The Gilets Jaunes (“yellow vests”) movement which started 12 weeks ago has revealed a fracture in French society. Guy Sorman believes it is time for the government to react, and suggests two major reforms: massive investment in elementary education and the introduction of a “negative income tax.”
Overall, the Gilets Jaunes are right, although they do not know why and have chosen the wrong slogans, methods, and demands. This may well be the mark of any spontaneous revolt. Violence aside, this movement highlights a real fault in French society and other similar developed countries. It’s no wonder they have inspired relative support here and there across the world. The Gilets Jaunes uprising is therefore far from anecdotal, and its causes go beyond the price of gas and President Macron. But where exactly is this fault to be found? A real and undeniable divide has appeared. Not between the rich and the poor, but rather between the middle class and the “new poor” or those who are scared of finding themselves in the same situation. This works out as around 80% at the top and 20% at the bottom in terms of income.
French and American economists are well aware of this gap, and have spent 20 years documenting and explaining it. Analyses of inequality and poverty saw James Heckman, professor of economics at the University of Chicago, awarded the Nobel Prize in Economics in 2000, and Pierre-André Chiappori, professor at Columbia, welcomed to the Institut de France on January 14, 2019. This tight-knit group of exceptional researchers has no direct ties with the political world. And it is an almost immutable law that some 20 years are necessary before essential discoveries are offered practical application. John Maynard Keynes’ correct analysis of the 1930s Great Depression was only understood in 1950, and Milton Friedman denounced the social damage caused by inflation during the 1960s but his work was only really considered during the 1980s. Due to this delay between economic science and political action, the Gilets Jaunes are demanding a return to an idealized old world. A time in which everyone had access to reasonably paid work and the state guaranteed equality. In the meantime, the government is offering outdated solutions such as an illusory debate, inevitably followed by a minor redistribution as a social sticking plaster. Another example of the old approach.
However, we are in a new world, in which the education we receive from the age of five generally determines what we will do for the rest of our lives. This concept is called the education premium, and increases exponentially over time. In short, the longer your studies and the higher your number of qualifications, the more you will earn. As it stands, the correlation is now nearly direct. It is almost certain that those with no qualifications will never join the middle or upper classes. As we can observe, manual labor does not pay more despite the amount of effort put in. Emmanuel Macron is quick to condemn laziness, but he is wrong on this point; despite a small number of visible exceptions that found this widely-held misconception, the poorest are rarely the laziest.
But why are we unable to progress simply through hard work? This is because the modern economy only hires experts or laborers. And because there are too few experts to meet demand, they are overpaid. As a result, the top wages grow ever higher while the poorest stagnate and skirt the edge of poverty regardless of their efforts. This situation is even more unfair as most qualified people are the children of parents with a university education. French schools such as Sciences Po, ENA, and the Ecole Polytechnique are proof of how the elitist status quo is maintained. Those who study for longest are also the children of parents with qualifications. And it has been observed that said educated parents spend more time on their children’s early learning than is the case in underqualified families. Hereditary inequality therefore begins very early in children’s lives, creating a near irrevocable slide towards poverty.
We should therefore redistribute income. France does this more than any other country. However, this does not reduce poverty much more than in the United States, where redistribution is relatively inexistent. Both countries have a rate of poverty around 14% — defined by an income for one person under 1,000 dollars per month. This paradox has an explanation: In France, poor people stay in poverty without working, whereas those in the United States work while remaining poor. Neither of these two distinct social situations is satisfactory. A massive, French-style redistribution is particularly disappointing as it does not restore social mobility and can even freeze it from one generation to the next. We have also heard outcry against the wealthiest from both the left and the right. But while it may offer some immediate relief is it not an effective strategy. There are very few ultra-rich people, and they travel with their wealth. Denouncing the rich — as successfully maneuvered by historian Thomas Piketty in his work Capital in the Twenty-First Century — and seeking to overtax them means failing to understand that qualifications are today’s capital. The same goes for attacking the market economy, globalization, and the Macronian neologism of “ultra-capitalism.” The alliance between business and trade is the driver of our collective wealth and well-being. On the other hand, the “Made in France” movement does not create jobs, but it may well destroy them. Do we really want to go without cell phones on the pretext they are assembled in 10 or 20 countries?
We should not however conclude that there is nothing to be done. There are such things as positive crises, and this may be one of them. We should therefore begin by thanking the Gilets Jaunes for highlighting the inequality between the middle classes and the poor, and the gap between us and a full awareness of the situation. If we know how to harness the power of this movement, it will enable us to offer an authentic analysis and an adequate political response. This demands major investment in preschools, nurseries, kindergartens, and elementary schools for everyone at an age when education is most important. These efforts will remove original discrimination, re-establish equal opportunities, and ensure a more balanced, long-term distribution of wages. According to Chiappori, “no public investment is more profitable than an elementary school education.” And yet this is not being discussed — despite featuring in Macron’s campaign promises — probably because we are in a crisis. But in crisis there is truth. Of course, investing in elementary education will not improve the situation of the Gilets Jaunes, although it will spell a brighter future for their children, which is no small thing.
For now, there is no alternative to redistribution but a different method is possible. The money currently given by the state in the form of welfare passes through countless, Kafkaesque channels before reaching a few clever receivers and many needy people. Once again, we should seize this crisis and unite all benefits in a single welfare payment, a universal basic income (UBI), also known as negative income tax. This is an ancient classical liberal proposition approved by certain socialists affiliated neither with the left nor the right. The UBI would be managed by those who receive it instead of by the administrations that grant it. The current, targeted benefits remove responsibility, whereas the UBI would do the opposite. Each person would be responsible for how they use it. The introduction of such a program would be easy. All citizens would fill out an income assessment form, and those earning over a certain limit would pay while those earning under it would receive. A pay as you earn scheme, but inverted.
If we are to debate — which should in principle take place in parliament and not elsewhere — here are two fundamental and simply-worded “reforms”: the immediate introduction of an UBI, and access to high-quality elementary education. The situation is urgent. Some may object that it is too soon to consider economists’ research and unanimous conclusions as to the real causes of this new mass poverty in wealthy countries. If that is the case, I suggest economists put on a vest to have their voices heard. The color is up to them.