Thursday, March 23, 2006

Why Would Business Set Up Shop in France?

http://today.reuters.com/news/newsarticle.aspx?type=worldNews&storyid=2006-03-23T180437Z_01_L23178518_RTRUKOC_0_US-FRANCE.xml&rpc=22

Seriously, who the hell is going to hire these people?

If I want something done in Europe I'll go to the former Soviet Bloc where they're not spoiled brat children.

5 comments:

Anonymous said...

Because many decision makers in business don't understand fundamental economics.

The French government gives boatloads of incentives to companies to locate offices in France (with plenty of strings attached). I think the current company match for the French social security is 50%! (vs. 7% in the US) But, if you start a new company you don't have to pay that for several years. Also, since they've got their national health care companies don't have to (directly) pay health insurance premiums.

Derek Jensen said...

Do you mean decision-makers in governments or businesses?

Of course the beauty of free markets is that decision-makers in business who don't understand economics will be outcompeted in the medium to long term and replaced by those that do. Government hacks have no such worries, since they pay no price for being wrong.

doinkicarus said...

the match in the US is 50%, too. The employee pays 7% or so, and the employer pays 7% or so.


But France's incentive system is totally wack.

Anonymous said...

Derek,

Decision makers in business. And you're absolutely right, they will be "outcompeted" in the medium/long term, but there always seem to be new takers. Someone is hiring the french.

Doinkicarus,

No, the company social security match is 7% of my income in the US. In france the company match is 50% of my income. (ie. it's much more expensive to hire french workers).

Derek Jensen said...

Unemployment just represents the unwillingness of able-bodied workers to accept the wages the market is wiling to pay.

If you consider that workers' aggregate "reservation price" to work is actually an upward sloping curve, this goes a long way toward explaining French unemployment. It can still be perfectly rational to hire some French, especially those with advanced skills.