One of the features of French society that an immigrant from England notices is the lack of personal credit available to the general public. There are few credit cards, bank loans are difficult to obtain unless you have an extremely good credit rating and without a sizable deposit then a house purchase has always been difficult if not impossible. This, in part, explains why housing and land is relatively cheap in France and why people are reluctant to buy new furniture and be involved in DIY.
All the above makes a pleasant cultural change for myself and Sandra. People tend to be less anxious about being up to their eyes in personal debt and focus more upon the quality of their lives. The difference in personal credit availability and pressure to max out one’s property equity I have always put down to: (a) the paternal role of the republican state in safeguarding its citizens; and (b) the inherent caution of a rural and recently rural population.
It was with interest, therefore, that, as part of my work as a business trainer, I came across a 2010 article in the Harvard business School’s e-newsletter. It featured research by Gunnar Trumbull, Regulating for Legitimacy: Consumer Credit Access in France and America (full working paper text downloadable here). The following two extracts give a flavour of what Trumbull’s paper contains and I feel that many of the American examples also apply to the UK’s post war banking system.
“It was the fragmented and highly competitive banking sector in the United States that led banks to offer credit, and especially revolving credit, as an inducement to attract new depositors. American retailers also provided credit, subsidized out of sales, to attract new customers. And because the goal of these loans was to attract and retain customers, the terms of lending tended to be humane.
In France, banks were making profitable industrial loans to projects that were being supported through coordinated government policies. Despite periodic pressure from the state to enter the consumer lending business, most banks stayed away. Without the legitimacy that would have accompanied bank participation, French lending continued to be viewed with public scepticism.”
“[Another] feature that set France and the United States on different trajectories was the divergence in attitudes about credit of progressive non-government organizations, including trade unions and other welfare and rights groups. In France, the relationship between credit and welfare was contested. France was a pioneer with early forms of social credit, including charitable pawn, but these forays into credit-based welfare were managed directly by the French state. This lent consumer credit a limited sort of legitimacy: so long as it was carefully regulated, it could provide benefits, but those benefits did not automatically emerge with free credit access. The labour left was generally opposed to consumer credit, which they saw as reducing worker purchasing power, and also potentially reducing worker militancy. Nor did other advocacy groups push credit access for socially marginalized groups. France’s tradition of republican citizenship implied equal treatment by the state, but not universal access to all products and services in the marketplace. In particular, the idea of “positive discrimination” in promoting market access was antithetical to the republican ideal.”