Wednesday, March 29, 2006

Does Rioting Create Jobs?

In a recent podcast with Claire Berlinski, I recall her saying that the French like to riot--apparently they do:

"At least 1 million people marched in French cities and unions staged a one-day national strike on Tuesday, urging the government to scrap a youth jobs law in one of France’s biggest protests in decades."

The French may think that rioting is the answer to getting what they want (which should be more jobs) but unfortunately, if their protests work, the result could be fewer jobs, not more, for youth--particularly for the poor immigrant youths who are currently unemployed.

Buisiness Week Online takes a look at the problem:

The Mar. 28 general strike in France over a controversial new labor law has once again focused attention on the nation's rigid employment laws and their effect on the French economy. The new law, known as the First Job Contract (the Contrat Premiere Embauche, or CPE), is much loathed by the many students and labor unions that have noisily demonstrated against it.

The CPE would essentially give employers powers currently unheard of in France -- the ability to fire, at will and with no financial consideration, new hires under the age of 26 during their first two years on the job.

"This contract could have a role in making it easier to adjust the labor force as needed," says Standard & Poor's economist Jean-Michel Six. "It might especially prove helpful for small and midsize businesses, where many owners are extremely reluctant to hire new workers." ....

Yet French Prime Minister Dominique De Villepin, who circumvented traditional political processes to bring the law into effect, maintains that it will induce small and midsize enterprises (SMEs) to take a chance on hiring more young people -- especially from among the thousands of alienated young immigrants and first-generation French who rioted for weeks last fall in the suburbs of Paris and elsewhere.

It seems to me that giving employers more incentives to hire young people, not fewer, would be a start in helping the French economy. And certainly rioting for cradle to grave job security is not the answer to the job crisis in France.


Blogger DRJ said...

I agree with you Dr. Helen but then we're both democracy-loving capitalists. The French generally aren't democracy-loving or capitalists. I wish they would change their minds. I think it would be better for America and for France if they did but I'm not holding my breath.

3:15 PM, March 29, 2006  
Anonymous Anonymous said...

An entire country who failed Econ 101...

3:46 PM, March 29, 2006  
Blogger grooveadam said...

I stumbled onto your lovely blog and I'm going to have it linked to mine. Are you a psychologist?

4:56 PM, March 29, 2006  
Blogger Henry Cate said...

The irony of this is it was a Frenchman who wrote the classic "The parable of the broken window"

Frederic Bastiat explains how people look at what happened and often don't seem to think about the unseen effects.

The rioters should stop and think about the unseen effects of their actions. At least one result is more businesses will think about moving out of France, which will farther weaken the job market.

5:05 PM, March 29, 2006  
Anonymous Anonymous said...

Two things are hitting the protected economies at tyhe same time.

First, businessses are moving out. Some are completely relocating, but most are just establishing foreign branches to which they can transfer work that is impractical to do in the home country. For example, German laws against overtime work make computer system development very difficult. The nature of the programmer is to grind away into the night. That's what programmers do. So, the company has a branch in Malta of Ireland where they can get things done. Then they can lay off the Irish or Maltans(Maltese?) when the project is finished.

Second, these foreign branches are becoming so productive the home country offices or plants can't compete with them, so more work accumulates in foreign branches as they demonstrate higher profit potential.

This is especially problematic in things like computer science, scientific research, and engineering. These people don't want anyone telling them they have to knock off and go home when they are in the middle of something.

The French are afraid of the Polish plumber coming to France, but they are oblivious of the French research effort going to Poland.

5:24 PM, March 29, 2006  
Anonymous Anonymous said...

I was just considering a few days ago why other countries have more riots than in the US. I think it is because of the First Amendment and our general focus on capitalism. Then we had the immigrant protests, but I suppose they weren't rioting or striking, just marching.

7:38 PM, March 29, 2006  
Blogger Grim said...


Respectfully, the classic answer to the question "Does rioting create jobs?" has already been written. I refer you to the following post by a Saudi blogger Alhamedi, chastizing his fellows during the last French riots, which he called "Muslim Mayhem Month."

And unlike other unemployed people the world over, who might:

* try and get a job
* set up their own small business
* buy useful things in one place and sell them for a small profit in another
* improve their own area, so that businesses want to come in and provide employment

...these enterprising youths have much grander ideas. After all, when

"Police say 519 vehicles were burned"

...then that's 519 new vehicles that have to be built in factories, and perhaps will bring a new factory into their neighborhood, and...

A clever enough answer, I suppose. Burn enough stuff, and somebody will be needed to rebuild it. Just make sure you burn the consumer goods, not the factories themselves. :)

8:11 PM, March 29, 2006  
Blogger Assistant Village Idiot said...

Anonymous 5:24 has it right. Old Europe is doing its best business investing in New Europe. Germany has a DIY store it is exporting to eastern Europe, and Italy is heavily invested in SE Europe.

dave, I think that western Europeans do not yet grasp that the free market is not a "system" at all, but the absence of one. The system aspect is only what amount of regulation and redistribution one imposes on that natural state. The US actually does use a similar type of regulation and redistribution as western Europe, just at about half the intensity.

To your examples of European nations doing well, add Norway and Switzerland. With Iceland, they are not EU. Ireland has gone to a simplified tax struxcture in the last decade or so, which accounts for their strength. The UK is somewhere between those nations and the Continental Europeans in their tax structure.

These issues are discussed in some depth, and often, over at Albion's Seedlings, an anglosphere blog.

8:13 PM, March 29, 2006  
Blogger Mark Daniels said...

You ask if riots create jobs. Of course, they do.

They create jobs for:

police and security personnel
first responders
ER personnel
carpenters, bricklayers, ironworkers, and others who rebuild vandalized and torched buildings
auto workers who manufacture replacement vehicles for those destroyed in riots

They also increase job security for reporters and editors.

Maybe those sly rioters know what they're doing after all.

Mark Daniels

11:50 PM, March 29, 2006  
Blogger David Foster said...

Note the point about how De Villepin "circumvented traditional political processes" to bring the law into effect. It's probably a good idea to have the national debate about a law *before* it is passed, rather than after.

Application of this thought to the increasing trend of legislation by the judicial system in America should be obvious.

10:21 AM, March 30, 2006  
Anonymous Anonymous said...

On the other hand, neither the UK, Ireland, or Iceland have flat tax structures, and their respective economies have been doing better than central Europe's.

While not a strict flat tax, Ireland's reformed taxes are close enough. The EU has condemned Irish tax reform as regressive, and called upon Ireland to get in line with their more socialist neighbors, because jobs have fled other EU nations to Ireland. The EU says this is unfair competition. To their credit, the Irish told them where to stick their demands.

1:37 PM, March 30, 2006  
Anonymous Anonymous said...

Actually, Ireland started out with tax breaks for high tech businesses. One immediate win was getting Gateway's Euromarket operation. The EU pointed out regulations prohibiting targetted tax breaks, and Ireland responded by bringing their taxes on other industries in line with the high tax ones.

I do short term contract work in cellular infrastructure. Under European hiring rules, the providers would most likely shuffle regular employees to staff these projects, leaving me unemployed. It is the freedom to fire which makes me employable.

11:29 PM, April 03, 2006  
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