Breaking Through

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

Between November 14 and November 22, Paris was in chaos because most of the metro and the buses were not running, it was impossible to get into a subway train, and people like Fabien Duquesne, a 20-year old student at the Sorbonne, had to walk an hour to get to class. When he arrived, many classes were cancelled because professors couldn’t get there. Mr. Duquesne, proud of his role in the 2006 student riots, told me from Paris in a telephone interview that the transportation strikes posed tremendous problems. Even though President Sarkozy is the last person that Mr. Duquesne would pick for president, he admits that pension reforms, the cause of the strikes, were necessary.

Under the current law, railroad workers are exempt from the rule that requires 40 years of work before receiving a pension. Instead, these workers, along with some others, can retire after 37 1/2 years.

It’s a sign of Mr. Sarkozy’s remarkable success since taking office last May that, after nine days of disruptive transportation strikes, his proposed pension reforms are deemed necessary by Mr. Duquesne, whose first choice for the French leader was the socialist mayor of Paris, Bertrand Delanoë.

“The reforms need to be made,” Mr. Duquesne said. “It’s not normal for train conductors to have special treatment.” Although a difference of 2 1/2 years may sound small to Americans, it is a major source of controversy in France and the political significance of winning reversal should not be missed.

Mr. Duquesne didn’t support the student strikes that sprung up on November 22 to protest plans to increase universities’ autonomy and ability to secure private funding. He said that organizers of these strikes are “anarchists” and came from the extreme left.

None of the other strikes that took place in France last week appeared to have won public sympathy either. On November 20, 1.5 million civil servants, including teachers, postal workers, nurses, and newspaper printers, went on strike because Mr. Sarkozy plans to replace every two retiring workers with one.

Mr. Sarkozy’s program for economic reform is nothing if not comprehensive. He has cut inheritance taxes, given tax relief for mortgage interest, and waived taxes paid by employers on employees who work more than 35 hours per week — an elegant reversal of the previous maximum of 35 hours that one could work per work.

In addition, he has formed a commission to identify regulatory obstacles to economic growth. It is led by the former adviser to President Mitterand and the former president of the European Bank for Reconstruction and Development, Jacques Attali. The appointment of Mr. Attali, an admired author and orchestra conductor in his spare time, ensures that recommendations will be taken seriously by the opposition.

The commission has proposed reducing the transactions costs of acquiring real estate and increasing competition among stores to lower prices. It has held hearings on difficulties of getting licenses to enter trades, such as driving taxis. Finally, it has suggested merging agencies that distribute welfare benefits with those that train unemployed workers and help them find jobs.

How did Mr. Sarkozy manage to convince his ideological opponents, many of them, anyway, that it was time for change? Since 1995, a succession of French governments had been trying unsuccessfully to end the 37 1/2-years exemption for railroad workers’ retirement.

Mr. Sarkozy played his cards right. Whereas advisors suggested last spring he run for president on a modest platform in order to get elected, and then, if he won, undertake dramatic reforms, he refused. Instead, he laid out his entire reform program, and, when he won, claimed a mandate for change. He also won a large enough majority in the National Assembly to let him enact his reforms.

In prior years, most recently 2005, strikes were the main obstacle to reform. This time, however, the French people did not support the strikers. Rather, the strikes with their attendant havoc caused a backlash in public opinion. The strikers went back to work without winning their demands.

Although the union leaders knew that they wouldn’t win, they were honor-bound to call a strike anyway, so that they would not be thought completely irrelevant.

Mr. Sarkozy’s victory over the strikers will undoubtedly help him win a popular mandate for future reforms, but it will by no means be an easy path. Earlier this week, riots erupted in the northern Parisian suburb of Villiers-le-Bel after two teenagers from immigrant families on an unlicensed Kawasaki dirt bike, neither wearing required helmets, collided with the left side of a police car and died.

The riots, controlled after two nights, appear to be a sign that France’s blue-collar and unemployed immigrants remain bitterly disaffected and are a continuing problem for the country and for whoever governs.

Furthermore, new strikes are forecast before 2007 ends and in 2008. Lawyers in Toulouse, a southern city, struck this week over plans to reform courts. Whether or not public sympathy will stay with Mr. Sarkozy remains to be seen.

And public sympathy will be influenced by the economy. Last year, GDP growth was an anemic 1.8% and job growth was weaker, less than 1%. Consumers’ purchasing power needs to grow to keep voters happy. Mr. Sarkozy’s campaign theme was “Work More to Earn More.” In order to keep that implied promise the economy will need to respond to his structural reforms.

Mr. Sarkozy, unlike his predecessors, has shown that he can stand tough. This puts him in a better position to achieve real reform, change that could lead to more jobs and hours worked, and more entrepreneurial initiative. When socialist students like Fabien Duquesne admit that reform is necessary, there’s hope for France’s future.

Ms. Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. She can be reached at dfr@hudson.org.


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