The Price Of Suspicion

"Hell is other people," Jean-Paul Sartre wrote in his 1944 play "No Exit." Apparently his countrymen agree. A new book by two French economists says the French consistently have less trust in one another than almost any other people in the industrialized world. According to surveys cited by the economists, Yann Algan and Pierre Cahuc, the French more easily justify accepting or paying bribes, buying stolen goods or collecting state handouts they aren't entitled to. They are more distrustful of powerful institutions like the judiciary, Parliament and unions. And only 21 percent of the French "trust other people"—a statistic that puts France 24th out of 26 countries surveyed. Only Portugal and Turkey are more suspicious of their fellows.

This wariness, they argue, manifests itself in virtually every sector of life, including employment and personal finance. Indeed, in their book, "La Soci?t? de D?fiance" ("The Society of Distrust"), Algan and Cahuc argue that this French "trust deficit … shackles the capacity to adapt, reform, and innovate." Distrust translates into a fear of competition itself—and the demand for protection generates a tangle of stifling legislation. They figure that if the French were as insouciant of others' intentions as the Swedes, the most trusting among nations surveyed, French unemployment, now at 8 percent, would be three percentage points lower. The nation's economy would be 5 percent larger, or €1,500 wealthier per person.

It was not always the case. The economists say World War II and the postwar construction of the social-welfare system were turning points. A general postwar wariness of others developed into a bureaucratic system that bred more suspicion. France's welfare state became both corporatist (where privileges are doled out based on criteria like occupation and status) and statist (where the state intervenes to regulate and reward corporate entities). Getting anything done required opaque negotiations with bureaucracies that handed out favors, and mistrust of others became embedded in the French psyche. The solution: a wary eye on one's neighbor and a penchant for regulation that would, presumably, ensure equal treatment.

But regulation has had its own drawbacks, and has bred still more distrust. Today, firing or laying off employees is almost impossible in France, and the cost and complexity of doing so makes firms leery of hiring. In employers' eyes, every potential applicant becomes a future liability who can be hired only with extreme caution. Legislation protecting tenants has a similar effect. Landlords must be ever vigilant of prospective lessees because evicting defaulters is so exceptionally difficult compared with other industrialized nations. So despite an apparent housing shortage in Paris, apartment vacancy rates have been as high as 10 percent.

Distrust also extends to the powerful labor unions. Unions receive generous state subsidies and a lucrative hand in managing pension and insurance funds. But they are allowed to keep their financial records secret. And while a mere 8 percent of French workers are members, the unions can paralyze the country at will. Allegations of corruption further undermine trust. In October, Denis Gautier-Sauvagnac, the metallurgy union president shepherding reform talks with labor leaders, stepped down from the talks after police began investigating him for allegedly suspicious withdrawals, totaling €17 million, from the union bank account. He maintains he didn't pocket the money; it was used "to smooth relations." But with such stories, it's unsurprising that 25 percent of the French "don't trust unions at all," according to Algan and Cahuc.

With such a culture, can distrust ever become a thing of the past? French President Nicolas Sarkozy seems to be trying. He is now battling the unions in the first mass strikes since his election in May. Last week, in a bid to protect an early retirement entitlement for some public-sector employees, unions brought public transport across France nearly to a halt. Polls show weak public support. "We've always seen majority support for big strike action," says Ga?l Sliman, a pollster at the firm BVA. "For the first time, that is not the case." In part that's because in his attempt to reform, Sarkozy has already done something that nearly counts as revolution in distrustful France: he told voters what they were in for, and acknowledged that the reforms could be tough. That kind of straight talk may have earned him a little trust along the way.

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