‘Fantasy economics’: Baby boomer vs. Gen Z tensions hit France as pension costs drive debt crisis and education cuts that fuel student protests

Bond market turmoil and the simultaneous mass student protests at French schools are not a coincidence and point to the generational tradeoffs made in government spending, according to Nobel laureate Paul Krugman.

In a Substack post on Thursday, the economics professor at the City University of New York’s Graduate Center acknowledged that the high debt and deficits driving up French bond yields lately are not unique to the eurozone’s second largest economy.

In fact, the U.S. is guilty of the same fiscal sins, especially as aging demographics push entitlement spending up faster than revenue comes in.

“But France does stand out, even among fiscally troubled nations, in one main way: its persistent inability to get realistic about retirement,” Krugman added.

That’s as France’s official French retirement age, when workers can collect full benefits, was just 62 in 2023, while the average actual age of retirement was lower than anywhere else in Western Europe at only 60.4 years.

Meanwhile, French students are taking to the streets to protest missing teachers, run-down classrooms, and buildings that aren’t equipped for rising temperatures.

Protestors blame years of underinvestment in public education.

Krugman drew a straight line from France’s retirement largesse to the student unrest, highlighting the generational tensions over how to allocate public resources to baby boomers versus the country’s youth.

“Thus the fiscal pressure caused largely by France’s very generous government pension plan has led to cutbacks in other spending, notably on education,” he wrote.

“France is effectively handing over large subsidies to older French at the expense of everyone else.

Mass national student demonstrations should come as no surprise.” Of course, U.S. debt is also on an unsustainable trajectory as spending on seniors jumps amid more baby boomer retirements.

But even some Republicans have expressed openness to tax hikes to keep Social Security’s trust fund solvent.

For his part, French President Emmanuel Macron attempted to raise the retirement age to 64, but intense political pushback has stalled those efforts.

And the front-runner in France’s presidential election next year, far-right leader Marine Le Pen, has vowed to roll back the official retirement age to 62 and even previously suggested dropping it to as low as 60.