Through all the changes and liberalization the French way of governing is not as unique as it once was. Bargaining agreements now tolerate hostile takeovers and France has become a liberal market economy . During the 1980s France was tempted to emulate the German economic model but since than has come to resemble more of the British way of doing business. France is not alone in these changes as most of Europe has embraced the same standards as the world economy slows down and this system is best positioned to deal with these factors.
Even though France has come along way since the 1960s not all is well among its citizens. In 2001, only some thirty percent expressed trust in the government and just twelve percent said they trusted political parties. Only fifty percent said they were satisfied with the state of democracy in France. Since 1980s it has been very difficult for any political party to stay in power very long and thus there is a high turn over of political leaders.Its no wonder there is discontent since real disposable income for the average worker has increased by only 1.2 percent a year since 1980.
French governments have more influence over the allocation of resources to market mechanisms, but the retreat of the French state is far from complete. France still plays a large role in the distribution of employment, by means of active labor acts and policies on which over three million households depend and thrive on. France also retains power over the distribution of social assistance funds with more than ten percent of the population receiving the minimum income, and millions more are pensioners. There are also more than 1200 kinds of public aid available to start-up firms in France.
As commodity price increases plunged France into recession in the mid 1070s it began an era of slow growth. French policy-makers responded as if it were a temporary problem and increased industrial subsidies to firms and social benefits to individuals to help them weather the storm. The economy did not grow as quickly as in past decades and the result was an increase in the share of gross domestic product used for public expenditure that rose from 39 percent in 1970s to over 5 percent in mid 1980s. This started a whole new set of problems for the nation as it now had expensive social programs the nation could not afford.
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Since the power now sat firmly inside Paris the big industrial corporations they saw it fit to keep wages just in line with the minimum wages set by the SMIC. As workers become organized and unions formed the inevitable changes in worker regulations began to shift when public officials and union leaders started to put their heads together. The result was a highly regulated economy in which public officials played an active role, a centralized polity that concentrated power in Paris, and a society accustomed to looking to the state to resolve its problems.
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Joining the EU is as big of an act as anything that acted towards liberalization. This locked France into lines of policy from which previous governments might have shied away from they had not been forced by EU agreements and institutions. The EU is equipped with regulations to open markets but few resources to intervene in limiting their effects. The EU has committed to expanding the role of markets in the allocation of these resources. The EU is continually maneuvering Europe into a competitive market model, yet one that has room for with multiple avenues of production and various types of welfare states.
The biggest decision the French government has ever made could be the move to embrace the single European market which meant to shift regulations in an economic sphere, or to take new policy initiatives. The problem was that the state was not able to dictate the pace or outcomes of social change verify often. The liberalization of financial markets gave firms new room for maneuver but did not dictate the strategies each would pursue. New laws would mandate closer consultation between firms and their employees and a 35-hour workweek for employees.
By the mid 1980s the exchange rate crises forced President François Mitterrand to deal with the growing problems. Faced with the continued slide of the Franc would force France to leave the European Monetary System. President Mitterrand would go on to announce budget cuts to bolster the exchange rate in March 1983. Mitterrand also opted for European integration. This decision and its subsequent affirmation when France supported the Single European Act of 1986 set the stage for much of what was to follow.The government embraced the opening of French markets to more intense European competition and further political integration into what was to become the European Union.
By the 1980s France had elected a Socialist president for the first time during the Fifth Republic. For almost three years, that government continued to fund the stagnant economy by nationalizing 49 major enterprises, and pouring funds into industry on the idea that public investment would offset the lack of investment by the private sector. This did little to help the economy as the markets continued to slide and even worse the exchange rate of the French franc spiraled downwards in comparison to the other currencies in the European monetary system.
During the 1960s and 1970s France was painted as a dirigiste state that used national economic planning. It had control over the flow of banking funds and government officials and leading businessmen were the key elements in creating the Grands Ecolesto mount an activist industrial police that would come to modernize the system to one that more resembles the current financial systems we see today. By then most of the power had shifted to Parisian technocrats that would be key in bringing France into the modern age.