The partial climb-down by the French government over its youth employment contract is the worst thing that could have happened to the economic reform process. The French are squandering enormous political capital on a reform that, in its new guise, will have virtually no impact on the labour market. The conclusion French and other European politicians will draw from this mess is that economic reforms should be avoided in future.
Amid the insanity, however, it is worth remembering that there are countries where economic reforms have worked – and even proved popular. One is Sweden, which succeeded by defying conventional wisdom and adopting a tailor-made approach.
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