France’s Economy: Worthier than GDP Alone

Last week I was sitting in a quiet hotel bar in Lilongwe, the capital of Malawi, drinking gin-and-tonics with my friend Abigail.  What better place, in the heart of mosquito-ridden Africa, to swap stories about the French?

Abigail, an American, sold French bonds in the 90s at a leading French bank in Paris.  Life is intense within any trading arena, but hers was additionally buffeted by cross-cultural expectations.  A male trading colleague once looked her petite figure up and down, for example, and asked, “Why is your shirt buttoned up so high?”

But this Wharton graduate had business to do.  One day a client from Putnam, the Boston money manager, rang Abigail at 1:00 p.m.  Back across the Atlantic, it would’ve been 7:00 a.m., smack at the bell of Boston’s trading day.  The client wanted a quote.

Abigail looked over at the trading desk – the same arena where her buttons were scrutinized – to get a price.  At least one of the bank’s two traders was meant to occupy the desk at all times, toilet and smoke breaks included.  This day Abigail was stunned.  Both traders were gone.

On investigating, she found a note:  “Fermé.  Au dejeuner.”  Closed.  At lunch.

Abigail returned to her Boston-based caller.  Call Goldmans or First Boston in London, she advised.  Surely there a trader would be chained to his desk.

In this market outside Lilongwe, business thrives...
In this market outside Lilongwe, business thrives…

My husband Philippe and I joined Abigail last week in Malawi and Mozambique to visit some microfinance projects that we sponsor through Opportunity International.  On each trip we are heartened by the entrepreneurial spirit of the poorest Africans.  By lending these people just a tiny bit of capital, they somehow transform their business ideas into enduring ventures – and thereby transform their own lives and those of their families.

Not that the African orange seller becomes Tropicana in one day.  No, there’s a certain custom of slowness that pervades much of Africa.  A certain recognition that, while time might be money, the rules are different on the Dark Continent.

One afternoon, an hour-and-a-half into a bumpy journey into the Malawian countryside, Abigail, Philippe and I wanted to know how much longer we’d travel until meeting our agricultural client.  It was nearing 4:00 p.m., and we knew darkness fell quickly this close to the equator.  The roads had no lights.  Ten minutes earlier, the local lending officer who led our journey had announced that we were “here” – but we continued to drive deeper into the countryside.

...in spite of the simpler circumstances.
…in spite of the simpler circumstances.

As our van swerved down this pothole-ridden lane at 15 kilometers per hour, Philippe finally asked the loan officer a simple question:  “I’m just curious.  How far is ‘here’ from ‘here’?”

“About 20 kilometers,” she said.  (We did a quick calculation and turned around.)

This mentality of slowness – of life happening at a pace dictated by the day’s circumstances – is hardly surprising in a land where walking is one of the main forms of transportation.  But on reflection, the mindset isn’t so different in France.

Take a recent report on the (lack of) usefulness of “gross domestic product,” a standard, globally-accepted, economic measure.  It was French President Nicolas Sarkozy who, back in 2008, commissioned a study of GDP’s appropriateness in measuring prosperity, and it was he who unveiled the results (with a note of victory) last September.

GDP could be improved, he announced, by including factors other than pure market measures in calculating the statistic.  By recognizing that more holidays and better government services (health care, education and child care, for example) contribute toward personal well-being.

And guess what?  In making these adjustments, France’s real GDP per person (using 2005 figures from the study) zoomed from 73% of America’s to 87%.  Measured in this way, the gap narrowed between French and American household incomes.

Of course it took the French – the folks who have been known to close trading desks for long lunches – to put this spin on the real world.  If you think about it, it’s a bit like Nestlé’s scientists reporting, as they did in February, that eating chocolate increases your metabolism.

Interminable lunches – it is true – are a marvelous piece of French life.  Peter Mayle writes about them with masterful wit.  Enjoy the set menu!  Chat with your friends!  Knock back a glass of rosé.  Maybe six!

And no matter what, you have to admire the French adherence to la belle vie.  But have you ever tried to get your shopping done under this regime?  I mean, shopping – American-style?

A couple days ago I popped by the dry cleaner’s with an armful of dusty clothing from our African suitcases.  Despite the fact that Antibes rocks with double its resident population at this time of year, the dry cleaner’s lights were out.  A scrawled note was stuck to the inside of his door.  Fermé.  Congé annuel.

The dry cleaner’s holiday had begun on August 11.  He would return to his post on September 11.  A full month later.

The laid-back lifestyle comes in smaller doses, too.  A couple years ago I discovered that some shops advertise that they’re open “Non-Stop.”  At first I rejoiced in the newfound efficiency of my days.  I remembered back to the late 80s in Chicago when my local Dominick’s grocery store stayed open 24/7.

But wait.  This is France.  “Non-Stop” simply means that a shop doesn’t close up in the middle of the business day for a two-plus-hour lunch break.  This is the land of the Adjusted GDP.

And store hours, even when they are advertised, can be flexible.  One Friday morning in July, I stood with Toronto visitors in front of En Sortant de l’École, an adorable toy shop in Cannes, at 10:55 a.m.  The lights were out.  Friday store hours were posted on the locked door as 10:00 a.m. to 6:00 p.m. (probably with a long lunch break in-between).

We returned to the store just after noon.  The lights were on, and the small shop buzzed with young families.  Hilary, our guest, overheard one shopper complaining to the proprietor about the late opening that day.

The proprietor’s simple response?  She’d been up late the night before.  (And with the answer, I imagine she shrugged her shoulders.)

It all stacks up to this:  France has an enduring devotion to personal time.  Our family sees it markedly through Sabrina, our French au pair.

Sabrina does magnificent work with five-year-old Lolo; that’s hardly the point.  But overtime – anything beyond the standard, French 35-hour working week – well, that’s not her bag.  Not that she wouldn’t do it if we asked, but left to her druthers, work is a capped portion of her days.    Extra time, even paid at 150%, is hardly the juicy, bankrolling enticement that our former (American) nannies enjoyed.

Anyway, the Government caps annual overtime hours (and overtime pay).  Even if you wanted to work them, 220 extra hours are all you legally can do here in a year.  In a year!  Let’s see, on average that would push the standard 35-hour work week up to a whopping 39.25 hours.

As hard-wired as the 35-hour week is, so is the idea of working for the French Government.  According to the OECD’s 2009 statistics, 22% of the French labour force works for the State.  That’s a full 8 percentage points higher than the OECD average.

And why not?  Government work in France is a coveted role, swaddled in enticements, like juicy retirement plans that shield workers from the brutality of market forces pummeling the private world.  Conversely, North American graduates tend to avoid Government jobs, seeking the upside potential in private industry – or even starting out their own.

Which means that profits are overrated here, too.  France is, in fact, one of the few European countries to impose an annual “fortune” tax on bigger assets, giving its citizens the incentive to earn less.  The whole play of demand-and-supply becomes theoretical jibberish.  But then again, this is the land that’s re-writing Economics 101.

Take our local Boulangerie de l’Ilette.  Their choquettes – two-bite puff pastry creations, lightly glazed and sprinkled with pearled sugar – are ambrosial.  Our bakers could sell choquettes to the world.  But no.  You want to taste the feathery sweetness of a choquette?  To let its fine pastry melt in your mouth as you sip a coffee?  Then make sure you’re at the front of the boulangerie’s queue by 10:00 a.m.  No later.  Oh, and it had better be a Tuesday, Thursday or Saturday.

Of course France has its exceptions.  There are folks here who mirror Agnes Lipita, the former Malawian schoolteacher who quit teaching in order to build a school that serves hundreds of poor children.  Or the 22-year-old Mozambican man I met who continues to enlarge his provisions shop in a dusty Maputo market with a third, consecutive loan – while supporting his wife and child on the side.

Here in the South of France, we have a friend Lorenzo, a high-tech specialist whose ambition actually frustrates him.  He regrets not accepting Job X in Saudi Arabia.  Now Job Y is a dead-end.  He wants a house, not an apartment.  He wants to work harder.  He wants to get ahead.  But here in the sunny, laid-back Côte d’Azur, it’s tough to do so.

Oops.  I forgot.  Lorenzo’s from Sicily.  He’s actually Italian.

But Lorenzo makes me realize that ambitious people, ones who aren’t satisfied with the status quo, should holiday in the French Riviera.  Even retire here.  But they should hardly pass their prime working years on its easygoing shoreline.  It’s the steady-as-you-go regime who can fulfill their happiness indices working in the area.

Nor am I complaining.  Truth is, our family can hardly get enough of this place.  For all its oddities – all the hiccups that the French lifestyle deals to my days – I’m here by choice.  So are the planeloads and carloads who rock up on these celebrated shores in the summertime.  And I know a lot of other people who’d join us on the next flight, given the chance.

The indices agree.  Every January, publishing group International Living creates a Quality of Life Index that ranks the attractiveness of living in 194 different countries.  In its 2010 rating, the group reveals that the winner is . . . France.  For the fifth year in a row.

When you’ve got a good thing going, keep it going.

There’s a certain irony about France’s winnings.  Living here is hardly easy.  It’s hardly just an issue of lunchtime store closures.  Grocery shopping is an almighty schlep.  Finding parking can be a fury.  Try opening a bank account without a friendly contact and you’ll chew up months and phone cards seeking the correct documentation.

But it seems that all the other things about France – the romantic stuff that carries you away with the place, as well as its first-world standards – are worth more than all the troubles combined.  Sure, International Living’s Quality of Life Index considers straight-talking things like the economy.  It also assesses each country’s cost of living (and in tax-ridden France, that’s a consideration).

But the Quality of Life Index also puts significant weight on more nebulous concepts like culture and leisure, the environment, freedom, health, infrastructure, safety and risk, and climate.  Stick all these factors into the blender, churn vigorously, et voilà!

Out pops France, on top of the milkshake.  Again.

The Anglos – outside the Aussies and Kiwis – didn’t make the top five.  The US came in 7th, offering top-notch infrastructure even if its health care and freedom points fell below what’s typical among its competitors.  Canada ranked a close 9th.  The UK, hit by a very high cost structure, ranked 25th.

Compared to this motley club, France’s cost of living was its only laggard (and still fared hugely better than Britain’s).  Everything else – except for its economy, which was hit like everyone else’s in 2009 – was pretty stellar.  France’s health care even was declared the best in the world.

A swift trip to southern Africa reminds me there’s even less reason to complain about French idiosyncrasies.  Mozambique scored 151st on the index.  Slammed for its health care and an (unjustly labeled) utter lack of leisure and culture, its final score tied with Uzbekistan, Cambodia and Iran.

Malawi came in a relatively decent 115th, with no major glitches and a lovely, equatorial climate.  Its final score placed it alongside Thailand, Russia, Lebanon and Bahrain.

Still, it’s a long way to the top for these countries.

Do France’s winnings add up?  The country is the best place to live (and from this statistic, I’m extrapolating the best place to visit, too).  It has the best health care in the world, surrounded by a top-notch infrastructure, climate, environment and sense of safety and freedom.  And it offers oodles of leisure and culture to boot.

But take all this delectable goodness – and set it against the 35-hour working week with restricted overtime.  Set it against long lunches and flexible store hours.  Against the overwhelming Government workforce.  Toss in, too, the State restrictions on competition – such as centrally controlled rules about when stores can have sales (see blog dated 11 February 2009).

It’s a bit like the coveted French diet.  Lots of foie gras and red wine, croissants and dark chocolate, and still the French don’t get fat.  It’s all a bit too good to be true.

Which is probably the case with the economy, too.  Today’s France has a lot to offer its inhabitants and its visitors.  Some of the bounty is thanks to its climate.  Some of it flows from the legacy of Louis XIV.  But France’s advantages in the world will wear thin as the country lives beyond its means.  Things are likely to change.

And they are.  Slowly.  France’s 35-hour work week and overtime rules are more flexible now than they were five years ago.  Government pensions are becoming less juicy and more market-oriented.  The regulations governing store sales have eased up a bit.  France is actually home to more Fortune 500 companies now than Germany is.  Competition will rise.

Which, frankly, could be a good thing for France’s Quality of Life rankings.  Assuming that the nation can retain its national character – the feted French lifestyle that the President evangelises amid the new GDP calculations – then greater competition in France will be a win-win for locals and visitors alike.

The country’s cost of living should fall.  Stylish French clothing, sachets of lavender and jars of marinated garlic could tear smaller holes in our wallets.  Eventually we may even discover more “Non-Stop” signs in shop windows.

Some day we might even be able to buy choquettes on Fridays.

And, with reasonable assurance, bonds at lunchtime.

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