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The French Way

Posted By Russ Roberts On February 21, 2013 @ 4:12 pm In Trade,Work | Comments Disabled

Yes, they have high wages and long vacations and a civilized pace of life. I wonder how long they can sustain it. The WSJ reports:

This article in the WSJ [1] tells the story of Morrie Taylor, CEO who was considering the purchase of a Goodyear tire factory in France:

The trouble with these French factories, Mr. Taylor added, is that once you own one, “You can’t do anything about it, because you can’t fire anybody, you can’t discipline anybody, because that’s against the credo.” Mr. Taylor told us that at least some of the union bosses agreed with him that the situation was out of control at that plant. Alas, it also isn’t the French way to speak out against the most militant of your fellow unionists.

So Mr. Taylor walked. That prompted Mr. Montebourg in January to beseech Mr. Taylor to return to the table. According to Mr. Taylor, the Industry Minister promised to “put his weight behind” getting a mutually agreeable deal with the unions.

And that’s where Mr. Taylor’s February 8 letter comes in.

“Sir,” he wrote, “your letter states that you want Titan to start a discussion. How stupid do you think we are? Titan is the one with the money and the talent to produce tires. What does the crazy union have? It has the French government.”

UPDATE: At the end of hisĀ letter [2] (HT: Lawrence Donaldson), Taylor mentions that his company brought the suit that led to the increase in tariffs on Chinese tires. He complains that while his company brought the suit, the US government got the tariff revenue so that the US government is like the French one. He seems to have forgotten that those tariffs allowed him to sell tires in a less competitive environment, presumably at a higher price than they otherwise would be. Other than that, he does have it right–both the French and the US governments sometimes favor special interests (unions, tire makers) at the expense of the rest of us.

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[1] This article in the WSJ: http://online.wsj.com/article/SB10001424127887323549204578316102560819808.html?mod=djemBestOfTheWeb_h

[2] letter: http://blogs.wsj.com/corporate-intelligence/2013/02/20/u-s-ceo-to-france-how-stupid-do-you-think-we-are/

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