Anarchists are having a field day. Mob psychology has made an ugly appearance as some ordinarily law-abiding Frenchmen engage in violent behavior. This is mobocracy in action—the degenerate side of democracy.
Chaos and mayhem have resulted from seeing real economic problems through the distorting lens of political myths and fantasies. Let’s try to untangle those myths.
First, an acknowledgment: It’s understandable that people who had long been told that they would be able to retire at 62 would be upset upon being told that the rules were going to change, and that they would have to work for two more years. There’s something irrational, however, about blindly lashing out in riotous behavior, randomly destroying property and injuring the persons of innocent individuals. Even if they were to attack Macron himself, that would be irrational, because Macron isn’t the real source of the problem.
Indeed, I’m sure that Macron, experienced politician that he is, would have preferred to avoid antagonizing French voters by announcing an unpopular reform. So, why has he taken this step? It’s because he recognizes an uncomfortable but nevertheless unavoidable economic fact of life: The French retirement system, as currently constituted, can’t meet all its promised obligations. The numbers just don’t add up: There won’t be enough revenue coming in to the French government to fund the pension payments that the government has promised.
Macron didn’t cause this unwanted predicament. Between French people living longer (something hardly worth protesting), decades of low birth rates resulting in there being too few workers to fund the retirement program at existing tax rates, and profligate government spending on various other programs, there isn’t enough money in the national treasury to continue on the current path. Fundamentally, the protests are irrational: They’re protesting a confluence of factors that no amount of protesting can change. The rage against Macron is a manifestation of the human tendency to want to shoot the messenger for the bad news he brings rather than dealing with the bad news itself.
What does Bastiat mean by “fictitious”? This touches upon the age-old philosophical division between realism and idealism, but for everyday purposes, Bastiat simply is pointing out that a “state” isn’t a physical entity, but a concept, a name. It’s like the legal definition of a corporation: a fictitious entity. To illustrate: When taxes are raised on oil companies, there’s no such creature as “ExxonMobil” that winces in pain. It’s real human beings—shareholders, customers, employees, etc., who bear the real burden of that tax. Similarly, when French protesters riot, there’s no entity called “the state” or “the French government” that feels the flames of the fires or the impact of rocks thrown. “The state” is simply a convenient label for an institutional arrangement by which some human beings take wealth from other human beings and spend it for the benefit of themselves and other human beings (with those groups of individuals often overlapping).
So, when protesters demand that they still be allowed to retire at 62 with the existing promised benefits, their demands won’t affect “the state.” They may, however, persuade enough of their democratically elected leaders to choose to appease them by somehow obtaining additional funds for their retirement. That raises a key question: From where can additional funds be obtained? Nowhere but from other human beings, either directly, via taxation, or stealthily, via inflationary money creation.
We may think that the riots in France are irrelevant to us here in the United States. Don’t be so sure about that. Our Social Security program is in a similar predicament to the French government’s pension system: The numbers don’t add up. Something will have to change—some combination of tax hikes and curtailed benefits. A lot of Americans will be very unhappy when that day comes. Will there be riots, like in France? I’d love to say “no,” but when you consider episodes of rioting such as happened after the murder of George Floyd, riots here in the United States wouldn’t be a surprise.
President Joe Biden and his party could avert future unrest by abandoning their current demagoguery and inflexibility about Social Security, but don’t hold your breath. By denying economic reality (the fact that the stream of Social Security disbursements is increasing more rapidly than the stream of Social Security revenues) and choosing instead to play politics with this vital issue, Biden et al. are committing a grave disservice to the American people.