Sometimes the best intentions are undermined by grim reality.
Take the French government. The country has had a good recession, proving to have an economy more resilient that the UK’s and Germany’s, even if it has bailed out banks, aided the car industry directly and through a car scrappage scheme that will run until 2011, and maintained heavy debt-financed spending.
President Nicolas Sarkozy has not been backward in criticising the US-UK models of business, especially banking and his government has led the way attacking business executive remuneration, especially among French banks.
That’s impressed The Sydney Morning Herald’s international/political editor Peter Hartcher who told readers today that France’s model of doing things was worth watching.
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He was reporting after a trip to Paris sponsored by the European Union and the French government. It would have made for a more rounded feature if he had mentioned the government aid to banks, the car industry and the heavy deficit-financed spending (which won’t be as high as in the UK). In fact, the credit crunch kicked off in Paris most colourfully when the big French bank, BNP, let three investment vehicles default after finding out on August 9, 2007, that there was no liquidity to continue supporting them.
“The complete evaporation of liquidity in certain market segments of the US securitisation market has made it impossible to value certain assets fairly regardless of their quality or credit rating,'” BNP Paribas said in a statement on August 9, 2007 that still nicely sums up the real story from the credit crunch: no liquidity, something no one ever thought would happen.
French banks were big investors in dopey financial products through their UK and US offices, not in France itself. They lost heavily and needed billions of dollars in fresh capital from the government. Then there was a series of trading losses, including the $US7 billion disaster at Societie Generale. Talk about banking the French way.
That seems to have driven the French government on its present path of attacking UK and US business, banking and economic management.
The government overnight revealed that it was looking at new ways of measuring economic growth, by including such concepts as “happiness”. A good idea, growth isn’t all its cracked up to be if it is accompanied by misery, pain and inequality, and especially if there’s the bonus of showing up the US and UK governments and their ways of running their economies by showing the superior French way.
“Happiness, long holidays and a sense of well-being may not be everyone’s yardstick for economic performance, but Sarkozy believes they should be embraced by the world in a national accounting overhaul,” reported the Financial Times.
“France’s president on Monday urged other countries to adopt proposed new measures of economic output unveiled by a panel of international economists led by Joseph Stiglitz, the US Nobel Prize winner.”
Sarkozy, who set up the Stiglitz-led commission last year, said the world had become trapped in a “cult of figures”.
One consequence of the commission’s proposed enhancements to gross domestic product data would be to improve instantly France’s economic performance by taking into account its high-quality health service, expensive welfare system and long holidays. At the same time, the commission’s changes would downgrade US economic output.
The commission suggested a series of improvements to the way GDP was measured. It proposed accounting for people’s well-being and the sustainability of a country’s economy and natural resources. “The world over, citizens think we are lying to them, that the figures are wrong, that they are manipulated,” said the president. “And they have reasons to think like that.”
But the president ought to look closer to home, because a report in the London’s Telegraph reveals a shocking story from the former state-owned communications company, French Telecom.
“Didier Lombard, chief executive of France Telecom, has been summoned to meet Xavier Darcos, the French Labour Minister, on Tuesday morning to discuss why 23 French Telecom employees have taken their own lives in the past 18 months.
“Christine Lagarde, the French Finance Minister, has also ordered the former state-owned telecoms company to call a board meeting to discuss the suicides as soon as possible.
“Ms Lagarde said the company needed to send out ‘very strong message to the personnel’ that action is being taken to combat the suicides. A spokesman for the company said an emergency board meeting to discuss the problem will be held in the next few weeks.
“France Telecom on Monday held an emergency conference call with thousands of senior managers to discuss ways to help staff who may be considering taking their own lives.
“France Telecom said it would suspend the reorganisation of the company until the end of October. The company, which employs 102,000 staff, has also taken on additional 100 human resources staff to tackle workplace stress.”
The reality of life in corporate France must be terrible if 23 people commit suicide in such a large company in 18 months (which is during the crunch and recession). So much for measuring new ways of economic performance when France, like the US, UK and Australia, not to mention other economies, are still grappling with making their present systems more equitable, enjoyable and less stressful.
The French way of life can be as brutal and nasty as any other around the world and no amount of papering over with nice talk about happiness indexes can avoid that grim reality.
If France was using this new method of computing growth, how would it account for 23 suicides in 18 months in such a large flagship company as France Telecom? Very hard to seasonally adjust this one away.