The U.S. and Europe Converge in the Search for Economic Answers

By Staff Report

Dec. 30, 2008

Once President Barack Obama moves into the White House on January 20, we will finally get a clue as to the direction he’s taking the country.

So far, like the Rorschach test to which he has compared himself, Obama is all things to all people. He even embodies multilateralism.

He is the son of a Kenyan father, and his childhood included several years growing up in Indonesia. To a greater extent than perhaps any other U.S. president, he is the world.

But opponents of the workplace law that Obama endorsed during the campaign worry that he would move the U.S. too close to a part of the globe they say is too highly regulated and too costly a place to do business–Europe.

Most of the attention so far has been on legislation that would make it easier for workers to join unions. That bill, however, may slow down.

The so-called card-check bill is only one item on a laundry list of proposals that could gain traction quickly. The list also includes measures to mandate paid time off and to lengthen the statute of limitations on pay discrimination.

Adding to their appeal is the fact that they are budget neutral–at least as far as the federal budget is concerned. The bills require no government expenditure at a time when Washington is spending hundreds of billions of dollars to prop up the economy.

Opponents say that the measures will cost business plenty. Senate Minority Leader Mitch McConnell, R-Kentucky (who also is husband of outgoing Labor Secretary Elaine Chao), has cast the union bill as a step toward “Europeanizing America.”

Meanwhile, some countries in Europe are trying to become more like the U.S. by loosening their labor laws and reducing regulations. In France, President Nicolas Sarkozy is pushing businesses and unions to agree to a plan to open stores on Sundays.

It’s one example of Sarkozy’s effort to address stultifying French labor laws. For instance, it’s almost impossible to dismiss a worker in France on grounds of incompetence, according to John Johnson, an attorney and director of business development at Daem Partners in Paris.

Johnson practiced law in California for more than a dozen years before moving to France about nine years ago to pursue personal projects. He was certified as a lawyer in France in 2007. In California, Johnson was a plaintiff’s attorney; in France, he represents corporations. I caught up with him while he was in the U.S. for the holidays.

Although he practiced in California, the state most friendly to employees, Johnson says that its worker protections aren’t as stringent as France’s. “You could call France ‘California-plus,’ ” he says.

Sarkozy is embarking on a long journey to reinvent the French economy. “For certain cultural and historical reasons, it’s going to be difficult to adopt a completely American or Anglo-Saxon-style system,” Johnson says. “There is a kind of distrust of all that is new.”

But there are certain advantages of the French approach for employers. For instance, companies have to pay higher taxes to support the health care system. But the coverage it provides makes it more likely that employees will get medical care and less likely to miss work because of illness, according to Johnson.

“I’m not sure you can say that national insurance coverage is a drag on economic growth,” he says.

Another advantage for companies is the French legal system. Multimillion-euro damages are unheard of, and there’s pretty much no such thing as a class-action lawsuit. Companies don’t often feel compelled to settle, as Wal-Mart did in a wage-and-hour case last week–to the tune of $640 million.

Johnson doesn’t think it’s ironic that some people see the U.S. trending toward a European-style economy while Europe looks to the other side of the Atlantic–or the English Channel–for guidance. The desperate economic times call for new thinking.

“Throughout the world, different systems are being forced to do a self-analysis,” Johnson says. “Every system is looking for a solution outside the box.”

As the global economy declines, Johnson sees the need for more experimentation and less political battle. “This old-fashioned [notion] of left-right, labor-employer doesn’t work anymore,” he says. “We’re in a different place right now. Everyone’s going to have to give something up to get something. That’s consensus.”

I can’t wait to see whether stateside Republicans and Democrats demonstrate that attitude.

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