INSEE Survey Finds 43 Percent of French Citizens Simultaneously Anxious for France and Confident for Themselves; Rest Haven’t Checked Their Bank Accounts
PARIS, FRANCE — A statistical paradox identified by the French national statistics institute INSEE has produced what economists are calling the most precise data portrait of a modern European citizen ever recorded: 43 percent of the French population is simultaneously worried about France’s economy and personally optimistic about their own finances, a combination that is logically consistent, psychologically understandable, and macroeconomically problematic in ways that take several paragraphs to explain properly. From Bohiney Magazine and The London Prat.
The paradox works as follows: a French worker observes that France has a public debt exceeding 110 percent of GDP, a fiscal deficit above 5 percent, political instability that has produced three prime ministers in under two years, and an economic growth forecast of 1 percent. They conclude that France is in a difficult situation. They then observe that they personally have a job, a rent-stabilized apartment, a CAF housing supplement, and health coverage through Assurance Maladie. They conclude that they personally are fine. Both conclusions are correct. The tension between them is the tension between macroeconomic anxiety and microeconomic stability that the French welfare state was specifically designed to maintain — the macro suffers; the micro is protected. The design works until it doesn’t.
Why This Is a Problem
When 43 percent of the population is worried about the national economic situation, that 43 percent saves rather than spends. Savings rates rise. Consumer spending, which drives approximately 55 percent of French GDP, slows. The economic growth that would reduce the national deficit slows. The deficit remains elevated. The anxiety about the national economic situation is validated, reinforcing the saving behavior. This is the savings trap — a self-fulfilling prophecy in which rational individual behavior produces the collective outcome that the rational individuals were saving against. La Banque de France is aware of this dynamic and has incorporated it into growth projections that assume it continues.
The French Solution
France’s traditional response to the savings trap is for the state to spend in compensation for private sector caution — public investment, welfare transfers, and public employment that maintain demand when private consumption contracts. This is Keynesian economics in its most French form: the state as the spender of last resort for a population that has decided to be personally cautious while worrying about collective outcomes. It works, within limits. The limits are defined by the deficit, which is the thing everyone is worried about.
The 57 Percent Who Aren’t Worried
The other 57 percent of the French population is either not particularly worried about the national economic situation, personally pessimistic about their own finances, or some combination that the INSEE survey captures in its finer breakdowns. This 57 percent is spending normally, working normally, and contributing to the growth forecast in the normal way. The 43 percent is the marginal drag. Macroeconomics is always, at its core, about the marginal actors — the ones whose behavior changes. The 43 percent are the change. Their savings rate determines whether France hits 1 percent growth or 0.7 percent growth. This is what economic forecasting is actually forecasting.
More economic paradox satire: The Poke.
SOURCE: https://bohiney.com/
