Saturday, November 3, 2012
My letter to the NY Times re: How France Can Restore Competitiveness
Re: French Socialists, Under Fire, Display a Lack of Fraternite
There are only two ways to improve competitiveness. One, work longer. But France chooses not to adopt this option. Two, extend the division of labor. This one has several components. The division of labor can be extended by increasing the number of people participating in the economic unit. France could lower trade barriers to accept lower cost goods produced by workers in other countries, for example. Or it could reduce labor laws that cause unemployment, such as minimum wage laws. Also, the division of labor can be extended by adding more capital per capita, making each worker more productive. Capital accumulation requires a prior act of saving; therefore, anything that reduces savings should be eliminated, such as taxes and monetary stimulus programs that debasement the currency.