France Strikes Over Increasing Retirement Age: The Meta-Economics of Success

France is into its third or fourth day of striking over President Nicolas Sarkozy’s bold plan to increase the retirement age from 60 to a whopping 62. Of course, striking in France is a national hobby, a way of getting outside and enjoying the sun. French strikes are dog-bites-man headlines.

The real story is why the citizenry is withholding their labor to protest that they should not have to labor and should instead be taken care of an extra two years of their life. Now, I am no expert in French economics and so cannot say whether retaining the 60-year retirement mark will be as disastrous for the State as Sarkozy says it will be. And perhaps French offices are such hellish places that the faster one can escape from them, the better. But just look at the following statistics.

Because higher education is largely paid for by taxing those who labor, the average French citizen does not enter the workforce until he is 22 to 25. That is, the care and feeding of the first 22 to 25 years of an average Frenchman’s life are paid for by somebody other than himself; first his parent or parents, then working citizens. After he himself begins working, this homme moyen expects to cease laboring at age 60. The care and feeding for remaining years of his life, which will total roughly between 20 to even 30 or more years, will be funded by taxing those younger folks who still labor.

It is easy to see that since the average Frenchman will work from 35 to 38 years of his life, and will have others work for him from 42 to 55 years, that from 53% to 61% of the man’s life will be supported by the labor of others. This crude estimate does not account for many factors, and it is only for a fictional “average man”, but it is suggestive. More than half a life spent laying in the vines eating grapes grown by the labor of others!

The hidden part of the equation is that the care of the young and the aged, indolent men are not merely being supported by an increasingly small fraction of the population. They are also being supported by the labors of the dead. This phenomenon does not apply just to Frenchmen, but to all of us.

A mere century ago, and except for a trivial fraction of humanity—kings, queens, and the like—-no person could expect to have the majority of his life supported by others. Before, say, 1900, lives were shorter and filled with sweat from a man’s first steps until his last. This included weekends! But from the year 2000, lives are longer and a man can now expect to spend a significant portion of his life in the pursuit of pleasure.

As said, this is only possible because those before us bequeathed us the knowledge and the tools to keep us well-fed, clothed, and housed. All evidence is that we appear to be doing the same for the generations that will come after us. That is, we are adding to the knowledge and tools which will allow our grandchildren to work even less of their lives than a modern Frenchman.

How long before we arrive at the point where food, clothing, and housing are so cheap the world over that no further effort need be made to procure them? A century? Two? Will life then become so easy that our base survival necessities are “free”? What happens to us then?

There are other things that drive us—hate, envy, lust, pride, a desire to best others—so it is likely that knowledge will increase. But by how much? When your dinners and entertainment are guaranteed, how much of the population will opt for a lackadaisical life? If labor isn’t necessary, many won’t bother.

But, humans being what they are, they will always find something to complain about. Given history, it is rational to assume that irritants which we now consider trivial, petty, and even non-existent will seem to our grandchildren gross outrages, just as French citizens scream like stuck cochons when asked to stick at it for a mere two more years. So it is likely that some innovation will continue.

That is, if our grandchildren bother to have grandchildren of their own. If you’re so busy concentrating on where you’ll find your next distraction, or “experience”, you’ll not spend much effort on procreating and bearing the burdens that activity implies.

It is the old question: how much success is too much?

15 Comments

  1. It gets stranger. The young people are in the street demonstrating with the workers. The logic for some of them seems to be:

    1 – There is high unemployment for young people.

    2 – If workers retire two years later, they are taking jobs from young people.

    3 – Therefore people should retire earlier, not later.

    There is a silver lining though. At least the young people want to work.

  2. cb; not so sure the younger ones want to “work”. They just want “jobs”. Not the same thing, don’t-cha-know. There is actually work out there but most of it is too far beneath their levels of self-image to be acceptable.

  3. Matt:
    I feel sorry for Sarkozy. He is trying to teach half the country that there is no such thing as a free lunch. It is far more difficult and far more dangerous than teaching statistics and algebra to unmotivated American college students. ALas you both have about the same chances for success.

    I hpe he succeeds because the unfunded “pension” bombs, particularly those in the public sector where the Unions can extort unrealistic terms, could take us all down.

  4. 49erDweet – I’m glad I didn’t have a mouth full of coffee when I read your post. I don’t know any French students but I sure wouldn’t bet that you aren’t right.

  5. Everybody wants to have a job. Once they have a job, they want less work, more vacation and early retirement. And of course ever increasing salaries.

    “The care and feeding for remaining years of his life, […], will be funded by taxing those younger folks who still labor.”
    And not to forget that, in all fairness, they should also contribute to “the care and feeding of the first 22 to 25 years of an average Frenchman’s life” of the following generation.

  6. Matt,

    I actually think it’s an interesting and rather complex problem if/when we are able to produce robots that can do labor that is today done by human workers.

    In Star Trek, people simply take to the stars and spend their energies on pursuing knowledge of the galaxy. I have a hard time believing that people are so driven.

    In any case, I don’t find it unfortunate that we no longer have to work from sunup to sundown every day until we die. What I find unfortunate is that so many no longer take pride in working at all. Then again, it’s likely that most people never did– they just did it because if they didn’t they starved. Today, you just give up smokes and alcohol (in Germany.)

    http://www.slate.com/id/2269040/

  7. I live in France; France has a post-War tradition that the worker must come first and so takes precedence over the client/customer whom he has learned to ignore, and is in a constant adversarial state with his employer whom he must dominate. Since nearly half of all in work, work for the State, this produces a continuous, dynamic tension.

    Labour laws have increasingly encouraged the French to believe they should work less and less – thus the 35 hour week and never on a Sunday. So entrenched is this that when Sarky relaxed the rules, he also had to “bribe” workers to work extra by making overtime income tax free. There have been few takers.

    The 35 hour week and early retirement was supposed to engineer a workforce deficit and out with the old in with the new situation which would oblige employers to hire more people, particularly the young, with the dual advantage of reducing unemployment and creating work opportunities for the young.

    It may have worked except high employer social security costs, coupled with it being almost impossible to fire anyone resulted in employers just managing with reduced workforces which means work gets delayed and everybody waits.

    It then dawned on the political wizards that older employees earn more and thus pay more tax than young ones starting out, so what with less work being done overall and more at the lower salary end, the overall tax take went down, but payouts went up because not only were the early retirement generation starting to retire, but those 25 year olds leaving education could find no jobs and so became clients of Sate hand outs.

    So to pay for it all direct taxation spirals up, but many cannot afford to live and pay the taxes, so there are a plethora of circumstances by which tax credits can be gained not least by having more children and of course costing the Sate more thereby, and the proportion of tax payers who actual make a net positive contribution to income tax goes down every year. In 2009 it was 43%.

    This is the true benefit of Social Democracy aka advance towards Communism via Socialism, which is now endemic in Europe and advanced in France.

    The shortfall is made up from indirect taxation which penalises low earners and thus triggers more State aid, increasing government debt.

    France takes over half the EU’s Common Agricultural Policy budget which is a de facto welfare system for French farmers who live on poor, low yield land growing very little or grapes that nobody wants, and without which France would collapse.

    The French do know this but they are like a dog with an old, old bone, even though all the meat, juices and flavour have gone, the dog will aggressively resist the bone being taken way.

    Prediction: in the current stand off, the Government will give in. It always has and everyone knows this but there is a tradition and procedure to be followed first so everyone’s honour is satisfied: the Government tried; the People prevailed.

  8. There are other things that drive us—hate, envy, lust, pride, a desire to best others

    It must be a sad life, when these things and survival are the only things that drive you.

  9. Matt,

    But aren’t they? In the “state of nature,” aren’t we pretty much just driven by preservation of self and propagation of our genes?

    Keep in mind that I’m Hobbesian at the core, but I think you hit the nail right on the head there.

  10. I live in Paris and follow all that directly .
    William there are many parts of your post that base on cliches and misinterpretations .
    I will try to briefly but accurately resume what is going on and why .

    1)
    The French retirement system is based exclusively on the repartition . The idea is that ALL the working people pay a retirement fee which is collected by the Caisses de retraite which redistribute the collected money among those who are in retirement . The basic axiom of the system is balance e.g collected money = paid money . One may find this system good or bad but the French find it massively good – if a referendum took place I guess that 90% + would vote for it .
    .

    2)
    When it was introduced (between Vichy 1941 and Resistance 1944) it found an overwhelming support so it is clearly legitimate . But most importantly the sanity check done back in the 40ies was the following :
    Do number of retired people x a modest retirement = A
    Do A / Average Salary x number of working people = B
    In order for the system to work , B must be a number much smaller than 1 and preferably smaller that the income tax percentage .
    The sanity check was OK .
    .

    3)
    Clearly the Result of the sanity check depends on : number of working people / number of retired people .
    This ratio was 4 in the 40 ies . But as the life expectancy increased , it is 2.5 today and tends to 1 in 2050 .
    The mechanical consequence is that B increases and the sanity check doesn’t work or will not work soon .
    To solve the problem there are only 4 solutions :

    – decrease A by decreasing the amount defined as “modest retirement” . If you try that then the hangings begin . The old people vote right wing anyway . And the right wing was majority in France since Napoleon . Sometimes silent sometimes less so . So nobody tries .

    – Add to a reasonable B a C which is a tax on something else than work . F.ex capital . This would be a destruction of the repartition system because you would make the retirement depend on existence and fluctuations of an exterior agent (f.ex capital) . The left is vaguely proposing that well knowing that it is on knife edge . Taxing the rich is rather popular in all countries but Luxemburg but destroying the repartition system is extremely unpopular . President elections are in 18 months so even the left is walking on the eggs before proposing that .

    – Increase the number of working people by decreasing unemployment . Magnificent solution that hurts nobody and would be extremely popular . Unfortunately all but a few morons of the Ligue communiste révolutionnaire know that unemployment depends on growth and growth can’t be decreed by a government (unless your name is Stalin and you are an illusion master or your name is Hitler and you have imaginative solutions how to use unemployed people) .

    – Decrease the number of retired people . Preferably by increasing the age of retirement , other methods being less politically correct . That’s what Sarkozy does .
    .
    4)
    Nobody likes the idea to work much more . But more importantly people (not only in France) are fed up with the international crisis , with delocalisation , with unemployment , with China and what not .
    And the polls are showing that the majority in France understands that something must be done and that Sarkozy’s solution makes sense .
    But the same majority is saying we are pissed and there is no reason that we don’t make Sarkozy pissed too .
    To that adds the very specific role of the french unions that doesn’t have afaik an equivalent in the world but that would take another full post .
    .
    The superficial result of all that is what you see but of course the understanding can’t be obtained by only watching CNN&Co 😉

  11. Tom,

    Hangings? Are there not still guillotines lying about from which the rust can be removed?

    I may have presented the details of the French system in comic form, but I still ask: isn’t it amazing that we as a species have progressed to the point where physical labor is only required a small, and rapidly decreasing fraction of our lives.

    What will be the consequences when this fraction becomes small?

  12. William you did not really analyse the system . You wrote several variations on “Of course, striking in France is a national hobby, a way of getting outside and enjoying the sun.” which are cliches . Perhaps funny cliches but cliches all the same .
    In reality striking is not qualitatively different in France , US , UK or Belgium .

    As for the 2 real questions .

    There is no normative fraction (time in work / total time) .
    It varies in time and space .
    Because there is no norm , it is not possible to say if a fraction measured at a given space in a given time is too “small” or too “big” .
    The problem in France is NOT whether people work too much or too little .
    The problem is whether a given fraction is economically sustainable for a certain interval of time .
    If the answer is no (case of France) then you must modify the fraction .
    Or break the system .
    The former is an evolution , the latter a revolution .
    Most people generally prefer the former .

    I would reformulate this question “What will be the consequences when this fraction becomes small?” in an exactly opposite causal way .
    What would be the cause of a small fraction like 10 % ?
    The answer derives directly from the economical meaning of the fraction .
    It would be the existence of something that creates wealth (=added value) and what is not human work .
    And we already have examples in our past .
    The existence of slaves (considered as not human) enabled a very small fraction within the population of humans (e.g Greek citizens f.ex) .
    So the answer is easy : non human slaves would be cause of a very small fraction .
    Evolved robots might be an example .
    Of course untill some revolutionary movement for the robots’ rights declares that robots are born equal to humans …
    And the wheel will have done one turn more 🙂

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