Wayne O'Leary

Joe Biden’s French Lesson

For many, perhaps most Americans, France’s days of political rage are a perplexing phenomenon. Those silly French are acting out again, taking to the streets, striking over having to work two years longer before reaching retirement. What’s wrong with them? The average American would never demonstrate about retirement pensions. Abortion rights, racial discrimination, or gun laws? Maybe. But not pensions.

The situation requires some explanation concerning France’s attitude toward business, the state, and the meaning of life in general. In these, as in many things, the French are outliers. They spend 14% of their national GDP on pensions, double the average for the nations making up the Organization for Economic Cooperation and Development (OECD); their so-called social-protection system, which provides state-financed pensions covering roughly three-quarters of a retiree’s final salary, is perhaps the world’s most generous. Senior poverty is nearly nonexistent.

Until French President Emmanuel Macron’s introduction this year of legislation raising the retirement age from 62 to 64 by 2030 — an unpopular conservative government under Nicolas Sarkozy had previously raised it to 62 years from the 60 established by Socialist President François Mitterrand in the 1980s — it remained by far the lowest in Europe. Even now, Germans work past 65 and will shortly stay on the job until 67, as Italians already do. (Likewise Americans, starting by law in 2027, though US workers may retire at 62 with reduced Social Security payments.)

On average, the French retire two to three years earlier than citizens of most countries, and they like it that way. Despite the harangues of their business-oriented president, who insists they must work longer and harder, France’s workers strenuously oppose retiring later. Over two-thirds of them reject Macron’s pension reform; they regard it as breaking a social contract between labor and the state.

This attitude is an outgrowth of the French democratic-socialist tradition, which began with the martyred leader Jean Jaurès, who was assassinated in 1914, and evolved through the Socialist Party governments of Léon Blum in the 1930s and François Mitterrand in the 1980s. Under Blum and later Mitterrand, a legislative program comparable to the American New Deal was enacted, including a shortened work week, collective bargaining for organized labor, paid vacations, and the state pension system incorporating early retirement (and funded by mandatory payroll taxes on employers and workers) at issue in 2023.

The generous pension plan, in particular, along with national healthcare, was introduced after World War II to compensate for wartime sacrifices and bind the divided postwar nation together. The French public bought in — and much to Macron’s chagrin, they still do. France’s rank-and-file cherish their pension model as literally sacred (much as the British regard their beloved National Health Service) and defend it with a class-based revolutionary fervor that flows from the Bastille, through the Paris Commune of 1871, to the “gilets jaunes” (yellow vests) rebellion of 2018-19.

There’s a pragmatic cast to the left’s position on pensions, however. Its leadership, especially the unions, recognize the demographic challenge that produced France’s pension crisis; that is, the dilemma posed by expanded life expectancy, proportionately fewer people paying into the system, and the resultant strain on the national budget. Their answer: Fund any shortfall by assessing the French economic elite and their dividends, or by increasing payroll-tax contributions, paid heavily by business.

The sticking point: France has an intractable president who worships wealth and big business, a technocratic former investment banker with Rothschild adamantly opposed to taxing the rich or the multinational corporations. Moreover, he admires the “Anglo-Saxon” (i.e. British-American) economic model of deregulatory, union-averse capitalism with its emphasis on finance and globalism. Regardless that it crashed in 2008, he wants France to emulate it.

The French public, for its part, takes the rather contrary view that life is about more than just serving their employers; they are reluctant to permit an undermining of the hard-won “life-work balance” that allows them to enjoy life, which they feel Macron is perpetrating. There’s another, often-overlooked factor at play as well. Losing earlier retirement, older French workers must contend with a business sector that won’t hire or retain them; French companies are notoriously reluctant to take on employees over age 45 and absolutely reject anyone over 55. Since a postponed pension means extended joblessness, age discrimination leads to rising elder poverty.

Emmanuel Macron, an arrogant sort who sees himself as another de Gaulle or even Napoleon, couldn’t care less. His pension reform is in line with his previous economic “reforms”: reduced taxes on the wealthy and corporations, cuts in public spending, and a revised labor code making it easier to lay off workers. This is the cynically named New Socialism he implemented as economic minister to his austerity-minded predecessor as president, François Hollande (2012-17), now reviled by the French left.

So, how does President Joe Biden fit into this pension story? Quite simply, he’s dealing with his own tentative crisis over retirement policy. For years, beginning in the Reagan era, conservatives and many so-called centrists have been predicting Social Security’s impending bankruptcy and calling for ideologically motivated program restrictions.

The alarmist chorus has included Reagan’s budget director David Stockman in the 1980s, House Speakers Newt Gingrich in the 1990s and Paul Ryan in the 2000s, and the Obama-appointed Bowles-Simpson National Fiscal Commission in the 2010s. Today, it’s GOP Senators Rick Scott (Fla.), Ron Johnson (Wis.) and Mike Lee (Utah), who would rectify the exaggerated funding problem by altogether terminating Social Security and Medicare.

The need for an eventual entitlement funding fix is real enough, according to program trustees; the question is how to address it. Joe Biden would deal with Medicare’s shortfall by savings gleaned from its newly established power to negotiate drug prices and by transferring funds generated from Obamacare’s investment-income tax, increasing it from 3.8% to 5%, but only on incomes over $400,000. Similarly, the president would preserve Social Security by eliminating the FICA payroll-tax cap (presently $160,200), yet only for incomes over $400,000.

The operable question, of course, is why he would protect in each case the professional-managerial upper-middle class (incomes of $120,000 to $425,000 in 2019), allowing these coddled 10-percenters a special tax set-aside; that is, no added assessment on earnings between $160,000 and $400,000.

Remember Macron’s French lesson, Joe. Americans may yet rise up over class favoritism. You can do better.

Wayne O’Leary is a writer in Orono, Maine, specializing in political economy. He holds a doctorate in American history and is the author of two prizewinning books.

From The Progressive Populist, May 15, 2023

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