Government Tyranny and Economic Life

Posted on September 27, 2013 by


There was an interesting article here by Peter Gumbel earlier this week on what France is doing in the face of high unemployment.  Before you read, remember this is France, since the nineteenth century, one of the most socialist (small “c”) nations in Europe, allowing for brief intervals of sanity.  It appears that Parisian officlals–the only ones that really count–have determined which stores in Paris can remain open past a certain time in the evening and which must close early.  Why, you may ask?  Because France has many regulations related to shopping and because the French labor unions are ever vigilant to enforce the regulations.  So if you want to remain open after say 9 PM, you must have special permission.  It doesn’t matter whether the employees like to work longer.  It dosen’t matter that they are paid extra per hour.  It doesn’t matter that shoppers will spend more money and help the faltering French economy.  Paris and France are full of such mindless regulations.

However the lesson here is that they aren’t mindless.  In fact, the unions and other guild-type organizations stand to gain from the rules.  An economist would say they are–succesfully–rent-seeking.  In the process of course they harm the choices and the pocket-books of consumers and also harm the economy as a whole.  The rules limit both the choices and the overall supply of many goods and services, thereby driving up the prices.  And, I almost forgot to mention, the unemployment problem is not at all helped. People who would and could work are denied work. Here at work is the true zero-sum game, not capitalism as some have argued, but rent-seeking, obtaining some benefit at someone else’s expense.  Of course public officials also gain from this cozy relationship as they increase their scope of authority and get to tell everyone else what is best for them.

We can hope the United States will not see more of this in the future, though we still have our share.  It seems to have decreased a bit over the last 25 years, but it is difficult to tell, since some large cities still engage in the practice.