We know that the rate of compulsory contributions in France is one of the highest of the 38 OECD countries and much higher than the average of those countries. We are less aware that after redistribution, income inequalities in France, whether measured by the Gini index, by the ratio between the income of the wealthiest 10% and that of the least wealthy 10% or by the relative poverty rate, have not changed or have barely changed over the past 20 years, contrary to what some say. And that they are among the lowest in Europe and in the world.
In France, redistribution is very high, reducing the ratio between the income before redistribution of the wealthiest 10% and that of the least well-off 10% from 20 to 9. And from 20 to 3 by adding the effect of public services paid more by the wealthiest due to the high progressivity of taxes. 85% of people among the poorest 30% thus receive more in terms of public services than they pay, compared to 57% for all people in France (INSEE study of 2023 on extended redistribution). Ignoring this when building economic programs is obviously a source of inadequate proposals and therefore dangerous for the economy and ultimately for the least well-off. Obviously, the same reasoning is not tenable for the United States for example, where income inequality is much higher and has increased significantly over the past 20 years.
Another fundamental point is seriously ignored by certain programs. The economy and the social spheres are not static. They are dynamics whose effects are difficult to isolate from each other and whose interactions can cause favorable or catastrophic developments, even contrary to the desired goals.
If, compulsory contributions in France which are already on the European and OECD podium, are increased further, they will have a negative effect on employment – by reducing the competitiveness of companies, the dynamics of entrepreneurship, the incentive to work, etc. – as well as on growth. However, employment and growth are the main factors in the fight against poverty and in the development of the standard of living. Since 2000, France’s GDP per capita has declined in relative terms in Europe.
Similarly, supply and demand should not be considered separately. France already has a very large trade deficit and a current deficit that demonstrate its insufficient competitiveness. Its financial dependence on the rest of the world is thus constantly increasing. Artificially increasing demand would only further aggravate the external deficit. The development of the economy requires that demand be firm, but it also requires the simultaneous development of a competitive supply, which will also increase demand, particularly through the development of employment. Demand cannot be sustained for long through ever-increasing public spending, which ends up
leading to unsustainable debt. Nor can it be sustained by financing this spending through an incessant increase in contributions that end up reducing supply and jobs. The right way to fight against poverty and for purchasing power is therefore certainly not to further increase taxes and contributions, which are already very high, nor public spending (which in the long term is not positively correlated with growth), but to promote technological and green innovation, social mobility to improve equality of opportunity and incentives to work, since many companies cannot grow due to a lack of human resources, etc. Let’s stop cherishing the causes that lead to the effects that we deplore!