The French economy is as modern as ours. It is even more exposed to the global market place: Exports in France account for 30 percent of its GDP compared to only 12.6 percent for the U.S. Because it must compete even more rigorously, France must use the highest levels of technology and automation. So if competitive global markets, new technology and automation cause rising inequality, then France should be its poster child.
It is not.
Inequality is far less extreme in France. The bottom 50 percent saw their incomes grow by 39 percent from 1978-2015. The incomes of the top 10 percent grew by 44 percent and the top 1 percent by 67 percent—unequal still, but nowhere near as lopsided as in the U.S.
Viva la Difference?
Social and economic policies, not blind market forces, determine the degree of inequality. Here are a few obvious differences:
France has universal health care—we don’t.
France has far stronger labor protections—U.S. workers are far more vulnerable to layoffs, with the Republicans now seeking to cripple unions still further.
France has more progressive income taxes—the Republicans want to lower them for the rich.
Higher education is virtually free in France—here we put students and families deeply into debt.
Financial institutions are more constrained in France—in America, Wall Street dominates the economy and politics.
The financialization of our economy—more aptly called financial strip-mining—is the most powerful driver of runaway inequality. This is the direct result of the failed neo-liberal policies that erroneously claim cutting regulations always makes the economy run better.
In the case of finance the picture is crystal-clear. When we had our foot on the neck of Wall Street (from the New Deal to the late 1970s) the economy became more egalitarian with real wage increases for working people of all kinds. But after deregulation of Wall Street activities—legalization of stock buybacks, end of Glass Steagall, prohibition of regulating derivatives, etc.—U.S. inequality soared.