Over at Econlib today, Anthony de Jasay skewers the French:
“[T]he ordinary Frenchman is surely among the very brightest of fellow Europeans and she no less so. He is quick-witted, sober in judgment, articulate and both capable and ready to resort to his critical faculty. Yet . . . the collective intelligence of political France works much like that of a mentally retarded child . . .
. . .This amazing failure to understand the realities of public finance—indeed, to understand reality—explains why in France the move of one pressure group to grab resources or “rights” is hardly ever countered by the resistance of other pressure groups that would have to bear the cost.”
Most social programs, so-called, are either described, or otherwise purported to be, some form of insurance. And given that most people don’t even have a basic understanding of the insurance policies that they actually need—homeowners, automobile, umbrella, &c.—they cannot be expected to understand that most of the “risks” covered by these social programs are not, in point of fact, insurable risks.
For example, localized natural disasters, like floods and hurricanes, are not really insurable risks. They occur with too great a frequency, the potential loss is generally not predictable, and they suffer severely from an adverse selection problem: the only people who need flood insurance live in flood plains. These programs can only ever be sustained by taxing people who live on high-ground, in order to subsidize the “insurance” of those who live in the disaster-prone areas. Moral hazard ensues. Because the burden of living in a high-risk area is shifted to others who don’t live in a high-risk area, more people choose to live in such areas, the costs skyrocket, and the people who don’t need the insurance are forced to pay an ever-increasing amount of money to sustain the program.
Unemployment “insurance,” a welfare staple in the United States, and also a favorite of the French, is also not an insurable risk, per Hoppe, who also argues in the extreme case, that most of what we consider to be the province of health insurance, is also not insurable:
“An uninsurable risk is one where the following condition holds: If I know with regard to a particular risk some or all of the factors that determine its outcome, then such a thing is no longer accidental; its likelihood can be individually affected, and therefore cannot possibly be insured.”
So it is no wonder, really, why the French are mired in 10%+ unemployment, year after year – with those recent graduates often experiencing a significantly greater proportion. The country is crippled by social insurance – whether it is unemployment guarantees, old age guarantees, minimum wages, maximum hours, massive farm subsidies, and so on. It is no wonder that, with little or no disposable income left over with which to enjoy the finer things in life, the French birthrate has been falling rather consistently. And like any good Ponzi scheme which requires an ever-increasing number of “agents,” a shrinking population is the harbinger of doom.
But like any Ponzi scheme, the crime does not occur, and guilt attach, at the moment the fraud is revealed – but rather at its inception.
