Sunday, October 20, 2013

The Glory That Was France

If you love big government solutions you look longingly at France.

If you believe that we must, in the name of social justice, to tamp down inequality by taxing the rich, you will be happy to know that the government of Francois Hollande has heard your pleas.

Of course, once the French run out of rich people to tax they tax everyone else.

Will the real vampire squid please stand up?

The government of Socialist Francois Hollande has become the poster child for a high tax welfare state government controlled economy.

How’s that working out? The London Telegraph reports the bad news:

A poll on the front page of last Tuesday’s Le Monde, that bible of the French Left-leaning Establishment (think a simultaneously boring and hectoring Guardian), translated into stark figures the winter of François Hollande’s discontent.

More than 70 per cent of the French feel taxes are “excessive”, and 80 per cent believe the president’s economic policy is “misguided” and “inefficient”. This goes far beyond the tax exiles such as Gérard Depardieu, members of the Peugeot family or Chanel’s owners. Worse, after decades of living in one of the most redistributive systems in western Europe, 54 per cent of the French believe that taxes – of which there have been 84 new ones in the past two years, rising from 42 per cent of GDP in 2009 to 46.3 per cent this year – now widen social inequalities instead of reducing them.

The socialist mania for raising taxes has produced so much uncertainty that it has become impossible to do business in France:

“It’s not only that people don’t like to be treated like criminals just because they’re successful,” says a French banker friend who has recently moved to London. “But this uncertainty in every aspect of the tax system means it is impossible to do business: you don’t know what your future costs are, or your customer’s. You can’t buy, you can’t sell, you can’t hire, you can’t fire.”

The result: French university graduates, especially those who have what are called “marketable degrees” want to leave the country. We are not talking about a discontented minority. We are talking almost all of those who can:

Today, one out of four French university graduates wants to emigrate, “and this rises to 80 per cent or 90 per cent in the case of marketable degrees”, says economics professor Jacques Régniez, who teaches at both the Sorbonne and the University of New York in Prague. “In one of my finance seminars, every single French student intends to go abroad.”

“The French workforce is now two-speed,” explains a headhunter who shuttles between Paris and London. “Among the young, perhaps a third speak English, are willing to relocate, and want to work. For one thing, their dream employers are the more prosperous of the large French multinationals, almost all those in the CAC40 index, who make over half of their profits abroad, sometimes over 90 per cent – companies like, say, L’Oréal, Schneider or Danone. This is why French universities have shocked the Académie française and now teach many courses in English.

In many ways, this is the ultimate indignity. French universities-- the pride and joy of a culture that touts its indigenous superiority at every opportunity-- teaching courses in English.

Unfortunately, more conservative French governments have not had the will or the ability to abort this calamity. They might have wanted to do so, but when push came to strike, they caved to the unions.

So many people are either working for the government or living on government assistance that reform has become politically impossible. Now, the French are discovering the hard way that they have sold their future and their nation’s future for the promise of a free lunch, paid for by the rich.

It looks like they are reaching the point that Margaret Thatcher foresaw as the endgame of all socialist experiments: they are running out of other people’s money.

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