​​Political Fantasies Versus Economic Reality

​​Political Fantasies Versus Economic Reality
A protester holds a placard reading "Macron pensions, it's no!" during a demonstration on the fourth day of nationwide rallies organised since the start of the year, against a deeply unpopular pensions overhaul, in Paris, on Feb. 11, 2023. (Christophe Archambault/AFP via Getty Images)
Mark Hendrickson
The protests in France against President Emmanuel Macron’s raising of the retirement age from 62 to 64 have increased in number and intensified in violence. A March 24 report stated that around 150 members of the French police forces have been injured.

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.

Unfortunately, many of the protesters seem incapable of facing up to that fact of life. One primary reason for this obtuseness is that they have been taught all their lives that one way of getting a benefit you want is to demand that your democratic government give it to you. This is a manifestation of the colossally arrogant and deluded belief that human will can alter reality and make it more agreeable. But no amount of human will can instantly increase the number of French workers or (we hope not!) force French people to die at earlier ages.
One of the most pervasive (and destructive) errors in human thought is the belief that government is somehow endowed with quasi-deific powers, and that if you find yourself needing economic help, you should ask your government to provide that help. But what, exactly, is this “government” or “state” that people believe in so fervently? The answer comes, ironically perhaps, from a Frenchman. The 19th-century economist and essayist Frédéric Bastiat gives us his pithy definition: “The state is that great fictitious entity by which everyone seeks to live at the expense of everyone else.”

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.

What the French rioters are demanding, whether they’re fully conscious of it or not, is to legally plunder (“legal plunder” being another insightful verbal gift from Bastiat) the wealth of their fellow citizens. That is, they’re trying to intimidate politicians into seizing more wealth from other citizens to give to retirees. Such a transfer of wealth would be illegal if the citizens receiving that wealth were to take it directly from their fellow citizens. But whether the wealth transfer is accomplished directly or indirectly, a society that condones such depredations on private property is heading in the direction of the type of savage world described in Thomas Hobbes’ 1651 book “Leviathan"—bellum omnium contra omnes (the war of all against all). This isn’t the path to social harmony and peaceful cooperation.

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.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
Mark Hendrickson is an economist who retired from the faculty of Grove City College in Pennsylvania, where he remains fellow for economic and social policy at the Institute for Faith and Freedom. He is the author of several books on topics as varied as American economic history, anonymous characters in the Bible, the wealth inequality issue, and climate change, among others.
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