(Paris) My farewell tour for the welfare state has taken me to France, where clear thinking economists are guessing when and not if the French government begins an economic meltdown, ala Greece. Bertrand Lemennicier, Professor of Economic Science at Universite’ Pantheon-Assas Paris tells me it could be a few more years, or it could be only months. But he believes it will happen overnight, stunning the world. Nicolas Lecaussin, Director at Institut de Recherches Economiques et Fiscales believes the meltdown will be triggered by a downgrade of France’s credit rating from the present triple A status.
Economically, France is not Greece, yet, but French politicians face the same political trap. There’s no political payoff for reforming the system. Cutting benefits in an already tough economy only triggers strikes and constituent grievances.
The French welfare state, as generous as any Europe—the minimum wage is close to the median wage—is like a freight train chugging toward a cliff. Demographics alone--aging baby boomers and falling birthrates-- dooms it. But the passengers and the engineers on board this train seem blissfully unaware of the danger that lies ahead.
At least half of the nation has a major ownership stake in the nation’s doomed welfare state, because they pay no taxes for the benefits they receive. A recent poll of French young people showed most want government jobs when they grow up, because of the benefits.
France’s official debt to GDP ratio is 80 percent. But economists say the real figure is over 100 percent. Greece’s solvency did a swan dive at 115 percent.
And there is a fear that when the French government finally goes bust, the nation will look to the Left, and not the Right, to somehow revive this welfare wonderland, throwing gasoline on an already burning economy.