vendredi 1 février 2013

Work organization : France in logic of honor when USA in logic of contract

In the last post, I've discussed how the French Ancient Regime (period from the wake of last millenary to the French Revolution in 1789) is still shaping the way we're governed. I will pursue with those considerations on a more day-to-day illustration : the way French Ancient Regime society organization is still largely tainting today's french society and mostly work organization. It explains a lot of misunderstandings and failures when a US company manages a french subsidiary and vice-versa. This post is based upon a book that has been written in 1987 : sociologists have studied organization and behavior in 3 plants of the same industrial group (US, France, Netherlands). This was 25 years ago and mostly blue collars, but the lessons learned are curiously similar to what I've personally experienced when my company was taken over by a US company less than 5 years ago,  in a completely different sector (software manufacturer). 

Ancient Regime

France has lived for 6 or 7 centuries under what we're calling the "Ancient Regime". It was a very rigid "class system" with strong barriers to move from one class to another. You had the aristocracy (including kings and queens), not engaged in any business but fighting, forming alliances and marrying amongst themselves to keep power and estates. You had the nobility and gentry, some of them more a sub-aristocracy, some of them doing business which was considered something "dirty" and kept you under aristocracy (a real aristocrat could not make a living conducting business). You had a class of religious (monks, priests), and then you had a class of people that had access to a better class through heroic behavior in battles : cavalry was for example considered as a superior class. You had craft-makers and shop-owners with a perpetuation through master/apprentice relationship (and protection through syndication). And most people were poor farmers working for small gentry. They were not slaves but working on lands that were not their property. They were working for their lord.

Everybody was under a logic of 'honor'. Belonging to a class came with a list of rights and duties. Those lists evolved with time but the system kept on being the very same. When in a class, you cannot do something that is devoted to an inferior class (or stick your nose too much into the inferior class business), that would lead you to dishonor. This is still surviving : in France, a manager cannot dig too much into a team member's work without being considered as "breaking the rank". And the team member being too much controlled will find outrageous that his manager is going too much into his business devoted to 'its class'. Even the lower class was in this logic of honor. They were into domination but were very proud and jealous of their autonomy in some rights and were not in rebellion of the duties they found 'natural' to their rank. The whole society was working well provided everybody stayed 'in his rank', benefited from 'his rights' and ensured he properly respected his 'duties'. A lord had all powers over poor farmers but he was meant to use it with moderation according to his duties. If he did so, the farmers accepted the domination. If not, there was rebellion. Nevertheless, this domination was difficult to endure. That's why, in France, "working for someone" is still seen as a problem because it always refers to a master/servant relationship, not to a contractual relationship as it is in the USA.

French revolution and US model

The French Revolution which started in 1789 was meant to break all of this. The King was beheaded in 1793 and it's true that the whole system was shaken around. The whole "class system" was torn and the aristocracy barely exists today. But the class logic and the 'logic of honor' is still vivid. The classes are far more numerous come in many shades. But each group refers to a system of rights and duties, even if it's not consistent anymore with the current reality. Some strikes are starting just because the 'honor' of a group is endangered.French employees are ready to be utterly committed in their work but don't accept  that their manager is checking on their work too much. Some people say french people are lazy and don't care about their work. That's simply not true. The fact is, people are very disappointed by companies more than most other countries simply because they put too much expectation on work (polls show very clearly the over-commitment of french people in their job). Some also say french are unmanageable. That's more true because each group refers to its own code of honor rather than to orders. And we're still reluctant to management because of the memories of the master/servant relationship. Just like the defiance toward the riches could be interpreted as remains of the time where conducting a business was considered dirty (vs aristocracy).

At the other end, the US system is built on a very different basis. The burden of the past is way thinner. US can be seen as the aggregation of free men, meant to be peers, working together under a "logic of contract". The key word is "fairness". Of course, there are a lot of inequalities in US, much more than in France. But France refers since 1789 to "equality" when US refers to "fairness". It's more acceptable in US to "work for someone" because you're meant to have freely chosen and accepted the situation and it could be reversed one day. Hence the important figure of the "self-made-men". Therefore, the work organization relies much more on procedures (job description, management by objectives, performance review). Each level, from shareholders to blue collars, is giving objective performance expectations to the inferior level which can work, inside those orders, with a fairly good autonomy. And, unlike in France, it's not a dishonor for someone to be 'checked' : in France, it's seen as a lack of trust and defiant gesture. US can also rely on contracts because it's a lot supported by culture which is tainted by community and fairness values. This contract system does not work very well in France when people are still entrenched into honor.


Management and organization models, theories, books, seminar consultancy, it's a big business. Each country, each company, is trying to find best-of-breed models. Hence "copycat effects" and dramatic changes in model popularity. We have always been impressed in France by US economic power so we've always tried to import US management methods. This is still true even if it has a little bit faded away. We've had our "Japanese model" (community and inputs bottom-up) time and now the "German model" is in everybody's mouth (consensus). "Japanese model" was also very popular in the US when Japan automotive manufacturers began to gain huge market shares in the US in the 80s with a productivity that was way superior to the US.

We've been so involved in trying to copy US methods for 4 decades that some management methods very unnatural to the French have now become quite common and seems to have always been around. This is the case for job descriptions and management reviews (for white collars at least). It would seem very unprofessional in my line of business (IT service & software manufacturing) to hire an employee without a proper job description and to not have a yearly or biyearly performance review based on objectives measurements. Still, most of the time, it's just make-up, a travesty of what the reality is about.

I've myself written a bunch of job descriptions. Most of them were never respected (except maybe the core components) because the employee was going over or under its prescription. Most of the time, I did not expect myself employees to respect it and I was expecting them to act autonomously in the company's best interest. It's the same for performance reviews : I conducted a lot of them, having prepared metrics and formal reviews and finally found myself turn the review into an informal talk. That's a real advantage for small companies in France (I've always worked for small business) : you don't need formal procedures, people will do their best and know what they have to do whatever their job desc states. And they will spontaneously help their colleagues if they feel their 'honor' commands them to do so. Problem is what works perfectly in a 30-people company does not work that well in a 10,000-people company. And also explains why we do have in France a lot of "small wonders" that never turn into "huge champions" like Google or Apple.

My personal experience

I was CFO and General Manager for France for a software manufacturer (approx 75 employees). The CEO  was french but had moved to California to develop US business. We'd been acquired by a San Jose, CA based company. It was fairly easy to deal with my new boss (company's CFO) and "indirect bosses" (General Counsel and HR VP). But I experienced a lot of tensions, struggles and misunderstanding with "peers". Finally, after 10 months, I decided to quit. Partly because of those tensions and mostly because my position was making less and less sense as control was centralized in California.

Tensions were largely between me and the VP US controller (may be the wrong title - the person was just "under" the CFO). Let's call him John. John was a real nice guy, very pleasant to deal with outside work when I was on business travel in San Jose or when he was in Paris or Lyon. But I must admit John was bothering me. A lot. And I could easily feet it was reciprocal. So the company CFO was constantly forced to act as a referee, which he was reluctant to do because he was very busy with other things and he did not want to push back nor John nor me. I was feeling that John was stubborn and not dedicated to the company, being in a pattern when he was just doing "his job", no matter what the company needed. It was easy to understand that he was thinking (as well as the CFO, at least for a part) that I was unmanageable, constantly doing things I was not asked to do, challenging things not meant to be challenged and a factor of disorganization. I can't remember us arguing is San Jose. I had a big number in my balance sheet on €/$ conversion risks. In my eyes, it was something to address. In his eyes, it was not to be taken in account because company procedures did not mention it. I was under the impression he was pushing the dirt under the carpet, he was under the impression I was making a world of something not that important while I was not addressing issues I was meant to address.

We were purely in the cultural mismatch I was exposing in the first chapter. I was in a "logic of honor". I had a view of my CFO's job that was not based on my job description but on feelings. So I thought this forced me to address issues I felt were important for the company even out of my scope. I also thought I had not only the right but also the duty to address this issue and couldn't care less about the effects on the company organization or on my peer's feelings. And I really apologize to John (and the CFO) for that. Not addressing those issues would have meant losing honor to my eyes and that was not bearable. The same applies to my peer. John was in a pure 'logic of contract'. He had a job to be done, following his job description and company procedures. He was working hard and very efficiently pursuing this goal. For him, addressing other issues would have bring disorder in organization and less efficiency in 'real issues'.

We were both right, both eager to do the best for the company, willing to interact at best, yet we mostly failed because we were trapped in our cultural vision bias. I can see this now ... 4 years after. This is something to keep in mind for people managing other people on the other side of the Atlantic Ocean. And also for managers or governments. You can't just look at the Japanese, US, Scandics, or German model and copy/paste into your country. That does not work well. Taking good ideas in other countries ? Of course but you have to deal with your history and culture. The 1789 Revolution did not ban the Ancient Regime organization that still survives more than 2 centuries after. A CEO or a Republic President who'd think he can delete History would be foolish and would fail.

jeudi 24 janvier 2013

France : a modern democracy on top of an everlasting monarchy

I understand that talking about Monarchy for France may seem weird. Where several European countries had chosen to keep their kings and queens (with very limited powers indeed), we're the ones who beheaded our king Louis 16th on Jan, 21st 1793. Still, the Monarchy System and what we call the Ancient Regime (the one which prevailed before the French Revolution) is still shaping large part of our political system, our national organization and also our work relationships. Nobility, gentry, aristocracy had shaped the way we interact at work, our companies hierarchy and also inter-companies interactions. We're working based on a "logic of honor" that was typical of this time rather than a "logic of contract" that prevails in US. That's why work relationships are sometimes so complicated when a US company manages a french subsidiary (or the opposite). I'll develop this in an upcoming post. In the current one, I'll talk about the political implication of the Ancient Regime everlasting effects and also about centralization. US had been built as a federation of states. France is quite the opposite and is desperately trying to mitigate the over-centralization of Paris where 1 out of 5 french citizen live. The result is odd : an obese headquarter surrounded by overgrowing multi-layers subdivisions.

An Hyper-President ?

Our former president, Nicolas Sarkozy, had been nicknamed as "hyper-president". Fact is that the French President has huge powers. It had not always been the case but it really is since the beginning of our 5th Republic (1958). You must keep in mind that, since the French Revolution (1789), we change the major version of constitution 19 times and we're at the V5 of the Republic. Our constitution is much more bigger than the US one but we also change it much more often.

People are elected a first chamber, the National Assembly. A second one (the Senate) is elected by local representatives, mostly mayors. The Senate is more stable and supposed to be more conservative (although it's now dominated by Socialist Party). Both chambers are voting the law. President is elected by the people in a two-round direct election. Every citizen is voting for a candidate among a dozen (that's the average number) then, two weeks after, for one of the two runner-up (best scores in first round). The President is then nominating a "Prime Minister" in charge of leading the country. The "Prime Minister" is then nominating the government with Ministers (20 in the current one like Army, Economy, ...) and "Sub-ministers" (18 currently). The Prime Minister must be confirmed by National Assembly. If the President is conservative but the National Assembly is leftist, then the President will be forced to nominate a leftist Prime Minister, what we're calling "cohabitation". It happened several times in the last 3 decades. But the President keeps a lot of powers : total control on armies, capability to provoke new National Assembly election (last used in 1997), the right to nominate people to some high positions in Administration, to veto some Ministers decision, ... The mandate duration for Presidency and National Assembly and election date had been aligned so that the cohabitation risk (cause of policy blockade) is now limited.

In the 4th Republic, the President was elected by the chambers, not by the people. He was weak (no direct people legitimacy) and unstable (26 presidents changes in 12 years) due to alliances swap. The 5th republic and the very strong role of the President is a reaction to the weakness of the 4th Republic. This instability led to 4th Republic Collapse in a very tough time (Algeria War which was an equivalent of Vietnam for France). The question is now : is this very "strong President regimen" still needed ?

How much the Presidence costs ? A lot !

The French President is living and working at the "Elyseum Palace", the equivalent of the US "White House" (unlike the 10, Downing Street in England which is a living place only for the Prime Minister ; in France, the Prime Minister has its own place : Matignon's Place. Fortunately, Paris is packed with palaces ...). French President has his "Camp Davis", a fortified place on the French Riviera.  It's interesting to see, as a symbol, how those administrations are living. Not that long ago (10 years), President, Ministers and part of their staff were paid by "secret funds" (bank notes !) in a total opacity. Ministers are now paid with an official wage in a fairly good transparency. Staff wages and benefits are still opaque. The French Presidency has a budget since ... 2008. Before this date, the money was just spent. No budget, no accounting. The official budget of presidency is 32 M€ but that must be completed with money coming from other ministers. Altogether, the budget is approximately 130 M€ ($175M/year). After the "bank notes payment" had been banned, the official wage of President had been raised from 7 k€/month to 19 k€/month (this sharp increase had been made by Sarkozy and was used by its opponent as a symbol of Sarkozy's preference for luxury - a dishonor in France !). That makes $300k a year (before income tax), less that IMF president for instance ($550k/year). Note that the new president, François Hollande, had decided to cut 30% of his salary (same for the Ministers).

Operational costs of French presidency (without staff salaries and travel) was $25M in 2011 compared to $13M at US's White House, same for German's chancellor and $18M for Queen of England. In 2011, the Presidency was owning 74 vehicles and 31 more were lent by french manufacturers. At German's chancellery, it's 27 vehicles only.  The cost per citizen of Presidency is 3.5 times more than in Germany. The staff of "Elyseum Palace" is 882 employees. It's 527 at the Germany's Chancellery and 582 in White House. This makes look French Presidency more like a monarchy rather than a modern democracy. Note that this is not the President'privilege only . The National Assembly President (4th ranked in France's protocol) budget is roughly $1.3M a year. In 2011, it spends $52k for wines (was $91k in 2008) and $82k for flowers ($137k in 2008).

Un-concentration : a fierce need to reform

France is too much centralized. Out of 65 millions citizen, more or less 12 millions are living in Paris suburban area. All political & medias powers are in Paris. A lot of economic power too. Always had been. It also was necessary because french borders were not "meant to be" : France had to be unified by a strong central power and a common language. Unlike the US, France shares the same very law everywhere upon its territory. It admits only very small variation in application. Only 5% of France's taxes and social charges are decided (and withheld) at local level ; only 25% of public spending are. Therefore, this leaves few room to local entities.

Nevertheless, efforts had been made since 1982 toward an "unconcentration" : more local taxes, more local spending and budget flexibility, a little bit more independence. French had been divided into "towns",  and the current split had been decided a little bit more than 2 centuries ago. There are 36.000 "towns" in France which means a town is 6 square miles and 1.800 citizens lives in. That's small. 50% of towns have less than 500 inhabitants while only 50 have more than 100,000. A US county mean population is 25,000. But France has another scale : the "departement", also created more than 2 centuries ago. We have approximately 100 of them for a mean population of 520,000 people (and a surface of 2,000 square miles). On top of that, "departements" are gathered into "regions" (22 of them in metropolitan area, plus some "special regions" for overseas). Some regions have a "cultural meaning" (Auvergne, for example, may be more or less connected with territory of tribes living 2,000 years ago), some others are pure administrative creation. All those lawyers have elected people (different elections on different periods), budgets and spending (department are for example handling school buildings for kids 12-15 years old, regions for kids 16 - 18 old). To be honest, very few people know exactly which entity does what.

The concept of "towns" is still functional in the countryside but not in medium/large cities. Since the split had been made 2 centuries ago, all cities have gone way beyond their borders. I live in a town (population 4,900) in the outskirts of Lyon (population 440,000), 10 miles away from the City Center. I couldn't make my way to the Center while finding a gap larger than 100 yards between houses (except parks) : this is now all the same city. So an "intertown" organization had been setup regrouping 58 towns for an overall population of 1,200,000 (second biggest one in France). Managers of this "intertown" are not elected (nominated by town mayors) but they are voting (small) taxes, they're spending money for resources sharing (garbage disposal, school buses, ...), they have staffs, they are paid. More than 15,000 of "intertown" organization had been created. This may had been a tremendous way to find synergies and save money. But staff of intertown organizations (most of local or national governmental organization staff members are entitled to "job warranty for life" - 5,000,000 people in France are under this status on overall 25,000,000 workers and 3,000,000 unemployed)  had sharply increased (+221% between 1998 and 2008) and town's ones never decreased ! So we're just piling up and there are more duplicates than savings.

A lot of people are now asking for a simplification : more transparency, the right to easily know who is responsible for what, taxes transparency. The main split had been made two centuries ago and going on piling up is not the good way when we're trying to find an equilibrium on our budget. But here's the trick : politicians are very often multi-mandate. A National Assembly representative or a Senator is most of the time also mayor and President or Vice-President of an "intertown" organization. Since 2012, Ministers are not allowed to keep local mandate but it was often the case before. So it would be hard for representatives to vote a law that would undermine their powers and financial resources : they're allowed to get a wage for each of their mandate up to a ceiling.  They're also benefiting various advantages for each mandate : car (with chauffeur), credit card, ... like barons in a Monarchy.

samedi 5 janvier 2013

Religion, politics, money : french taboos or cornerstones of good manners ?

Christmas and New Year's Eve are over. This was good family time for me and I hope this was the same for you. Gathering with family members should always be a good time but sometimes it can degenerate into trenches battlefield. Because even if we're same blood, each one of us has his own opinions and beliefs. I've never been at an American Christmas or New Year's Eve, never been at a US family gathering either. But I did see a lot of American cars with political stickers, I've discussed with business acquaintances about politics, economy, religion, money. All things I cannot discuss in France with family and friends, even closest ones. Cause those subjects are taboo in France. Or is this just good manners ?

Politics, revenues, religion : French taboos

When I was young (8 years old), my father, a university researcher and teacher (thermodynamics) went for 4 months in Newark, Delaware to work at the university there. I joined him with my mother at the end of his stay and this was my first discovery of America (a few key memories : Airspace Museum in DC, Airforce planes in Dover, a lot of yellow cabs in New-York, endless firemen trucks). Then, the professor my father worked with came to France. I can remember him in a restaurant saying out loud "Mitterrand est con" ("French President is a jerk"). My father wanted to hide under the table and other clients were horrified, staring at us or acting like they had not heard which was quite impossible considering the loud voice of the Delaware professor.

In France, we speak a lot about politics. But saying who you vote for ? That's a taboo. I know who my mother voted for at the last election, but nothing about my father's vote. Among my best friends, I know for sure the vote of one of them. For the others, I can often guess. Since we speak a lot about politics and economic policy, I can infer who they voted for. But we can't say it outloud. That would be embarrassing for everyone and, moreover, rude, impolite. Having a sticker on your car stating you're pro-Sarkozy or pro-Hollande would lead other people to think of you as a weirdo. 

Revenues are one degree above politics. Talking about money is not really polite but talking about your revenues ? Well, you may as well get up, jump on the table and show your genitals. I don't know any of the revenues of my family or best friends. Again, considering their position, the way they live, the size the house they've bought, I can make a good guess. But asking ? I don't want to lose my friends. Don't ask, don't tell, that's the policy. Recently, I've told my mother my exact revenues and savings position. She was raised in different time and culture where, if you have a good working position, you keep your head low and keep it. I'm more the changing type, changing jobs every three years, therefore worrying her. So that was a way for me to tell her : look, I'm OK, you don't have to worry. But there was a silence on the phone because this display of numbers made her uncomfortable.

Religion was also a taboo but it's fading away. That's because religion itself fades away. Less and less people believe in God in France and only 5% people go to the mass on a regular basis. So the taboo is falling apart. You could note it's a lot easier to you to say you don't believe in God than the opposite. France has a long tradition of sarcasm, of being non-believer (I'm not talking of God) and maybe some cynicism.

California vs France : Freedom or bad manners

Now, let's talk about US. Most of experiences I had (except my 1980 small trip on the East Coast and some other short trips) were in California. And I'm aware that US is not the same depending on which part we're talking about. I've already spoken about the bumper stickers. I've also found that some people I worked with and barely knew were very open to talk to me about their political choices (Democrat or Republican), if they were liberal or not, if the Obamacare should be implemented or not. Asking them if they have faith or not wasn't rude at all. About the revenues, they may not tell me the exact numbers (especially when we worked for the same company) but it seemed not to be a problem.

The fact is Americans (or at least Californians) are speaking their minds where French choose to hide. A Freudian would say the American way is better. Hiding things into your brain will cause neurosis. Maybe French behavior will lead us to a collective neurosis (or are we already there ?). But the French attitude may also be seen as "good manners".

The CEO of the company I worked for a few years ago, an English (or Scottish maybe) fellow living in the Silicon Valley for 15 years, told me that he hated the relationship genuine Californians had with money. "If they could display their yearly revenues on a T-Shirt and wear it, they would do it", he said to me. Well, they actually could but don't. But they're doing it through "wealth displays" : the number of sports cars on the 101 or 405 (San Francisco / San Jose) is just amazing.

In France, especially in traditional countryside culture, you don't speak about politics, money or God. But you also don't show your money. Even if you have plenty of it. You don't buy a sports car, but you indulge in some leather inside because it's discreet. The very traditional culture was no good to me because we were hiding too much and it actually led to neurosis. But the modern culture is more balanced : the taboo still stands but you have more space, more freedom. Therefore, maybe it's a good thing to keep those taboos. That's part of "french style". And keeping some secrets, even to family and friends, is a good way to keep peace at home and abroad, and also to leave some secrecy and mystery in our lives.

samedi 22 décembre 2012

France, shame on rich, poor management, mutual untrust, taxes and welfare system

Lyon, France
Dec 22nd

Dear Marc,

As it seems we've survived the Maia's 'end of the world' prediction, I can reply to your last note about economic policy as a pie recipe. I'll answer on the core aspects of the matter but I'll also focus on a very specific topic. Because that debate is currently raging in France (in the political world and, for a large part, in the media world, making the headlines in the most viewed evening news) : tax level, and the way we should "manage" rich people and famous people fleeing in more rich-welcome countries (Switzerland or Belgium). All the ingredients are gathered for a great buzz : famous people (actors), relation to the Nation (is it legit to leave your country to avoid paying too much tax ?), large revenues. But it's also highly related to the economic policy or, to take your analogy, Marc, the pie recipe.

France budget tanked, welfare 60% of national budget, no mutual trust, everlasting unemployment

Let's add some context here. French budget is tanked, debt is high, nothing really different compared to US (metrics are quite comparable, debt is almost 90% of GDP). But, as you noticed, the positions are extremely different when you come to welfare. Three stats here :

  • 45% of individual yearly revenues are absorbed by taxes or social charges to cover governmental machinery and welfare spendings
  • Governmental spending (including welfare) equals 56% of our GDP
  • 60% of our national budget (welfare + Nation budget + local administration budget) is absorbed by welfare (mainly pensions and health)
That's huge. Obama Care is a boy's toy compared to our welfare system, born in the ruins of post-WWII. Only a few small countries in Northern Europe (Denmark, Norway) have comparable numbers (actually slightly more.)

Other major issue : people don't trust each other in France. A worldwide survey is being performed every 4 or 5 years with the same set of questions submitted in each country to approx 1,000 persons. At the question : "Generally speaking, would you say most people can be trusted or that you need to be very careful in dealing with people ?", possible answers are "Most people can be trusted or "can't be too careful".

Here are the results for the last survey (2005 - 2007) :

Scandics people are trusting each other strongly which was expected. As well as a low mutual trust in former USSR countries. But a lot of surprises here :
  • Iraq has the same ratio US have (as well as Japan, Germany or Italy)
  • France ratio is half the US one, competing with pre-revolutionary Egypt or African countries

Why does it matters ? Because trust is business. Some research shows each percent added trust result in raises in GDP and wealth. Why ? Because you can have contracts and lawyers backup but, at the end of the day, business needs trust. You don't make good business with people you don't trust. The other outcome is that the society works better if people trust each other. The defiance we see in France in those stats result in lower or middle-class suspicion (at least) for the rich, private workers lurking for governmental workers benefits (and opposite), small business against blue chips (and vice et versa).

Same research came to the conclusion that it is not linked to France's DNA. Apparently, we trusted each other until WWII. Swedish, now at the top ranking for mutual trust, were defiant against each other back in the 20s. The level of trust is the result of History but also of economic policy. The fact that we have more than 500 different retirement pension systems is a powerful tool to fuel distrust (cause every system beneficiary thinks the other systems are more generous).

Last issue we have to address : unemployment. Let's face it and use a blunt word : this is the cancer of French Society. If the National Front (extrem-rightist party, anti-Islam, anti-arabs, anti-immigrants , used to negate or minimize Jewish holocaust during WWII) is close to 20%, that's one of the major reason. Basically, you have 29,000,000 potential workers in France.

  • The number of "category A" (never worked at all during a month) unemployed is currently 3.1 millions, basically 10.6% of population
  • If you include categories B and C (worked even an hour but way less than they wanted), the number rise to 4.5 millions, 15.5%
  • If  you add categories D and E (e.g. people close to retirement so they don't have to search for a job anymore), that's 5 millions so 17.2%

But we're in crisis time, aren't we ?

The real drama is that if you go back until '97, the "best times" were in 2008 with 2 millions "hardcore unemployed" (6.7%), 3.1 millions with categories B & C (10.7%) and 3.5 millions overall (12.1%). So France is basically unable, even when economy is booming, to go under 10% unemployed. We're glorifying ourselves because we have one of the best worldwide (maybe the best one) productivity per head. Well, it's easier to play football if you downsize your team (and the opposing one) and let all the weakest (young, 50+ years old, low-educated) on the bench, isn't it ?

Gerard Depardieu fleeing his country to a low-tax haven

One of our most famous actors, Gerard Depardieu, just announced that he will now live in Belgium, no longer pay taxes in France (possible if you live 183+ days a year outside France, unlike in US where you still got to pay something as a citizen), give back his french passport and welfare card. This has been a shock as he's the latest of a streak. Some of our neighbours (even in European Union) are very welcome with French People leaving France : they offer them a tax rate even lower that the one applied to their own citizens. The French Prime Minister said that Depardieu is "a prick", a lots of celebs backed Depardieu or confirmed he's a moron. Lots of politics said he's everything but a patriot. Some say people on tax exile are "rats leaving the ships", some others that they'd do the same would they be in their shoes. All of this is is page 1 in newspapers and makes headline story in evening news. Me ? Well, I'm not in their position and I don't like being too affirmative telling what I would do in this or that situation.

Let's try not to get ahead of ourselves and get some background. French economy is tanked, no growth, high deficit, high debt, high unemployment. Elections have taken place in May 2012 and leftist François Hollande won. As you described, Marc, the main thinking in France is to share the pie, not to enlarge it. This is especially true with leftist party.

Says French President : "I don't like rich people"

The government decided to massively raise taxes to reduce the deficit as asked by Germany and rating agencies. It decided that reducing Nation's and welfare spending is impossible (the conservative government tried to reduce them between 2007 and 2012 but failed). So taxes have been raised, mostly for the richest, and for 2 years. Hence the temptation for businessmen or actors to flee in Belgium (Brussels is 1h30 away from Paris in high-speed train) or Switzerland (Geneva is next to the french border). About the spending, almost everyone from politics to the media through the population wants them to be reduced so we could reduce taxes. Well-known CEOs have made a paper in the most famous French newspapers to say that a year ago. The problem is when you want to get the specifics : do we cut into military ? justice ? pensions ? health refund (75% of individual health expenses are covered by national mandatory system) ? Nobody wants to tell. Everybody wants to have the cake and eat it too. Sure it would be possible to improve the global spending efficiency (it's what a politician invokes when he says we must downsize spending and he's asked by journalists on what and he does not want to be unpopular - 100% of them - by saying 'yeah, let's cut on health refunds'). Choices have to be made. If we want less taxes and a more lightweight governmental sector, we need to be prepared to pay more for school, health or save more for pensions by ourselves.

About the tax raising, question is : are we too tough with wealth ? Well, the current President said a few years ago that he "does not like rich people". In another interview, he said that being rich starts with $75,000 yearly revenues (in other words, he is part of the rich now so he should not like himself, right ?). His behavior toward the rich has greatly evolved since, during the campaign and after the election but one can't forget where he comes from.

You said, Marc, that there's a profound distrust toward the rich in the French psyche and I'll give you that much. My feeling is that it comes from centuries of catholic religion being official in France. It's somewhere in the Holy Bible that "it will be more difficult for a rich to enter the kingdom of heaven than for a camel to go through the hole of a needle". That leaves some marks and, indeed, French people are suspicious  of the rich.

But I also doubt that most of our rich (or high revenues) are "love-able". The problem is that, in France, to build a fortune or to enter in the inner circle of very high revenues, you need to :
  • Inherit from your parents
  • Graduate from specific schools (2 or 3)
  • Have a rock solid political network and use it
  • Have worked as a "sherpa" or spin-doctor for a politician at the beginning of your career : at lot of blue chips CEO nominations, even for stock-exchange listed companies where France is not shareholder, need to be "backed" by government

Add to this that French capitalism has a level of endogamy : CEOs of Blue Chips are at the board of other Blue Chip companies. This is the same in US but to a much higher extent in France. Let's take an example : the French richest man, Bernard Arnault, has a $25B fortune (do I need to mention that he lives in Belgium ?). He inherited from his father (pretty large real-estate company) and used the cash to buy a large sinking company, Boussac. A deal was made with the Prime Minister of the time (1981), Laurent Fabius, now Secretary of State, so Bernard Arnault could buy Boussac at a very-low price in exchange with the promise to "save the jobs". He cut the company in pieces and sold them with a very nice bump. He was asked later on about the promise on the jobs he did not respect. He said that, once he had sold the companies, the promise could not be respected. No harm (for him). Then, he used the cash to buy LVMH and managed to raise it to worlwide #1 of luxury industry.

I don't say that Mr Arnault does not have talent or insight : he does. But let's compare this with the two co-founders of Accor Group. This is a hotel chain including Ibis, Novotel, Four Seasons, Sofitel, Pullman and many others. $8B yearly revenues, 4,500 hotels, 145,000 employees, all of this built on their own with no political network or dummy promises. What is the fortune of the two co-founders ? $200M each.

The problem in France is that the yearly revenues or fortune is not related to personal credit, risks taken  or talent. And people are no fools : they see that (with more or less accuracy). Take Xavier Niel, the rising star of French Capitalism. He did not attend the "good" schools, did not succeed because of political friendship, never worked for a politician, was a son of middle-class average couple. He started in the sex industry and "pink Minitel" (Minitel was a french-designed ancestor of Internet in the 80s). He's now compared to Steve Jobs. That is wrong because he did not invent a product but a business model. He launched a low-cost telco company (Free), paying himself a very reasonable wage but his fortune is worth $5B. And I never heard anyone complain about the guy (unlike other rich people) except 5% extreme-leftist that are opposed to any property rights.

Rich Americans are a lot about philanthropy (Gates "Giving Pledge" program, building a hall or an aisle in the college where they graduated) : that's very rare in France. Mr Arnault is a sponsor for his passion : contemporary art.  That's nice but that's not a way that is recognized as "giving back to the community". So I wouldn't say that French don't like the rich. This is much more complicated and I would say that French are waiting for rich people they would be able to like.

Have a merry Christmas, my friend, waiting for your views on this,

lundi 17 décembre 2012

Post economic meltdown : France vs US two opposing recipes for recovery

Redwood City
December 16th 2012 
Nicolas (*),

I‘ve been living in the Silicon Valley for sixteen years. You live in Lyon, arguably the best spot on earth when it comes to fine food and wine. I’m keeping an eye on what’s happening in France, and I know you are in touch with what’s happening in what is my current country . I believe we can agree that the differences in vision and strategy to resolve the economic crisis that fell on us are incredibly striking. And this comes with consequences: as we are experiencing a slow but consistent recovery, France is going deeper and deeper in a financial and moral meltdown. 

USA and France : so much in common, so many differences

We shouldn't be surprised. Sure, France and America have a lot in common. They share extremely deep historical roots, have never been at war against each other (there are not that many other examples among the “civilized” countries) and have been fighting side by side in almost every conflict in which one of them was involved. Both nations pride themselves on their active promotion of tolerance and freedom. Both respect free enterprise and private property.

But. Even if France is one of the largest European countries, it sits on a land seventeen times smaller than the USA. Its history goes back twenty centuries, coming to existence in its current shape during the Middle Age, growing up in the Renaissance, surviving a few kings misusing their absolute power, reinventing itself through several major revolutions and bloodbaths, agonizing during WWI (one of every three male citizens ended up dead or crippled), disintegrating during WWII and a gruesome occupation, reconstructing itself while losing its colonies and former glory and power, while under the threat of a nuclear war, with a Soviet Union at its door, and a communist party gathering over 20% of the voters within its borders.

Economic policy as a pie recipe

Let’s refocus on the economy and consider it as a pie. Looking at France, this pie is not growing, however what is discussed is how the pie should be shared. This comes with several consequences:

  • If someone has a larger portion, others will see their share as reduced. The consequence is a profound distrust of the “rich people”. This is deeply rooted in the French psyche, perhaps also a consequence of living for too long under the rule of an aristocratic class.
  • As the surface of the pie remains constant, the role of the government is to make sure that everyone gets a share. This leads to a system based on massive welfare programs.
  • At times of crises, the government will be expected to manage the decreasing size of the pie. By sharing.

Now let’s come back to the Land of the Free. For most American citizens, the discussion is around the growth of the economy, hence, how to enlarge the pie. The country is expected to become richer and richer. Consequences follow:

  • If someone accrues large wealth for himself, he is usually very well considered, as he is contributing to enlarging the pie. Since this will be benefit to all, nobody really minds if his size is bigger.
  • When facing an economic crisis, the focus is on maintaining the size of the pie, and even making it bigger to resolve the issue.

At times of troubles, the scenarios differ:

  • Day one: a big disruption occurs. Markets collapse on both sides of the pond.
  • Day two: in America, companies “reduce expenses,” followed by a flow of unemployed people filing for unemployment. In France, hiring is stopped, but employees keep their positions, as firing them would be in the short term more expensive than getting rid of them. France shares the shrinking pie while America modifies the sharing.
  • Day three: US companies deliver better results and start hiring again. French companies are still in the red, increasingly so, and as the economy supports the growing ranks of the unemployed (the one who could not find a job because nobody is hiring) taxes go up. As a side effect, the US companies that are too weak to survive in a bad economy disappear.
  • Day four: America is back on track, everybody is happy until the next crash. New businesses are created, taking the place of ones that disappeared. In France, the deficit rises and companies benefit from the wellbeing of the US and world economy, but are getting weaker because they have less cash at hand than they should. They could hire new workers, but are afraid that the next crisis might kill them if they have too many employees.

That’s the theory. Reality is, of course, more complicated as the models are not so crisp and pure, but you get the idea. Will this stop? Well, it will have to at some point. The real question is: when?

(*) Marc and I decided to work this blog as a correspondance between two french-born men, living 8.000 miles apart. Our inspiration (Marc's idea actually) comes from "Les Lettres persanes" of Montesquieu (1721). Except that, in the Montesquieu masterpiece, the two correspondents were imaginary. It was just a matter of style. Marc & I are real. Well, even if we add our talents, we won't be 5% as gifted as Montesquieu. That's the bad news. The good news is that we're alive and writing. We don't know each other that well. We bumped out in each other while he was board member of a company were I was CFO. But most of the boards were over the phone so we maybe met twice or 3 times. Nevertheless, we managed to keep in touch, mainly from Marc who posted comments on the economic blog I handled for 3 years for a french national newspaper. Let's not pretend we're enemies or opponents. As far as I can tell, we're sharing a strong core of views and values. But there are enough discrepancies between each others to challenge ourselves enough. It won't restrain us to post papers outside this correspondence. I'll keep on posting my favorite kind of papers : long with a load of stats and data.

samedi 15 décembre 2012

Gun control and mass killing sprees: European historical perspective trying to understand

This morning found myself explaining my 5 1/2 years old daughter why a man killed 20 children at the Sandy Hook Elementary School in Newton, Connecticut. And I started to cry. I did not have the President Obama standing to retain my cries outburst. Why did I explain that to her ? Because I thought it would be better for her to hear this from me with context and explanation rather than get a random glimpse from radio or TV. Kids are always surprising. The first question was "Daddy, how do you do to kill yourself ?" when I explained about the shooter's fate. Well, I know it's time for prayers for those who believe or grievance or just empathy thoughts. I just wanted to bring some European's "return of experience" and history lessons about gun proliferation and violence control. Well, it's not perfect over here, far from it. A so-called white supremacist crusader killed 77 innocent people in a single day in Norway a year ago. Huge majority of French population never hear about the 2nd amendment, they just think you can have in US any firearm you want, anywhere in America and wear it into your belt. And that Americans are crazy about this. And I want to say to my compatriots that Americans are nor crazy nor fools. Just products of their history like we are.

Statistics : guns proliferation control and homicide rate

We know that the 2nd amendment is coming from the time where there was no US Army, thus the need of militia and the need for any individual to own a firearm. That was the case in some times in French history but too far away to remember. It's also difficult from French people to understand that Americans don't want to move anything from their Bill of Rights when we changed 19 times of Constitutions in the last two centuries (I mean major versions !). It's also very difficult to understand why lobbies like NRA spend some much money on defending the freedom to carry weapons when we care so little about civil rights in France.

I've made a graphic (on the left) of the number of guns (or other small firearms) for 100 citizens for a various range of countries. USA is worldwide leader but a European country like Switzerland has a high rate because its army is made of reservists (and they should keep a firearm at hand). Some other countries decided to keep a firm governmental monopoly of guns (and violence) : Russia, China, Japan. Note that among this list, democracies are not a majority. Other countries like France and Norway have a pretty high rate of small guns equipment for traditions. In France (like in Norway), people use to hunt in countryside from centuries. So you can easily acquire a small caliber firearm (.22 long rifle being the most common but I'm no expert in firearm, never shot an ammo for my whole life !).

Now, let's try to cross those data with homicide rates. Well, the correlation is not really obvious (see below) 

Officially, Rwanda or Russia have very few firearm proliferation. But their homicide rate jump to the roof : homicide rate in Russia in 2.5x higher than in US, 10x higher than in France and 30x higher than in Japan. Switzerland, despite its gun proliferation, has an homicide ratio 6 times lower than in US and 50% lower than in France. Iceland has 3 times less firearms per citizen than in US but 30 times less homicides per citizen.

Beyond the stats

It's way more difficult to have statistics on killing spree. In France, March 2012, an arabic-origin french citizen killed 7 people, including children and targeting Jewish and French soldiers. During a siege that lasted more than 30 hours and were he finally been shot dead by elite police, he claimed to be leaded by Al Qaeda. In 2002, a french citizen was assisting a local town debate and killed 8 elected people, few months after another guy killed 14 people in similar circumstances in Switzerland.

But it's easy to see that it's way less frequent than in US. Columbine High School shooting did not happen in France. The closest event was in 1993. A guy, calling himself "Human Bomb", took a preschool class (with the teacher) as hostages). The story made all France catch its breath for more than 48h (I was 21 years old at this time and I perfectly remember this). The RAID (french version of SWAT) was negotiating. The mayor of the town on which the preschool stands was a certain ... Nicolas Sarkozy who'll become President 14 years after (yes, that's him on the photo lifting a kid away from the classroom). Finally, the hostage taker appeared to be more desperate than dangerous. But the authorities did not want to take any risk. The RAID managed to put some sleeping pills in its food and shot him in the head during his sleep. (Pretty happy) End of the story.

So France and Europe are mostly pacific. You have some places with high-rate homicide : Corsica island or Marseille in France or Napoli in Italy. It's mostly related to mob and drug trafficking. But desperate killing spree like shooting from a University Tower in Austin in 1966 ? Virginia Tech ? Very very rare. Fortunately. Is this due to firearm control ? I don't think so. In Corsica or Marseille, people who really want to kill someone find Kalachnikov on black market for few hundred bucks. Russia shows that if you want to kill someone, you don't need a gun. At least not an official one.

Do I say US don't need more gun control ? Well, I think they do need some. I don't have any right to intrude in this debate as an European but seen from Europe, well, I think a better control would be no harm. Now, even with a better control, would those killings disappear ? Part of them maybe. It's about raising the difficulty to organize a mass killing and to discard the "opportunistic" issue.

Beyond that? I think it's more a problem of American society being violent. Stats show that USA and Russia are indeed violent societies. Russia violence surely comes from its very violent history. US history had also been violent from american-native extermination, far-west and Civil War. This violence can also be seen in Kennedy assassination and Reagan life's attempt. In Europe, we can't glorify ourselves. It took us centuries to domesticate our civil violence and give the monopoly of legal violence to Nations. Although, this domestication did not prevent the WWI and WWII butcheries. I'm pretty confident in the fact that America will become less and less violent as time goes by. In a meantime, some law about gun control may help ...

I usually put a song at the end of my posts.
Today, I would just put a prayer but I'm not very religious myself so I won't be able to choose something that fits. If someone has a religious song or any appropriate song to suggest, I'd be happy to paste it here

lundi 10 décembre 2012

Old Europe is more and more risk adverse, shutting the door to progress, jobs and prosperity

Today, I want to talk to you about risk and progress. Progresses can only be obtained at the price of risk taking. And it appears that "Old Europe" is becoming more and more risk adverse, France leading the way. Much more than US, much much more than emerging country, China first. That may lead Europe to further de-industrialization, job losses, welfare system crash, decline and relative poverty. I've also taken the energetic policy as an example to show that the "cautious principle" we've set in our Constitution is leading us into dead-ends as we need to take risks not only to make progress but just to cover our basic needs.

Optimism bias, black swans and Challenger crash

Risk is very difficult to assess if not impossible. If you have a very strong statistical database (with a deep outlook on the past), then you have a chance. But that's not because something never happened that it won't happen. Nicholas Taïeb (or Taleb) described those phenomenons as "black swans". Europeans long thought that swans were all white, that the probability to see a black swan was equal to zero ... until they explored Australia and found black swans. Earthquakes of magnitude 10 had never been measured but one could happen. 9/11 can be seen as a black swan : we (and the CIA) knew terrorists were ready to do anything to harm America, we knew they used to hijack and destroy airplanes. But crashing planes into building ? That was too hard too imagine. This is also about detecting "low-intensity signal" and not being in denial. A plane was hijacked in 1994 between Algeria and France and French Intelligence had some clues that the terrorists intended to crash the jet onto Paris. We also need to avoid denial because sometimes it's just too tempting to discard images too awful to sustain.

The other mechanism at stake is hidden is everyone's mind. It's called the "optimism bias". We all tend to overestimate our chances to win (the lottery for instance) and underestimate our chances to loose (die from a lung cancer when we smoke - which is my case : smoking and underestimating consequences). Some may say it's hell of a flaw we have in our brain ! But some others think this is the very reason we're humans and not apes. If they didn't have overestimated their chances, our ancestors would never have explored continents, domesticated horses, grew wheat or corn, flew over Atlantic oceans or fly to the Moon. And we would still be in the countryside eating fruits from the trees and hoping to catch an animal from time to time.

So taking risk is part of human progress. But we need to domesticate our optimism bias. The US spatial vehicle Challenger had exploded because of a black swan and optimism bias. The O-Ring were meant to keep the booster solid fuel inside its cylinders so Challenger won't explode. Those O-Ring were never tested in cold ambiance because weather is never cold in Florida. Almost never cold. Unfortunately, in the night between Jan, 27th and Jan, 28th 1986, it was freezing at Cap Canaveral. Some engineers noticed that. But the decision was made by NASA to proceed with the launch. That is because the risk was dramatically underestimated. The crash happened on the 25th launch. Field engineers thought the crash probability was somewhere around 1 out of 100, managers 1 out of 1.000 and the investigation found that some upper management members thought it was 1 out of 100.000 (which is totally out of proportion showing not only optimism bias but also a belief rather that a rational estimation and huge dose of denial of reality). Well, anybody know what happen this Jan, 28th. 

The French "cautious principle" : no GMO, no shale gas

But we need to keep the optimism bias alive. Otherwise, we'll stop progressing. This is all about competition too. If we, French people, decide to stop moving on the progress path, then Americans will. Chinese too. And we will keep on losing our industries, our plants, our jobs and our wealth. 

Of course, we had our failures like Challenger. The most recent scandal (which is different because the Challenger case revealed no bad intent like greedy guidance) is "Mediator". This is the drug that was conceived, manufactured and sold by a french lab (Servier). It was filed as a cure for diabetis but the lab advertises it to physicians (prescription drugs ads for population is forbidden in France) as diet pills. Millions of people took it (especially women) for years. It appears now that the lab had cheated on the filing, has hidden some side effects, had lobbied (at least) to avoid the drug being withdrawn from market. It took a French's Erin Brockovich to fight the lab and authorities for years to see the drug go off the pharmacy's shelves. Now, it appears that the drug caused 500 to 2,000 deaths not counting all disabled persons (lung severe problems) and was not really efficient on diabetis (althought it was good diet pills ... but losing 10 pounds weren't worth the side effects) . Well, the case is "under investigation". That kind of case usually takes 10 to 15 years to go to trial and the lab founder & CEO (deeply committed in the drug misfiling and misuse) is 90-something. So he'll die quietly without being convicted. As there's no class actions in France, the pharma company will also easily survive (unless the government use its power to marry it with Sanofi, our national big pharma).

But I don't think we have had more failures and cheating than other countries. In 2005, a "cautious principle" had been added to our Constitution with opinion favors. The habit is when politicians want to do something but they know they won't do it, they put it in the Constitution (that's why it's not a booklet but a multi-volumes encyclopedia). Two years ago, a huge debate took place to know if we should add a "golden rule" in the Constitution forbidding more than 3% GDP national deficit. This has been abandoned. This cautious principle says : "« When a damage realization, even uncertain in the scientific state-of-art knowledge, might affect seriously and irreversibly environment, authorities, by applying the "cautious principle", and in their competence domain, will setup evaluation procedures to assess risks and to take provisional and proportional measures to avoid damages realization".

Wrapped-up, it says that we need to be sure beyond reasonable doubt that there's no risk before going on. As a result, all genetically modified (GMO) crop had been banned.

On shale gas, it appears that our soil may be packed with shale gas. But not only extraction had been banned but exploration too ! So it's forbidden to dig a hole trying to see and assess our shale gas potential.  At the desperation of industrial companies CEOs seeing a potential competitive advantage (lower price energy) disappearing. When we have too few of them

France : no energetic resources in our soil but a real cool climate

The nature gave us a disadvantage : we have no energetic resources in our soil. We used to have a lot of coal but we extracted about every ton of it and the few left is way more expensive to extract rather than to import it (from US - 22%, Columbia - 19%, Australia - 17%, Russia - 16% and South Africa - 12%). We never had any petroleum so we bring it from former-USSR countries (36%), Africa (29%), Middle-East (19%) and Northern Europe (14%). We have only one natural gas exploitation site so we're also importing it from Norway (32%), Netherlands (16%), Russia (13%), Algeria (11%). We don't have any uranium so we're bringing it from Mali or Canada. That leads us to import roughly 70 billions dollars a year of energy, roughly our trade balance deficit.

To be fair, nature gave us a huge advantage : a very moderate climate. The number of days with freezing (even 5' during the day) is 32 yearly in Paris, 59 in Lyon. In "coldest" places (except mountain villages), it's 100. The number of days in year where the temperature reaches 85°F is 16 in Lyon and the highest ever is 104°F. Coldest ever is -9°F. In Paris, 13 days of haze yearly (all data after are in Paris). 15 days of snow. 4.5 hours of sun a day as yearly average (more than 7h on the French Riviera). Coldest ever -10°F. Highest ever 105°F. 19 days of thunderstorm. Heaviest rain ? 41 inches a day. 105 mph as the worst wind burst. All of this is average. We don't have a lot of storms, no tornadoes, some flooding but few earthquakes. A good land to live on. In 2003, a wave heat of 3 weeks saw the temperature tops to 100°F in most of the countries. As we're not used, not equipped, not prepared, 11,500 people (mostly elderly) were supposedly died because of this.

Energy mixes and why France is pissed-of about American energetic policy

With this cool climate, we need to consume less energy. In 1985, only 1.5% cars sold in France had air conditioning. It began to be really ordinary in the 2000s and now comes with 90% of new cars. Only 3% of homes in 2012 are air-conditioned equipped. This ratio is the one that used to be in US in the early 50s. The current equipment rate is nowadays 87% in USA. That's one of the explanation of the fact that the energy consumption per capita was 3 (forget about the unit) in France and European Union (EU) in 2004, 4 in Japan and Russia and ... 9 in US ! Not mentioning 1 in China and 0.5 in India. Many other factors explain those numbers : industry (more plants, more energy consumed), efficiency (more plant efficiency, less energy consumed), culture and way of life (it's always surprising for Europeans to have to wear a sweet-shirt inside a restaurant in US when the temperature is 90°F outside).

Well, even if we don't need that much energy, we need some in France. And we also need to ensure your "energetic independence". Being dependent of other countries for our energy is no good because you'll have to bend your diplomatic choices to ensure your supply. And, in wartime, it'a drama. Fortunately, during WWI and WWII, we were relying on our colonies with gas and petroleum in their soils.

Where does all this energy comes from ? Worldwide, 2004 data, 35% petroleum, 25% coal, 21% gas, 10% biomass (burning wood) and 9% electricity. This electricity comes from 39% coal, 21% gas, 16% nuclear power plants, petroleum 7% and 16% renewable (solar panel, wind turbine and mostly dams). So, all in all, nuclear power plants are providing 1.4% of the world energy. To ensure our energetic independence, lower the electricity price for consumers and improve the trade balance, a huge nuke program was launched in France in the 70s. We're now world leaders (in percentage) with 75% to 80% of our electricity being produced this way. We also fully exploited our hydroelectric capacities which provides 10% of our electricity. Rest is mainly burning some fuel and some coal. We now have a cost-efficient electricity with few CO2 emissions.

US made radically different choices. Three Mile Island incident in 1979 froze the nuclear program. Therefore, in 2009, nuke was representing only 20% of the US electricity production and most of it is burning fossil resources with a lot of greenhouse gas (GHG) emission. And this is really pissing French people off ("Americans don't care about the Planet !").

Basically, in France, our energy comes :

  • 52% from petroleum
  • 20% gas
  • 16% nuke
  • 3% coal
  • 2% dams
  • 7% others (including an experimental plant to get the tides energy started in 1967)
In USA :
  • 37% from petroleum
  • 27% gas
  • 8% nuke
  • 23% coal
  • 3% dams
  • 2% others
More fossil energy (87% vs 77%) in US - especially coal, more nuke in France. 

The main reproach the French politicians and medias address to United States is : "you're burning too much energy, especially in residential and agriculture (because you're eating too much meat), you're using too much fossil resources, you're emitting too much GHG". French usually also ignore regional differences in US. A Texas resident will use twice more electricity than a San Francisco or Chicago resident and 3 times more than a NYC resident.

French energetic policy : no (more) nuke, no shale gas, no petroleum, no more coal

Now, once that said, what do we really do ? The ecologists ("greens") electoral score is within 2 to 15% but the average is 5/7%. Not a strong political power. But they're smart and managed to have some seats (2) at the current government table (french greens are on leftist side). They obtained the nuclear power plant program to be stalled and that the % of nuke in electricity production will be decreased from 75 to 50% (in 10 to 25 year, very unclear). We also don't want to burn anymore coal and want to reduce the petroleum usage. We cannot build any more dams. We have forbidden any shale gas exploration.

So what's the solution ? Trying to decrease the energy consumption by a better energy use efficiency or a better building isolation. Fine but it'll take a long time (and need investments with money we don't have at hand). Trying to develop "alternative energies" like solar, wind, geothermal but we're in stop & start policies. There were huge subventions for solar panel until the government find out most of them were manufactured in China and stopped the subventions. Wind turbine setup is blocked by the NIMBY (Not In My BackYard) effect (we're a densely populated country). Fact is we have no solutions other than trying to do a little better, step by step, and find a better balance.

So we're at the leading edge of ecology in the major conferences (Kyoto, Durban, Doha recently), giving lessons to the world (one of our favorite activity) but we haven't found our way. And our "cautious principle" won't help us find smart solution to fight global warming or to feed to world without killing the climate. Not having found our way is not abnormal because it's utterly hard. French citizen are making some small efforts, like US people do (the density of Toyota Prius on 101 or 405 south of San Francisco is amazing) but we like being fresh in our car, like big motors (well, me at least), like to be warm in our houses in winter, like to travel, prefer our individual car to buses or train. I don't think we're saints. No more than evil. Maybe Americans have had "easier energy" in the past so they have more room today to smooth their consumption without too much restriction. So let's US citizen find their very own way and improve, without giving any lessons.

Nicolas QUINT

Some say that's progress
I say that's cruel

Midnight Oil "Progress"