The French Stimulate Quicker

By Daniel Indiviglio

It seems that Washington could learn a thing or two from France. Like the U.S., France is in the throes of a nasty recession. Like the U.S., France responded with a stimulus package choc full of government spending. Unlike the U.S., France's stimulus package is actually working. The New York Times explains:

"America is six months behind; it has wasted a lot of time," said Patrick Devedjian, the minister in charge of the French relance, or stimulus. By the time Washington gets around to doling out most of its money, Mr. Devedjian sniffed, "the crisis could be over."


Gallic pride aside, Mr. Devedjian has a point. While he plans to spend 75 percent of France's stimulus money this year, the White House is giving itself until fall 2010 to lay out that big a share of the American expenditure. And many experts predict that Washington will fall short of that goal.



What is France doing right that the U.S. is doing wrong? Their stimulus money is going to more "shovel ready" projects. Unlike so many of the U.S. projects, there are fewer barriers to the French projects that prevent breaking ground quickly. That means the French economy can feel the effects sooner. These include more basic infrastructure projects like "fixing potholes" and "upgrading railroads."

The U.S. stimulus, however, includes a great deal of funding for some much more difficult endeavors. The broadband infrastructure projects, for example, might not produce jobs for some time.

Republicans like to speculate that the Democrats expertly timed the stimulus for their political gain, as the U.S. is likely to see most of its effects right around the next election cycle. I'm pretty cynical when it comes to politicians, but I have a hard time believing that Democrats are so evil that they would intentionally allow the U.S. people to suffer double-digit unemployment just to give themselves a better chance of reelection.

The U.S. stimulus has been so ineffective mainly because of the types of projects it contains. So why did Democrats pick those projects, if not for political gain? Many have noted that the stimulus basically contained projects that Democrats had been pushing for since the days of Bush. They structured the projects to satisfy their policy goals.

Unfortunately, those projects provided results that where not as immediate as was desired. They probably believed that those policy goals would have greater positive effects on the country in the long-term. And that's probably true. But the entire purpose of a stimulus package is to provide short-term relief. What we've got here is a failure to differentiate.

France's government also had a little more incentive to make certain its stimulus works as quickly as possible. The Times also reports:

Paying for all those jobless French will not be cheap. Under French job regulations, unemployed workers are guaranteed up to 67 percent of their former salary and can collect as much as 70,000 euros ($98,000) annually in benefits for two years.


Indeed, without major changes in government policies, France faces costs that will probably be crippling in the long run. "We're insulated from the shocks, but the next generation will pay for it," Mr. Boulhol warned.

This article available online at:

http://www.theatlantic.com/business/archive/2009/07/the-french-stimulate-quicker/20793/