Concerns about France's Social Security System

“Le Front National” is an economically and socially conservative nationalist party in France. This article (translated into English) posted to their website on September 17^th, 2013 discusses recent recommendations that the Social Security system in France become increasingly more privatized. Currently, France’s “securité sociale” program encompasses a National Health Program and the European governments have made clear that universal access to healthcare is part of the necessary elements to fight poverty. Because the welfare system has been in an unstable financial position, reforms were taken by former president, Nicolas Sarkozy, that have led to a decrease in the amount of repayments and medications provided by the government. To create a more efficient Social Security system that does not solely guarantee the wealthy full refund of their care and does not convert the system into private enterprises, “Le Front National” is recommending a tax be imposed on the banking system which would therefore lead to a more “equitable redistribution of wealth.”

The article points out a market failure in the French Social Security system – that the public good of Social Security is not being allocated efficiently. Jonathan Gruber tells us that one way to correct this failure and reach an allocatively efficient output is through corrective taxation as “Le Front National” is suggesting here; however, Gruber also tells us that the difficulty in measuring the actual costs and benefits of providing this public good can result in further problems including the Free-Rider Problem. Additionally, Mueller warns that as you start initiating state intervention, this intervention will only have to increase and result in a degenerative process. It is important that the current French government consider all of these potential market failures as they determine particular reforms to the system.