Economic evidence does not support claims by ‘Gilets Jaunes’ about inequality
France one of world’s leading redistributors of wealth, according to OECD
Though it started as a protest over fuel taxes, the still simmering ‘Gilets Jaunes’ revolt in France quickly morphed into anger over income inequality and social injustice.
Yet paradoxically, the French government is one of the world’s leading redistributors of wealth and social injustice is less than in other developed countries.
Le Point magazine and Le Parisien newspaper have in recent days published in-depth dossiers on the question. They cited studies by the French statistical institute Insee and the Organisation for Economic Co-operation and Development which found that income inequality is relatively low in France. And there is less poverty in France than elsewhere in the EU.
Economists measure income inequality by the Gini coefficient, where zero would mean complete equality. France’s Gini coefficient of 0.289 compares favourably with inequality in the UK (0.351) and the US (0.391). Contrary to popular perception, inequality is not increasing, but stagnating, in France. And it is dramatically lower than 50 to 100 years ago.
Likewise, statistics show that purchasing power too has stagnated, not decreased, over the past decade, except for brief periods in 2012 and 2013. However, Insee admits, the cost of basic necessities has risen, especially for the poorest, which sometimes gives the impression the statistics are lying.
Only the wealthiest 43.14 per cent of French households pay income tax, and France has the highest rate of payroll deductions in the world. Yet “make the rich pay” is a constant cry of the ‘Gilets Jaunes’.
Insee reported in October that the richest 10 per cent of the French paid 70 per cent of all income tax collected in 2017, or €55 billion out of €78 billion.
Before income redistribution, the average income of the 20 per cent of wealthiest households was 8.4 times the average income of the poorest 20 per cent.
After redistribution, the richest were only 3.9 times better off than the poorest, Insee reported. Government payments, including housing subsidies and social welfare, accounted for two-thirds of the reduction in inequality, while income tax accounted for the other third.
Less socially mobile
However, the French are less socially mobile and less equal in opportunity than citizens of other developed countries. It takes six generations for the offspring of a poor French family to reach median income, compared to four to five generations in other OECD countries.
In 2017, France ranked eighth among 28 EU countries, with 14 per cent of the population, or 8.8 million people, living in poverty, according to a chart published by Le Parisien. Ireland ranked 11th, with 15.6 per cent in poverty, while Germany was 15th, with 16.1 per cent, and the UK was 17th, with 17 per cent.
The French far right and far left claim that ordinary French people are victims of “ultra liberal” government policies that have led the state to disengage from the economy.
In fact, Le Point reports, “The weight of the state has never been greater in the economic life of the country.” Over the past 30 years, public spending has tripled, from the equivalent of €416 billion in 1987 to €1,294 billion in 2017. As a percentage of GDP, government spending has risen from 50 to 57 per cent of GDP, the highest in the OECD and, according to some sources, the highest in the world.
Social protection has risen from 24.5 per cent of French GDP in 1959 to 32 per cent – also the highest in the OECD – in 2016. Between 1980 and 2017, the number of civil servants rose from 3.86 million to 5.66 million.
When President Emmanuel Macron addressed his compatriots in a letter announcing a national debate earlier this month, he said, “France is not like other countries. The sense of injustice is more intense than elsewhere. The demand for mutual assistance and solidarity is greater.”
One can only speculate why a generous welfare state has engendered the most persistent anti-government protests in Europe. The different attitude cited by Macron, coupled with a revolutionary tradition, has something to do with it. Fears that Macron’s reforms would alter the system also played a part. As the 19th century philosopher Alexis de Tocqueville observed, the most dangerous moment for a government is usually when it begins to reform.