In a story headlined, “France Drowning in Rules and Regulations, critics say,” WaPo writer Edward Cody presents a caricature of a country with one of the highest standards of living in the world. Based on little more than interviews with disgruntled officials in one small town, Cody variously describes France’s regulatory regime as “strangling,” “smothering,” or “burying” the economy. For example:
“France and its southern European neighbors, such as Italy and Greece, are increasingly being buried in such norms, rules and directives. In the past two decades, the number of legal do’s and don’ts has become so great that businessmen and economists1 warn that it is smothering growth just as the continent tries to dig out of its worst slump in a generation.”
But France is not Italy or Greece, and the truth is almost the opposite of Cody’s claim that, compared with the Scandinavian countries, France discourages business. In fact, the World Bank measures the nations of the world on the ease of starting a new business, and France ranks well above all four of the Scandinavian countries. France also ranks about 80 places ahead of Europe’s economic powerhouse, Germany.
Output per hour worked in France is higher than in any of the Scandinavian countries and is higher than productivity in Germany and England, as well. Cody says the Organisation for Economic Cooperation and Development finds excessive regulation in France2, but the evidence, presented in an OECD report is ambiguous. In one of two measures, French regulation is rated as lighter than in Germany; in the other, France’s rules are heavier. In both cases, they’re at about the midpoint of the 0 to 6 scale.
Cody’s greatest disservice might be his utter failure to discuss the benefits of France’s regulation, such as the fact that France spends half as much on medical care as the U.S. while getting better results in longevity and infant mortality. But really, what can you expect from someone who thinks keeping traffic signs out of the middle of sidewalks is excessive regulation?
1. It’s worth noting that the West, Texas fertilizer company whose plant blew up yesterday didn’t think it needed to engage in disaster planning because its chances of a catastophe were near zero. And most economists thought the U.S. financial system was benefitting from the deregulation that preceded the crash and the Great Recession. The opinions of unnamed “businessmen and economists” on matters of regulation should always be taken with a grain of salt.
2. Cody says the OECD calculates that France spends $10 billion a year on rules and regulations. I can’t find his source, but I note that France’s GDP is about $3 trillion, so his figure is actually about one-tenth of the 3.7% of GDP he claims regulations cost the rest of the OECD countries.