William Thay is president of Le Millénaire, a Gaullist think-tank specializing in public policy.
It publishes a report on industrial policy in France.
FIGAROVOX. - You are publishing a report on French industrial policy for the 21st century.
Is the objective to draw inspiration from Asian industrial models to better compete?
William THAY. -
The health crisis has accelerated changes already at work on the economic or geopolitical level. Economically, the 2008 financial crisis undermined the neoliberal cycle initiated in the 1980s by Margaret Thatcher and Ronald Reagan. Only, if we had a Keynes or a Friedmann to think about the Keynesian and neoliberal eras, we don't yet have economic thinkers who imagined the world after.
It then seemed appropriate to us to observe the remedies of East Asian countries for several reasons. First, it is a model that has met with success after being transformed to adapt to economic cycles. While in 1960, the East Asian countries were still little industrialized, China (2nd), Japan (3rd) and South Korea (10th) are currently among the top 10 world economic powers.
Then it is probably the geopolitical and economic core (enhanced by the “Comprehensive Economic Partnership” free trade agreement). This area then finds itself as our next partner but also a competitor. Probably the next world power, China is dragging in its wake the shift of the world's center of gravity from the North Atlantic to Asia Pacific. So, if the East Asian countries have taken inspiration from us to catch up with us, it seems wise to do the same for them.
Finally, it is for us to build a new post-crisis economic model to reconnect with the happy days of the Gaullist model in order to build a nation of industrialists and scholars, which makes it possible to respond to what Marcel Gauchet describes of “French Misfortune” and to put an end to the continuous spiral of decline and the race to the bottom.
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You mention little about the role of the European Union and insist on the industrial sovereignty of the country. Can France afford to go it alone to revive its industry?
Becoming the first European economic power must be an objective because this quality will allow us to have the necessary status to change Europe.
William Thay
We have two solutions vis-à-vis the European Union: either plead for a long-awaited change of model in order to be less naive about global developments, or act ourselves to become a benchmark for other States to follow members. Thus, Germany did not wait for Europe to save its model thanks to the Hartz reforms carried out by Chancellor Schröder in the early 2000s. France must strengthen itself to be credible. In this sense, becoming the first European economic power must be an objective because this quality will allow us to have the necessary status to change Europe.
However, the French strategy must take into account European specificities, both its strengths and its weaknesses. Of our fifteen proposals only two require a European modification. This is a reform of competition policy in order to lift the thresholds allowing the creation of European champions from our national champions. The other concerns the protection of our internal market to impose a customs barrier on products that do not meet our standards. Other proposals could have facilitated the implementation of our plan, but they required the agreement of the other European capitals, which is unlikely, particularly on trade policy.
You speak of “certain questionable economic and industrial choices” which would be “at the origin of French industrial decline”. What are you referring to?
France has missed two key turning points, these are the entry into globalization in the 1980s and the early 2000s when Germany begins to recover from being called "the sick man of Europe ".
Socialist elites led by François Mitterrand have neglected global changes preferring to cling to old socialist moons...
William Thay
In 1981, France missed its entry into globalization. While all Western countries were adapting their economy to the neoliberal era, the socialist reforms plunged France into a state of mind where our welfare state and our bureaucracy prohibit more than they protect our economic actors. The socialist elites led by François Mitterrand have neglected global changes, preferring to cling to old socialist moons that were no longer valid with a Keynesian era undermined by the two oil shocks and the opening up to competition induced by globalization. Thus, policies to support consumption have been favored by raising the minimum wage and reducing working hours rather than encouraging innovation andinvestment in sectors of the future. These shortcomings are at the origin of the French decline which marks a break with the Gaullist industrial epic.
Added to this is the lack of structural reform in the early 2000s marked by the Jacques Chirac and Lionel Jospin tandem. These years are crucial to understand the delay accumulated by France. While the per capita GDP of France and Germany were at a similar level in the 2000s, a gap widened from the years 2005-2006. Indeed, France has not carried out structural reforms and has pursued a policy of reducing working hours that is unsuited to global industrial changes. While the structural reforms led by Chancellor Schröder have given a comparative advantage to German economic players so that they can impose themselves in global competition. This French economic stall has been revealed twice:during the 2008 crisis and during the 2020-2021 health crisis.
You explain that the low cost of labor in Asia is beneficial to him. Do you consider that the SMIC – which, in comparison with Asian salaries, is high in France – is a brake on France's industrial competitiveness?
The East Asian countries from which we have chosen to inspire ourselves have benefited from an abundance of the labor factor, like France at the end of the 1950s. Initially, the absence of a protective social model allowed them to enter into intra-branch trade, mainly as suppliers of components for export, before producing manufactured products with higher added value, allowing wages to catch up.
It is necessary to review the financing of our social model which weighs too much on work and which undermines our competitiveness.
William Thay
The European Commission has long deemed the French minimum wage “too high”. In 2020, according to the OECD, France has the third highest level of real hourly minimum wage in PPP among developed countries with a salary of $12.2 per hour. This is slightly higher than Germany ($12), and much higher than South Korea ($8.9) or even Japan ($8.2). All the more so since France is one of the countries which works the least since working time throughout life is the lowest of the OECD countries. This is in fact a brake on France's industrial competitiveness. However, the issue of the minimum wage in France is more related to the cost it represents for the company.It is therefore appropriate to review the financing of our social model which weighs too much on labor and which undermines our competitiveness. To make France a work paradise, we must break with our economic policy based on consumption and public spending.
The demographic, social and especially political scheme of France is quite far from the Asian models, is it thus possible to adopt their economic and industrial model? Do economic choices not go hand in hand with the political and societal context?
The idea is to draw inspiration from the said model, not to deny the inherent excesses and the obvious repercussions of authoritarian interventionism in China or previously in South Korea on individual freedoms.
We want to draw inspiration from the operating method by adapting it to our historical trajectory, our sectoral issues as well as our traditions and political culture.
In this sense, General de Gaulle's action is an illustration of the possibilities of adopting an economic model that can make us unique. Its action plan based on economic reforms and management through the planning commission constituted a French singularity. Since the 1980s, we have been subjected to what the philosopher Marcel Gauchet calls “French misfortune”, since we are in a model between two: between the desire to preserve our singularity and the necessary adaptation to globalization. The public authorities have wanted to adapt France to globalization since the famous turn of rigor in 1983, without assuming it.They have thus had this adaptation supported by the European institutions while compensating for the perverse effects of globalization through an expensive social policy. This same social policy that undermines our competitiveness and prevents our economic players from being able to conquer European and world markets.
We propose to build a nation of industrialists and scholars to build post-crisis France and break with the French misfortune as well as the infernal spiral of leveling down.
William Thay
The new economic cycle which opens after the Keynesian and neoliberal eras is more favorable to French culture since it is a question of combining economic prosperity with an aspiration of power. Taking this evolution into account, we propose to build a nation of industrialists and scholars to build post-crisis France and break with the French misfortune as well as the infernal spiral of leveling down. For this, our action plan brings together 15 proposals around three axes: structural reforms to create an environment conducive to economic players, strengthen our economic fabric around national champions and a network of SMEs and ETIs.
This industrial policy note appears in the context of the presidential election. Which candidate do you think is the most likely to revive the industry and share these recommendations?
Given their economic position, three candidates are likely to apply this program, each with strengths and flaws: Emmanuel Macron, Valérie Pécresse and Éric Zemmour.
The President, soon to be candidate, has for him his desire to focus his economic policy on improving France's attractiveness and investment. As such, its policy of reducing taxes, particularly on capital (transformation of the ISF and implementation of the flat tax), and its investment policy through the France 2030 plan are moving in the right direction. However, we can have doubts about his reforming will. First of all, the abandonment of the Public Action Plan 2022 and its absence of structural reform during its five-year term are a shortcoming. Then, Emmanuel Macron is running into some resistance as recent protests underline after his remarks about the “unvaccinated”. Do'an attempt at structural reforms in the event of re-election will not come up against a blockage of society as during the Yellow Vests and the demonstrations against its failed attempt at pension reform?
Valérie Pécresse has many advantages by drawing inspiration from François Fillon's program.
His economic reforms are the most precise and the most proactive.
However, like the former Prime Minister, his program appears to be punitive because he does not offer a perspective to the French, namely a course.
If she manages to project a vision like the one we are proposing, namely to build a nation of industrialists and scholars, she will appear to be the best armed among the three because she will be able to justify the efforts necessary to build a France of post-crisis.
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Éric Zemmour has more liberal positions than Marine Le Pen, whose economic and social program includes retirement at 60.
On the other hand, he has not planned his reforms to build the France of 2050 and his program, which is too interventionist, does not include real structural reforms.
In this sense, he combines the faults of Emmanuel Macron and Valérie Pécresse: a lack of desire for structural reform, a significant possibility of demonstrations, and an absence of economic vision.