
Retirees meet to play pétanque, Nimes, France. (photo: Sebastien.b via Flickr)
The French equivalent to our Social Security is one part of their system for handling health care, workers compensation and other social benefits. A detailed description of that system can be found here. It operates on a pay as you go basis, which requires budgeting for pensions as well as health care and other parts of their system. They face the same demographic concerns for their program that we face in financing Social Security and Medicare: the baby boom generation is coming, and pensions and health care costs will rise. Le Monde reports that Eric Woerth, the Minister of Labor, Solidarity and Civil Service in the center-right Sarkozy government, has released a report setting out the government’s plans to deal with this problem going forward. (in French, run it through Google Translate, or Babelfish.
The report begins by explaining the role of the pension system and the entire social protection program of which it is a part. It then lays out the principles which will guide the government’s response to the problem, thanks to Google Translate:
A society in which selfishness between generations has no place.
A society in which the French regain confidence in their retirement system.
A society in which the effort is distributed equitably.
A society in which age is redesigned for the seniors find their place in the world of work.
I think that last one means that age should not be the controlling factor in continuing to work. This explanation makes it clear that the government understands the role of pensions in the life of the French people, and intends to honor that commitment.
Solidarity, including intergenerational solidarity, is a critical component of the French political system. This idea is completely foreign in the US today. In the political war over health care, it was obvious that the Obama and Romney plans both depended on bringing young people into the health care insurance scheme, even though almost every individual young person would calculate the odds of needing insurance to be very low. Both systems require today’s young to subsidize the older people who do need health care. No one ever once pointed out that this is an entirely reasonable thing to do, if it means that those young people can count on the availability of the same care in the future. In fact, conservatives reject the concept of intergenerational solidarity. They insist that the young cannot count on anything from the government in the future, and have to figure out how to go it alone.
The French government proposes to deal with the coming demographic problem with two basic changes. First, they want to increase the age for eligibility. Currently the age is 60, assuming you have the requisite work history, with early reduced retirement even earlier. The justification for this increase is, in part, that many people have trouble finding a job in their 20s. The government thinks that people should work 40 or more years to achieve the full pension.
The second proposal is to increase taxes on high income people, and to increase the tax on capital. The first of these is outside the range of acceptable political discourse. It is only offered by unserious writers on left wing websites. The second is some kind of heresy, which cannot even be given voice. Tax CAPITAL? The lifeblood of the American Way Of Life? Swoon.
The report says the Sarkozy government will use this situation to work toward fairness in the burdens of taxation. It states that a general tax increase will hurt average people, who will have to reduce their consumption, hurting the economy, and increasing unemployment. The government apparently believes that taxing the rich doesn’t produce the same problems. The notion that the wealthy contribute by job formation is not addressed, nor is the silly trickle-down theory so popular in the US.
I don’t know whether many of us could explain the principles on which Social Security and the New Deal as a whole are based. I don’t think we can discuss repayment of the Trust Fund and the taxes necessary to fund repayment without guiding principles and consideration of history, including the history of the Trust Fund. History and principles are the right starting place. The wrong starting place is some grab-bag of proposals put together by ideologues and their lobbyists.



34 Comments












Support this site!
Subscribe to the newsletter
Advertise on Firedoglake
Send
us your tips
Make us your homepage
About Firedoglake
Simply put, France is a more civilized and empathetic society than the U.S..
We are so damn sick!
Drop the insanity!
I am not sure the Greeks are finding they can depend on the government so much.
Lots of nice talk, but as Cuba said, “Show me the money.”
Their government made the mistake that they could depend on U.S. banksters. What is happening in Greece is a result of U.S. banks manipulating the markets. Get a clue.
We’ve already learned more than enough from the French, but that hasn’t stopped us from trying to mimic them. Think of France/EU as Tower One of the WTC, and the US as Tower Two. Communism/Socialism do not work…
Does [Edited by Moderator] keep you warm at night?
[Mod Note: Do not insult fellow commenters]
Francois Mitterand used to say that of the three words ‘Liberty, Equality, Fraternity’ the most beautiful word is Fraternity. At the time I didn’t understand what he was getting at. Now I do.
Greek people don’t pay taxes, and the government kept spending. That didn’t work there, and it won’t work here.
And when you visit France “Fraternity” is palpable. In the U.S. you get the sense that everyone is on their own.
Especially the rich in both countries.
On intergenerational solidarity. Part of the deal was that the older generation would pay for the education of the younger, so that when you put the transfers on a larger time scale, they tend to balance out as between generations. Starting in the 1980s (wonder why?) the United States began phasing out the subsidies to education, especially higher education, and began forcing young people to take out loans to finance their higher education. This was in effect a reverse transfer from the young to the old. Not surprisingly, what goes around comes around. Had education continued to have been subsidized in the measure that it was when I was young (and when we had the social mobility that resulted from it), there would be less caviling on the part of the 30 somethings who are still paying their college debts because the Reaganites cut their stipends.
After reading parts of that paper, I understand much better myself. The French see themselves as a nation. I see it with their struggles with their Muslim immigrants, trying to figure out how to maintain their Frenchness and teach it to their immigrants.
There seem to be a large number of us who think many of their fellow citizens aren’t real Americans.
Exactly.
Center right, huh? Can we send some of our ‘centrists’ over as exchange students?
The French really do not need to be copied at all. They have chosen to sacrifice significant freedoms in the name of social order and welfare. The two primary ones I will point at are the sacrifice of economic freedom, and their freedom of speech.
First, there is economic freedom. The French economy is a disaster, because it has failed to grow with it’s population. The crushing tax burden (33% corporate, 30-40% for individuals) and employment regulations have discouraged business from establishing operations in France. Rather, you see businesses with European operations establishing in Germany, Ireland, the Czech republic, or other eastern European nations in the EU. The employment regulations in France go far beyond what American unions have established. It is exceedingly difficult and costly to fire incompetent workers in France. Layoffs from business slowdowns or changes are also significantly burdensome. Lack of jobs is the core reason we see annual riots from the young and disenfranchised in France.
Second, there is the personal freedoms they have chosen to sacrifice. France has significant restrictions on speech. Specifically, France prohibits hate speech against race, religion, sexual orientation, and the positive representation of drugs. While it may be disgusting to hear hate speech, people must be free to express what they think. It is unjust to make thought a crime.
The French have used an authoritarian majority to restrict their own freedoms, and it is tearing that country apart. It’s bad enough the damage done to our economy and freedom in the last 10 years. There is no need to go making it worse by copying France.
I’m sure you’ve also noticed how many of the French are immigrating to the US to escape all that.
Seriously, how much worse off are they than us?
The countries you herald as “more free” than France do pretty much the same things as France. Germany prohibits expression of white supremacist views, and Czechoslovakia and Ireland have laws against disparaging religion.
As for a 40% tax rate being “crushing”, you do know that the top US rate used to be double that, don’t you? That was in the 50s, when our economy did just fine.
Sarkozy, a right-center politician, would like to lower benefits, but his ambitions in that regard pale in comparison to those here, by virtue of the social solidarity you discuss.
Here, the Right wants to do away with social benefits entirely, a career-ending aspiration for a European politician. As is true regarding taking away a woman’s right to choose, any compromise results in demands for more compromise, never a lessening of tension or acceptance of an alternative view of society.
The Right in America envisions some Randian Eden, where the motto is one for one and all for none. That inverts the notion of shared- and self-sacrifice that has united bands large and small since before Dumas’ gave voice to it through his three musketeers, since before fire fighters said, “You go, we go,” since before soldiers promised each other to leave no one alive or dead on the battlefield, even when keeping that promise meant more casualties.
People live best when they live for each other. They live tolerably when they recognize that to meet their own needs, they need also allow others to do the same, compromising over scarce resources. It’s the sort of thing two and three-year olds learn when playing together. The Right abhors that maturity, preferring instead a medieval solution, from a time when it seemed impossible to create wealth and where the only way to increase one’s own was to take someone else’s.
Ironically, that’s how the Right feels about all taxes, as a taking with no recompense; it assumes that a just working society either cannot exist or will function without them. That its problems result from unfettered selfishness never occurs to them. It prefers instead its dreams of a Randian Eden that is tax-free, worry-free, and neighbor-free. That’s a childish caricature of what it takes even to live alone as a Robinson Crusoe. In reality, Crusoe’s fear was that in aloneness lay madness, however troublesome society might sometimes be.
What makes the minimal social programs we have here vulnerable is that the center right, in the hands of leaders like Obama, remains speechless, or caves to the orchestrated noise from the Right merely to drop the decibel level a short while. A majority on both left and right, inside and outside, seems to assume that life will go on with no substantive changes, barring more noise from Washington. I think those folks ought to reconsider that happy assumption. The Left needs to help them do that; no one else will.
Don’t be so stupid. I pay that here in the US. 15% Self Employed tax, 15% US Income tax, 10% State tax, 8.25% sales tax, 1% of assessed value property tax, $1,000 per money in Medical Insurance.
Idiot.
Such as? Health Care?
No. NIH.
Exactly. The notion that average European tax rates are crushing is nonsense, especially when you consider the social benefits received, not just health care – France may have Europe’s best system – but lower costs for such things as higher education and public transport systems.
Those are neo-con sound bites, not an accurate description of contemporary French, Dutch, English or German societies.
* All tax on an individual’s income in Greece is progressive. As of 2009, a Greek individual is taxed at a rate of 15% – 40%.
* Exemptions are granted to taxpayers with specific types of income.
* In 2009 the standard rate of corporate tax in Greece is 25%. For Greek partnerships the tax rate is 20%.
* The 25% corporate tax rate will be reduced by 1% annualy, starting 2010, down to 20% in 2014.
http://www.worldwide-tax.com/greece/greece_tax.asp
Clearly you have no idea what you’re talking about. It took me about 5 sec. to find this.
You have obviously never been to Greece or seen its barter economy at work, nor do you seem to understand the difference between official rates and rates actually paid in practice. Tax evasion is common in many countries, Americans and German included. In several Mediterranean countries, it’s a test of wits and manhood.
Perhaps but masaccio said
Greek people don’t pay taxes, and the government kept spending. That didn’t work there, and it won’t work here.”
That statement is clearly untrue. The Greeks do pay taxes.
I have read about how the Greek government over paid Government employees etc. Also how Goldman Sachs helped the Greek Government hide their debt then bought CDO’s in order to hedge their bet the Greeks would fail.
Do you believe it is fair that a hedge fund manager who made $4 billion last year paid zero taxes?
The point is masaccio said
Greek people don’t pay taxes, and the government kept spending. That didn’t work there, and it won’t work here.”
In Greece, it is said, the government taxes swimming pools. The Greek records showed there were some 100 or 200 pools in one city. An aerial view showed there were many more times that number. All that tax revenue, uncollected. However, this aerial view was taken by the Google satellite, so it wasn’t that hard for the government to know those pools were out there.
Today, there’s a new industry starting in Greece – how to camoflage (sp) pools from the Google satellite.
Nevertheless, fixing the Social Security problem in the US is a no-brainer. The SSA doesn’t collect social security taxes on annual income over $106.800. Why should there be a limit? And this would not attack the so-called middle class. Simply collect the 6.2% each from employer and employee for the entire year’s income. Fixes the whole problem right there. I cannot imagine how much support is being lost because of this limitation.
href=”http://www.taxresearch.org.uk/Blog/2010/05/03/when-tax-fails-so-does-the-economy-and-then-society-itself/”
Link for Greek swimming pool thing, above.
So which right wing belief tank do you work for?
Masaccio’s overstatement was rhetorical; the Greek government obviously gets some income tax revenue from individuals and corporations, though less than if income were fully declared and the official tax rate were paid. I didn’t feel that his rhetorical flourish detracted or distracted from his main point. That said, I’m glad you mentioned Goldman Scratch, which had a large role in making Greece’s problems worse than they might have been.
Of course they have a formal tax scheme in place. Please read this article, explaining the extent of tax avoidance in Greece. There was a similar article in the NYT on May 1, and plenty of others if you search.
In the same way we have a statutory tax rate and the effective tax rate here. The rich and corporations don’t pay much if they don’t want to.
Haven’t you heard that American Exceptionalism prevents the United States and its citizens from LEARNING ANYTHING?
Don’t you know we’re still having toddler discussions about race, immigration, civil rights and social justice in general?
The narrative that Europeans are crushed under the weight of their taxes is preposterous but because so few Americans travel outside the United States they can make these grandiose statements.
Most Europeans move from Europe (to the US) for better weather or opportunities! Not because they pay too much tax, that’s ridiculous and those that complain about taxes are just greedy/selfish.
Like I said in another post, sure you can find some Tory to come out against the NHS in Britain or some Ultra Right Winger that hates the “Nanny State”, Africans and Muslims in France.
Those people are not in power even with the elections in Britain, they will not touch NHS, its political suicide and they know it.
Here the loons elect Rand Paul because he’s to the Right of The Republicans who are still dominated by the Neo-Cons if you can believe that.
And they say The Republicans will take back Congress, pardon me while I laugh out loud. Too many Democratic Strategist are worried about a “Enthusiasm Gap” on the Left, there isn’t one, its just on the blogs and forums around the net, they will show up when it counts in Nov.
I am spending the summer in France. Have a bad sinus infection from a cold caught on the plane a couple of weeks ago. Called a local doctor’s office; got an appointment for that afternoon; they didn’t speak English so I typed out my issues in google translate and took it along to augment my still fledgling language skills. Was examined, given appropriate prescriptions and because unlike everyone else there am not an EU citizen and thus don’t have the magic insurance card had to pay for my visit.
This was an ordinary French doctor’s office; the waiting room was filled with both immigrants and native French people. I waited about half an hour after my appointment time although they were ‘working me in’ the same day as I called.
The cost of a doctor’s office visit? 22 Euro. That is about my US Blue Cross co-pay. My 3 prescriptions cost 18 Euro at the pharmacy down the street.
yes do hate that horribly inefficient French health care with their long lines and all.
Nothing you say is in any way related to my post, but I’ll try to explain. Hate speech works against solidarity, which is a much more important principle in France than it is in the US. Almost everyone here lives in close proximity to their neighbors, both in the cities and in the country. Avallon is a typical small French town in Burgundy, look at it on Google Earth, see how close people live, even in a small town.
The principle of fraternité that Knut mentions above is very important to maintaining a decent society.
As to economic freedom, that is a mixed blessing as well. All that economic freedom you talk about led to the Great Crash, and created a society where the middle class is being crushed by falling wages and decreased services. Here the recession was bad, but the social system countered that to a large extent so there wasn’t a great increase in the budget deficit. The imposition of taxes on wealth and higher income taxes means that revenues don’t go down as much as they do in the US with similar financial pressure.
The point of my post was that the way the French approach the deficit problem begins with thinking about what the purpose of the program was, how it fits into the lives of the people, and the principles which should guide the response to the problem. In the US, the conservatives hate the program and want to abolish it, along with every other positive social program. Centrists don’t seem sure about anything, and liberals don’t know how to explain the principles they believe in. That leads to proposals created by people who stand to benefit, rather than programs that will carry out the purposes of the program.
Anarchism has even less to offer than the French.
`Seems like you asked how does Social Security work.
I think this might explain it:
http://mises.org/Community/cfs-filesystemfile.ashx/__key/CommunityServer.Discussions.Components.Files/5/8867.Picture-6.png
And these (haven’t read these yet)
The Roots of the Social Security Myth [pdf]
The Secret History of Social Security [pdf]