Explaining France, a reader request

France. Explain

By which I mean this: relying solely on prejudice and snippets of information, it would seem to me that France should be an economic backwater. The rate of taxation, cost of labor, early pension age, large public sector, high welfare payments, etc., none of this suggests a highly dynamic and performative economy fit for the 21st century. Certainly, it would seem, nobody would use France as a model for restructuring their economy, but the country does seem to emerge from each crisis more or less unscathed, and remains highly prosperous, with an admirable quality of life. Why is this? What are they doing right? Are they just lucky? Or (more likely) am I just poorly informed?

In all fairness, previous talk of a "Franco-German economic alliance" has dwindled and Germany is now seen as the key to EU financial decision-making.  And France has gone from the world's number one cultural power to a minor player.  Still, the French economy has held up relatively well.  A few points:

1. The French elite work very hard and are educated very well.

2. Contrary to stereotype, France has arguably the strongest work ethic in the world.  Given the rates of taxation, and the difficulty of being fired, most people still do a fair amount of work and they do it fairly well.  If that's not a work ethic, what is?

3. Esteem and approbation are especially important in France, as incentives.  This is one reason, not always voiced as such, why immigration in such an issue there.  It breaks down prevailing forms of status competition.

4. France has been well-positioned to benefit from the growth and economic integration of Europe.  The more open the economy, the less domestic economic policy matters.

5. The French are very smart and able, and have been so for a long time.  You'll note that a wide variety of French companies, whether Dannon or Carrefour, do well around the world.  The French are preeminent globalizers.

6. The foreigners' view of France, and its charm, would be very different if all of the country's buildings dated from after World War II.

7. The French are the very best, and wisest, consumers in the entire world, whether it be for clothing, music, food, or for that matter Hollywood movies and American blues and jazz.  The French government tries to influence this activity, or put up some nominal protectionist measures, but for the most part this French specialty and strength remains unregulated.  It helps account for the very high living standard there.

8. If you see a "World Music" recording from a French record label, buy it.

Personally, what I find most distressing about France is the limited number of dimensions for status competition.  Very often there is one right way to do things, to dress, and so on.  But that's also part of what makes the place work.


@Tom, perhaps a better summary would be "the French do well because French élite culture values smartness"

As an economist, how do you explain the existence of a "work ethic"?

One reason people may not understand France is here in the U.S. we live under the assumption (which I believe is wrong) that more hours at work means more work gets done. I'm not sure what the French rate is for watching YouTube on an office computer (or making blog comments, for that matter).

1 - 8 are good point. But, in addition, I've long assumed that France is a book-keeping fraud.

Does cultural and ethnic homogeneity have anything to do with the ability of the French to make social democracy and their economy work?

Having worked in a number of countries my conclusion is that everyone works about as hard as everyone else -- the difference is the time they spend at the office. American spend forever at the office and have lots of meetings and down time talking about nothing -- lots of consensus building. Germans and Dutch keep it short and go home when business is done -- very direct and confrontational in the style. The French and similar and their meetings are very structured and authoritarian (they are like stereotyped Germans. Brits are somewhere in between -- its seems like nothing is happening but everything is -- all signs and understandings. Japanese stay in the office the longest and most of the time nothing seems to be happening -- waiting for someone else to make a decision. In the end everyone does the same amount of work. Just how they do it and how long it takes (in uncompensated time) it takes to do it. The French don't work harder than anyone else but the disciple of French business organizations is impressive.

I am a non-French living in France. It is a mystery to me how France can keep the standard of living (or, if you wan the GDP per capita) so high. I see France as country in very slow decay.
1. The country is full of inefficiencies and bureaucracy if you compare it with UK or Germany (no, I don't have data, just my opinion).
2. Culturally, the French want to avoid change at any cost.
3. Many bright young people emigrate to the US, Germany or UK.
4. The immigrant class is not very well integrated.
5. Culturally, the French see the State as a provider that operates independently funded by something other than tax-payers. When people ask for more money for some reason, they almost seem to forget that the money comes from taxation. Reminds me of Latin America, where I am from.

I agree with the existence of (1) a highly intelligent elite that does not exist anywhere else, (2) world-beating companies that are innovative and operationally excellent, (3) a History that provides an advantage in a globalized world.

However, short France in the long run.

France is also the world's number one tourist destination.

Also, don't discount the role bribes play in French business life.

Or: maybe economists' theories about the greatness of the markets aren't right? Really, it's amazing how, when economic theories are shown, again and again, not to apply in the real world, the reply of economists is to rationalize them away, rather than look at their theories.

"Previous talk of a "Franco-German economic alliance" has dwindled and Germany is now seen as the key to EU financial decision-making." IMHO, no. There is no way back for either country. Which doesn't mean the French populace won't throw a wrench into the machine just to spite their elites in the great French tradition of ras-le-bol and muck everything up. But the Franco-German alliance is stronger rather than weaker now, and the Franco-German alliance is telling the rest of Europe what to do more rather than less. I know that pains the Anglo-Saxons no end, but sorry it's the truth.

In France, women's productive and reproductive lives are not so much an either/or proposition. As a result, France's social democracy is not facing the same demographic constraint as Germany's or Italy's.

Very interesting! Most pertinent points are: the French value on merit and learning ( being smart is an asset, not something you have to hide, often the case in the US), also they make very smart lifestyle choices in regard to food, leisure and cultural activities. The French set high standards in whatever they do, as someone mentioned the example of infrastructure above, and this keeps their economy strong.

I see you've decided to go with a blaze of amateur sociology.

What accounts for 8? Has there been any attempt to measure? How can other cultures copy?

Albert, you can't just say 'that is a total fallacy' and then not provide your reasoning for your claim.

There are huge benefits in the US to showing how smart you are. The financial industry, Silicon Valley, Big Pharma, and the huge university system are basically huge IQ pissing contests.

Maybe preconceptions about the necessary consequences of a high tax rate, large public sector are wrong?

We accept the stereotypes of the French as pusillanimous, unbathed, with unshaved body parts.

Hey, what's this about unshaved body parts?

There is nothing about France that needs special explaining. France is faced with the same set of tradeoffs as other advanced countries, and outcomes are based on the preferences of French consumers and voters. The preferences, and therefore the outcomes are different for each country.

France's choices regarding its labor market (inflexible relative to the US) have led to average levels of unemployment that Americans would consider devastatingly high. The average level of unemployment in France for the 1990's--meaning the entire decade--was very close to the peak US unemployment at the height of the most recent recession. In the 2000's, levels were typically 2-4% higher than the comparable US level. (Data is from the St. Louis Fed's database, research.stlouisfed.org)

France's preferences and choices explain its 'admirable quality of life'. Americans have chosen a more dynamic economy with more volatile but on average substantially lower unemployment.

Just a point of clarification, but how does having discriminating spending habits correlated to GDP growth exactly? Wouldn't countries, where consumers are binging on any gimmicky thing sold on HSN, have higher AD and thus GDP?

The Revolution

Also, at the end of the day it doesn't matter that the French government wasted billions on the Minitel, and tried to suppress all other alternatives. The global marketplace means that foreign electronics, the internet browser, and all the tools of the web were provided so widely and cost-effectively to render the ham-fisted intentions of the French state irrelevant.

Really interesting discussion. I live in Paris and much of the economics of daily life blow my mind. My readers and I are still trying to piece together how the French do it: http://pretavoyager.blogspot.com/2011/01/unglamor...


p.s. it's also interesting to hear my American friends discuss how there's no sense of letting someone know they're doing a good job in the French workplace. It's just silently acknowledged that if there's a problem, you'll be told. No gold stars or pats on the back here!

Those damn elitist lefties who value smartness and refined taste!

Very often there is one right way to do things, to dress, and so on.

In other words, French fashion designers rush their creations to the mass market retailers so everyone immediately changes style???

If you are suggesting that the French enforce a sort of uniform dress and social convention, isn't that a conservative trait.

After all, I hear American conservatives complain most about the flagrant violations of dress and social interaction, of failing to show respect for others by calling them by their first names and other lack of formality recognizing the status of others.

France has nuclear power but don't forget they also have Total which has oil reserves on par with BP and Exxon. They do their "environmental destruction" in Africa.

A few comments, some of which will, of necessity, overlap with the previous ones.

Let's start with #7: any country that idolizes Jerry Lewis as a comedic god cannot be accused of impeccable good taste: nor is this revealed preference limited to Mr. Lewis, as many of the great French comedic actors of the post-war era (Fernandel, Bourvil, Louis De Funes, Jacques Tati, Pierre Richard, and many others too numerous to list) are also highly physical in their comedic shtick.

Next, let's talk about France's social welfare infrastructure. I think it's become clear to the French government at any rate that this can't go on, hence the various attempts under the present government and its predecessors to mitigate or attenuate it. These efforts have been almost systematically blocked by strikes and other forms of /agitato/ in the streets. If France doesn't manage to "bend the curve" on things like pensions, they're going to the poorhouse.

I'd add that France--like the PIIGS--has largely put off the evil day through socializing the cost of their debt within the EU. Also, unlike the Germans, the French have no special fear of inflation in their bones (the franc was revalued on a 100-to-1 basis after the war, almost without any controversy), and so they also have no real concern about monetizing their debt.

France also has a large underclass, mostly (but not, I fear, exclusively) composed of unassimilated immigrants: these rarely figure in discussions of French economic prowess. In answer to the pervasive question of how does Paris manage to avoid the pathologies of most other urban metropoles, it's really very simple: they exported them to the /banlieues/, which exhibit all the classic urban pathologies (high levels of crime, low levels of employment, poor schools, /e tutti quanti/) but which no one ever sees, except whisking by at 200kph while you are on the RER going from CDG to downtown Paris.

Another point about the French elites: everything that's been said is true, but here's the catch: if you aren't an /enarque/ (a graduate of the ENA, the Ecole Nationale d'Administration), you aren't part of the elite. Pretty much everyone in France who counts--whether politically, economically, or socially--is part of this tight-knit group.

Now, the ENA graduates about 200 people a year, so you can do the math yourself: it's roughly like if the US elites were entirely composed of Harvard graduates (Yalies and other lesser breeds need not apply), and you basically couldn't start a business or a political career unless you were part of that small group. Somehow, I just don't see the US adopting that model, except by mistake: I mean, even with the high concentration of Ivy grads among our own elites, it's still entirely plausible for a Bill Clinton, a Jimmy Carter, or a Ronald Reagan to become president: to say nothing of the "starting a company in your garage" thing, which doesn't require any credentials at all.

The French aren't quite as credential-nutty as the Germans (you'll never hear a Frenchman complain that you only addressed him as "Professeur" rather than as a German might insist, "Herr Doktor Professor"), but credentials sure count for a lot when you're trying to get a job: they just don't count for as much as /piston/, what we might call pull.

Finally, I would also say that there's a historical factor at work. I like to say that the French are the only country that has made socialism work, but it's only because they've been working at it for 400 years. /Dirigisme/ (a political philosophy of top-down management) has been a part of the French system since Louis XIV: the Revo only made it even more systemic.

What I admire the most about the French personally is their balance between work and personal time. I read that even though the French have way more vacation time than U.S workers, they tend to be more productive during the times when they are at work so in the end, it all evens out and their productivity makes up for that additional vacation time.

Another example of the French philosophy of "everything in moderation" can be seen in their cuisine; they freely enjoy their French Brie and wines and yet the majority are svelte because it's all done in moderation.


I have heard about the immigrant population not integrating at times but I think that is happening in other countries such as the Netherlands as well. That factor depends on the individual and if they want to integrate; nothing to do with France.

I am French and have been living in the US for five years (with frequent trips back to Europe).
The question is interesting and being french of course doesn't give me the answer. Just a few scattered remarks:

-6 is a very good point: France is (or seem) rich not only because of what it produces every year, but in no small part because of the huge stock of wealth it has accumulated for centuries.
This stock can be seen in residential buildings (most of them in the big cities were built before WW I and have been built to last for many more years), in the numerous palaces (think of Versailles), in the great many pieces of fine furniture from the 17th, 18th, 19th centuries, in the well-thought road networks (dating in part from the Romans), in the well-thought road network (dating in part from the Romans) etc. Remember that France was very rich in 1800 relatively to other countrier (or for that matter, in 1700), and that its 1800 population was half of what it is now (compare with one fourth for UK, 1/60 for the US)

- The real highest taxation rate for the income tax (after exemptions, tax elusion,
Sarkozy's "bouclier fiscal", etc.) is probably not as high as it may seem. Most of the fiscal pressure
(which is real and strong) is from the V.A.T and the "social security taxes" which are
not nearly as disincentive for hard work as the progressive income tax.

- I agree with everything that Londenio has said. Especially with his point 3 :-)

As another Frenchman currently living in the US, I have to kick in....

Somebody stated that the GDP per capita of France was two-thirds that of the US. The difference can completely be explained by the different amounts of yearly hours worked. Productivity is about the same, and was actually higher in France a few years ago. In other words: different lifestyle choices.

For all the free-market conventional wisdom out there, I have a strong feeling that as long as you have an educated population, decent infrastructure investment, and some way to provide all the essential services of modern life, output-wise, you're good. The devil dwells in the details: wealth distribution, quality of life... In other words: relax. The rest is politics.

Speaking of which, I am amazed at how universal the great disease of capture of politics by special interests can be.

Taxes: well, they are much higher indeed, but for a fair comparison with the US, you should take into account not only federal and state taxes, but health insurance premiums/copays, retirement savings, and college savings/loan payments. Then you can compare effective rates. I come from a pretty poor family, and got a top-notch education in a "Grande Ecole" at the taxpayer's expense. Not sure it could have happened here. France is notorious for its elitism, but income mobility is still better than in the US. The education system is largely meritocratic, which does not mean it is perfect.

Comsumers: There are definitely different tradeoffs between quality and quantity in the US vs. France (and Western Europe in general) in consumer goods. That goes from food to houses (size vs. construction techniques; you call these big garden sheds houses ?) to cars to household appliances (hey, my aunt bough a clothes washer like this in Russia in the 60's. No kidding.).

The greatest things about America ? Netflix, Pandora and the great outdoors. The greatest thing about France ? Living there. Makes me nostalgic, I guess.

As for the slow decline, I had the same impression about the US on arrival. (Then again, I initially landed in Tennessee.) True, talented French people go abroad. Meanwhile, Italians immigrate to France, and I know a few Germans who did too. Hell, it's a globalized world! There are obviously more opportunities in the US, but when I see the $100k+ salaries that are expected in some professions, I cannot help but think that there is tension in the skilled-labor market: the education system can't keep up. This is often compensated for by immigration. I work in research, and in my previous job, in a leading team at a US national lab, there was exactly one American.

The French system outputs talented people by the truckload: we can afford to lose a few. The country is evolving, adapting, like all the others. I'm not worried. There are structural problems in the economy, but pointing at too-big-government is oversimplifying. There are many solutions to the economic problem.

For more quantitative insight, I second the WEF report posted above.

Tyler, many thanks for answering my query. It's been most interesting to read the discussion your response provoked.

Just for the record, as some commentators have rightfully picked up on, the fact that France, at first sight, seems to cope well with a social democracy model (and a big government version of it too) does show to me that there's multiple ways in which you can make an economy (and society) work. My question was framed somewhat provocatively to encourage discussion.

One of the main points I retain from the discussion is that French success owes much to the international success of its big corporations, and (tentatively) the fact that the government has been successful at inducing them to retain much productive capacity and employment at home -perhaps considerable leniency with regard to corporate taxation compensates for high labour costs.

The fact that good taste (knowing to consume) is a highly marketable commodity does help too, but this seems to be more a matter of branding than superior consumer choice. The French brand signifies 'savoir vivre' - which doesn't mean that you won't find French men with flannel shirts and mismatched ties, or examples of shocking interior decorating.

Incidently: this related blogpost is worth a read: http://understandingsociety.blogspot.com/2011/01/...

Finally: I was a little disappointed at your point about work ethic. The fact that the French work hard for a living is only a real insight to those who thought they didn't. Your French work ethic seems to be of a primordial variety, surviving despite bad incentives. The more interesting take on this (which you hint at) is that talk of high rates of taxation discouraging hard work is a bit overblown. I think there's plenty of research to back up that workers are motivated by a much wider range of incentives than mere monetary reward.

It has long been my impression that bad public policy can take longer to do harm than people tend to realize (and fixing the harm is slow, too). The "benefits," however, are often immediate. Thus, socialists look at France (or Sweden!) and conclude that no harm is done by high taxes and big government, while free marketers suffer self-doubts. Look at the longer term; Sweden was once much wealthier, relative to other countries, than it is now. Today, in France, if you have a job it's fairly comfortable (although, anecdotally, the cost of everyday goods is often shockingly high, relative to incomes, by US standards); if you're young and unemployed, your best chance is emigration to the UK or Germany (remind you of Michigan, at all?)

@ rcyran and others who seem to conclude that France is a model for policy:

The premise of the question is misleading. France does not have a highly dynamic and 'performative' (?) economy. Since unadjusted per capita GDP in the US ($47k) is nearly 20% higher than France's ($40k), literally everything France does is (at least economically speaking) an option for the US. Adopting French policies would lead to things like:

1) lower purchasing power parity GPD per capita (currently $47k for the US vs. $35k for France).
2) substantially higher unemployment. As I posted before, mean unemployment in France from 1990-2009 was 9.2% vs. 5.6% in the US

France works ok for the French, but adopting French policies would make both the median American and the majority of Americans worse off. Whether the bottom x% of Americans would be better off I don't know.

Thirty years ago, people were asking the same kind of question about Japan: "They have lifetime guaranteed employment, nobody ever changes jobs, the government props up a few big corporations, and yet their economy is booming and in a few months they'll probably buy all of New York."

So I'm going with the "fraudulent bookkeeping" explanation.

As a German who worked in France for some time, I have two adjustments to your list:

#1: Not entirely true. Yes, there is a small number of people that are very well educated, but it's a tiny tiny minonrity. Then there is another minority that is well educated (university level) but they have the work ethics. Unlike Germany, the productivity drop due to the 35 h week in France is taken up by engineers and everyone else joining in the "Cadre" placement. They have a set salaray but NO LIMITATIONS in working hours, meaning they are putting in 10-12 hour shifts whenever it is necessary.

#2: French work ethics are not exceptional if you go below Cadre, there are a lot of inefficiencies. The most tiresome and problematic their war between workers and management. Unlike Germany, where the workforce actually cooperates with management (management starting at engineer level), we have a constant antagonizing of the superiors in the french economy. This is a real problem and the source of a lot of inefficiencies in french companies. Also, logistically, French companies are still very backwards which is ok if you are a 50 employees company, but a big problem if you have 2000 employees.

#4: And yet France is one of the most closed-economies of Europe in some regards (deriving from their "cultural superiority"). They get rid of some of the problems by entrenching national monopolies in partly state-owned companies (energy sector, steel refineries, chemical industry, car industry etc.).

#5: Your selection is intersting and yet strange. When it comes to high quality supermarkets Carrefour is ok, but on the low-end German hyper-efficient super markets like Aldi, Lidl etc. have successfully beaten French competition (and even Walmart!). French have other companies that are (with the help of the French state) pretty successful. Some are military suppliers, banks and a lot of government-related activities (EDF, Alstom, AXA, BNP, Sanofi-Aventis, Total etc.). Even street signs in Australia are supplied by French companies. And yet, the French don't trust or even like those big companies.

I think one of the things many people don't know is that actually the tax burden for lower and middle incomes is low compared to other European states. It is the high incomes (48 % tax rate) that pays more than most Europeans, while even with an income of 40.000 € p.a. you only have a tax rate of 28% compared to 40% in Germany.
Of course, the high VAT and indirect taxes make up for most of it.

Nobody has pointed out the European Union? Really? The European Union (especially the Common Agricultural Policy) is designed to transfer German money to France. How obvious.

I agree with the comment about the superficiality of your analysis. You may want to add another (global) dimension to your view on France ... Ever heard of FranceAfrique? France still maintains strong grip on former colonies as source of raw materials and parallel economy, while the rest of former colonial powers such as Great Britain have "lost" their colonies when the latter got their independence. Take a look at how it controls most of the resource-rich-former-colonies and you will see how the French extreme social welfare system could be sustained year after year. Perhaps it's part of their "smart"? ... Conspiracy? Non?

Americans put far too much emphasis on taxation rates and the size of the public sector as determining factors to economic success. The truth is that most modern post-industrial nations (Japan, Canada, USA, Australia, UK, France, Scandinavia) are relatively successful despite a wide variation in the size of the public sector. What all of these countries have in common are strong democratic institutions, a respect for the rule of law and property rights, and relatively low corruption. That's why the US and France can both have relatively strong economies and good quality of life despite large variations in taxation, public sector size and generosity of state-provided welfare.

"Relying solely on prejudice and snippets of information, it would seem to me that France should be an economic backwater."
In life, one of the keys to success is lowering your initial expectations. Many if not most of the critics of welfare-state France have an equally misguided view of what makes America work - including our country's large and active federal government. France and the US are both successful (relatively) and have a great deal in common. Libertarian, Conservative and Liberal commentators also have a great deal in common - they're usually completely wrong in their analysis of what makes a country work and what doesn't.

One reason the French stay ahead is they don't confuse "smart" and "educated" as several posters here do.

France is great - as long as you don't mind being permanently assigned to a career and fixed education/income level by about 10 years old. Have a bad day and score low on a standards test? No university for you! Off to a trade school and into a low class eternity. The employment caste system in that country is disgraceful. Maybe it "works" for them, but it comes at great expense of self-determination and person liberty.

France is great - as long as you don't mind being permanently assigned to a career and fixed education/income level by about 10 years old.

Still vastly superior to having the same done to you at birth.

The biggest problem with France - and most of continental Europe for that matter - is that the "entrepreneurial spirit" is lacking amongst ordinary people, as compared to the US. Surveys show that a high percentage of French youth see government employment as their goal. This is not indicative of a vibrant, dynamic, risk-taking society. Indeed, France has a number of world class global corporations. But I would bet that there is a lot less bottom-up churn and innovation in the French economy than in the US. Where is the French version of Sam Walton, or Mark Zuckerberg ? Americans are always looking to the future, wondering where the next billionaire and next Starbucks or Wal-Mart will come from. This goes a long way in explaning the eternal optimism of the US. This culture of dreams, innovation and entrepreneurialism simply does not exist in France.

Consider other human factors that explain France's outperformance relative to expectations given its high taxes and regulation. Like all of Europe, versus the US, France has much lower rates of illiteracy, murder, teenage pregnancy, tax-subsidized religiosity, incarceration, obesity, diabetes and gun ownership. It also has higher and faster growing life expectancy.

I have to agree with Jan above. This is just another case of economists being shown their theories don't actually apply to reality, and coming up with some justification of how this particular reality is special, rather than scrapping the theory. Nothing to see here.

I'm a non-French person who has lived in France. I love the place! People count more than business. Quality is more important than quality. Taste matters.

"the country does seem to emerge from each crisis more or less unscathed, and remains highly prosperous, with an admirable quality of life"
A few comments on the previous statement:
- France still holds its AAA rate but for how long? The French debt increases everyday because of a short term view of its politicians (linked to their short term and selfish desire to be elected) on long term issues. While the French people should question themselves, most people keep defending their social benefits (the famous 35-hour week for instance) in a continuously changing and competitive global word. Chinese workers don't care about 35 hours. That's what they work in 2 days and that is why their GDP growth rate is nearly 10 times higher than the French one. In the meantime, people demonstrate in France against the plan to raise the retirement age and the government has no choice but to borrow money to pay pensions and other sorts of debts.
- As far as the quality of life is concerned, my guess is that this article has been written by a gentleman who has only spent time in France as a tourist. In short, the French population can be divided in two categories. The first category is formed of a large group of baby boomers who hold most of the 'capital'. Most of these people bought real estate at a time when the real estate market was still decent. They are now able to live on their rents and enjoy their retirement time in good conditions. The ones who did not buy real properties a few decades ago (or could not afford it) are now the owner of their own home only and cannot afford buying another real estate unless their sell their own current real estate. The second group is mainly formed of the children of these baby boomers, aka the Y generation. These younger people are highly qualified for most of them (a large part of them actually hold a postgrad degree - no joke) but they struggle to find good jobs as the French industry is dying (due to irresponsible and inconsistent decisions taken by the French politicians) and the older generations stick to their 'highly paid' guns anyway, while demonstrating to defend their social benefits. The result of this previous is that a lot of these young guys live close to the poverty line and have to rent crap apartments located far from CBDs which force them to commute everyday in a crap and unsafe public transport. This is everyday's reality for most of these young people unless their baby boomers parents are so well off that they were able to buy spare apartments to cheir children, in which case the lucky ones can enjoy France as tourists would. This is today's reality in France. Several depictions of the French 'joie de vivre' are utopia. As an illustration of the previous, many surveys actually show that the French are very pessimist (

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