The French Are On A Roll

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Few countries would seem less likely to succeed in the modern world of globalization, free trade and high-tech, speed-of-light capitalism than France. Widely caricatured as the home of the five-week vacation, the 35-hour workweek and the crippling public-sector strike, this overcentralized, overtaxed, state-heavy, tradition-bound, protectionist and perversely self-satisfied nation could not possibly survive in the competitive, market-driven international arena of today. Could it?

Think again. A new France is taking shape at the dawn of the 21st century. Like a newborn chick pecking out of its protective shell, the fledgling is only partly visible--a beak here, a claw there--but already it has begun to reveal a dynamic, high-tech nation in which the old state-controlled system will give way to a more decentralized, privatized and entrepreneurial society. Says former Socialist Finance Minister Dominique Strauss-Kahn: "We're becoming a country like any other."

Well, it's tough to go that far. France still has one of Europe's highest tax burdens (45.3% of gross domestic product) and one of its most bloated public sectors (accounting for 1 of every 4 French jobs). The leadership is nothing new either; it consists of Gaullist President Jacques Chirac, 67, who has been battling in the political arena for more than three decades, and Socialist Prime Minister Lionel Jospin, 62, an austere Protestant who still lapses into old-fashioned leftist rhetoric and heads a coalition that includes one of Europe's last and least-reformed communist parties.

Yet look what Jospin's government has accomplished since coming to power in June 1997. He has totally or partially privatized more state-owned companies than his conservative predecessors, including such behemoths as Thomson Multimedia, Air France and France Telecom. France's economic growth this year is projected by some to exceed 4%, the strongest performance of any major European country. Though France was slow to plug into the Internet, it is quickly closing the gap, and its burgeoning New Economy could account for as much as 20% of all French production this year.

Most important, unemployment has dropped from an alarming 12.6% when Jospin took office to 9.8%, still appalling by U.S. standards but a substantial improvement. The turnaround has also shifted the public mood from a decade-long depression into an exuberant optimism. Says sociologist Robert Rochefort, head of the CREDOC, a Paris-based think tank: "We have seen a spectacular return of confidence, a sort of alchemy in which everything seemed to turn from lead to gold."