France taxes the money people spend much more heavily than the money they save. That encourages investment, and the French economy has grown vigorously. Therefore, the argument goes, Americans ought to adopt the same kind of taxation.
Britain props up failing automobile companies to preserve jobs. The British economy has fallen far behind France's.Therefore, the same argument continues, Americans need to be wary of the Chrylser precedent and refuse further aid.
American anxiety over low economic growth -- and the search for remedies -- is generating a sudden sharp interest in other countries' successes and failures. There is usually a grain of instruction in these examples. But the economic policy that works brilliantly in one country may be a bust in another. It all depends on people's habits of mind, their assumptions and their national history.
France and Britain differ in their fundamental attitudes toward wealth and power. Britain was righer in 1950. But then France's productivity began to rise at great speed; Britain's notoriously did not. Currently, France's output is about 40 percent higher, per capita, than Britain's -- and the glossy prosperity of French life reflects it.
There are a lot of technical explanations for the disparity. But the real reasons all seem to be back to World War II, the great and terrible experience that formed the generation now in authority in both countries.
The British stuck together, in great danger and hardship, and ultimately they won. Those years seem to have welded the nation together, conferring on the people at the top a strong sense of obligaton to take care of those farther down the ladder who steadfastly followed them. The result is a selective politics of the left that emphasizes sharing, social services and income redistribution -- but does not offer much in the way of social mobility or access for the lower orders to higher education. The same war experience simultaneously produced a selectively conservative politics that protects the individual's right to have things left the way they are -- including, specifically, his job.
In France, by way of contrast, during World War II people did not stick together and they did not win. The consequences were scarifying; it is very difficult for any American to comprehend fully the effect on a nation of defeat and hostile occupation.
The French came out of that experience with a burning determination never again to fall behind their neighbors in national power -- beginning with economic power. The French had felt an economic inferiority to Britain every since the Napoleonic Wars, and that sense of jeopardy had been heightened by German industrialization.
But, for the past 30 years, with ruthless and unremitting purpose, the French have kept themselves on the fast track of economic growth. They have paid many kinds of price for it. Their tax structure encourages investment, true enough, but it operates by concentrating wealth at the top of the scale. The distribution of income in France is the most top-heavy -- and, by British standards, the unfairest -- in any industrial democracy.
The basic national tax, the value-added tax, is a kind of sales tax, bearing most heavily on those with the lowest incomes. Of the wealth generated by manufacturing, labor gets a smaller share in France than in any other major industrial country. In Britain, labor's share is higher than in any other major country.
Rents in France are astoundingly high. That's because French policy held down investment in housing for two decades after the war. As late as 1968, only 43 percent of French homes had indoor lavatories and baths.
Instead, the money was shoveled into industrial growth, into chosen technologies and into certain kinds of education. It wouldn't be a popular program in most countries, but in France it has been consistently supported by a remarkably durable public consensus. Two years ago it seemed, for a time, that the voters might abandon the drive for growth and turn to the left. But when it came to a choice, in the 1978 parliamentary elections, they stayed with the rigorous policy of growth -- of, specifically, starving abreast of the West Germans. Income distribution may be outrageous, but a typical French factory worker's wage is now half again higher than his British counterpart's. f
Britain is now experimenting, in a gingerly way, with the French style of value-added tax in hopes of raising its very low investment rate. So far, the effect has been principally to increase inflation. As a science, economics has its limitations. Policies work only where they lead people in directions that, for reasons embedded deep in their national experience, they have already decided they want to go.