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When you consider the modesty of the current reform and the vehemence of the reaction against it, you begin to suspect there's more at stake than just the CPE. Though directed at a single issue, the demonstrations seem more like a mass expression of anxiety over an unexpected future. The word for this future is globalization.

On the French Protests

At one corner of the Place Bastille, every Thursday and Sunday, one of the largest open air markets in all of Paris convenes. From there it stretches half a mile along both sides of the boulevard Richard Lenoir, a thriving, crowded bazaar piled high under countless canopies with all the splendid variety of European (and North African) agriculture. Hidden within this exhibition of the wealth of French food, among the disarray of meats and fish and bread and cheese and fruits and vegetables and wine, are booths hawking less picturesque necessities like socks and children’s underwear—all of it cheap and much of it presumably made in China. Even in this bastion of Gallic pride, one can hear, above the vaunting of the marchands, the overseas cry of globalization.

The birthplace of many spontaneous historic manifestations, the Place Bastille sits appropriately at the heart of the path many large Parisian demonstrations follow from the Place de la Republique to the Place d’Italie. At one recent demonstration against the much vilified Contrat de Premiere Embauche (CPE)—Prime Minister deVillepin’s hapless attempt to remedy the persistent problem of youth unemployment here—protesters, mostly students (and manifestly bourgeois) were attacked by groups of men reportedly from the ghetto-like suburbs, or banlieus, whom the media have dubbed casseurs. This breakdown in solidarity revealed the confused, inarticulate frustration behind all the tropes and political representations that thus far have been organized, as if by reflex, under the rubric of the “spirit of ’68”. From now on, characterizations of the protests as simply anti-CPE or anti-government will seem deficient; there’s a complexity here that demands a reassessment of the situation.

Perhaps it is because these recent demonstrations can so easily be viewed as yet another iteration of the peculiarly French culture of perpetual protest that so little of the discussion has addressed larger questions of meaning and context in, say, the way the more anomalous (and violent) banlieus riots last fall did. French commentary has remained carping and mostly political, with every move at the governmental level somehow subsumed into the interminable logic of the presidential election (still a ways off) and the continual power struggle within the ruling UMP party, which is looking more and more like an endless production of King Lear with deVillepin and Sarkozy, the Interior Minister, arguing over who’s Edmund and who’s Edgar, while King Chirac lunches with the King and Queen of Spain and the socialists are left hoping that their candidate Ségolène Royal will turn out to be Cordelia and yet also somehow survive. Meanwhile, the kids are marching in the streets under the aegis of their parents’ ideals and demanding, in an oddly conservative vein, their birthright: the privileges of the French social model.

But all this is just the story in the newspapers. When you consider the modesty of the current reform and the vehemence of the reaction against it, you begin to suspect there’s more at stake than just the CPE. Though directed at a single issue, the demonstrations seem more like a mass expression of anxiety over an unexpected future. The word for this future is globalization, and it has come back into play precisely when the French state must deal with the unforeseen results of longstanding, well-intentioned policies on immigration and social protection adopted, in many cases, for short-term gain some 20, 30, or 40 years ago. These problems are coming home to roost in France sooner than elsewhere, but such challenges are due to be shared by most, if not all, developed western societies.

France has a whole slew of employment contracts, all of which exist under the Code de Travail, a suite of labor laws among the most protective in Europe. The two most important categories are the Contrat a Duree Determinee (CDD) and the Contrat a Duree Indeterminee (CDI). Suffice it to say that the unlimited-term contract, the CDI, is more attractive to employees than the fixed-term CDD. It is arduous and often costly for an employer to terminate an employee under a CDI. Employers, therefore, are extremely reluctant to write CDIs for young employees, who by definition are inexperienced and unproven. As a result, 80 percent of young people are hired under a CDD, often for the minimum duration of nine months. To make matters more insecure and arbitrary, a CDD contract can only be renewed for exactly the period of its initial duration, which means, in many cases, a seemingly endless succession of nine-month contracts. Often young employees must wait eight to eleven years before receiving a CDI. Add to this the last 15 years of sluggish economic growth in France, and one gets a building sense of an entrenched, two-tiered labor system—one for the young and another for the middle-aged.

If enforced, the CPE would create a two-year trial period during which employees under the age of 26 (a demographic with 25 percent unemployment) can be dismissed within 15 days without cost to the company. It’s textbook liberal economic thinking on labor market flexibility: if you lower the cost of acquiring labor, companies will acquire more. In practice, the reform is less consequential and probably less effective than advertised. Leading French economists don’t believe the CPE will have much impact on youth unemployment, since the primary users of the new contract will be firms that already have high rates of employee turnover. Yet the protestors suggest that their economic survival is at stake:

“The CPE puts the young in an unacceptably precarious position, since they can get laid off any day and for no reason. It opens the door to all sorts of abuses. Under the CPE, an employee will have a sword of Damocles hanging over his head. He or she will be subjected to a paralyzing psychological pressure. One would never dare, for example, to ask for overtime pay for fear of getting dismissed.”

The above quote (in my translation) is from a round table by Figaro magazine called “Jeunes et Patrons Face à l’Avenir” and is attributed to Julien, age 25, a member of “the Precarious Generation” and holder of a CDD. Julien’s sensational rhetoric does not mark him as exceptional, and I think it expresses a fairly profound sense of economic dislocation. This word precarious comes up again and again in interviews and conversations here, so often that it seems as if someone had distributed talking points to the crowd. It cuts to the core of young people’s fears about the CPE in particular and economic liberalization in general. One of my wife’s Sorbonne students said to her, “Flexibilite is just another word for precarite.”

I’ve read in the foreign press that the French students are protesting against a reform that for most workers in most developed countries is a fact of life. Perhaps they are “too busy burning cars to look for work,” as John Tierney put it. Prejudiced and xenophobic observations aside, it is not an unwillingness to work that makes the young people of France fearful of exposure to the free-market elements via the CPE. Rather, it is precisely because they are worried about their economic futures and the degree to which the social welfare model is letting them down that they are fighting tooth and nail for these protections.

Most of the kids who are fighting against the reform would agree that something needs to be done to change a system which fails to employ one fourth of them. Indeed, to believe otherwise would require a Brezhnevian degree of denial. Yet beyond the abstract agreement on the need for change lies an impasse. The anglo-saxon liberals suggest piecemeal liberalization. Everyone else objects. The opposition socialists and their allies the unions seem mostly interested in scoring political points. Meanwhile, the politics of the jeunesse remain conservative and/or destructive, mostly standing in opposition to change and at odds with reform, oblivious to the irony of their ’68 pantomime.

To the students’ credit, it’s not clear why they are the ones being asked to bear the brunt of the labor market reforms. It’s legitimate to ask what good will be accomplished by liberalizing one portion of a market when the rest of it will remain essentially rigid. And there’s something to be said against the arbitrariness of the 26-year cutoff; it makes it seem as though the young are being unfairly targeted for belt-tightening, even though many of these kids would be on CDDs anyway.

Here we arrive at the sticky wicket of French politics: Everybody agrees that something needs to be done, so long as it doesn’t require pain. I’m reminded of a piece I read in my hedge-fund days by an economist named Woody Brock called “Japan Does Not Exist.” What he meant by this absurd, half-joking statement was that the Japanese economy was in dire need of reform, yet for various reasons the government was unable to distribute the necessary pain (don’t you love economists? necessary pain!) among powerful constituencies who had a greater interest in the status quo than voters in general. In effect, he argued, Japan had ceased to be a functioning polity and had devolved into a grab bag of special interests. (Incidentally, Brock’s observation turned out to be totally wrong. Koizuimi was elected shortly thereafter with a reform mandate, and many supposedly unlikely reforms have been accomplished since.)

You don’t have to be a hedge-fund pundit to see that the problem with France’s present and future stems from still-festering problems in its past. The high rates of unemployment in the banlieus, for example, are the legacy of a 1960s-era immigration policy meant to plug a short-term labor shortage, combined with longstanding government neglect and an unwillingness to educate the children of those immigrants adequately. Now we have casseurs, part of a generation of undereducated kids who will not be absorbed overnight into a labor force whose main engine of growth is a government that is already in breach of its Maastricht Treaty budget-deficit limits and must sell off public assets, like the electric company EDF, just to stay in balance.

These longstanding problems demand a solution, and so far small-scale market liberalization seems to be the only plan articulated by the government. The opposition hasn’t progressed much past the famous NON of a year ago; though it’s been taken up as a rallying cry by many, it hasn’t yet produced a program for reform. Which leaves us with the euphemisms of the center-right parties, like “Economic Patriotism” and “dynamism”—all of them routes around the word competitiveness, which returns us again to the effects of globalization: not the amorphous bogeyman that seems to lurk at WTO meetings, but the world economic system as it stands now, which challenges the very sovereignty of national economic decision-making. France (or any other government) can still organize its economy however it pleases; but governments can no longer insulate their people from knowing and feeling the consequences of national economic decisions. Controlling immigration has no effect on the global cost of labor; regulating your economy does not insulate it from the activities of the other economies with which it’s intertwined. As of now, liberalization combined with affordable social protection and investment in one’s labor force (read: education!) is the only playbook we have. (Personally, I’m still holding out for some supra-national solution to the problems presented by globalization, a la Habermas, but I’m not holding my breath.) But long-term solutions can’t fix mature economies with structural social problems or untenable macroeconomic positions overnight, and they’re not likely to assuage dissatisfied voters (and students) who’ve become accustomed to believing they can have it all-high levels of social benefits, high levels of debt, economic growth, and cheap prices for consumer goods.

Perhaps a way will be found out of the current impasse. Perhaps not. The German economy, an export powerhouse and one half of the French/German axis, seems poised to benefit from the promise of the EU and globalization. The question is whether the “Rhineland model” (the economic policies favored by Austria, France, Belgium and Germany), can find the flexibilite to face the challenges of globalization while buffeting their citizens against excessive precarite by preserving a viable social insurance scheme and pension system for the out-of-work and retired. So far, the trend seems discouraging to anyone who hopes for the development of a successful modern economic model that doesn’t depend upon excessive consumerism and a foundation of low-cost labor—one capable of coping with the 21st-century challenges of changing demographics and scarce resources, and of exploiting the opportunities of globalization, without wrecking the planet along the way. A tall order, indeed. Barring the emergence of a capable leadership that can speak to French voters with compassion and honesty about what needs to be done, I fear the order will remain unfilled.

In the meantime, I’m headed back to the Bastille market for cheap socks and children’s underwear (we’re expecting). I’ll be shopping alongside a whole host of French folks.

I love it here, so I certainly hope “France exists.”

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