The French approach to globalisation
Written by Tom Clougherty
Wednesday, 01 November 2006
As reported in yesterday's International Herald Tribune, the furore over a French-based company’s attempts to outsource its bra-making operations to Tunisia has offered a glimpse at how Jacques Chirac's socialist challengers would "tackle" globalisation. Basically, they would bury their heads in the sand and hope it goes away.
Segolene Royal, currently the left's prime contender for the Presidential election next year, has been central to the fight to save the factories in her Poitou-Charentes region. Royal has suggested that, in future, companies should be barred from moving their operations abroad if they have previously received assistance from the state. She would also like to tax French companies for reimporting goods made overseas. The French Socialist Party platform calls for the establishment of a new state agency to find "new uses for worksites made obsolete by outsourcing and rescue trades threatened with extinction because of outsourcing."
All of which are excellent ideas, assuming that your goal is to create a stagnant economy and further deny French citizens the overwhelming benefits of economic globalisation. Will some lingerie manufacturers lose out because jobs are shipped abroad? Of course they will - at least in the short term. But something tells me there will always be a market for French lingerie, just as people will continue to pay more for Italian suits instead of buying Chinese ones. The key is to adapt to competitive market forces, not attempt to isolate yourself from them. This means that French manufacturers should concentrate on making high-quality, value-added undergarments rather than mass-producing them.
Free trade benefits everyone. It helps the workers and businesses in poorer countries, who are able to trade themselves out of poverty. It helps the consumers in rich countries, who are able to buy cheaper products and stretch their incomes further. Moreover, it has an incredibly benign effect on the national economy. Free global trade forces countries to allocate their resources in the most efficient way possible - producing only those things they have a comparative advantage in making and selling them to people who want them. That’s how economies grow and how wealth is created. France, and indeed the EU as a whole, needs to realise this and act accordingly. This is the only way they will be able to compete with India and China and the other emerging economies in the years ahead.
