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The GDP: French Labor

Feb 27, 2013 • Behavioral Economics, Businesses, Economic Debates, Economic Growth, Economic History, Economic Thinkers, Environment, Labor, Macroeconomic Measurement, Uncategorized • 245 Views    No Comments

By changing its GDP, France could make its economy look more robust. It also might defuse criticism from the CEO of tire maker Titan.

Yes? Probably not but the issues are fascinating.

In 2008, French President Nicholas Sarkozy asked Nobel Prize winning economist Joseph Stiglitz to chair a commission that reconsidered the GDP. The result was a commission report that concluded, “…the time is ripe to shift emphasis from measuring economic production to measuring people’s well-being.” (Italics are from the report.) If leisure, for example, were a positive economic variable, then fewer work days would not be (statistically) punished through less output.

And that takes us to Amiens.

Asked to take over an Amiens Goodyear tire plant that is scheduled to close, Titan International’s CEO refused saying, “I have visited the factory a couple of times…The French work force gets paid high wages but works only three hours. They have one hour for their breaks and lunch, talk for three and work for three…I told this to the French unions to their faces and they told me, ‘That’s the French way!’ ”

If a yardstick from the Stiglitz Commission became the norm, more leisure would be a plus with French labor driving the “new” national accounting numbers higher.

Now though, the traditional  GDP numbers do not look so good. An ailing euro zone just reported a GDP growth rate at negative .6% and for 2012, France reported no growth.

And a final thought: Very wisely, the commission report points out that, “”What we measure affects what we do.”

Sources and resources: This Financial Times article and the report itself convey a pretty good picture of what the Stiglitz Commission concluded while the exchange between Titan and the French is here with a copy of the Titan letter. For my GDP numbers, Eurostats was the source.

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