Springford says: “Output per hour worked in France has kept pace with the US since then [2008] while Britain has fallen behind. Average French incomes are similar to British ones largely because they choose to bank productivity gains by working fewer hours. And the main reason for that growing productivity gap is lower business investment.”
France is still not as productive as the USA but it hasn't got worse since 2008, while we have.
I’m sure tinkering with the tax system will produce some effects but having worked for a French company for ten years from 1993, I think the notion that our productivity is woeful entirely because of some quirk in the tax system is an illusion, albeit one that politicians like to nurture. It is a preferred explanation because it’s something they can address relatively easily, although it's never worked in the past.
The French are more productive because they invest more, they invest for longer and they make the investment work better. The key difference is that they’re serious about work. I realise this doesn't explain the change since 2008 but I think that may well be due to the financial sector, much larger in the UK, rather than manufacturing.
We don’t invest enough, and when we do we tend to choose the cheapest option rather than the best, we accept failure by the supplier to achieve the specified performance far too easily, we don’t employ staff capable of maintaining the investment and we don’t budget for proper maintenance anyway. The result is that whatever little investment is made doesn’t show results and I think this tends to create a reluctance to invest in the future, a sort of vicious circle.
Mr Springford says: "Improvements in skills levels have been a bigger driver of French growth over the past two decades than in Britain. While the salaries required to get a visa are similar, France’s visas for knowledge workers are more competitive. The “talent passport”, a four-year visa for knowledge workers from outside the EU, costs €225. The UK equivalent costs £719, and it imposes an 'immigration health surcharge' for use of the NHS."
In my experience if a European employer who sends an employee for training expects a lot and the employee understands that, and takes it very seriously. British employers are often reluctant to spend money and hope employees can "pick it up" somehow.
Note that he compares France and the UK with America since this is the accepted gold standard. America's economy is larger than China with about a quarter of the population. They are indeed incredibly productive. An opinion piece by the FT's Martin Wolff concerning America (What makes the USA truly exceptional) tries to explain why their productivity and wealth is so much higher than most other big countries.
He sets out the dynamism of America, the innovation, the massive global businesses that are mainly American but also sets out the other side of the balance sheet. The murder rate, the 400 million guns in circulation, the prison population and the lower life expectancy. He doesn’t mention the lack of any paid holidays, the long hours or the personal bankruptcies caused by the staggering costs of healthcare but they are also factors in my opinion.
But the main factor is greed. Americans (I know this is a sweeping generalisation) just seem to want more and more money. Elon Musk is seeking a $56 billion (yes BILLION) dollar payday from Tesla (which a court has twice blocked)!! Who needs $56 billion? He's the world's richest man already but he provides an example of why many wealthy Americans can't stop chasing more and more wealth. It's a disease.
And Wolff goes on to say”
“A big question for non-Americans, notably Europeans, is whether these pathologies are the necessary price of economic dynamism? Logically, it is not clear why an innovative economy cannot be combined with a more harmonious and healthier society. Denmark would suggest so. One might hope that the scale of the US market, its relatively light regulation, the quality of its science and its attractions to high-quality immigrants are the explanations. But there is this lingering fear that the technologically dynamic society Draghi and other Europeans now seek might require the rugged, nay dog-eats-dog, individualism of the US. It is a sobering possibility.”
Europeans will never accept that sort of society. Any politicians suggesting swingeing cuts to the welfare state would never get elected.
If anything, it’s America which is out of step. If you go to YouTube there are any number of American citizens who have moved to the UK or the EU, speaking about their experience and it is universally good. They are stunned to find they can call an ambulance and it costs nothing!
As for free or virtually free healthcare at the point of need, even for serious accidents, that blows their minds. We take publicly funded healthcare for granted but they pay hundreds of dollars per month for insurance and even this doesn’t cover all costs and isn’t limitless. About half a million Americans go bankrupt each year with thousands of dollars of unpaid hospital bills. Most Americans delay going to see a doctor to the very last minute.
Public transportation is another area where they’re amazed. In the US everyone drives everywhere. Nobody walks and the cheap, highly processed food containing lots of sugar (it's even added to bread!) and corn syrup as well as just about every preservative, colouring and flavour enhancer known to man, just adds to the chronic obesity problem.
I think the notion that we should follow America down that route is madness. What do we work for? It must be for something other than money.
We do need to improve productivity but we don't need to go that far and I think sooner or later Americans will come to the same conclusion.
