S&P Cuts France’s Credit Rating by One Notch to Double-A – WSJ.com.
It isn’t a great surprise to David or I that France’s credit rating is being downgraded yet again. And this won’t be the last time either. As the French government resists ongoing re-allocation of resources (i.e., people) away from what they’ve done in the past and toward those activities they need to be doing to offer sufficient value to justify the salary/compensation they are receiving, there is an increasing number of French people who cannot be employed. Even for those who are employed, an increasing number of them do not contribute sufficient value to society to justify the salary/benefits which they receive, so it is only a matter of time before they, too, find themselves unemployed.
The mistake made by many commentators and policy makers is thinking that growth is the “solution.” Far from it! If we “grow” the economy by simply employing more people in jobs which don’t deliver sufficient value to society (in the form of actual products and services which improve our lives in ways such that we are willing to pay more than the cost of delivery of the product/service including the opportunity cost of capital), then the value destruction becomes an ever-increasing shadow hanging over the economy. The key is to orient the resources around value creation, which for many of the employed in France will require re-allocation (i.e., stopping what they are presently doing) so that they can be available to become employed when someone (which will be an entrepreneur, not a large company nor the government) figures out how to utilize their resources in a way that benefits society sufficiently to cover their desired salary and benefits. How likely is the government to embrace such an orientation when it almost certainly involves paying a short-term price in order to achieve the long-term benefit of a healthy, vibrant, and adaptive economy?