Fixed Point

No, I haven’t gone crazy, though if I have, there is method in my madness.

France is a great country. Wonderful cities, some of the biggest European companies fighting it out with the worlds best; a fairly successful auto industry, and a health system and public transport network that the British could die for (in the case of the health service, that’s not an aphorism).

But if you’re not one of the protected elites or a tourist, then France is far from great. France needs fixing. And it’s only when things are broke, really broke that somebody tries to fix them.

Sarkozy has promised a few liberal reforms, but they are mere tinkering, and do little to address the most fundamental problem with France: it’s sclerotic labour market. The generous welfare provisioning, and other problems like lack of risk-taking and innovation, are all second order effects. With less rigidity in the job market with employees attracting workers throught their own packages, it’s likely that the extent of public provision wouldn’t need to be so great. A generous welfare state also ensure the continuance of the system: who would vote for labour reform if it was tied to the end of their fat pension?

That is why Segolene needs to win. Her ‘reforms’ – in reality maintaining, if not strengthening the current system – will cause France to buckle. It will probably be ugly and painful to watch the Fifth Republic go down like a vin de table in the Ritz, but at least then France will be broke. And somebody will have to fix it. And fix it properly.

Mervyn writes.

The Chancellor writes back.

How nice. what have we learnt? Zilcho, but perhaps any sense of impending panic has been managed by knowing that there is a process in place.

It seems rather quaint that the economy is treated like an errant child who behaves beyong the bounds of acceptability and must be reported to its parent. This gives the parent some feeling of responsibility and power over the child, as no doubt the Chancellor like to think he has, and would probably like to actually have, over the economy.

But of course the Chancellor will not have to report to anyone; Parliament is a poor arbiter of economic management, especially fiscal policy. Moreover, as with hoodies, part of the problem lies with the parents themselves, but Mervyn King can hardly castigate his employer for decidedly dodgy policy, can he?

A DJ gets fired for making unsavoury remarks about a women’s basketball team. Tim Worstall takes issue with Jane Galt’s view that Don Imus can’t be expected to keep his job if he makes offensive comments and contributes to falling rating and advertising income. Don Imus has essentially been fired then because he has suddenly become a low productivity worker

No, there’s only one good reson to fire Don Imus:

And your show seems to be about to not make any money.

Capitalism is as capitalism does. That the show being about to not make money is a result of his appalling racial slurs is a minor factor, that it is about to not make money is the only one we actually have to take regard of.

As it turns out, the people don’t want racial slurs….which is why the show is about not to make money. But it’s the money measurement that we should take note of: the racism has been rejected by the markets, which is really rather something to celebrate, isn’t it? That trusting the people does in fact work?

This is a typical Beckerian view of discrimination: employers who racially discriminate for example, can be exploited by employers that don’t and have the opportunity of hiring more productive workers, perhaps at a lower cost, and dricing the discriminating firms from the market, or else forcing them to be less discriminating.

Problem is, you may find yourself in a market in which it is optimal for all firms to discriminate, so you never move from that equilibrium. Don Imus may be able to get a job at WKRP Burning Cross FM where local firms are only to happy to advertise, or perhaps quiet sponsors keep the station afloat. In such a market, there could even be competition amongst DJs to out-hate each other in order to attract money.

I agree entirely with Mill’s view that free speech should be allowed because it’s the only way of ensuring which views are ‘right’. The marketplace of ideas, in other words, has some merit to it, and in a wide sense, TIm is right: racist ideas have been driven from the main market. But those ideas can still be viable if money is the only yardstick, as Tim suggests it is.  That leaves me feeling slightly uncomfortable; it would be great to live in Mill’s idealised world bad ideas got short shrift, but in a world where the most eduated and richest country in the world can actually get into a tizz about whether teaching Creationism alongside classical evolutionary theory is appropriate, I’m not sure that the ‘market’ alone is enough.