Deal of new French bashing

France's Prime Minister thinks a Nobel Prize for some Frenchman he's never read, should be reason to crow;

Manuel Valls on Monday hailed the country’s two Nobel wins this year and, in a dig at certain Anglophone businessmen, politicians, and right-wing media, added that it was a slap in the face to all those who criticise France.

"After Patrick Modiano, another Frenchman reaches the top: congratulations to Jean Tirole," Valls tweeted after the Nobel economics prize was announced, adding that it "really thumbed the nose at French bashing."

Peut-être that's premature;

France wants €10 billion a year from the EU’s “New Deal” fund, amid warnings that its budget profligacy could harm the “credibility” of EU financial rules.

Because;

Credit rating agency Standard and Poor's last week dropped France's outlook to “negative” and predicted a deficit of 4.1 percent between 2014 and 2017.

Speaking at the Atlantic Council think tank in Washington DC on Friday (10 October), the Dutch finance minister Jeroen Dijsselbloem, who also chairs the 18-member group of eurozone finance ministers, described the new budget plans as "simply not good enough" and "too far off target".

Left unchanged they would "damage the credibility of the pact", he said, adding that "the ball is in the court of the French to look at those figures and see what more can be done".

Maybe M. Valls' fair-haired boy could offer some advice;

Hours after he won the economics Nobel Prize, [Jean] Tirole said he felt “sad” the French economy was experiencing difficulties despite having “a lot of assets”.

“We haven’t succeeded in France to undertake the labour market reforms that are similar to those in Germany, Scandinavia and so on,” he said in telephone interview from the French city of Toulouse, where he teaches.

France is plagued by record unemployment and Tirole described the French job market as “catastrophic” earlier on Monday, arguing that the excessive protection for employees had frozen the country’s job market.

“We haven’t succeeded also in downsizing the state, which is an issue because we have a social model that I approve of – I’m very much in favour of this social model – but it won’t be sustainable if the state is too big,” he added.

Tirole remarked that northern European countries, as well as Canada and Australia, had proven you could keep a welfare social model with smaller government. In contrast, he said France’s “big state” threatened its social policies because there will not be “enough money to pay for it in the long run”.

Which is just how Margaret Thatcher (gasp!) put it; The problem with socialism is that eventually you run out of other people's money.

Deja vu all over again

Ya gotta hand it to those Anglo-Saxons...when ya gotta looming electoral defeat;

French Prime Minster Manuel Valls on Tuesday unveiled a series of reforms aimed at curbing rising unemployment. The measures include relaxing labour laws and giving business owners incentives to hire more staff.

Because;

President François Hollande has pledged not to seek a second term in office in 2017 if he fails to reverse the upward trend in unemployment that has been hovering above 10 percent.

So the government tries, tries again to placate the people who hire the employees.

The measures sought to appease French employers who claim the country’s stiff labour laws discourage them from hiring new workers for fear they won’t be able to fire them, or have to pay big legal fines to former employees.

The government said it will cap the amount of the damages that can be awarded to a staff member found to have been fired unfairly.

Seems we've heard this song before. From a French economist.

Hours after he won the economics Nobel Prize, [Jean] Tirole said he felt “sad” the French economy was experiencing difficulties despite having “a lot of assets”.

“We haven’t succeeded in France to undertake the labour market reforms that are similar to those in Germany, Scandinavia and so on,” he said in telephone interview from the French city of Toulouse, where he teaches.

France is plagued by record unemployment and Tirole described the French job market as “catastrophic” earlier on Monday, arguing that the excessive protection for employees had frozen the country’s job market.

Tirolecon: Self-image is funny

It can make your day frowny or sunny, says newly minted Nobel laureate Jean Tirole (along with Roland Benabou) in Incentives and Prosocial Behavior:

We develop a theory of prosocial behavior that combines heterogeneity in individual altruism and greed with concerns for social reputation or self-respect. Rewards or punishments (whether material or image-related) create doubt about the true motive for which good deeds are performed and this "overjustification effect" can induce a partial or even net crowding out of prosocial behavior by extrinsic incentives.

Good thing to know if you're an executive for a PBS affiliate trying to put on the most effective Begathon you can. However, the Nobel Committee didn't mention it. Instead they focused on Tirole's on-the-other-handed work on monopolists and regulation.

Regulation is difficult

 Which activities should be conducted as public services and which should be left to private firms is a question that is always relevant. Many governments have opened up public monopolies to private stakeholders. This has applied to industries such as railways, highways, water, post and telecommunications--but also to the provision of schooling and healthcare. The experiences resulting from these privatizations have been mixed and it has often been more difficult than anticipated to get private firms to behave in the desired way.

Words to live by.

Also, Tyler Cowen does yeoman work on this years winner.

Define comedy

You'll need go no further than Italian labor law, but at least they're making some baby-steps toward economic rationality (thanks to new Nobelist Jean Tirole);

Since 1 March 2015 all new open ended contracts in Italy offer graded security, that is, severance payments in case of dismissals ... which are gradually and steadily increasing with tenure without any major discontinuity. These new contracts also reduce the range of compensations that judges may impose on employers in the context of judicial procedures on the fairness of the layoff, thereby reducing the uncertainty associated with the actual costs of dismissals. 

Sad that that qualifies as an improvement in the situation for Italians (both employers and employees), but it does. More easily fired or laid off, thus more readily hired. Contemplate the possibilities, signori.

This particular design of employment protection for open-ended contracts largely draws on proposals developed by labour economists in Italy (Boeri and Garibaldi 2006 and 2008), France (Cahuc and Carcillo 2006, Blanchard and Tirole 2008), and Spain (Bentolila et al. and Le Barbanchon 2012) in order to reduce contractual dualism, improve incentives for human capital investment in the workplace, and reduce inefficient layoffs.

Our bold above, so the Italians won't miss that advice comes from the most recent Nobel laureate in economics.

Cultured Pellerin

In France the Prime Minister doesn't know the work of its Nobelist in Economics, Jean Tirole, and the Culture Minister hasn't the time to read;

When French novelist Patrick Modiano won the Nobel Prize in literature earlier in October, the country's Culture Minister Fleur Pellerin said it showed the "influence and vitality of French literature in the eyes of the world".

But in an interview with Canal+ on Sunday, Pellerin was forced to admit she had never read any of the acclaimed French author’s novels.

“I haven’t had time to read anything in the last two years except for a lot of notes, legislative texts and news wires,” she said.

Big deal. Nobody else has heard of him either.

Du sublime aux plus ridicules

It's been a decidedly erratic (typically?) day for French economics. First, we have the announcement of this year's Nobel Prize for Economics going to Jean Tirole. Then we have this from Florian Mayneris and Sandra Poncet, which is worthy of the country that trained the Khmer Rouge...economic cleansing of the least able, ala Chine;

Low wages reduce the cost of not adopting the best production processes. In some developing countries, the absence of minimum wage might thus give incumbent firms little incentive to adopt more efficient but also more costly technologies or management practices; they might also allow some inefficient firms to survive.

Along with their less efficient employees.

In line with this intuition, our results show that in a fast-growing economy like China, there is a cleansing effect of labour market standards. Minimum wage growth allows more productive firms to replace the least productive ones and forces incumbent firms to become more competitive, these two mechanisms boosting the aggregate efficiency of the economy.

Another Great Leap Forward at the expense of those left behind, mon dieu!