In this latest opus, the authors, who are not at their first book together, look at some long-term proposals to reinvent a social model for France and Europe vis-à-vis the ambitions of the United States and China.
This first quarter of the 21st century has been marked by a spectacular drop in the European economy and even more so in the French economy. Since 2002, the US GDP has grown twice as fast as the European GDP. And this slide continues regardless of the elements of analysis: productivity, R&D, investment, employment rate, trade balance, training, etc. France has even fallen behind on its own continent compared to its neighbors. The irresistible French de-industrialization has not been offset by the development of a significant technological sector, the debt and the trade deficit are abyssal, the quality of public services is deteriorating despite an ever-increasing budget deficit, and finally, the wealth per capita is 15% lower than that of Germany.
Europe is at odds with Schumpeter and is paying a high price for its risk aversion. 54% of American R&D is devoted to new technologies compared to 15% in Europe, which prefers to continue investing in its old industry. Nine of the top ten European capitalizations are in traditional sectors, while nine out of ten of the American ones are related to new technology and AI. The major advantage of the American model lies in an ecosystem that is conducive to innovation and investment, in stark contrast to the European model, which is hampered by a restrictive fiscal, legislative, and regulatory framework. It could be summed up in a slogan: risk appetite versus the “precautionary principle.”
But this very “business friendly” American model hides weaknesses. Inequalities and impoverishment continue to grow, the exorbitant cost of care is a factor of indebtedness, and the financial situation of the Federal State, despite or because of the dollar, is catastrophic. While Donald Trump has promised the Americans to return to the golden age of the McKinley period, will a weakened and demoralized Europe be able to react?
To achieve this, it will need to escape the trap of weak growth, regain its dynamism, and defend its position in the global arena. The authors make concrete proposals at both the national and European levels. The urgent reforms needed in France are well known, as are the solutions. Choices will have to be made if we want to preserve our social model. But above all, we will need to find consensus and active involvement in a context where exasperation, deadly dialectics, and mistrust of our leaders are preventing necessary reforms and fueling accusations of democratic models’ inefficiency.
Patrick Artus is an economic advisor to Ossiam and a member of the Cercle des économistes
Marie-Paule Virard is an economic journalist
Ph Alezard