mainstream conservative parties are more comfortable pursuing conventional liberal economic reform. So the terrain for liberal reform in Latin America while challenging as, certainly the Argentine case reveals it's still probably

Negotiating Economic Reform: Lessons from Europe

00:17:20 - or East Asia, where conservative parties are deeply ambivalent about the wisdom of such reforms themselves. I think that the most important change that French, French reformers could undertake is to stop making liberal policies in a technocratic bubble of the president and five of his, advisors who all attended the same elite schools and then ran trying to ram those policies down the throats

00:17:51 - The government instead should negotiate with key stakeholders such as opposition parties and the trade unions. The government may be forced to move more slowly than it would like and to make concessions, but once an agreement is reached, it's much more likely to be successfully implemented than if none of the stakeholders are involved, and they instead take to the streets to get the government to listen.

00:18:23 - Sweden, Denmark, Germany, and the Netherlands have been able to reform their systems of, social protection and labor markets, is that governments there have negotiated reforms with the political opposition and or the social partners. Governments have made concessions, but by doing so, they've also been able to make far reaching reforms To give one illustration,

Lessons from Sweden: The Challenge of French Pension Reform

00:18:55 - for Sweden to overhaul its pension system, but the result of that reform was a points-based system that treats all retirees in the same way, and that is financially sustainable and adjusts automatically in the face of economic or demographic shocks. The Swedish pension system has become a model for reformers everywhere and international financial institutions

00:19:25 - and for Al himself, yet the French pension system, despite six to eight different rounds of attempted reform over the past 30 years, the French pension system remains consistently in the red and continues to privilege certain c categories of pensioners in ways that are difficult to justify. So sure, the Swedish pension reform took 15 years to negotiate, but it was enacted a quarter century ago

00:19:58 - More than 25 years later, France is still chasing that Swedish pension model. Now, a second related recommendation is that the French government devote more energy to pursuing an equitable distribution of the costs and benefits of liberal reform. One of the reasons why I advocate a process of reform grounded in negotiation is that it's more likely

Equity in Economic Liberalization

00:20:31 - or adjustments that address the fairness issue. Even in cash strapped France, there are ways to make liberalizing reforms more equitable. For example, cuts to pension benefits for the general population could be accompanied by improved benefits for historically disadvantaged groups such as low wage workers, workers who've experienced long periods

00:21:00 - or women who stayed at home to raise the children. Similarly, labor market reforms designed to pressure the unemployed to seek jobs could be accompanied by higher and longer lasting unemployment benefits for those who genuinely cannot find any job. Now, these kinds of give and take deals would still save money and boost employment, but they would do so in ways that are protective

00:21:52 - In other words, the pursuit of economic liberalization need not and should not take place at the expense of fairness and social justice and agenda of punishing the poor. And vulnerable is not just morally objectionable, but as the French case shows, it's also a recipe for contestation.

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