Pardon my French about French economics.

Fifteen years ago, just after François Mitterrand became president of France, I attended my first conference in Paris. I can't remember a thing about the conference itself, although my impressions of the food and wine--this was my first adult visit to the city--remain vivid. The only thing I do remember is a conversation over dinner (canard aux olives) with an adviser to the new government, who explained its plan to stimulate the economy with public spending while raising wages and maintaining a strong franc.

To the Americans present this program sounded a bit, well, inconsistent. Wouldn't it, we asked him, be a recipe for a balance of payments crisis (which duly materialized a few months later)? "That's the trouble with you Anglo-Saxon economists--you're too wrapped up in your theories. You need to adopt a historical point of view." Some of us did, in fact, know a little history. Wasn't the plan eerily reminiscent of the failed program of Leon Blum's 1936 government? "Oh no, what we are doing is completely unprecedented."

The French have no monopoly on intellectual pretensions or on muddled thinking. They may not even be more likely than other people to combine the two. There is, however, something special about the way the French political class discusses economics. In no other advanced country is the elite so willing to let fine phrases overrule hard thinking, to reject the lessons of experience in favor of delusions of grandeur.

To an Anglo-Saxon economist, France's current problems do not seem particularly mysterious. Jobs in France are like apartments in New York City: Those who provide them are subject to detailed regulation by a government that is very solicitous of their occupants. A French employer must pay his workers well and provide generous benefits, and it is almost as hard to fire those workers as it is to evict a New York tenant. New York's pro-tenant policies have produced very good deals for some people, but they have also made it very hard for newcomers to find a place to live. France's policies have produced nice work if you can get it. But many people, especially the young, can't get it. And, given the generosity of unemployment benefits, many don't even try.

True, some problems are easy to diagnose but hard to deal with. If George Pataki can't end rent control, why should we expect Jacques Chirac to be able to cure Eurosclerosis? But what is mysterious about France is that as far as one can tell, absolutely nobody of consequence accepts the obvious diagnosis. On the contrary, there seems to be an emerging consensus that what France needs is--guess what?--more regulation. Socialist leader Lionel Jospin's idea of a pro-employment policy is to require employers to pay workers the same money for fewer hours--an idea that was popular with voters, the recent election results would suggest. Even conservative Phillipe Seguin, regarded as an iconoclast by French standards because he has questioned the sacred goal of European monetary union, thinks that one way to add jobs is to ban self-service pumps at gas stations.

Beyond more of the same, what does the French elite see as the answer to the nation's problems? For more than a decade its members have sought salvation in the idea of Europe--that is, a unified European economy (under French leadership, of course), with common regulations and a common currency. In such a continental market, they imagine, France can once again prosper.

Now a unified European market is a pretty good idea. There is even a reasonable case for unifying Europe's currencies--although there is also a good case for doing no such thing. (There is a whole industry of people--Eurologists?--who make a living by debating that issue.) But to acknowledge the potential virtues of European economic integration risks missing the essential fatuousness of the whole project. France's problem is unemployment (currently almost 13 percent). Nothing else is even remotely as important. And whatever a unified market and a common currency may or may not achieve, they will do almost nothing to create jobs.

Think of it this way: Imagine that several cities, all suffering housing shortages because of rent control, agree to make it easier for landlords in one city to own buildings in another. This is not a bad idea. It might even slightly increase the supply of apartments. But it is not going to get at the heart of the problem. Yet all the grand schemes for European integration amount to no more than that.

Indeed, in practice the dream of European unity has actually made things worse. If you are going to have a common currency, everything we know suggests you should follow what Berkeley's Barry Eichengreen calls the Nike strategy. But instead of just doing it, European nations agreed to a seven-year transition period during which they would be required to meet a complex set of criteria--mainly to reduce their budget deficits while keeping their currencies strong.

There is nothing wrong with balancing your budget. In fact, European nations need to do some serious fiscal housecleaning. And as the happy experience of America under Bill Clinton has shown, it is quite possible to reduce the deficit and increase employment at the same time. All you need to do is cut interest rates, so that private spending takes up the slack. But you can't cut interest rates if you are obliged to keep your currency strong. So the Maastricht Treaty (the blueprint for European currency union) ensured that the budget-cutting it required would be all pain and no gain. Nobody can make a precise estimate, but a guess is that without Maastricht, France might have an unemployment rate of 10 percent or 11 percent. Not great, but a couple of points better than now.