France’s (& Our) Small Businesses

An old A&L link reports on French start-ups.

It’s not exactly haute culture, but these days this is a vital topic here in France, where the unemployment rate has been stuck between 9 and 10 percent for a quarter of a century and where not a single enterprise founded here in the past 40 years has managed to break into the ranks of the 25 biggest French companies. By comparison, 19 of today’s 25 largest U.S. companies didn’t exist four decades ago.

Small business people tend to want different legislation (and less of it) than do big companies who are more likely to effectively lobby. Small business people tend to be independent; I think I started one because it had not been my experience that I would enjoy being part of an institution or to work at a 9-5 government job. I never really thought I’d get rich but I did think I’d get independent. That probably isn’t that unusual. Some of my staff were not so happy with the lack of firm and separated job descriptions but many liked learning a variety of skills and making decisions on their own.

Of course many small business owners are more competent and more ambitious. That 19/25 reinforces my earlier post about the churning among quintiles of net worth–obviously, such size is rare but movement upward through small business is common. Little outside the most intensely personal is as exhilerating and requires as much creativity as small business start-ups. That energy comes from the challenge of responsibility; France recognizes the need but will need to work against their inclinations to foster these. The role of such businesses in introducing new workers to the marketplace, in fostering independence and creativity should always lie somewhere in the back of legislators’ minds.

15 thoughts on “France’s (& Our) Small Businesses”

  1. “France recognizes the need but will need to work against their inclinations … .”

    Very deeply-rooted inclinations.

  2. Although Socialism in both strong and weak forms is always touted as a means of controlling powerful corporate interest, the reality is that the powerful always benefit more from state intervention than do the powerless. France’s large corporation have used socialism to create an environment that plays to their strengths while insulating them from competition from smaller businesses.

    We can even see that effect in America. There are significantly fewer small businesses and self-employed in the Left leaning Blue zones than in the right leaning Red zones. Business is so heavily regulated in the Blue zones that only big players with political pull and legions of lawyers can afford to play.

  3. ” There are significantly fewer small businesses and self-employed in the Left leaning Blue zones … .” Shannon, is that really so? Do you have a source handy for that? It does not comport with my observation of two places I have lived. Massachusetts is like a Scandinavian country in terms of socialism, but there is remarkable high tech activity there. Indiana is Red State all the way, but its economy is anything but dynamic.

  4. As someone who suspects “blue” state regulations limiting new housing and energy infrastructure construction render these states prone to “housing bubbles,” I’d like to know Shannon’s source, too.

    I’d like to see someone, maybe C-Boyz, compile fifty years’ worth of examples of adverse “unintended consequences” bred entirely by progressives’s policy successes, from FDR to LBJ and on.

    This morning I heard a Democratic Party voice on Fox News (sorry, too busy online to log the spokesman’s name) saying the party needed to come to terms with the fact that its “New Deal” mentality may not integrate with the realities of “globalization.” I almost spit up my corn-flakes in response, but on second thought I realized that maybe even the Dean-Dems, and the “inclined” French, cannot remain blind to the Anglosphere’s successful global economic model for long.

  5. In “The Old Regime and the French Revolution,” de Tocqueville argues that centralization in France long predated the Revolution. One example he gives is getting a local church steeple repaired, which required extensive correspondence with authorities in Paris.

  6. Not to nitpick, but what kind of a person uses a half-assed phrase like “haute-culture”? It’s either high-culture, or haute-couture. If they’re going to garble up their terminology they might as well use ex-scape or nukular. Hell, why use a fancy Francais term like haute-whatever at all when you can just say “fancy clothin’s”, or such like? How many levels of flawless editors does the WaPo have again?

    Anywho, as to the main point of Ginny’s post, I think it’s spot on. America’s is a dynamic economy (/culture/society/government/everything), while much of the rest of the world is still stuck in traditionalist or quasi-traditionalist modes.

  7. Thanks for sharing this interesting articel. It’s ironic how the country that invented the word Entrepreneur seems to be its most burdensome adversary.

    My French uncle in Beauvais runs his own business from his home distributing lasers for various machines. During a typical two-day stay, you realize that all that you remember what he says is about how lousy the regulations on small business are in France. My uncle’s resentment about taxes and and French business life seemed like one endless speech. He loves going to England on business trips, just to breath the ‘free air’ of lax regulation.

    I’ve linked to another article about the French welfare system on my new blog

  8. I predict that should the French ever succeed in reforming their rules, all we will hear about are all the negative consequences of deregulation.

    Can’t you just see the articles now?

    “Headline 2012

    Even though unemployment has fallen to 6% and GDP growth has been steady at 3%, France suffers from an excess of economic insecurity. Chic shops and great restaurants are being displaced by McDonalds and Target. In the growing banlieues, even the BCBG are shopping at Walmart. And French students are reading the WSJ and not Sartre. In the meantime, middle management is facing increased layoffs, and unions do not strike for fear of corporate takeovers.”

    Get your Le Monde 2015 templates ready now.

  9. My source for the rates in self-employment in politically Red or Blue zones is the Regional Asset Indicators:
    Entrepreneurship Breadth and Depth[PDF]
    published by the Federal Reserve Bank of Kansas City. The study provides maps you can project onto Red/Blue maps by county.

    In summary the study can be used to show that (1) people in Red areas are more likely to be self-employed (2) people in Blue areas who are self-employed make the big bucks.

    I think its an open question whether Red or Blue zones produce more new types of businesses and industries. The Blue zones seem to have an edge in the highly visible areas like computers or fashion but I strongly doubt they lead the edge in manufacturing. I suspect that the Blue zones have an edge in information industries which are (1) relatively small scale (2) use high skilled non-union labor. In other words, industries that do not trigger the political and legal attention of the local powers that be.

    What is inarguable however, is that it is far easier to start a new business in a Red zone than in a Blue.

  10. I’ve got diplomas in management, finance , engeneering (signal processing), and I’m gonna work in finance soon.

    I’m from a public school, but in France, top schools are public schools,and most of other public schools are better than private ones, because we send a child to a private school when public schools refuses him.(it happens often)
    Then I did a top engeneering school, called Supelec(computer, automatic, energy …) then a master (signal processing) from georgia tech (small part of it is in france) and a financial master at HEC .

    For the moment I’m working at the IFP (French Petrol Institute) on engine signals.

    I’m working on a project ordered by Ford :) (3 million $), and I found some intersesting stuff I don’t have the right to talk about, just by processing the vibrations generated by an engine.

  11. “… In the growing banlieues, even the BCBG are shopping at Walmart. And French students are reading the WSJ and not Sartre…”

    French students reading the Wall Street Journal? It would be a major achievement if papers like Le Monde and Liberation and magazines like L’Express and the Nouvel Observateur were to vanish into irrelevancy. Nonetheless I love your sarcasm, NN.

    What Sandy P says about public and private universities in France is true. My father was a graduate of HEC, and I attended for one semester one of those rare catholic universities in Angers. It seems to me that part of the reason private universities are not prestigious in France is that they lack institutional and financial resources enjoyed by private universities in the U.S. Although the cost of going to a private university in France is higher than attending a state school, it’s a drop in the bucket compared to what most American college students have to fork out.

  12. ACK! That wasn’t me, what happened to my 1st line?

    That’s from Pierce who’s jousting w/Denny @ Grouchy Old Cripple.

  13. The economic vision of socialism is the seduction of hope over immutable reality, the fantasy that human frustration and earthly unhappiness can be overcome by admonitions, will, belief, or revolution. Unbelievers cannot be tolerated, however, for pulling back the curtain, even if just to look. And, after all, someone must be blamed.

    The lack of respect for the truth of human nature has been the cause of endless grief. The social redeemers attempt to build heaven on earth, but their towers keep crashing down. Yet they seem to learn little from these lessons.

    Socialism is a closed economic system with a built-in mechanism for generating shortages and fiscal crises, for which there is no solution. Efforts to remedy its perverse incentives either exacerbate its problems or return it to market principles, voiding its raison d’ętre. Luckey said it “is not really an economic theory but a kind of gnostic ideology with economic overtones”

    I look with hope on Frenchmen reading the Wall Street Journal. I sincerely hope the idea catches on here, perhaps in the halls of Congress, or maybe in a University somewhere.

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