France Shows the Peril of a Minimum Wage that's Too High

[Toro]

This doesn't necessarily mean the minimum wage can't rise in America. But there is a natural limit.

Many countries have been labeled the "Sick Man of Europe" over the years. Now it is France's turn. As the crisis countries of Southern Europe start to show signs of recovery, the spotlight has swung with remarkable speed onto the Continent's second-largest economy.

After three recessions in five years, France's economic weaknesses are becoming harder to ignore: Growth flatlined in the third quarter of 2013, unemployment hit 10.9%, up from 7.8% in 2010, and the current account, which was consistently in surplus before the crisis, is persistently in deficit. ...

His high-profile efforts to impose a 75% top rate of tax—the cost will now be borne by employers—only reinforced the perception that France is a hotbed of militant socialism: overtaxed, overregulated and hostile to wealth creators. ...

The article says some nice things about France, but then ...

But France's real problem is that this long-term potential growth rate is far too low given its expanding population and importance to the wider euro-zone economy. Most forecasters estimate that France's real potential growth rate—after stripping out inflation—is only around 1.2%. The U.S. and U.K. are widely thought to be capable of growing at about 3% and 2.2%, respectively. ...

There is no great mystery why France's potential growth is so low. The EU, IMF and OECD all agree that the core problem is that wages have been growing faster than productivity for many years. The minimum wage is now equivalent to 62% of the median wage; that compares with 47% in the U.K. and the Netherlands and 38% in the U.S. Rising wages helped support consumer-driven domestic demand but made French firms less profitable and caused them to cut back on investment, making them less competitive. Meanwhile, many economists argue that overgenerous unemployment benefits—anyone who has worked for more than 28 months can receive up to 75% of their old salary for 24 months—have acted as a disincentive to work.

And ...

Yet rather than cut spending, which now accounts for 57% of GDP, Paris has chosen over the years to raise taxes.

Finally

The World Economic Forum ranks France 144th out of 148 countries for ease of hiring and firing.

All of Europe Awaits Hollande's Cure - WSJ.com

So, a lot of lessons from France on what not to do.

 

[william the wie]

Yeah and no end in sight.

 

[Avorysuds]

WHY DO YOU HATE POOR PEOPLE!!!!

Living wage or you hate poor people!

 

[Zander]

Socialism is great!! ...at least until you run out of the "other guy's" money.

 

[william the wie]

Socialism is great!! ...at least until you run out of the "other guy's" money.

France has.

 

[oldfart]

This doesn't necessarily mean the minimum wage can't rise in America. But there is a natural limit.

Many countries have been labeled the "Sick Man of Europe" over the years. Now it is France's turn. As the crisis countries of Southern Europe start to show signs of recovery, the spotlight has swung with remarkable speed onto the Continent's second-largest economy.

After three recessions in five years, France's economic weaknesses are becoming harder to ignore: Growth flatlined in the third quarter of 2013, unemployment hit 10.9%, up from 7.8% in 2010, and the current account, which was consistently in surplus before the crisis, is persistently in deficit. ...

His high-profile efforts to impose a 75% top rate of tax—the cost will now be borne by employers—only reinforced the perception that France is a hotbed of militant socialism: overtaxed, overregulated and hostile to wealth creators. ...

The article says some nice things about France, but then ...

But France's real problem is that this long-term potential growth rate is far too low given its expanding population and importance to the wider euro-zone economy. Most forecasters estimate that France's real potential growth rate—after stripping out inflation—is only around 1.2%. The U.S. and U.K. are widely thought to be capable of growing at about 3% and 2.2%, respectively. ...

There is no great mystery why France's potential growth is so low. The EU, IMF and OECD all agree that the core problem is that wages have been growing faster than productivity for many years. The minimum wage is now equivalent to 62% of the median wage; that compares with 47% in the U.K. and the Netherlands and 38% in the U.S. Rising wages helped support consumer-driven domestic demand but made French firms less profitable and caused them to cut back on investment, making them less competitive. Meanwhile, many economists argue that overgenerous unemployment benefits—anyone who has worked for more than 28 months can receive up to 75% of their old salary for 24 months—have acted as a disincentive to work.

And ...

Yet rather than cut spending, which now accounts for 57% of GDP, Paris has chosen over the years to raise taxes.

Finally

The World Economic Forum ranks France 144th out of 148 countries for ease of hiring and firing.

All of Europe Awaits Hollande's Cure - WSJ.com

So, a lot of lessons from France on what not to do.

You have no idea how physically painful it is for me to defend the insufferable French, but the German press campaign picked up by the WSJ and right wing commentators around the world force me to it. They are pissed that the French balanced their budget through tax increases on the highest incomes rather than austerity. That's it. End of story. When the French don't collapse, their narrative falls apart.

Everyone knows the French are decadent and lazy. The Germans are hard working and frugal. This is an economic morality play. Except that economics is not a morality play.

I could give you my reasoning, but let's make it sporting. I predict that the French economy will outperform the German economy over the next two years. Sign up now; who agrees with me and who disagrees. You can give your reasons if you wish. Anyone using insults directed at other posters must write a 500 word essay on the contributions of Francois Quesnay.

 

[Zander]

This doesn't necessarily mean the minimum wage can't rise in America. But there is a natural limit.

Many countries have been labeled the "Sick Man of Europe" over the years. Now it is France's turn. As the crisis countries of Southern Europe start to show signs of recovery, the spotlight has swung with remarkable speed onto the Continent's second-largest economy.

After three recessions in five years, France's economic weaknesses are becoming harder to ignore: Growth flatlined in the third quarter of 2013, unemployment hit 10.9%, up from 7.8% in 2010, and the current account, which was consistently in surplus before the crisis, is persistently in deficit. ...

His high-profile efforts to impose a 75% top rate of tax—the cost will now be borne by employers—only reinforced the perception that France is a hotbed of militant socialism: overtaxed, overregulated and hostile to wealth creators. ...

The article says some nice things about France, but then ...



And ...



Finally

The World Economic Forum ranks France 144th out of 148 countries for ease of hiring and firing.

All of Europe Awaits Hollande's Cure - WSJ.com

So, a lot of lessons from France on what not to do.

You have no idea how physically painful it is for me to defend the insufferable French, but the German press campaign picked up by the WSJ and right wing commentators around the world force me to it. They are pissed that the French balanced their budget through tax increases on the highest incomes rather than austerity. That's it. End of story. When the French don't collapse, their narrative falls apart.

Everyone knows the French are decadent and lazy. The Germans are hard working and frugal. This is an economic morality play. Except that economics is not a morality play.

I could give you my reasoning, but let's make it sporting. I predict that the French economy will outperform the German economy over the next two years. Sign up now; who agrees with me and who disagrees. You can give your reasons if you wish. Anyone using insults directed at other posters must write a 500 word essay on the contributions of Francois Quesnay.

First you need to define "economy", specifically.

Then you need to define "outperform". Based on what economic measurements?

Maybe a wager could be made at that point, but only with appropriate odds.


that reminds me of an economist joke......

Two economists were walking down the street when they noticed two women yelling across the street at each other from their apartment windows.

Of course they will never come to agreement, stated the first economist.

And why is that. inquired his companion?

Why, of course, because they are arguing from different premises.

 

[Toro]

This doesn't necessarily mean the minimum wage can't rise in America. But there is a natural limit.

Many countries have been labeled the "Sick Man of Europe" over the years. Now it is France's turn. As the crisis countries of Southern Europe start to show signs of recovery, the spotlight has swung with remarkable speed onto the Continent's second-largest economy.

After three recessions in five years, France's economic weaknesses are becoming harder to ignore: Growth flatlined in the third quarter of 2013, unemployment hit 10.9%, up from 7.8% in 2010, and the current account, which was consistently in surplus before the crisis, is persistently in deficit. ...

His high-profile efforts to impose a 75% top rate of tax—the cost will now be borne by employers—only reinforced the perception that France is a hotbed of militant socialism: overtaxed, overregulated and hostile to wealth creators. ...

The article says some nice things about France, but then ...



And ...



Finally

The World Economic Forum ranks France 144th out of 148 countries for ease of hiring and firing.

All of Europe Awaits Hollande's Cure - WSJ.com

So, a lot of lessons from France on what not to do.

You have no idea how physically painful it is for me to defend the insufferable French, but the German press campaign picked up by the WSJ and right wing commentators around the world force me to it. They are pissed that the French balanced their budget through tax increases on the highest incomes rather than austerity. That's it. End of story. When the French don't collapse, their narrative falls apart.

Everyone knows the French are decadent and lazy. The Germans are hard working and frugal. This is an economic morality play. Except that economics is not a morality play.

I could give you my reasoning, but let's make it sporting. I predict that the French economy will outperform the German economy over the next two years. Sign up now; who agrees with me and who disagrees. You can give your reasons if you wish. Anyone using insults directed at other posters must write a 500 word essay on the contributions of Francois Quesnay.

I'll take that bet! 14 and 15, German GDP will grow faster than France. Winner gets control of the loser's sig for a month.

France hasn't balanced its budget. The deficit is expected to be 4% for the next few years.

 

[ABikerSailor]

Has anyone paid attention to the fact that the United States has done less austerity measures than Europe, and our economy is doing much better?

Sorry......................but keeping unemployment benefits going and increasing the minimum wage will do more for our economy than giving tax breaks to the rich.

Why? Simple.............................if unemployed people can keep receiving benefits, they will continue to do things like pay rent, pay utilities, and possibly even (if they can save the pennies they have left over at the end of the month), go out to a movie or dinner.

If the minimum wage is increased from 7.25 to 10.00 (although I feel it should be increased to 15.00/hr), those who are being paid minimum wage (which there are a whole lot more minimum wage earners than there are those who are considered to be part of the 1 percent) would have more money to do things other than just pay for stuff like food, rent, utilities, and general living bills. They may have enough money to actually spend on things like dinners out, going to the movies, or things that they can use, but currently can't afford.

The real job creators aren't people like Mittens Rob Me, Rubio, Cruz or Boehner, the real job creators are those of the middle to poor class, because they are the people who actually buy the stuff that creates jobs.

 

[Sallow]

This doesn't necessarily mean the minimum wage can't rise in America. But there is a natural limit.

Many countries have been labeled the "Sick Man of Europe" over the years. Now it is France's turn. As the crisis countries of Southern Europe start to show signs of recovery, the spotlight has swung with remarkable speed onto the Continent's second-largest economy.

After three recessions in five years, France's economic weaknesses are becoming harder to ignore: Growth flatlined in the third quarter of 2013, unemployment hit 10.9%, up from 7.8% in 2010, and the current account, which was consistently in surplus before the crisis, is persistently in deficit. ...

His high-profile efforts to impose a 75% top rate of tax—the cost will now be borne by employers—only reinforced the perception that France is a hotbed of militant socialism: overtaxed, overregulated and hostile to wealth creators. ...

The article says some nice things about France, but then ...

But France's real problem is that this long-term potential growth rate is far too low given its expanding population and importance to the wider euro-zone economy. Most forecasters estimate that France's real potential growth rate—after stripping out inflation—is only around 1.2%. The U.S. and U.K. are widely thought to be capable of growing at about 3% and 2.2%, respectively. ...

There is no great mystery why France's potential growth is so low. The EU, IMF and OECD all agree that the core problem is that wages have been growing faster than productivity for many years. The minimum wage is now equivalent to 62% of the median wage; that compares with 47% in the U.K. and the Netherlands and 38% in the U.S. Rising wages helped support consumer-driven domestic demand but made French firms less profitable and caused them to cut back on investment, making them less competitive. Meanwhile, many economists argue that overgenerous unemployment benefits—anyone who has worked for more than 28 months can receive up to 75% of their old salary for 24 months—have acted as a disincentive to work.

And ...

Yet rather than cut spending, which now accounts for 57% of GDP, Paris has chosen over the years to raise taxes.

Finally

The World Economic Forum ranks France 144th out of 148 countries for ease of hiring and firing.

All of Europe Awaits Hollande's Cure - WSJ.com

So, a lot of lessons from France on what not to do.

Yah Toro..it was minimum wage that is causing France's economic woes.

Never mind that trivial banking crisis..

Minimum wage is the new shiny.

 

[oldfart]

First you need to define "economy", specifically.

Then you need to define "outperform". Based on what economic measurements?

Maybe a wager could be made at that point, but only with appropriate odds.


that reminds me of an economist joke......

Two economists were walking down the street when they noticed two women yelling across the street at each other from their apartment windows.

Of course they will never come to agreement, stated the first economist.

And why is that. inquired his companion?

Why, of course, because they are arguing from different premises.

And if you laid all economists in the world end to end, they would never reach a conclusion.