 All right. Good morning once again to Political Science 303. Last time, ladies and gentlemen, we were discussing the case of France. We did do an introduction to political economy of economic and social policies. And I guess we were, I think, if I'm not wrong, we were discussing Mitterrand's U-turn. A socialist president comes to power, promising all kinds of collectivization, socialism in one country, all kinds of reforms that would roll back early signs of neoliberalism that would go against her neighbors and counterparts, France's neighbors and counterparts at doing. So trying to do something in reverse, in opposition, to what others are doing. Because we've got 1979 Margaret Thatcher coming to power, 1980 Ronald Reagan coming to power, all with conservative neoliberal agendas. And Mr. Mitterrand comes to power in 1981 and says, hey, I'm going to tell another narrative, another story. I'm going to write history in a different way than these guys or these ladies and gentlemen have been writing. And he promises socialism in one country, increases social benefits, increases minimum wage, public employment expands, state through all kinds of subsidy systems, encourages high tech industries. And he says, hey, I'm going to nationalize some of the industries as opposed to privatize, right? Privatization was sweeping, at least in rhetoric, at least in discourse, the day. But he says, I'm going to nationalize, collectivize some of the industries. But then, of course, business lobbies oppose this, these kinds of reform. And then a recession starts, 1980, early 1980s. Or the recession, in fact, deepens a little. There has been some recession, late 1970s. The recession deepens. Exports plummet. Social spending in response increase. Why would social spending in response increase in times of a recession? Any ideas? There is a recession. What happens to output of firms in a recession? Uh-huh. That's one way. What else? In every session, firms are producing more or less? Less. If you're producing less, would you recruit more workers or less number of workers? Less number of workers. Less number of workers mean either, well, unemployment. If there is masses of unemployed, the state intervenes and provides unemployment insurance, which is part and parcel of the French welfare state. If unemployment benefits, if unemployment schemes in total increase, what happens to your social spending? That increase. That means your costs are increasing. You need to collect more taxes. And in a recession with firms being stalled, they can't produce more. You can't raise more taxes. So you're really caught in between a rock and a hard place. Plus, you have a world in which you have NICs, newly industrializing countries, exporting like mad. And France is falling behind. So it's starting importing. This means that the foreign exchange reserves of the central bank, Bank de France, is being depleted. So the French state was almost near bankruptcy with all kinds of changes. And this was the time when delegism, in a way, was discredited. And in effect, Monsieur Mitterrand says, OK, we design an alternative program. This didn't bode well with the society, with the economy. So he makes what's called the U-turn, engineered with Monsieur Jacques Delors, who was his finance minister, who was then the president of the European Commission in the 1990s. So modernization, yes, with another qualifying adjective, neoliberal modernization, which means that France started to privatize. France has started to liberalize. France has started to deregulate. What's interesting here, ladies and gentlemen, we had all of these. We've seen all of these in Britain. We've discussed a little bit in detail what these policies are like. But those policies were brought under by a conservative government, Mrs. Thatcher. Mrs. Thatcher's government. But here, we've got all these being introduced by a socialist government, which is, in a way, either ironic or, in a way, paradoxical. So all of these changes take place. 1983, all of these reforms are introduced. But the government, the French government is still guiding the market more so than the British government is doing. And all of these are also, on top of these, we've got more EU integration in this period, relaunching the European single market. So this was a high time for relaunching Europe, 1980s, which culminates in 1985, 86, with the Single European Act, which aims to complete the single European market by 1992. So markets are becoming more important, even in a country with a digigest history, as opposed to the case of Britain, which had a less-affair history. So economic policy styles, national policy making styles, traditions matter. But we see some kind of a convergence around these neoliberal ideas, conversion to macroeconomic discipline, tighter monetary policies, tighter fiscal policies. So tight macroeconomic policy, in addition to all these. But 1980s were not years of growth spurs. We've got growth plummeting, or not as good as 1960s, 1950s. There has been some structural change. Did we ever talk about what structural change mean? What are the structures we refer to? Structures. What does structural change mean? Structure. In order to understand structural change, we need to talk about structures, right? Please. By structures, we mean sectors. But sectors, institutions are changing. But what we mean by structural change here is that France used to be an agricultural economy, or the agriculture sector had been very large in France throughout history. It was a late industrializer. Remember? Structural change means a move away from one dominant mode of production, or one dominant sector of production, to another. So we've got industrialization still going on. But at the same time, we see the service sector expanding. So a dual structural change here. Agriculture sector shrinking. Industrial sector growing. But at the same time, we've got the services sector still expanding, or expanding at a rate which was higher than anything and everything. Which brought with it some kind of problems with respect to the competitiveness of the French economy. As you've seen, as we've talked about, imports have been rising. That was one of the reasons underlying the Single European Act, meaning, hey, European counterparts, friends and neighbors, let's come together, and let's build a united front, a block, so that we expand trade, we can compete as one with competition stemming from East Asia and to a certain extent from Latin America. But because this was in the books yet, it wasn't being implemented. There were competitiveness problems still lingering, which, of course, meant that we had higher levels of unemployment. What does French welfare states look like in terms of social policy? What does social policy in France look like? We have the French welfare state has secured higher levels of welfare state spending, which translated into higher standards of living due to a large set of comprehensive and generous welfare state. Remember, we talked about the British welfare states, so we know what these programs are like. Welfare state programs include pensions, retirement pensions, old age pensions, health care, unemployment benefits, active labor market policies, social assistance, housing, family benefits, child care. So all of these disability benefits, industrial accidents, and all that. So all of these are secured by the French welfare state. We've got a comprehensive once again, we've got a comprehensive welfare state, and quite generous welfare state. So the French have been enjoying, the French youth has been enjoying all kinds of educational allowances, assistance from the state. So French universities, as opposed to British universities, have been at no cost or very low cost. It's always been publicly provided. Public housing was available. We had rent subsidies, price controls on rent. So all of these were part of the French welfare state. And France was one of the countries which introduced early retirement programs. So they wanted to withdraw the elderly, especially in the 1990s, away from the labor force by providing them early retirement benefits. Because the government was thinking these older workers, age 55 and above, are not so good in terms of their skill set in adapting to technological structural change. There has been structural change, which means that there has been technological change. And technological change meant that the older workers were not trained, did not have the specific skills that this new production techniques required. So take them out from the labor force. This meant that the French welfare state had to provide higher levels of retirement programs in terms of benefits. So the government wanted to provide an incentive to these older workers so that they could retire. And that means if you retire at the age of 67, let's assume that you'll live for another 15, 20 years. The welfare state will be, the pension system will be providing retirement pensions during that period. But if you retire 10 years earlier or 15 years earlier, the state would provide, instead of 10, 15 years, would be providing you retirement pensions for about 30 years. So that was a burden, a further burden, on the French welfare state. Higher minimum wages or high minimum wages compared to her neighbors and counterparts in the EU in advanced industrialized countries, six weeks of vacation. Just imagine, traditionally, six weeks of paid vacation. Well, you don't know what that means at this age, but six weeks of vacation in time means something entirely different. It's an entirely different ballgame. It's an entirely different labor force participation. It just redefines what work is in many respects. Unemployment insurance, as we've talked about. So if and when you bear the risk or the risk materializes and that you're fired or you're laid off, you will be receiving unemployment insurance. So the French welfare state had been quite generous with respect to providing unemployment insurance. And what's also very important, we've got universal health coverage. So all French citizens, regardless if you're paying to the social security system, regardless of whether you're working, you are entitled to all kinds of health care programs at low or in fact no cost. So very generous, very generous health care, publicly provided health care program. But 1970s, world economic crisis, 1980s, stagnation plus inflation, competitiveness problems, unemployment rising, aging societies. We've got the French social security system coming under much stress due to rising costs. And then the French government started to borrow more day by day or year by year in order to finance all these rising costs of the social security system. This meant that if you borrow more, you run budget deficits, you incur public debt. What is public debt? How does public debt emerge? Any ideas? What is public debt? Public debt. Sena, any ideas? Any ideas, ladies and gentlemen, public debt? What is budget deficit? We know what budget deficit is. It's in a year you have the government's receipts and you have the government's expenditures, right? Receipts include taxes and other coming in assets from different assets. And you have expenditures. You wish to balance the two. But if your receipts fall short of your expenditures, you incur a budget deficit. Did I say it right? I hope I did. If your receipts exceed your expenditures, you incur a budget surplus. Thank you very much. If and when you run budget deficits after a year, one year after another for consecutive years, because sometimes you have to, you may be in a war, you may be in an economic downturn, right? You will have to run some budget deficit at some point. If you incur a lot of deficits, you amass, you accumulate behind you, not in front of you, behind you a lot of debt, OK? So this is called all those budget deficits accumulated in time. We call that public debt. Clear? So if and when the government runs deficits because of these rising costs, we amass or the French state amass public debt behind them, which needs to be paid or repaid to the creditors at some point. This is how the system runs, really. Despite all these comprehensive structure of the French welfare state, we have quite an inegalitarian system in the sense that we have unequal distribution of benefits. We have, on the one hand, the organized part of the labor force, highly unionized, good paying, highly protected, full time jobs, stable jobs versus part time jobs with flexible working systems. It's easy to hire and fire in this segment. So we have, in terms of the composition of the labor force, we have two groups, the good jobs and the bad jobs. And the good jobs are protected well, and they're covered more fully by the French welfare state, whereas the bad jobs, the lower, generally lower skilled jobs, are not protected as good as the good jobs by the welfare state. So we have quite an inegalitarian system of social protection. Labor management relations, what do labor management relations look like in the French case? In general, we have what's called an adversarial system, where one party sees the other party as an opponent, as a rival, as a competitor. So in the French system, we have an adversarial labor market relations. As we shall be talking about in the case of Germany, we will see the opposite of the system. We will have a concerted system, adversarial system versus more coordinated concerted systems. This is an example. France is an example of an adversarial industrial relations system. The relations between management and labor, capital and labor, or employees and employers, had always been poor. There is no tradition of collective bargaining, or if there is some collective bargaining, it is limited to a certain segment of a sector or to a certain kind of industry or a firm. So no strong tradition of collective bargaining. What is collective bargaining? Collective bargaining between whom? Trade unions, government and also employers. You need to take them on board too. Employers, employees, capital, labor, and the state. When we talk about Germany, for example, we'll talk about this triangle or tripartite relationship. And we will call that neocorporatism. Very much organized. We don't have that in France. We have very weak tradition of collective bargaining. One reason is that unions are neither supported by the state and they're not liked by the employers. So unions are seen as an opponent in this kind of a non-concertation system. In a way, we do not have in this country a strong tradition of collective bargaining. Although there is collective bargaining, much of what happens stays on paper. And the state really does not favor the unions. So in the French case too, we have the state not favoring the unions, except for a brief period of two years under early Mitterrand presidency from 1981 till the U-turn, not even two years. So mind you, the Fifth Republic saw presidents and also members of the National Assembly, the legislature, as we'll talk about, all coming from center-center-right coalitions. So we had the Trente Glorieuse taking place against a government of center-right coalitions. So Pompidou, Valerius Gardestein, then comes Mitterrand and then continues with Monsieur Chirac, Monsieur Sarkozy. Then interestingly, we have an alternation once again, Monsieur Hollande. So mind you, those years, the Fourth Republic and the Monsieur de Gaulle, General de Gaulle. So all of these presidents were representing center or center-right. And under these circumstances, taking root of a collective bargaining tradition in general is not really typical. The French, I'm sorry, the German example is a little bit different. I'll explain how when we talk about Germany. But in this system, unions are not supported by the state. And there is no tradition of neocorpetism or consultation. Inequalities, levels and levels, layers and layers of inequalities in France too. Ethnic minorities wise, we have North Africans living in Germany, living in France, residing in France at the end of the decolonization period. They have been recruited in the post-World War II era because they were speaking. They had special relationships with the France. They were the colonies. But also that they were speaking the French language. They were recruited in the post-World War II era. But with the disappearing of unskilled jobs, these ladies and gentlemen were mostly gentlemen who were participating in the labor force. They were getting old. More were coming in. But there was structural change. There was technological change. What's called skill-biased technological change. So this technological change required higher skills, upgrading of skills, updating of skills. But these immigrants had lower skills in general, not all of them. There were, of course, exceptions. So unemployment among them increased, which was, in a way, as a result of technological change, skill-biased technological change. But also there was discrimination increasing. Hostility towards these sectors or segments of society had been increasing. At the same time, women, that's also an interesting story. In the contemporary period, we see massive expansion of family-friendly policies. But in time, I mean, when you look at French labor force participation among women or labor force participation among French women, it had traditionally remained at low levels, like about 40% or below 40% by about 1970s. Then, in the late 1980s, French women had been increasingly participating in the labor force. And they're now participating at around 60%. So 60% of all women are participating in the labor force in France. So that's quite some number. Which really averages, which is around the average across the advanced industrialized countries. Any ideas about Turkey, labor force participation rates among women in Turkey? It's higher than 20, but lower than 30. So imagine the difference between these two countries. In the UK, too, we have high levels of labor force participation, at least as high as France in the contemporary period. Family-friendly policies, what do these policies include? These policies include parental leave. I think it was six months of maternity leave, paid maternity leave, then two weeks of paternity leave by fathers. Family allowances, generous family allowances, increasing family allowances, public daycare, publicly provided daycare, high quality availability, and child allowances. That was also very interesting. Think of it like, in order to engineer or introduce a pronatalist policy, the French government under Monsieur Sarkozy introduced a benefit something to this effect. The first child gets 100 euros. These are all hypothetical numbers. The second child gets another 100 euros per month. So that's about, if you have two kids, that's about 200 euros in addition to your regular household income. But the third child gets 400 euros. So in total, per child, it becomes 600 euros divided by 3, 200 euros. So imagine the incentive that the third child, the marginal child, would bring. So the state had been playing with the incentives of the families, the households. But despite all this, we've got still a very large wage gap, gender wage gap. I think I did talk about the gender wage gap in Britain, which has come down to 10%. We still have about 20% in France. One of the reasons for this gender wage gap is the incidence of part-time versus full-time jobs. Women are increasingly under part or full-time jobs. Part-time jobs. Men still stick to full-time jobs. But women are increasingly under part-time jobs, which mean that their wages and salaries are lower than men's. Youth also is another segment of society which is seen surfacing of inequalities. We see from the 1980s, throughout the 1990s too, and to a certain extent, the 2000s, protection of older workers in France. So the system was geared towards protecting the elderly who had entered into the labor force in the earlier periods, as opposed to young workers coming in. So on top of it, there was labor market deregulation, which meant that it became easier to hire, as well as fire workers. And if a company would be firing workers, the first fired worker would be the one who would be recruited the last. So that also meant that the youth were doubly disadvantaged in the system, which really made the young increasingly vulnerable. There have been some changes brought about by Mr. Sarkozy and followed by Mr. Hollande, their cabinets of providing incentives to firms to recruit younger workers. But we do not see, we still see, high levels of unemployment among the youth in France. Any questions on political economy in France, political economy of economic and social policies? We've seen some comparisons with Britain, that the transglorious and the golden age of capitalism, 20th century capitalism, were similar in terms of the consensus in between, the consensus among capital and labor in both countries, the consensus that the state would provide for, or the state would deliver all these services to the society and that there was massive economic growth with low levels of unemployment and very low levels of inflation. But then we've seen some changes, late 1970s, early 1980s. In Britain, this happens with the conservative revolution, 1979 with Margaret Thatcher, neoliberalism being introduced, first in rhetoric, then being implemented. In parallel, we've seen, in fact, in contrast, we've seen a socialist government coming to power in France, but lasts for about two years in terms of its socialism in one country motto, but then switches to thatcher-like neoliberal policies. And then we see some changes from there onwards. And we see similar structures in terms of the French welfare state and similar structures in terms of inequalities in addition to these social policies. So I think that concludes my discussion on political economy of economics and social policies. Let me briefly talk about, let me briefly introduce to you governance and policymaking, the organization of the French state. Let's briefly talk about that, and then we'll take a break afterwards. Governance and policymaking. We've got, remember, the Fifth Republic, as opposed to the Fourth Republic, installed a strong executive but a weaker parliament. So the Fourth Republic was quite the opposite. Weak executive, stronger parliament. The Fifth Republic installed or introduced a strong executive with a weaker parliament, right? But there have been some reforms. The power of the French executive had been reduced to a certain extent. One reason was it was that there was a power reversal or power transfer away from the center to the subnational. So the regional, local, municipal at the department level, the powers of these administrations had been expanding at the expense of the central state. Remember, we have a state which is highly centralized, which has been highly centralized under the French empire, the ancien régime, right? The French Revolution, yes. And then First Republic, Second, Third, Fourth, Fifth, still very centralized system because of the instability, because of the fragmentation of the political system. So centralized unitary state was the name of the game. But things have been changing. There had been a consensus that France would be stronger had it kept its centralized unitary structure, had it kept its centralized unitary system intact. But these ideas have been changing since the 1980s, in fact, under socialist government, Mitterrand's government, and under M. Chirac's government, M. Chirac's government in 2003 or around 2003. There have been some reforms towards expanding the role of the subnational elements or units or subnational governments. Second, the state's role in the economy after M. Mitterrand's U-turn, we see a reduction in the role of the state. So rolling back the state is also taking place in France or has been taking place in France too, in addition to or in parallel with France's neighbor across the English Channel. Judicial review by the constitutional court. The Fifth Republic installed the Constitution installed constitutional review. Remember, we talked about the presence, the existence, or absence of a constitutional review when we talked about majoritarian versus consorciational or consensus systems. Remember, Leipzig's models. In this way, we have a constitutional review, which was weaker in history, but in time, the constitutional court is becoming stronger. Its authority is increasing, and the 2000s saw even more expansion in this direction. And term limits on presence, which did not exist. We now have the French president being elected for five years, but there's a term limit on the presence, which means that you can be a candidate or you can run your office only twice in total. So there is a term limit on two times five years. A little bit more to go. When we look at the organization of the state, we see that we've got a semi-presidential system, which means the executive, i.e. the president and the legislature here, members of the parliament, are both directly elected. So both posts, MPs, the legislators, and the president are both directly elected. That's one of the distinguishing characteristics of the semi-presidential system. So we've got a dual executive with the president on top and the prime minister at a lower rank because it is the president who appoints the prime minister. So the president appoints the prime minister. The prime minister has always been, I think if I remember correctly, I don't think there has been an exception, the chairman of the party, who got the largest number of seats in the parliament. So the president invites the chairman of the party and then grants the right to him or her to install, to introduce, to come up with the cabinet of ministers. So what's important here is that each post, each branch, is in a way independent from one another because they're directly elected, but they have to be in relation to one another. In a presidential system, as we shall be talking about, in the US, for example, neither of the two, the legislature and the president, neither of the two elect one another. Here we have, in this case, the president appointing the prime minister. But both are directly elected. The French system has always been criticized for a lack of checks and balances or absence of checks and balances. It has been criticized for that. We've got the president or president's powers rather unrestrained. So there has been some criticism with respect to that. There has been some kind of an imbalance, many critics argue, in terms of the executive and the legislature. The legislature is quite weak vis-a-vis the executive, the head of the executive here. And there have been two political challenges facing the Fifth Republic. One is, remember what we talked about this last time, alternation or alternation. The Fifth Republic and the Fourth Republic and the Fifth Republic had always had center-right coalitions governing, coming to power. Only after 1981, we see a socialist president. So it was, in a way, a litmus test for the system. Would the system get derailed because of an entirely different ideological coalition coming to power, or will the system last? That was a question, really. One wouldn't have thought about it in the contemporary period, but that was one of the questions that observers had. So Mitterrand's defeat of Valéry Jusquard-Esteing was, in a way, an experiment for the Fifth Republic. And the second very important element of French system is cohabitation, which means residing of two different representing different political factions, which is, in a way, you could see it as power sharing among two different ideological units or posts, which has been introduced for the first time in 1986. We had a socialist president continuing his post, Mitterrand. But M. Chirac had received the highest number of seats, won the highest number of seats, representing UMP in the National Assembly. So for the first time, you had a French socialist president inviting a candidate for prime ministry from another alternative faction. So from then onwards, we had the institution of cohabitation in force. But there have been reforms to prevent it, like synchronization of elections and other measures. But we still had the institution of cohabitation being introduced, which was another test to the Fifth Republic in 1986 for the first time. I think I should end here. I know you have another class right after this. I bid you a very nice weekend.