The next European economic disaster: France?

The French economy—Europe’s second largest—grew at just 0.1 percent in 2012, and unemployment remains at a 14-year high of nearly 11 percent. High labor and production costs have all but crushed competitiveness with European and Asian exporters in the global market, and the French continue to resist making the kinds of deep economic reforms that helped countries like Germany get back on track in the 1980s.

Walking the streets of Paris during the recent holiday season, few French nationals were to be found along the boulevards of les grands magasins. Rather, Chinese, Russians and Brazilians filled the streets admiring the holiday windows, which in many ways were a reflection of their own images.

“France has essentially become a luxury economy catering primarily to foreigners,” one Parisian told me. “We don’t create anything outside of fashion, foods and touristic experiences.”