Wednesday, October 20, 2010

Where economic illiteracy has led France

In France the protests are getting violent. The public is rising up against the proposal to raise the retirement age from 60 to 62. France, like many European countries, is facing ruinous entitlement obligations. For years these nations have added in sweeter and sweeter benefits for workers and now the bill is coming due. Those protesting don't see why the government shouldn't just raise payroll taxes on businesses. Those employers currently pay more than 40% in payroll taxes.

If you look at the news reports on these protests, most of the people in the street seem young. The WSJ captures their thinking with this quote from one protester.
"I've not even started working yet, but I will now have to work longer—that is, if I can find a job," the young man told Sky News.
Oh, sweeetie. Why do you think businesses are employing fewer workers? Could it have anything to do with the costs the government imposes on employers to fund those generous retirement benefits?

As the WSJ points out, the average life expectancy in France is 81.5 years now. So those protesting are angry that they will have to work a couple of more years to gain close to 20 years of government-paid benefits. When declining demographics are added to rising unemployment among the young, the funding picture for those benefits is increasingly stark.

Everyone in California should be taking notes on what is going on in France. It is their future. And do they think that Jerry Brown is the guy to fix those problems? Sheesh!