France's bum-steer battle both for and against economic growth

Bizarrely, the complete takeover of the French government by Socialists early last year hasn’t done much to improve the fortunes of France’s economy — quite the opposite, actually. France’s economy is in recession, businesses are fleeing their shores, unemployment is hovering around eleven  percent, public spending is still unsustainable; and despite their very explicit best efforts to grow and expand, the whole thing is only continuing to get worse.

French national statistics agency (INSEE) forecasts the country’s economy to contract by 0.1 percent this year.

The INSEE, which revealed its latest forecasts on Thursday, estimated the unemployment rate to hit 10.7 percent from 10.4 percent a month ago.

The agency predicted that consumer spending, the traditional motor of France’s economy, would continue to decline by 0.2 percent in 2013 after falling by 0.9 percent last year.

Their economy is “suffering” from an [entirely self-imposed] crisis of non-competitiveness, and somehow, they just can’t seem to figure out why — but their spectacularly misguided campaign to quash online delivery retailer Amazon’s growth in France is a perfectly representative example of precisely why. More, via Bloomberg:

France’s culture minister said Friday that she would introduce legislation to block Amazon from offering free shipping on books already sold at a discount by the online retailer, according to Reuters. France and other European countries have long fixed the price of books to keep bookstores in business. Current laws keep Amazon from offering discounts on books that exceed 5 percent of the sale price as set by the publisher. But even that seems not enough. Last year, the country’s culture ministry also suggested other forms of aid for bookstores, with help from both publishers and the government. One such policy: limiting rent increases on bookstores, according to the New York Times.

“Amazon’s behavior, and the risks it poses for the survival of a whole network of bookstores and the entire chain of book production, are obvious in Britain and in the United States, too,” said Aurelie Filippetti, France’s minister of culture and communications, who is also a novelist with several books for sale on Amazon.

“Fixed the price.” “Help from both publishers and government.” “Limiting rent.” And the Socialists are sincerely wondering why their economy is going further into the tank. ‘Quelle horreur, the gall of Amazon, offering up an efficient, convenient service in the free market for purely voluntary consumption!’ …They’re just not getting it.

 France has the highest tax and social security burden in the Eurozone and the second lowest annual working time. There has been a sharp rise in unit labor costs, making France even less competitive. …

You can read a half a dozen reports and analyses of the French predicament, and they will all mention “labor rigidities” as being part of the problem. There is a high minimum wage cost, and it is hard to let employees go in difficult times, which discourages businesses from hiring young, inexperienced workers. New business start-ups, the source of real job growth, have fallen as a result of the relentless assault by the bureaucracy on entrepreneurs, not to mention the impredations of the tax-man. Corporate profit margins are thin in France, and companies are leaving for locales that afford them more-attractive cost options. …

France is on its way to becoming the new Greece. In 20 years, the Harvard Business School will do a case study on what not to do when faced with a massive fiscal crisis. France and Hollande will be Exhibit #1.