The Real Reason For France’s Pension Protests | Economics Explained
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- Опубліковано 12 кві 2023
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France's economy faces turmoil due to strikes over retirement age increase. Essential industries grind to a halt as violence and unrest dissuade tourism. This video explores economic arguments, lessons for other nations, and potential impact on the Eurozone.
We also spoke to Dr. Tomasz Michalski, a professor at HEC and a resident of Paris, living and working in the city while these events unfold. Our full interview with him is live on our Spotify podcast page now: 🎧 Listen at: open.spotify.com/show/5TFVUEJ...
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I'm curious: it doesn't seem like anyone is talking about the possibility that the CFA Franc system is more than likely ending in 2027. Is this factoring into France's push to increase the retirement age? The CFA Fran system is how France has kind of funneled a lot of money from Francophone African countries. So if that system is ending, France will suddenly be missing a huge source of money they've been pulling from, and maybe Macron is aware of that?
Ban capital flight, and make rich ppl actually pay for their existence. Problem solved.
Are you sure that there is a need to pay for fewer people working? If there are a lot of people who buy stuff and less to make them, is that noy super good for business? People will probably spend their retirement money.
Unpopular opinion: truth is Macron is making sure that France will not have Big problems in the next decades regarding this. We need RESPONSIBLE people in politics like this that do what is necessary even if that makes them lose elections.
Greece, Portugal, Spain, Italy who have a much lower fertility rate and a huge debt above 100% of GBP will suffer greatly
Oh, don't you worry now: If France's pension "reform" is just the start, its civil unrest is more than only just beginning.
Based on the more detailed accounts I've heard, I'm not sure that I agree with the policy on net, but I'm jealous that France is doing SOMETHING about the issue rather than just waiting for the system to collapse entirely like they're doing here.
Where?
@@leandrog2785 There
also jealous that the people raise their voices too!
I work for a state pension system in the USA, and I agree with the reasoning for raising the retirement age in their situation. However I think a better solution would be changing either the employer or the employee contribution rate (or both) and then flexing that back down after they get over the hump of funding this current generation. This still allows people to retire when they plan to, and still allows for better pension system coverage. It would just come at the cost of either the employer or e.ployee still working, but at least they know they will be able to start their benefits at the same age as their older generation. It may be an easier pill for people to swallow to at least know they are getting the same benefit at the same age they plan, but just to understand they may have to contribute more to it
Please 'where' is here?
You are absolutely correct in saying that the reason for the protests happening are the strong workers rights in France. They allow people to protest more intensly and more often in comparison to other countries. France also has a culture of protesting. However, the INTESITY of this protest is the way in which the pension reform has been implemented. For months, unions have been organising peaceful protests in which millions of people have been protesting against this reform. But the reform has been implemented in a politically SUPER sketchy way, bypassing a parliament in a controversial but constitutional way. People feel like they are not being asked and not being heard. The day this was announced was the day things started escalating. I was in the streets of paris that very day. Obviously you are an economics channel and not a politics channel and the discussion you are presenting is one that needs to take place in french society, because its economic implications are immense. But the french protests are now about BOTH the topic of how to manage pensions in an aging society AY WELL AS how that discussion is being held. The escalations have pretty much stopped by now as well and life as normal has always been possible except for like a handful of streets in the entire country. I'd be surprised if an economic impact will be measruable.
Parliament was not bypassed they did vote for censure of the government over the project. What was bypassed was a debate in parliament before voting for or against the project .
If there’s no economic effect what are you guys even doing if Macron hasn’t changed his mind ?
Thank you so much for writing this comment, I got so frustrated when I was presented with the explanation in this video.. half the truth missing honestly
@@giofilms9099 There would be a great economic effect if the legal rights to strike and protest were respected. The protesters are physically hurt by the police forces, whose role is supposed to be to ensure the right to protest safely, and the key sector strikers (oil refineries, nuclear PP workers) are denied their rights, by requisition of the task force. In other terms, the requisitioned workers that refuse to comply in the name of their constitutional right to strike are heavily fined or brought to jail. The ones that still try to block production are violently repressed. If that abuse wasn't being used by the government, there wouldn't have been oil or gas in our stations for a month, and Macron would have already folded.
The French government has very carefully made it almost impossible for the protests to have any economic impact, without refraining from abusive procedures, or sneaky uses of shady laws. So yeah, there won't be any major economic impact. The political impact however, is tremendous. I wouldn't be too confident in @Economics Explained assertion of France as a well-respected and famously stable democracy.
It just looks weird to everyone else. It was in the manifesto Macron was elected on and every country with an increasingly aged population is doing this sort of thing. Here in the UK you qualify for the state pension at 66 and its about the same as the basic French one but nothing else. I think it makes more sense for people to work longer but at reduced hours. I am 67 and cannot imagine anything worse than just pleasing myself all day.
Living and working in France as a foreigner I can say that the news is exaggerating about how the demonstration are, but it's still pretty bad. If you want to visit France you still totally can, but just be sure to have your time table well planned out and avoid specified areas during certains hours on certain days
Yeah i use to live in Libya and while there was a war it was nothing like the media showed
@@azargelin You could say the same about Ukraine lol. Civilian casualties after over a year - a little over 8000. Iraqs' casualties after a fortnight were already 15k (and the total ended up north of 800k), but of course that's Iraq so no one cared.
Gotta make sure you stay out of those no go zones too eh...
@@Rollin8.0
Like in Syria , Afghanistan , Iraq and in the Ukraine.
These kind of protest make people travel by car instead of airplane/train/bus.
The political angst in France is due to the fact that wealth transfer, ahem, "reforms" that were not an emergency and singular in focus were rammed through circumventing the democratic process. The other source of that angst is due to the fact that during an era of record wealth concentration, the rich and the corporations they own were not required to sacrifice anything. This is what class warfare looks like.
Again false. The 49 2 is in the Constitution since 1958 and has been used by all presidents.
@@patriciabrenner9216 doesn't make it okay
@@patriciabrenner9216 A bad law in place, does not make it ethical.
@@jojo-pk It isn't a law. It is part of the Constitution. It is quite ethical and useful.
@@patriciabrenner9216 Legal does not equal ethical and constitutional does not equal democratic.
How can you pretend otherwise when the majority of of the people and their elected representatives reject this reform?
A major thing you missed is about the inequity of labor. A nurse that has to lift up patients won't work until 64, while an office worker might. That is factor too often forgotten in this discussion and I would love that you mention it. I feel that this video only scratched the surface of the problem.
yup
That's because physical labor is valued less, so the implicit reasoning is that physical laborers deserve less.
I don't think it's fair, but that's one consequence of having a service based economy.
The reality is that many poor people die before receiving any retirement, so I'd like to see that money accounted for. Overall, I think all our current systems are obsolete
I mean there are 70 something year Olds working as nurses in the USA. But I do understand that that is an abnormality than the norm.
Yes find me a tradesman older than 50 who doesnt want out
@Pasta&Peas Disagree, the pays great, especially if you can also run the buisness side of things
There are plenty of 70 year old nurses where I'm from, the French are just weak as usual I guess.... at least since Napoleon.
The retirement age in the Netherlands is currently 67 years, give or take, and will likely continue to increase.
In the meantime, _everyone_ is forced to work, unless they have the luxury and capital to live off of dividends. Furthermore, automation has long since been applied in many fields, yet all the rewards reaped from that have stayed in private hands.
If automation could contribute to funding retirement funds, that would go a long way to improving the situation. Obviously, that's never going to happen in this current... system.
Our country is both quite left, and also very right at the same time
The irony is that you could blame the Dutch, in part, for the current situation. I mean, they nearly created modern (1700’s to today) capitalism
@@hunterkincaid4972 I blame them for quite a bit more. It's not even close to the paradise people make it out to be.
@@hunterkincaid4972 This is not capitalism at work, true capitalism has a free market that functions without government intervention. This is a distorted, farce of big government colluding with big business and big data to create a dystopic nightmare we call Neo-Liberalism. Key features are: Dwindling worker rights, massive government spending on anything but the public benefit (which are severely budget cut), a huge lobby from corporations who pay little or no taxes and increasingly repressive measures to silence discontent or violently repress protesters.
Really there's three methods of thought there. One laissez faire, two let it build up and then tax it eliminating future growth and upkeep but giving a large medium term boost to living standards, or three somehow thread the needle so it's still economically competitive to automate positions vs just hiring someone.
That being said using said tax money to fund pension schemes isn't much better than just raising taxes on younger workers because they lose out either way here.
Yea, it’s crazy to think that giving your workers more vacation time and treating them more humanely increases labor force participation. US companies need to be taking notes
It doesn't.
Like what give us an example
There's a contradiction in the video... high labor force participation with high unemployment. How does that work? France youth unemployment has been in the high teens to low twenties. Only recently Macron opened up the apprenticeship programs to absorb the young adult population. These are not real jobs but but it "statistically" reduced unemployment.
Labour force participation in the States might also be lower because of the huge amount of wealth there. Labour force participation also accounts for non-working spouses and children of the rich. I also imagine there are a lot of people who make their money solely on the internet also get left out since it is easier to count a worker when they have formal employment at a company with records.
Except it doesn’t, he deceptively uses two completely different metrics, for France the measure is 15-65 but the US measure is anyone over the age of 16 including those over 65. If you use the same metric for France as you did America they would get just 56% in 2021
I just returned from Paris yesterday. The streets were clean, I witnessed no protests, nor any strikes. The city was packed with tourists from all across the globe, and everywhere museums, bars and shops were bustling. The stories told by mainsteam media have little relation to the actual world.
Good to know I am going there next week
Same, I've been to Paris the weekened before Easter and, to be honest, it was comparable to London when it comes to the amount of trash floating around. Everything I wanted to visit was open and we only had a single conversation with the police, because they thought that I am going for a protest. And in my experience, the city wasn't that packed, which was actually really nice.
There is about one day of protest scheduled every week and for this one it's today so it's quite normal that you haven't seen anything...
Are you saying main stream media is bias? LOL
Yep, protests are tuesdays and thursdays. And the Paris' garbarge collectors started act 2 of their protest yesterday.
These pension systems depend on enough young paying into them. There just aren’t enough people going to be able to support the olds folks anymore. When Bismarck in Germany implemented the 65 age retirement very few people would actually make it to 65.
Logic and nuance don't make for clickbait articles though.
From what I heard from some of my friends in France, most French people, including protestors, are aware of this problem. However most are unhappy with the solution being to increase the pension age, rather than for instance increase tax for super rich... France has a lot of billionaires. There is also a growing general discontent with Macron's Liberalist politics (many voted for him simply because the alternative would have been Le Penne) and blatant use of special powers when pushing through the reform.
@@crymp2057 you do realize those billions of dollars are just numbers on a paper and not gold sitting in a bank right?
@@crymp2057 Many of those "evil billionaires" left btw when they implemented wealth tax, which they already scrapped to my knowledge. Not to mentioned that the wealth of those billionaires, like Bernard Arnault are in the forms of shares, not stacks of cash.
Shhhhhh, we cant talk about that.
As an American I definitely envy the French people's ability and willingness to mass protest.
I don’t envy their president that shills to China… Poland 🇵🇱 is better friend
It’s nice to see, unless I’m wrong, that they’re better able to protest without it devolving into rioting and looting…..
As a european, I envy the American rights to bear arms and kick a non-functioning government out of office. (or at the very least would make them think twice about police brutality in the streets against innocent protesters)
@@pinobluevogel6458 The U.S police attack protesters if they don’t have weapons on them….The only time they don’t attack is if the protesters are carrying assault rifles
@@pinobluevogel6458 Uh, sorry to burst your bubble bud but we have plenty of police brutality here too. And if you try to pull a gun on a government official and you will soon find yourself under the foot of an $800 bil military. Having an armed population ironically makes it more dangerous for the average person. Police and government officials are too well protected for that to matter. Believe me, you don't want to live in a place where shootings happen every other week.
I am currently living in Finland where the retirement age is 65 and Finland I believe is going to experience a really bad pension crisis because the average population is getting older. We are also finding it hard to find skilled people ready to work in startups because there seems to be a skill gap in certain fields between the old and the young and old people understandably want to work in big companies due to job stability and much higher pay.
Hey Economics Explained! Can you do a overview of the Danish pension system? Our government says its widely regarded as the most future proof system in the world and includes the best elements of private and public pension plans. I don't really trust that statement. I want to see a more sober critique. Keep up the good work!
Ye if you live until 70 to take it 😂
the issue on my end is that there really isnt a functional distinction between public and private pensions due to the fact that even private pensions are funded partially through corporate bailouts
@@Gary-bz1rf uk has compulsory state scheme and is raising the age on this. It is supplemented by automatic enrollment in a defined contribution scheme after a few months which you can opt out of or choose your scheme.
Don't you guys think state pension systems are unfair with those who die young?
@@joaocosta3374 he didn’t say I’m danish you moron. Even when he said it, when he’s danish citizen he can say it
My experience of working in France is that people work hard for the whole work day aside from scheduled breaks and most workers from construction workers to managers have had high quality training. This means their working hours are often very productive even if not so long.
More importantly, we don't like social injustice.
Having lived in several places, France is very - VERY - sensitive to inequalities. Way more so than liberty (that would be more the American vibe).
I believe they are one of the most productive countries in the world
Productivity is easily measured. It's not a "feeling".
@@goofygrandlouis6296 Income inequality is low when wages/salaries are low, which is the situation in France for many years. In the US, the Asian immigrant community, as a group, has the highest median wages/salaries but also the highest inequality. You know why? The older people who came here with little to no English, without degrees, work in low-paying jobs. But 25 years later, their children became engineers, pharmacists, nurses, doctors, lawyers, scientists and entrepreneurs, which pushes their median income 4-5x higher. This generational improvement is desirable because they have become wealthier and more productive. On the other hand, the inequality in Soviet Russia was very low because everyone was poor. Social justice or injustice is heavily linked to wealth in western societies.
thank you I appreciate this comment. it's frustrating seing my countrymen labelled a lazy simply because we value life outside of work too.
As a frenchman, thank you for making this video ! The problem I have personally with the reform isn't age, I entered the work force late, at 26, so I've made my peace that I'll have to work passes 64 if I want a full pension (and I work in a branch I like, part of a hobby of mine),. My problem is the government and how they're presenting the reform, and how they're horribly condescending,band say "the People don't understand". The people do. But you could talking to us like we're dumdums, and the fiery french average Joe does not like being treating like a fool. Also, it appearing now the current government is violent and lies. Trust in the president and the government are in shambles and the executive seems deaf to any discussion. They always say "we understand the concerns" but when unions ask for talks directly with the government, they get ignored.
Macron and Borne are counting on people getting tired and going back to work, so just weathering the storm... And it could work. It's the 12th protest day so far, and there are less protests already. So they're very visible ! Trash collectors have a very visible impact.
I can't resist to ask but will we see a French revolution again? 😂
Nonsense. This isn't about how the reforms were presented or anyone feeling insulted. Governments everywhere introduce policy all the time in this way, and no one cares until it affects them. People say it's about presentation when they want a policy to be put back into a negotiating position, so they can change it.
There are socialists all over this comment section, which should tell you what the government is dealing with. Of course they saw it coming and are weathering the storm. The violence is a reaction, the unions would just stall everything and make it worse, and people are dumdums who always want more. If you don't like liars, don't be one.
@@ideologybot4592 rarely have I read a more impressive bootlicking word salad, good job
26? You're good mate. I entered the workforce at 31. I'll die working
@@ideologybot4592 Hey Adam Smith, I agree in a way, but as an American I believe in "means based" Social Security, meaning rich people won't get Social Security. If you're American, do you agree? if not, how are you different from the French? Fun fact: at the moment, April 13, 2023, the French stock market (CAX) is at all time highs.
10:45 this isn't true though? I believe the French retirement system works in such a way that every working person pays for the retirement of every retiree in a given year (hence why the gap in active vs passive people becomes a problem). Their money isn't invested over their lifetime and then paid when they reach retirement age.
Yes exactly, well a small part is invested (in some years the system had excess money so it was invested, but it is less than 2% if i remember correctly)
That is indeed the powerful thing here, it is money that is by the workers and for the (now retired) workers. Money that capitalists cannot touch and use against the workers.
And that's what Macron and his class cannot stand.
I was going to make the same exact point.
Like I’m Italy
Exactly. Many foreign outlets treating that subject are missing the fact the French pension system is not based on capitalisation but redistribution. Levies on the working population are directly funding pensions.
Paris is not overflowing with garbage, not boarded up, and not shut down by violent demonstration... It is life like normal there. The news reports i believe you are relying on wildly overstate the severity of what is happening on the ground (at least in the main tourist area that most people would visit). No garbage on the street was visible. Walking around through the major tourist zones, I encountered only one protest of 10 students singing in a circle peacefully.
There is no war is ba sing se 😃
And the protests are not violent. There are some people in the crowd making trouble, as always, but the violence is largely from the police beating protesters, as always.
@@kobet7341 Impeccable reference.
It depends on which "arrondissement" you are. In the 6th and 7th, garbage is overflowing on the streets.
I concur. my daughter was in Paris last week, and they never saw any protests or were affected by them at all. The professor was right to describe these protests as "peanuts ".
I'd love to see a breakdown video of what happens if an economy takes the route of just accepting low levels of growth. It feels like a lot of these measures are an effort to maintain or improve growth rather than maintain a consistent quality of life for a stagnant or falling population, as most developed nations seem to have now. So what happens to an economy when you do that instead of chasing limitless growth?
Arguably this is EXACTLY what has happened in Japan. A long period of miserable GDP growth has not generated any discontent at all. This is because the Japanese are old. The old do not like change for perfectly rational reasons. They aint fond of Schumpeterian creative destruction - you only do that when you've got little to lose, and the old have accumulated lots of stuff to lose. This is why I think population aging will lead to very conservative, economically stagnant, but surprisingly contented societies.
Uhhhh Japan has an insane suicide rate! What do you 'has not generated any discontent' ?!?!
The age of economic growth in developed countries is over, it has been ever since peak oil late 1970s. Europe's oil suppliers will see their production divided by 2 before 2050 which means europe will lack oil very soon thus collapsing its economy. Moreover, the disasters of climate change that will happen before 2050 (mass immigration from south east asia and peaks in every thing) are gonna fundamentally change the way we see growth
@@zebizebi5842 gonna be a crazy centrury.
It's exactly what is happening in Italy and Japan and it's not good. Stagnation is never good
I'm glad you are revisiting some old videos. I was kind of annoyed that almost 50% of the time in Spain video was dedicated to how the things were done in USA, and the ranking was even left behind to the 2nd channel 🙂
Local hotest topics are specifically the pensions (from 15-20% of total GDP) and the highest unemployment rate we have heard of ever. You know the deal.
The new job reform only allows the permanent contract, but the institutions do not publish how many people are not active at the moment with those contracts (the "fijo discontinuo" one), so the real active population is lower than the calculation of the published unemployment rate
France's pension age is still lower than it's comparitive EU partners which is something like 65. Its likely not going stay there. Im already expecting a retirement age in the 70s-80s. by the time I retire. That is if pensions still exist by then.
Full benefit is 67 in France (other than odd exemptions due to carryover from Royalty days). The change is that they won't let them continue to retire early at 62. If you retire at 62 in France, your benefit is reduced by about 10% compared to 64.
I really like your videos, well researched, balanced and informative, congrats!
As a programmer, I desperately wish more people had the fundamental understanding of the utility of AI/ML that this video gets right in less than a minute of explanation. Well done.
As a russian programmer, I desperately wish more people had the fundamental understanding of Kommunism, to learn that no AI/ML can save them from being robbed every day by capitalists. Pension reform means - no money for workers, no money for free medicine and education, but there is allways plenty of money for the army, police and billionaires who have not worked a single day in their lives.
@@imsreki right, Kommunism worked so well that Russia does not have a problem with billionaires hoarding the people's wealth.
@@imsrekiok Ivan, go back and watch some more RT 👋🏻
Tomasz was excellent, I love when interviews are included.
Solidarity with everyone striking across Europe! Power to the people.
There's plenty of options other than raising the retirement age. Just none that are as good for the Billionaires as hurting everyone else
Billionaires and Silicon Valley is getting us to the Star Trek economy, where robots do the work and everybody is rich. Got a problem with that? Educate yourself by reading this book: Trekonomics: The Economics of Star Trek is a 2016 book by French economist Manu Saadia
The French people and protests are a match made in heaven.
You don't say
I spent years working professionally on the economics of public pensions (for a number of countries). I'm really glad in explaining the central issue that you avoided two very common traps, even among experts - focusing solely on MONEY rather than on real resources (in particular changing age dependency ratios leads to general equilibrium effects that make fiscal balance very misleading as a guide), and assuming that private transfers do not have similar effects on utility as public tranfers (IOW if it is too expensive for the state to keep the old out of poverty then that must mean it will be too expensive for families to do it too). There's a lot more I could add to a good beginner's guide to some surprisingly complicated issues here - but it is a good guide. Thanks.
i needed those five seconds, thanks!
France is also a major car and aerospace and defense exporter. I think they wont have any problem with getting their currencies.
Not to mention tourism
@@johnsamuel1999 I think that is why EE said that in the first place, because EE was lead to believe that Paris was a burning wasteland now while protest are during set days and garbage collection even during strikes are probably still better than New York's usual (and people cleaning streets and parks are not slave labor as for Central Park).
@@Vaasref true
They are the 3rd largest arms exporter and is challenging Russia for 2nd.
I have a huge amount of respect for the French to strike. I wish my country had this level of self respect
As long as it doesnt turn into a chaotic mess..
Where are you?
@@lashoes2207 It didn't for now, despite what the media says...
Yeah strike and protest over reasonable changes that must occur due to realistic and actual problems the country faces. Lol people are hilarious. They literally don't have a choice.
They strike for stupidity as the system is going to go bankrupt. I am happy I left France.
5:00 Oh, I never thought that my economics degree could explain my heartlessness, but it makes a bunch of sense. Thanks, mate!
This video was excellent, it really understood the more nuanced problem with France's economy, while also acknowledging its strengths.
So over past 50 years peoples productivity has been increasing while their wages were actually dropping/staying the same (accounted for inflation). What if wages increased accordingly? Suddenly people would be paying more taxes from wages which would support pensions a lot better. Suddenly people would be spending more on stuff and services to keep that economy rolling and keep those taxes coming even more. The problem is that governments are not forcing corporations to pay money to their employees accordingly.
Thank you! Yes yes yes! The rich are stealing from us and then telling us we have to “make sacrifices for the good of the country”. Meanwhile they fly private jets and eat caviar on their yachts. How cute.
This gots to be the most ridiculous economic statement I've read this year. Even worse than marxist statements.
lool ignoring the other guy. That would give you immediate inflation as the costs would be incurred on the consumer pricing. For a politician who has to deal with the immediate problems you're just giving yourself a headache. better to not touch it. You would need the capitalists to willingly increase pay. Like fb who paid their programmers above market rate to attract high talent forcing the market for programming to be as astronomical as it is today.
Governments wouldn't force them because they are only in power because of the corporate donations
The situation is even worse. Not only has productivity increased, it also gradually introduced women into the labor market. While this isn't bad in itself ofcourse, especially if it is optional, but the reality is a two person household has the same income (compared to prices) as one person had 50 years ago. Work has been devalued to the point that to get the same things you used to have with just one person providing for a household with children, it now requires two. So if you account for the increase in productivity, which isn't paid in wages and the inflation of income that happened, the working class got screwed over twice.
It is just really weird that as technology continues to advance governments and corporations expect us to work more. That often for less compensation. Meanwhile pretty much all the companies mentioned at the start of the video are having record profits. Profit is money that leaves the public economy and ends up in the hands of a few unellected who can spend that money however they see fit. That is why there is inflation billions leave our economies every year. We see the results of this right now and it leads to some absurd behavior like France, an self proclaimed, democracy forcing through the retirement bill even though the greater majority of the people are against this.
yup
Drowning in elderly
Well technology increased but so did our consumption and all the benefits such as low cost education, low cost healthcare, etc. so public spendings increased
I dont follow you regarding the 'unelected rich people', its a simplified and wrong view. Shareholders and debtholders are provisionners of capital which is remunerated. There is no election or unfairness.
>That is why there is inflation billions leave our economies every year.
Hm? Money leaving the economy causes deflation. It reduces the supply while maintaining the demand, which increases the "price" of the money, so a single dollar or Euro goes further.
@@lashoes2207 No
Your way of estimating values for you board is very interesting at best.
Very insightful!
In Germany they raised the pension age in a smarter way. They coupled it to the birth date of people so that younger people have a higher entry age (67) while the older generations keep their historic entry age. There was still some backlash but it was conveyed with reasonable arguments of economics and health progress.
Also there are plenty of options - private or state offered - to build your own pension savings. Those who solely rely on the minimum state pension will have a bad surprise anyway, in almost any country.
Is the French mandatory pension actually invested, or “invested” in government debt like social security?
Nothing is invested. The cotisations of the workers are used to pay the pension of the retirees. This Ponzi scheme is called repartition.
Underrated comment...on many levels most likely not understood by most reading here.
Love your videos as always!
If you want to know more about what's going on in France, watch the reportages I made in Paris during these 3 months of protests, they are available on my UA-cam channel with English subtitles
Thanks!
I just noticed that Germany isn't on the list, which is kinda weird knowing how big it is
Tou failed to mention that the movement is more centrally about economic justice and that french people are struggling while the CEOs of big companies are gaining wealth like never before.
Thank you for another great video mate. I enjoyed every second. Please keep it coming. Thank you for another great video mate. I enjoyed every second. Please keep it coming.
Amazing video
One of the main econonic argument against the retirement reform we have in France comes from the official institution in charge of predicting our pension systeme evolutions (Conseil d'Orientation des Retraites). While we now that our elderly population proportion is increasing, this reform and other political choices are reducing the percentage of the global gdp going to the elderly (strang isn't it ?). At the same time, the only poeple that actualy retire imidiately after their 43 years of contributions and 62 years of living are the ones that hade their body strained from their work. We do not want to impose more burden on them. And finaly, making those poeple continu doing hard jobs with broken bodies will cost even more, so the expected saving for the gouvernement budget is miserable and could be filled up by many less painfull ways (like a 20€ increase in contribution by workers from companies). And at the same time, the opposition argues that budgets 10 times greater are spend in stupide ways.
yup
French workers are already expensive and basically impossible to get rid of. So just constantly keep raising the cost and make them even less competitive? I am not sure if that is the solution.
@@dr3am5ers Do you realise we are talking about 20 euros here, that's nothing, 20 euros vs having a miserable life, in France we don't live to work, we work to live and if work is killing us, it's a problem. I'm not even sure, you read the comment, this pension reform is not doing any economies when you take into account long term consequences on the healthcare system. You can always have more money, but you cannot buy yourself many years of healthy life (especially when you are doing the jobs that are not well paid, so manual labours, the one that will be paying this reform by their sweat and pain). We only have one life, it's important to remember why we do the things we do
@@Inconito___ government just doesn't have money to pay pensions, and there is nothing where they can take money so they have to increase age. And of course people will bring more profit than they consume (healthcare i mean)
@@alekseiduleba9508 Have you read the comment again, we can avoid this pension reform by paying 20 euros more (so the government will have the money, this is not the only way to get that money by the way, Macron lightened taxes on companies and this government refuse to tax a few companies that are doing tax evasion because of political reasons but that would be too long to explain). This reform has been debunked by Michael Zemmour (an economist specialised in the french retirement system), so it's not a problem of money, it's a question of ideology. Do you penalise the people that are already the poorest and working in harsh conditions or do you adjust the fees fairly so everyone participate and everyone gets a few more years of free life, something that we cannot buy
Or explore graduating the retirement age by benefit like the US and let the person choose. US Social Security retirement benefits start at age 62 with less but increases 8% each year until 70.
So someone could retire at 62 and receive $1,023 per month (for example) with a gradual increase for deferring retirement until age 70 with a benefit of $1,812 per month(almost double).
It's already the case in France, atm it starts at 62 and ends at 67 (which is the actual age most people retire at). After the reform it will start at 64 and end at 70. Every year not done will reduce the total pension by 5% (50 base% of your best working years salary minus 2.5% per year). I oversimplified it a bit but that's it
Thank you so much for the clarity of this post! Such an interesting problem, but you counter it so well by pointing out France’s strengths. You also did a good job at not politicizing the issue, at least in my opinion! Just a clear, concise explanation of the situation, just like all your other videos.
great video
looking forward to the Denmark video
I'm looking forward to the Andorra video.
The big problem is that promises have been made that can't be kept.
The social contract is being defaulted on.
This is going to happen everywhere. There is not enough of the scarce things to accomodate the level of lifestlye for everyone that people have been led to expect.
The only possible way out is if there is a dramatic increase in productivity by means of new technology AND the benefits of that increase in productivity and distributed widely.
Singapore minimum retirement is 63 and we have CPF as well that worker and employer need to contribute.
God I love watching the French protest, the entire world needs to learn a thing or two about making the rich fear for their lives.
The result of that is a non-functioning economy
Tell me you’re american without telling… other first world country already have robust retirement plan for their citizens
@@Sarayne13 The result of a non-functioning brain is having an anime girl as your profile picture.
@@Sarayne13literally one of the most advanced economies in the world
Ah yes, make the people who pay the bills fear for their lives. Makes complete sense...
Was running out of things to watch and you came in just in time! Thanks EE team!
how do you have a Internet connection in 2023 and are "running out of things to watch"? are you high?
@@skeetrix5577 Re: "Are "running out of things to watch"?
Depends on what your taste is! Lol!
@@skeetrix5577 a lot of people want video essays to watch when eating food, not something else
It's better to run out of things to watch
@@skeetrix5577 I'm running out of things to watch... that I'm interested in*^. Fixed it. Sorry for that.
pension age of 64 is just too low and these protesters want it to keep it at 62?! Waaayyy too low! Practically whole western-european countries have it at 67. You also have to count medical progress; lots of diseases are probably going to be eliminated or under control, meaning we're probably going to live healthier a little longer than previous generations. I understand there are also other factors for the protests, however i can't help but think the most important one being the deviant nature of French people. Massive protests for change that other citizens of nations accept as inevitable. 💟
You can't compare, people in syria are dying before reaching the retirement age, people in africa are dying before reaching the retirement age, just because you have it worse, doesn't mean others don't have the right to complain, if you think that way, maybe think about the syrians before crying about your mom not buying you the Iphone 15
Imagine being so cucked by propaganda that you believe people protesting for what they believe in is "deviant". Honour to the french people.
I have not heard of any sales slump for Hermes or Chanel! LOL! Thank you for the video!
We need more of this in the uk when we aren't happy with what the government does
Why? So you can go bankrupt and have garbage in the streets?
@@TheSteinbitt so they can make change. Sorry you aren’t willing to sacrifice for a better life.
@@BrightWendigo but it’s arguably not better
@@BrightWendigo exactly what I would have said. Rather than sit there and just take what your given.
@Tavas nobody said it was better but fighting for what you believe in and at least trying to make a change
🐸Our election system is not representative.
Macron received only 27% of the votes in the 1st round and was only elected because he managed to find himself in the 2nd round against far-right Marine Le Pen (27% of the votes = 9 000 000 of 68 000 000 french people).
And even then, he was only narrowly elected, which he himself admitted.
He even claimed that he would take into account the fact that we had mainly voted against Marine Le Pen and not for his own program, which he nevertheless strives to force through Parliament thanks to articles of law which he twisted the meaning.
That is, roughly, why we have been demonstrating in the streets and tirelessly for months, to fire him and, for many of us, to rebuild a new Constitution.
These governments are parliaments so a politician rarely gets more than 40%.
Politics in your country as similar to those in mine: I know you have many political parties but in the end you are just voting for the lesser of two evils
@@complexaltruist But some legislative proposals obtain approval scores above 70%: Like taxing the richest more heavily. This is also the case in the USA.
It is often out of misplaced partisan sentiment that people reject certain "leftist" proposals aimed at better distributing the wealth, primarily created by those who work with their hands and their backs.
@@corybooker5332 Yes, but in the same way as the movement behind Bernie Sanders, we have in France a political movement with a real program for the restructuring of economic, equitable and ecological activity. It's called "L'Avenir En Commun" (LAEC) and if you have the courage, you can try to read some parts of it that may be applicable to countries other than France.
But first you have to go through a Constituent Assembly. France, like many countries suffering from the monopolization of political and media power by a minority of rich people, must thoroughly review its constitution written by the rich for the rich.
@@philippebrehier7386 France tried taxing the rich more heavily decades ago. It went exactly as you'd expect. They repealed the wealth tax because they were losing money at a greater rate than they were making.
Not sure if you realize this but protesting (revolting) is basically the French national past time
Every time feels like an adventure, it breaks the routine, and it’s a good way to meet new people ^^
In the US, we have so many people getting government benefits while not working, therefore not contributing to taxes and social security.
11:18 This is Angers, a lovely city in western France, 1.5 hours from Paris by TGV...
It's interesting how all these videos on European economies never account for colonisation. These countries wealth in large parts were due to wealth accumulation from Colonisation. Now that they don't have colonies they can exploit, although France does have some small ones still, their wealth growth has stagnated.
Most of the wealth accumulated from colonial enterprises was entirely the property of the already rich. The effect on the entire country was an economic loss; the colonies were not profitable compared to the money spent to maintain them. Regardless, personal wealth for ordinary people only got to the standard we see today well after world war 2 and whilst decolonisation was almost completed. And the countries like Canada or South Korea or Singapore did not have colonies so how are they rich? If there was one big advantage of colonialism it would be the development of technology and investment capability, which in our currently globalised world allows all countries to access it if they play their cards right, just look at China.
@@user-cx9nc4pj8w doesn't matter if the wealth from Colonisation is restricted to the already rich. That money is still used to build industries etc. Colonies became unprofitable once they had been completely stripped off everything valuable. At this point Europeans then cut bait and ran. The fact that Singapore, Korea etc became rich is irrelevant from the fact that Europe financed its rise and its industrial revolution by stripping the East of its wealth.
While that is very much true, a lot of that wealth ended up destroyed in the two World Wars, and Western Europe only remained prosperous due to the intervention of the USA. The colonial powers basically squandered everything they got.
Are capital owners considered productive members of society? As far as I know we calculate productivity on a per worker per hour basis.
Thank you.
Tax the capital owners.
Capital is not really owned. Capital is considered an investment that makes workers more productive.
You and Karl Marx, with his flawed book "Capital", apparently think the same...
In Poland we had a raise of retirement age in 2013 to 67 years. People were unhappy but I don't remember any protests. In 2017 the current goverment lowered retirement age to what I think was before 2013 that is 65 for male and 60 for female which of course was recieved very well by the public opinion
Very informative. The Labour participation rates not something I knew much about.
Anyone claiming AI will benefit workers hasn’t paid attention to how computers have boosted productivity yet wages have stagnated. Any benefits for optimized production efficiency will go straight to the owner class not the working class.
More efficient work means only more shopping, not more free time. You buy a Porsche instead of a Sandero, but you make the same kilometers with both.
same thing happened in US with SS. we are up to 67 and might be pushed to 70.
Yep. With higher income tax. While I'm in favor of income assistance to the truly needy, I cannot stand social security as it stands. We're stubbornly attached to the idea of it and blind to its unsustainable and lackluster payoff.
@@richardshipe4576 Agree. Make SS "means based" and you solve the Fed deficit instantly, as 50% of Fed government spending is SS. Too high. Rich Boomers like me don't need SS.
No justification for 70, but a case could be made to raise to 68 for millennials and beyond. Probably best to make it a flat tax eventually. Start SS taxing above 250k and let current cap increase from 160k to 250k so it becomes a flat tax.
What were all the other options that were considered and discarded? What are the options that should have been considered but were not? By providing that information it may help to explain why The French President concluded that increasing the Pension age was the best option for France and its people.
India also had a similar problem in 2004 but it was resolved through the implementation of nps
Or, close tax loopholes and focus on tax evasion in a criminal fashion. Once you've done that, then tackle social programs
Too bad that's what governments use to steal your money. Asking the fox to fix the hole in the hen house fence.
Ahhh, the old midnight upload for all of you East Coast Australians playing at home 🇦🇺
Australia pensions age 67. No protest.
Vive la France !! Vive la Liberte !! Vive la Fraternite !! Thank you for this video.
One little correction, the debt to GDP ratio has been over 100% for some time now.
Otherwise good video, thanks.
The raised retirement age in France echos that of what has happened and is happening in Barbados. Except our democracy here is not nearly as stable and the people are willing to accept these changes without so much as a second thought.
Would love to see you do a video on Barbados however I understand that it's unlikely due to the small size of the nation and the lack of available information. Would still be really awesome if you did one though.
I also heard an argument that raising the retirement age implies that economic growth has failed to actually improve living standards despite rising productivity and GDP, causing general dis-satisfaction/disappointment with the whole economic system. In a way it makes sense, because what is the point of economic growth if life gets worse? Although on the flip side it could also be argued that it's necessary due to longer life expediencies, *but* on the flip side of that -- wouldn't all this economic and productivity growth compensate for the rising life expectancy?
Would appreciate it if you did a video on US pensions/ retirement plan and maybe do a country by country comparison of retirement plans. This is a super important part of economies and it’s not talked about a lot. I’m talking like a country by country analysis of the best retirement systems and maybe some bigger countries that are struggling like the US.
As a United States citizen, I appreciate this video. I was confused why the French people were so upset about Pension reform because I was thinking about it in the way Pensions are here in the United States. Now I know, the French Pension is essentially the same as our Social Security system. Yeah, I can see the same thing happening here if our government tries to do the same to our Social Security.
Every government regulation and law is designed to give some advantage to one idea while rejecting all the alternative that would be created. It's a way to limit progress, limit wealth, limit freedom, limit competition, limit thought.
Good video overall, but quite incomplete analysis, with some inacurracies, or rather you missed some important factors. One thing to note is that there has already been a pension reform which is slowly kicking in. As a matter of fact, to get a full pension, the vast majority of workers today already have to work until 64-67. Second is the number of annuities required which is 43 years of full time job, which impacts hugely non qualified workers who usualy start their career at a younger age and have more painful jobs (and would still need to wait 64 to retire if they ever reach that age - which most don't), and women who give birth. I would also add, from an economic point of view: land and capital are not infinite; you only have so much usable resources. Productivism is a capitalistic dead end.
Agree.
I dont think what you mention about the reform has a macroeconomic impact. Its social matters.
Capital is 'infinite' or rather 'arbitrarily large' if you consider france on a world context. The lower the barriers, the more capital you attract.
The average life expectancy is 80 years or more. People on average will spend a lot of time in retirement. 60 years ago jobs were even harder for a worker and people died earlier...
So actually for most people there is not really any impact from raising the age limit from 62 to 64 because they wouldn't have qualified for 62 anyway. If so, why the troubles?
Capital is infinite. Capital includes new ideas, or the knowledge to use new systems or to create them. Capital is fixed at any given time, but expands continuously.
1:10 The violent demonstrations and tear gas ARE the attractions I want to see. It's a quintessential part of the french experience.
Agree. :D
It is a bit strange to see these protests in France when the minimum retirement age here in Brazil is 65.
We used to have a similar system and it almost drove my country bankrupt. The public Pension Provision system is horrible. It disproportionately benefits the wealthy (they live longer and have higher ending salaries) and it creates a dangerous liability on the young generation. Moving to mandatory private plans saved my country from France's fate.
When you mentioned brain drain of young people especially, it got me thinking about something I read recently. See, I`m a french engineering student -which has a much broader meaning here, like a stem student who only goes to schools with a special status (ie not a university or a faculty etc), and in a couple weeks ill take nationwide competitive exams to see what school I can access. One such school is called the ENSEA and it sits weirdly between math, economics, social studies, data science, and insurance (actuariat dont know if the world also exists in English). It is consistently ranked among the ten best schools available and one of the impressive metrics it boasts is first year salary, that is the AVERAGE salary one can expect, the first year of their first job, without tax etc.That average is about 50K for students staying in France and over 120K for the ones going abroad.
There is some more nuance to it though, for a multitude of reasons, built still.
I believe you just implied that you can make over double income leaving an advanced economy for another advanced economy. 😅 That's just wild
You’ll get paid a lot more in the US. Go and fill your boots
Actuarial Science? I think jobs in insurance companies pay well.
yeah, you get more, but you also pay more (pensions, universities, healthcare ...) are self paid in the US, and also the food is horrible
@@laMoria He can always get someone to send food parcels
Hey, maybe you should start using the Genie coefficient as another measurement in this test.
Thank you for making more more videos per month! They're great, and something I expect every few days.
This doesn't make any sense though, why would the pension fund be bankrupt. The pensions should not be paid for by current workers, they should be paid for by the previous contributions by the same worker now collecting the pension. So unless those funds were stolen or otherwise mismanaged, they should not be bankrupt. So what happened?
A certain social class in french society doubled their incomes during the pandemic thanks to macron. There was never a priority for the average person and all these instances from 6 years since he had been president weren't going for the interest of any public sector worker or hospital. I am not french, but romanian, I do fear for my romance speaking cousins a lot.
That's not how things work in France though. In France the working population actually pays the retired people directly through the pension fund.
The money simply flows through and get redistributed. It is not invested or saved. If there is a mismatch, the government borrows the difference, hence the increasing GDP/debt ratio.
Or to put it simply it is like if you worked and whenever you got paid, you handed over 25% of your wage to your grand-mother/grand-father.
That is why the birth rate is very important. The French kids will literally pay for their parents retirement.
You appear to not understand basic economics.
Here is how it works:
There is too many old people who never saved and are relying on the daddy government and yet, they demand expensive services and want to retire early and at the same time, they never had enough of children.
Now there is fewer and fewer children and working men to pay for way too many old people.
People born after 2000 will have to retire at the age of 90, btw males do not live that long, so because of old people I have no chance of seeing my retirement.
@@janchovanec8624 I am not sure if you are responding to me or to the original commenter but i think your response deserve a response because you don't know what you are talking about.
There is too many old people who never saved and are relying on the daddy government
=> The statement above means absolutely nothing. Of course the retired people are relying on their pension to live. That is how the system works. The fact is that they were promise something and now they are getting it.
they demand expensive services and want to retire early and at the same time,
=> Services are actually being gutted left and right, if the retirement age is raised and services are declining, the correct question is where is the money going?
They never had enough of children.
=> France has one of the highest birth rates in Europe, so that statement is false.
people born after 2000 will have to retire at the age of 90,
=> You don't know that at all. Nobody knows if retirement will even be a thing for people that are born after the year 2000. There are too many moving pieces at this stage to make such a prediction.If you can see this far ahead , then start playing the lottery because you must be onto something.
so because of old people I have no chance of seeing my retirement.
=> no true at all. The government is choosing to increase the retirement age instead of doing at least a dozen of other things in order to fix something that is not even an issue. If you had watched the video you would have learned that this pension reform is actually not necessary because the current system is in equilibrium.
But even if it wasn't balanced and even if the government needed to raise more money, it could have done so in many other ways such as:
- fight tax fraud done by the corporations whose profits are being stashed in the tax heavens
- increase the employment of young and old people (two categories of people who are chronically underemployed)
- force companies to raise wages across the board, therefore increasing the payroll taxes
- increase payroll tax on all workers by 20 euros per month, which would have resulted in an increase of 7.2B Euros per year in payroll taxes (more than enough to plug the hole if there was one)
Instead this government went out of it's way to force through parliament a reform that is wildly unpopular and not even needed currently.
instead of sitting down with unions and the other political parties to try to find a middle ground or even discuss other possible options, it used a legislative tool in order to bypass the will of the people.
So in conclusion, demographics in this case have nothing to do with it. This is an ideological reform that has no basis in reality.
@@Cassiopeia45 I'm so impressed by your comment. You helped me, op, and probably this gentleman. Thank you for clarifying and caring 🙏
Also I would like to add that pensions in general are actually made from one's country prosperity. There needs to be radical change for wealth taxation and affordable or close to free higher education
It’s not like the government can only raise the retirement age for people who are currently just entering the work force, because those people won’t be retiring for almost fifty years.
@@user-kh8mv2be8t
Of course. The basic problem is that government pension systems are usually Ponzi schemes, paying out benefits to people who didn't pay for the benefits they receive, and overcharging young people to pay the difference.
Perhaps they should take a Logan's Run 'Carrousel' style approach to managing an aging population.
Out of curiosity, is there a video placing Norway on Economics Explained Leaderboard??
How does France's high unemployment rate play into this?
its important to take into consideration that blackrock, which handles most pension funds in france, has been dumping unfavorable investments in those funds just in case of an economic downturn - blackrock would end up floating on by without any issues at the expense of people who have pensions.
How did a private fund get to control pension funds? 😂
nice packet. thanks
There is no burden on younger workers. There are companies with oscene profits, they are the burden.
The problem is that AI whilst increasing worker productivity will force more and more people to be made redundant. So corporate profits increase but the tax take by government decreases as most taxes fall on the worker and not on the company. Taken to its natural conclusion you could have entire companies in the future run by the CEO hitting a button to switch on all the AI robots....the problem is they'll be no one who could afford to buy his products?
This is one of the things that will kill capitalism for good. When people no longer are economically viable workers, then the entire economic system will crumble... Or humanity will slowly starve itself to death. Whichever comes first.
In the US, unfortunately they changed policies years ago to tie taxes to work force size. If it was a simple flat tax that scaled with company size there wouldn't be a issue
So? That's how the "Star Trek" economy worked. Robots do all the work and everybody is rich. Got a problem with that? Read the book by a Frenchman for more: Trekonomics: The Economics of Star Trek is a 2016 book by French economist Manu Saadia.
@@raylopez99 hahaha that's a form of utopia that will never be possible under a capitalist economy
@@raylopez99 star trek still had federation credits that paid people for work :)
Hi man, I would really love to see you make an episode about my home country Israel, I know it's controversial but we are a significant and interesting country economic wise!
Yeah Israel is a flower in the desert, amazing country, high-tech (having met many who worked in Silicon Valley), I'm currently re-reading Benny Morris' "Righteous Victims" on the creation of Israel (not a hagiography despite the title).
1:31 you phrased that well...
I would love to see a video discussing the Mexican pension system.
Maybe we're seeing the failure of shifting society away from family units. Homes used to house multiple generations of a family, where the elderly would help look after the grandkids while the parents are working. This old style of living drastically decreased the 'economic burden' of the elderly, and senior homes have a startlingly high rate of abuse. Old people were both more valuable and happier back when they were kept with their families, modern society is just a bunch of isolated people all struggling on their own rather than building up generational wealth. This is by design, imo.
Francis Fukuyama literally wrote a book on this theme, recommended.
And old people still worked, much slower than the young, until they died. The new system eliminated the old from working, because if you have an old worker in the factory, the young are not afraid enough that they don't work fast enough and will be thrown out.
Pensions need to be realistic and need to adapt to real life specifics.
Women for example live 5 years longer on average so it stands to reason they should entire retirement age 5 years later than men.
Will you cover the CFA and the modern french empire? That should be an interesting topic.
France should also implement nps of India in which a worker along with his employer has to contribute 10 percent of basic wages or salary each to a pension a/c in the online based nps website and after the person retires at the age of 60 or 65 the money shall be given to them in lumpsum or in installments depending on the choice of the employee .
you forgot another option for funding pensions, tax the wealth/profits appropriately. profits are exploitation of the workers, skimming or gouging resources out of the system. taxing income from things like stock trades more effectively, limiting how ppl at the top can exploit the system, workers, and natural resources will all help.
It's reasonable to require land and businesses to pay for the general expenses of government.
But ---- you want to retire early? Be prepared to pay for that luxury.