Explainer: 'Yellow Vest' Crisis Exposes Limits of French Welfare System

BY LEIGH THOMAS

PARIS (Reuters) - France's "yellow vest" protests have exposed a deep-rooted belief that society is not working for large swathes of the French population, especially outside major cities.

Driving the unrest is anger about rising living costs - particularly among low-paid workers - and a perception that President Emmanuel Macron is deaf to their needs as he presses on with reforms seen as favoring the wealthy.

The following graphics look at underlying economic and social indicators in France to try to explain why so many people believe the system is working against them.

IS THE FRENCH WELFARE SYSTEM GENEROUS?

Without welfare transfers, poverty and inequality in France would be among the highest in developed countries belonging to the Organisation for Economic Co-operation and Development http://www.oecd.org (OECD), the Paris-based group estimates.

While many protesters rail against what they see as a gulf between them and the upper echelons of French society, OECD data suggests that the wealth divide is not as bad as in many other rich countries.

France's extensive welfare system keeps the poverty rate at 14.3 percent , below the 18 percent OECD average and on a par with Scandinavian countries known for their egalitarianism.

Without tax and welfare payouts, nearly 42 percent of the population would be living in poverty, the highest rate among OECD countries for which recent data is available.

Likewise, France's Gini coefficient, a gauge of income inequality, is slightly below the OECD average whereas without welfare transfers it would be among the highest, just behind Italy, Portugal and Greece, according to OECD data.

While a progressive tax system and generous welfare help narrow the wealth gap, it comes at a price as French taxpayers also bear the highest tax burden in the world https://www.reuters.com/article/us-oecd-tax/government-tax-takes-at-record-high-with-france-in-top-spot-oecd-idUSKBN1O411Y.

Tax cuts on wealth and financial assets early on in Macron's five-year term have added to middle-class taxpayers' frustration and he has been criticized as being a president of the rich.

WHY DO MANY FEEL LEFT BEHIND?

Unlike Scandinavian countries, France's poor have little hope of improving their lot in life despite the billions of euros the government spends on them, according to OECD data.

The OECD estimates https://tmsnrt.rs/2Ruv0ef it would take six generations for a person from a low-income family in France to reach an average income compared with only two generations in Denmark and an OECD average of 4.5.

"There are no rungs anymore on France's social ladder," Finance Minister Bruno Le Maire, a conservative, said on Monday.

While six generations is on a par with its neighbor Germany, the French have a deep attachment to the idea that state institutions, from schools to courts to government, are supposed to offer the same chance of success to all.

But despite income support for those on low incomes, they have little chance of doing better than their parents, according to a study last year by France Strategie https://www.strategie.gouv.fr think-tank, which is linked to the prime minister's office.

The study found that a person whose father was a senior white-collar worker was 4.5 times more likely to belong to the wealthiest fifth of the population than someone whose father was a manual worker - largely because social origin correlates closely with one's level of education.

While France is close to the average in international education comparisons, it has a bigger gulf between the scores of the lowest and highest performing upper school students, the OECD's director of social affairs Stefano Scarpetta said.

WHY DO PEOPLE FEEL UNDER FINANCIAL PRESSURE?

The protests originally erupted in November over higher fuel taxes, that have since been scrapped, and general frustration about the high cost of living, sparking the worst street violence Paris has seen in decades.

https://www.usnews.com/news/world/articles/2019-01-18/explainer-yellow-vest-crisis-exposes-limits-of-french-welfare-system

Public Takeover of PG&E: A Radically Common-Sense Proposal

California’s large investor-owned utility, Pacific Gas & Electric (PG&E), announced it would be filing for bankruptcy by the end of the month after being faced with $30 billion in damages related to a series of fires over the past two years, including last fall’s deadly Camp Fire, which was allegedly sparked by the utility’s old, faulty transmission lines.

That fire killed 86 people, destroyed 14,000 homes in the town of Paradise, and stands as the deadliest and most destructive fire in the state’s history.

PG&E’s bankruptcy forces a critical choice for new California Gov. Gavin Newsom and other state leaders. They could opt to bail out PG&E, or break up the gargantuan company into presumably more manageable pieces.

Or they could do the right thing and take the utility into democratic, public ownership.

A public takeover is not outlandish, but rather, is a common-sense proposal for the future of Californians. With the company’s value dropping precipitously, this is a key moment for the state to step in, take over, and design a utility system that centers affordability, reliability, resiliency and leadership on climate change. Public ownership could also help secure the priorities that bankruptcy puts up in the air — such as pensions, union contracts and renewable energy investments — that the for-profit utility might not value saving as much as it would CEO bonuses.

The idea of public ownership is getting traction. California communities are tired of dealing with the consequences of a company designed to deliver maximum shareholder returns, constant growth and big-dollar CEO paychecks rather than safe, affordable power that does not put people and the planet at risk.

As an Oakland attorney of a group suing PG&E describes, “Rather than spend the money it obtains from customers for infrastructure maintenance and safety, PG&E funnels this funding to boost its own corporate profits and compensation.” The utility has been under scrutiny for its safety culture for years, including a gas explosion in 2010 that killed eight people.

In November, protesters shut down a California Public Utilities Commission (CPUC) meeting, calling for a public takeover of the company and to reject a bailout that puts the brunt on ratepayers (for which PG&E has lobbied hard). After the protesters were escorted out, CPUC President Michael Picker said that the commission is investigating the company, leaving all options on the table — be it bailout, break up or even public takeover. In the investigation, CPUC even names the option: “Should some or all of PG&E be reconstituted as a publicly owned utility or utilities[?]”

State Senator Scott Wiener from San Francisco announced a proposal for San Francisco energy municipalization in reaction to the bankruptcy news. “As disruptive as it is, PG&E’s bankruptcy creates an opportunity to form a comprehensive publicly owned electric utility in San Francisco,” he said. State Senator Jerry Hill, an outspoken critic of PG&E, has championed a call to hold PG&E accountable for its actions and is now also considering a public takeover option.

California already has a flourishing form of quasi-public power ownership, called Community Choice Aggregation (CCA). This program allows local governments to pool electricity customers from their jurisdiction and take over the procurement of energy generation for their communities. There are already 19 CCAs operating in California, serving a total of 2.6 million customers. Advocates for CCAs argue that they allow their communities to transition to 100 percent renewable energy more quickly, enable more community control and charge lower rates.

So how could a state-owned utility work?

California could take over PG&E and build a fully reimagined energy utility system based on 21st century grid realities and community needs, with any money made reinvested back into the grid or the larger community rather than shelled out to shareholders. State-owned regional grid operators could manage the energy delivery throughout different regions of California, focused on keeping the grid safe, investing in modernization and accelerating electrification of new sectors of the economy, such as transportation.

Local government CCAs could take on building or procuring energy generation, prioritizing locally owned renewables and so-called “non-wires” alternatives to create a more climate-resilient energy system, such as solar panels and battery storage, that don’t require the kind of transmission lines implicated in the Camp Fire and other large fires. The CCA could also take on reducing energy burdens — particularly for low-income residents who are often people of color — by integrating plans for energy efficiency with local plans for affordable housing.

https://truthout.org/articles/public-takeover-of-pge-a-radically-common-sense-proposal/?mc_cid=61b889dac3&mc_eid=8c3fb014e0