[fn Editorial] The Collapse of France, the Land of Napoleon, Called by 'Welfare Disease'

The pride of Western civilization and the world's 7th largest economy, France is currently walking the path of humiliation. The country is on the brink of closing due to a fiscal collapse crisis. In the meantime, the international credit rating agency Fitch has downgraded France's national credit rating from 'AA-' to 'A+'. It is a lower rating than South Korea. Even France, boasting a brilliant history from Napoleon's continental conquest, is starkly showing the harsh reality that it cannot escape the swamp of fiscal deficit.

The fall of France did not happen suddenly like a bolt from the blue. It was a foretold disaster. The fiscal deficit is 5.8% of GDP, and the national debt ratio has long exceeded 113%. The debt ratio, which was 60% in 2000, has doubled in 25 years. Despite sensing this crisis, the political circles have not been able to come up with a proper solution.

The result of indulging in sweet welfare has led to a disaster where the country is on the verge of paralysis. There seems to be no way to prevent the fiscal collapse crisis now. President Emmanuel Macron has taken a direct approach to overcome the fiscal crisis, changing the prime minister five times in less than two years, plunging the political situation into chaos. The citizens are fiercely resisting the austerity policies and show no sign of backing down.

It is time to reflect on the future of South Korea from the current state of France. South Korea, where government debt and household debt are dragging down the economy, resembles France. South Korea needs to take the French situation as a lesson.

First, it must be realized that the longer the fiscal problem is postponed, the exponentially higher the cost of resolution becomes. Trying to avoid the immediate political burden can eventually lead to a vicious cycle of losing national credibility. Particularly, in France, the fiscal burden increased in the process of resolving population aging and increasing welfare demands. It seems like looking into the future of South Korea. Although it is a situation where a small hoe should be used to block the work, even this is not easy in the current state of France. It must be remembered that losing the key to fiscal stability inevitably leads to being sucked into the swamp of snowballing fiscal deficits.

The phenomenon of French citizens' 'refusal to share the pain' is also a point to watch closely. The French government proposed a plan to reduce public holidays to improve productivity but withdrew it due to public backlash. To resolve the fiscal crisis, spending cuts and productivity increases are essential. However, the citizens demand to work less and receive more benefits. This is a typical symptom of 'welfare disease'. It can be reconfirmed from the French situation that once increased welfare is difficult to reduce, and once reduced working hours are hard to increase.

President Jae-myung Lee emphasized the expansionary fiscal policy on the occasion of his 100th day in office. Fiscal input for economic stimulation and livelihood stability is fully understandable. However, the risks that expansionary fiscal policy brings are complex and unpredictable. This is because various spending factors such as population crisis and climate change are piled up. Fiscal soundness is a core element of policy and should never be neglected even for a moment. We cannot guarantee that we will not end up like France if we become complacent.