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A Frenchie travelling the world...

05 January 2007

BBC - OECD warns about lack of structural changes

Dear readers,

According to the BBC and Le Monde the OECD has warned the member states of the Eurozone about their economic policies. Despite timid attempts, such as the recent changes in Germany, the countries which adopted the euro as a common currency are relying too much on economic integration and external factors for their economies. Practically none of them took the political risk of strong structural reforms in the fields where the unbalance with the USA and the other developped countries is the biggest: the job markets and innovation policies. Europe as a monetary union has succeeded in fighting inflation, despite odds such as the tremendous increase of commodity as well as energy prices. This was thanks to the orthodoxy of its Central Bank. But it has been poorly accepted by member states and even worse by some of the populations, especially in France, a key member of the Eurozone.

Most French people, even with a relatively higher social standing, have a very poor understanding of basic economic issues (even worse, I'd say, than in most other countries). This is due to educational problems, but also to the media which are not really doing a good job in explaining these topics to the public opinions. And unfortunately, politicians are not doing any better. Just after the OECD comments, Jacques Chirac made a speech in which he detailed what the economic problems in France where caused by. And the "song" was the same as usual: it is not the French government's mistake (with its heavy and unadequate social and economic policies), nor the weakness of French research and development (with its totally unefficient national research centre, the CNRS), it is the Euopean Central Bank ! This amazes me. Chirac is not a great economist, but he did study a bit, and even him should know what the ECB did to support the Eurozone. But no, rather than taking his responsibilities (something he has only been able to do once so far, during the Iraqi crisis), he preferred to blame the "too strict ECB monetary policy". Basically, he is saying: "who cares about inflation, let's people have jobs even if their salaries can't support them in any way..."

Like the first years of socialist government and massive inflation, between 1981 and 1986, haven't taught the French anything...

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