Public Sector Distortions

Brigitte Granville discusses how a large public sector in France creates political and economic tensions.

"Private France" - despite its dynamism - cannot continue to compete and innovate while carrying the dead weight of "Public France" on its shoulders. Many ill-managed public or semi-public enterprises only survive because they are saturated by state subsidies. The private sector's burden is not limited to state enterprises, but stems more generally from the vast share of national income (51%) that the state taxes and spends, with a large part of taxation falling on employment.

Discussion Question. Politically, how can a country escape from an equilibrium in which a large share of the population is employed by the government?