The ‘Let Us Eat Cake’ Generation

With strikes and demonstrations seizing France again this week, French politicians and protesters appear to be radically at odds. In fact, they are strangely allied. From the president on down to the sign-waving teenagers, no one seems to have any idea how the global economy works.

Its tempting to criticize the protesters, who are clamoring for airtight guarantees against la prcarit. The leaders, though, are as much to blame for the unrest that now threatens to bring down Prime Minister Dominique de Villepin. A calcified political elite has long promised that public spending and protectionism can maintain the French standard of living. Indeed, modern French governments have staked their legitimacy on a strong, cradle-to-grave social safety net. But with chronic unemployment and public debt at 66 percent of gross domestic product and rising, the state can no longer deliver the goods.

It took a wake-up calltwo weeks of nightly riots last fall in the minority suburbsfor French politicians to get religion on free market reforms. In February, the prime minister attempted to loosen the rigid job market by creating the First Job Contract, or CPE. The legislation allows large companies to hire people younger than 26 without offering them permanent contracts within their first two years of work. It is supposed to help reduce an unemployment rate that is stuck at 10 percent nationwide, hovers at 23 percent for young people, and is higher still for black and Arab young men, the demographic that accounted for last falls unrest.

And, voil, a mock revolution was born. Nationwide, more than a million protesters last week filled the streets of cities such as Paris, Marseille, and Bordeaux. Theyre not calling for political freedom, which the French enjoy in spades, both in the street and at the ballot box. The current protests lack even the altruism of Frances anti-war movement, which at least suggested a certain engagement with the outside world. It seems that saving Arab lives in Iraq was desirable, but improving Arab lives in the banlieues is notcertainly not if it promises a whisker less reassurance to educated, middle-class youth. When Marie Antoinette purportedly said, let them eat cake, it showed how out of touch the French aristocracy was with the people. Now, its the people who are out of touch with the world beyond France. The new generation wants what their parents had: jobs guaranteed for life, complete with five-weeks of vacation every year.

Intent on protecting the privileges of a bygone era, the protesters dont seem to have a clue that France, with its wealth, educated workforce, and energetic private sector, could actually do well by globalization. In fact, it already does. The countrys top 40 companies saw their profits jump 50 percent in 2005. Yet only 35.5 percent of those companies sales are in France, according to a report published last year by the investment bank IXIS. If those companies are benefiting from foreign markets, though, they are also benefiting from foreign labor: Forty-three percent of their employees are in France. With other countries more than happy to welcome French capital, France will continue to hemorrhage jobs until it stops punishing employers.

Frances leaders have done little to speak the truth about the global economy to the people. And thats not surprising for a president who last year declared liberalism a greater threat than communism, and a prime minister who adheres to a policy of economic patriotism to block foreign takeovers of French firms.

Now, finally, the government is confronting the French street. Unfortunately, this costly political battle comes over a measure that doesnt go nearly far enough. Rather than simply making it easier to lay off young people, Villepin should have eased restrictions on the entire job market. Instead, hes frittered away political capitaland possibly blown his shot at the presidencyin a small-stakes game.

And he may not even be able to win approval for this modest measure. Typically, when French protesters scream loud enough, the government backs down. What would a climb-down on labor reforms mean for France this time around? The late management guru W. Edwards Deming summarized the dilemma. It is not necessary to change, he said. Survival is not mandatory.

France can change and thrive or it can drift into economic obscurity. It can preserve its villages and city centers in aspic for tourists, send its best and brightest abroad for work, allow employers to slink away, and build bigger and better barricades against the restless unemployed. Its a clear choice, but the French leadership still seems inclined to duck it if at all possible. On Friday night, Chirac hedged his bets on the CPE, pledging to sign it into law but to modify it before implementation. Protest leaders, in response, vowed to hit the streets again.

Theres one bright spot on the horizon. The Easter holidays start next weekend. Students and workers were more than happy to man the barricades when it meant missing exams and skipping work. Just as Marie Antoinette played at being a shepherdess, these kids are playing at revolution. Its unlikely that theyll stick around once their vacations begin.