Globalization Explained to the French

The Affaire Danone – the recent panic in Paris set off by rumors that one of France's top food companies was subject to a hostile takeover from PepsiCo – is but the most recent example of France's particular resistance to economic globalization. From sheep farmer José Bové's famous dismantling of a McDonald's restaurant in 1999 to the rejection last summer of the supposedly "neo-liberal" EU constitution, the French continue to demonstrate that they have an even tougher time than others in accepting the growing, and inexorable, integration of the world economy.

Another of France's particularities is the tendency of its leaders to noisily denounce globalization while accepting the reality that they cannot stop it – and should not want to. For former Prime Minister Lionel Jospin, the practice consisted of criticizing "jungle capitalism" and promising to "tame" globalization while at the same time privatizing more of the French economy than the five preceding prime ministers put together. Similarly, President Jacques Chirac promises to "humanize" globalization and denounces the "ultra-liberal Anglo-Saxon economy" while the share of foreign stock and investment in the French stock market only increases under his leadership.

Today, it's current Prime Minister Dominique de Villepin's turn to maintain the French tradition of globalization by stealth. In the face of French worries about growing foreign investment in the French economy, Villepin has invented the reassuring concept of "economic patriotism," all while taking some very useful steps to make the French labor market more flexible. The Prime Minister's idea is that France must defend its "national champions," as if in today's world the idea of a truly "French" company still actually made any sense. The majority of Dannon employees, for example, work abroad, and the firm makes 70% of its profits from outside of France. Is this really a "French" company? Do its owners invest more in France than a foreign owner would, and are they doing it for patriotic reasons?

Why can't French leaders be more frank with the French, and explain to them that to succeed in the 21st century, a modern economy must be open to the world? That cheap imported goods from the developing world reduce the cost of living in France and make French companies more competitive, which creates jobs in France? That an American investor who buys a French company does not do it to gobble up the "crown jewels" of France but because he or she hopes to make that company more profitable? That decades of economic history show that closed economies are the poorest, with little job creation, and thus the least capable of caring for their citizens, including those whose jobs are threatened by globalization?

It seems to me that there are three explanations for the French hostility toward globalization. The first is that globalization directly challenges the statist economic and political traditions of the country, which has by no means disappeared. Despite efforts over the past few years to reduce the role of the state in the economy, government spending continues to represent 54% of the French GDP, a much higher level than in most other industrialized nations.

A second reason is the very strong French attachment to their culture and their identity, which many in France believe is threatened by a globalization that takes the form of Americanization. Would the French have been as troubled by a takeover of Dannon if the buyer had been the Swiss firm Nestlé instead of Pepsico? The ghost of "coca-colonization" seems to bother the French as much as a new investor badly running one of its companies.

Finally, the French resist globalization because it threatens the notion of equality, which is one of the founding principles of the French republic. The inequalities created by globalization, which is more or less accepted by the more individualistic Americans, are not acceptable in a France that prefers equality – even at the cost of an elevated rate of unemployment and lower standard of living.

French leaders' hesitation to accept globalization is therefore quite understandable – but not necessarily any more wise. If Villepin's economic patriotism is solely designed to reassure the left and French nationalists by protecting truly "strategic" industries while liberalizing the French economy so that it functions better, the concept is not bad. But the attempt to protect a yogurt maker suggests otherwise. If a French Dannon succeeds less well than a global Dannon, is it patriotic to protect it? If foreign investment better assured its success, is it "economic" to reject it?

What France needs is education on globalization, and not a reinforcement of French prejudices on the subject.