Posts Tagged ‘Francois Hollande’

Francois Hollande and the French economy both down the drain

April 27, 2013

Francois Hollande is down and out in Paris, his popularity rating as President having fallen faster and further than that of any other president since the Fifth Republic began in 1958.

The reason for his decline and fall is the progressive socialist agenda that he touted during the election campaign and that he has attempted clumsily to pursue since gaining office. The French economy has seized up in response to his anti-business rhetoric, unemployment now stands at 11 per cent, and the targeted reduction in the budget deficit to 3 per cent of gross domestic product by the end of 2013 has already been abandoned. That target will not be achieved during a progressive’s presidency.

The 75 percent top marginal income tax rate that he imposed immediately upon accessing the Elysee Palace succeeded in driving a number of top companies and a number of top celebrities into exile in other grateful European Union countries. The increased tax rate failed to generate any net revenue as tax avoidance and tax exile escalated in response to what is widely considered to be government theft.

In December 2012, France’s constitutional council provided Francois Hollande with a second chance when it ruled that the 75 per cent tax rate was unconstitutional and noted that no individual tax should exceed 66.6 per cent. Alas! progressives are not to be deterred by such rulings. Caught between political betrayal and folly, Mr. Hollande naturally chose folly.

On March 28, 2013, Hollande announced that the 75 per cent tax rate would still be imposed on incomes in excess of E1 million, but that they would be paid for by firms rather than their employees. Clearly this stupid man has no understanding of the nature of tax incidence, in particular of the conditions required for an income tax increase imposed on an employer not to be passed on in a salary reduction to an employee.

Why are progressives always so ignorant of basic economics? My former colleague Gordon Tullock explained the lacuna by noting that no good economist could ever be a progressive.

One great man’s take on freedom

December 23, 2012

“Despite my excesses, my appetite and my love for life, I am a free man.” Gerard Depardieu, December 2012

In 2012, the French government extracted 44 per cent of gross domestic product in tax revenues.  This is ten percentage points above the OECD average. Yet,  the newly-formed  Socialist government of Francois Hollande has hiked tax rates yet further, imposing a new top rate of income-tax of 75 per cent and taxing investment incomes so heavily that some investors are receiving negative returns (i.e. the effective tax rate exceeds 100 per cent).

In a series of Asterix cartoons, super-human strength enabled Obelix to carry seriously heavy burdens.  Gerard Depardieu, the famous once-French actor, played that over-sized Gaul in the movies characterizing those cartoons.  However, Depardieu, like Atlas, has now shrugged.  He has crossed the border from France to Belgium, locating himself one mile on the right side of tax freedom, and lowering his effective marginal income tax rate by some 25 per cent and eliminating additional punitive taxes on his accumulated wealth.

That is Gerard Depardieu’s definition of freedom. Exit indeed is more powerful than voice in a country that is corrupted by envy and a lack of work ethic among the majority of its slothful population.  Ayn Rand identified and ridiculed  that disease more than 50 years ago.

The French government, far from rethinking the revenue-raising efficiency of its tax hikes, has pursued Gerard in a moralistic manhunt.  The Prime Minister, Jean-Marc Ayrault called his departure ‘pathetic’ and deplored the great actor’s ‘lack of patriotism’. The Culture Minister, Aurelie Filiippetti, claimed to be ‘totally scandalized’. Bernard Cazeneuve, the Europe Minister, complained ‘when a country has given you a lot, there are moments when you must give a bit back’.

‘A bit’ is not exactly how Gerard Depardieu sees it.  Having commenced work as a printer at the age of 14, he has amassed a fortune by hard, successful work. He has paid E145 million in taxes over 45 years.  Angered by the abuse spilling out from Paris,  he has now surrendered his French passport, and rejected all his social security remittances from France.

This great Belgian now resembles the world’s greatest detective (in his own judgment) Hercule Poirot, in his love for a small less envious country, that treats him well and that provides refuge for him against a rapacious government.

BRAVO Gerard Depardieu. May many other wealthy Frenchmen follow suit in defense of their imprescriptible rights to their own property. Remember that the British Prime Minister, David Cameron, also stands by with a red carpet  to welcome to the shores of  Albion  rich Frenchmen yearning for a similar freedom. And Britain’s top rate of income tax is a full  5  percentage points lower than that of Belgium!

Hat Tip: ‘Adieu Obelix’, The Economist, December 22, 2012

Do voters believe the lies told by political candidates

October 2, 2012

A few months ago, Francois Hollande was voted into the Presidency of France on promises to target the wealthy with punitive taxes while avoiding austerity programs for France and the euro-zone. He is delivering on the former promise while radically reneging in the latter. The latter renege will impact on the large majority of the electorate while the former delivery will impact only on a select few.

Question: Did those voting for Francois Hollande truly believe that he would veto austerity measures?

The question is important for the United States because in the presidential debate scheduled for October 3, 2012, BarackObama and Mitt Romney will both lay out huge lies before the viewers. How many lies, we shall not know until the debate is over. But here are two lies that you will surely hear:

Barack Obama: 90 per cent of the US debt that has occurred during my first term is due to the policies of George W Bush . Truth: President Obama signed into law two bills alone that account for $1.6 trillion of the $5.2 trillion in deficits over the last four years. This is approximately 31 per cent, not 10 per cent.

Mitt Romney:  Five studies show that my plan to cut taxes by 20 per cent will not lower revenue or raise taxes on the middle class.  Not true. Only three such studies exist and their results are based on significant eliminations of middle class tax preferences (mortgages and employer-based health benefits) that Mitt Romney surely does not want to divulge at this stage in the election race.

How far will voters stretch their imaginations to believe either of these two fairy tales?  Who knows.  Electors choose between an agenda-manipulated set of two candidates,  presented to them by a two party duopoly, so they may just accept the lesser evil as they perceive it.

I doubt that many voters would buy a second-hand car from either Barack Obama or Mitt Romney.

Francois Hollande exposed to economic reality

July 3, 2012

President Francois Hollande received marching orders to fiscal austerity for France yesterday from the Cour des Comptes.  Inevitably, the news was far distant from the duplicitous garbage that he had poured out to a gullible, uneducated French electorate only a short month ago.

The national auditor warned the French President that the government must simultaneously cut not one but two deficits this year and next, one in the public finances, the other in its tax competitiveness. 

In order to meet a committed 4.4 percent of gross domestic product  budget deficit in 2012, against a backcloth of dfeclining economic growth, Hollande will have to impose an additional E10 billion of savings.  In order to meet the committed 3 percent of gross domestic product  budget deficit in 2013, Hollande will have to impose a further E33 billion of savings.  Otherwise, by 2013, France will see its public debt exceed 90 per cent of gross domestic product.

Because France is already saddled with one of the highest tax burdens in Europe, and because most of its fiscal savings to date – and projected – will result from raising taxes, the national auditor stressed that this competitiveness deficit must be narrowed.  So, if the warning is heeded, massive public spending cuts must be implemented.

In truth, massive spending cuts should not prove harmful at all to France’s social market economy. With public spending running at 56 per cent of gross domestic product – the second highest among all OECD countries – there is plenty of worthless  belly-fat to be extracted from this over-gorged patient.

Whether or not the cuts will be implemented is now the $64,000 question. With an economic growth rate now estimated at 0.4 percent for 2012, and with registered unemployment at 10.2 per cent and rising, there must be scope for private sector expansion. Of course, the private sector may disintegrate, as Hollande’s 75 percent top marginal income tax rates drive successful French capitalists to London and  a 45 per cent maximum.

Hail!  Francois Hollande – the twenty-first century replica of Argentina’s Juan Peron. From first to third world economic status in a single  generation. Maybe they will make a movie about his mistress (es).

Capital flight from France

July 1, 2012

President Francois Hollande, his Socialist Party securely in control of the whole of France, is now free to impose his socialist agenda upon his country.  The top rate of income tax will rise to 75 percent, a wealth tax will be imposed, inheritance taxes will be tightened, while the age of retirement for  the lazy among his population will be lowered from 62 (itself ludicrously low) to 60 years of age.

For those who remain in France, the specter of Greece now walks the land. Without any program for public spending cuts, in a country facing a rising problem with respect to its sovereign debt, Hollande’s plan now relies on one instrument alone:

“I shall soak the rich until the pips squeak”

Unfortunately, for Hollande, the English Channel represents but a small obstacle to many of France’s rich, or potential rich, escaping the vise that he is about to impose. Major French companies – Givenchy, Peuguot, and Dior among them – may relocate to London as soon as the early fall of 2012. British Prime Minister David Cameron, famously has offered to receive them in the manner accorded by Sir Walter Raleigh to Queen Elizabeth I of England.

Francoise Hollande – a low-brow socialist by all accounts – most likely is not widely read in the literature of laissez-faire capitalism.  Before he attempts to squeak those pips out of his juiciest fruits, he might care to glance through the pages of Ayn Rand’s  Atlas Shrugged.

He might well worry that England’s London is a much more attractive environment than the Colorado Mountains for those who resolve their victimization by walking out on those who wish to live unproductively off their hard-earned wealth. The worthless majority may have the votes.  But they do not have the where-with-all to maintain living standards stolen from their betters, once those betters show them clean pairs of heels as they exit to relative  economic freedom.

Europe’s financial capital is surely much more attractive to the brightest and most productive citizens of France than is a City of Lights that surely will be extinguished under a torrent of government-induced debt.

Give us more, Monsieur Hollande, if only pour encourager les autres.

 Perfidious Albion welcomes those who flee your shores.

Plus ca change, plus c’est la meme chose

May 7, 2012

In yesterday’s French presidential run-off election, Francois Hollande narrowly edged out Nicolas Sarkozy with a vote of 51.6 to 48.4 percent.  Thus the French electorate has provided the first Socialist president of France in 17 years with a mandate to challenge the austerity pact signed by all  euroland countries and by all  E.U. members other than Britain and the Czech Republic.

In practice, the incoming Socialist French government will quickly find itself in chains. Despite some socialist tinkering at the margins of tax policy –  penal tax hikes that will induce a major emigration of the rich and successful from France to London – very little by the way of macroeconomic change is to be expected. Such has long been the nature of the French Republic.

One reason why change is quickly choked off, once presidents are elected into office, is the dirigiste control of the French economy by elitists educated at the Grand Ecoles, planners who have little affection for free markets and a great deal of respect for the high salaries and perquisites of office that flow from big government. Demain le Capitalisme is the long-standing refrain of the French electorate and their Republic.

The second reason why any further shift to the left will fail, following this election, is the ruthless and independent nature of the bond markets across euroland. No new French President will relish interest rates on his country’s sovereign debt rising significantly above 6 percent, especially when sovereign debt is running at some 90 percent of gross domestic product.

The third reason why presidents typically fail in France is that the Fifth Republic was devised with one man in mind – Charles de Gaulle. He could handle the system just fine.  It was designed by and for him and for him alone.  The sequence of weaklings who have followed  have  never remotely earned the  following and demonstrated the personal charisma of Charles de Gaulle.

For Charles de Gaulle, l‘etat, c’est moi. For those who have followed, including the meek and weak Francois Hollande, such is simply not the case. As the French electorate, perhaps thankfully, knows full well.

Sensibility dominates sense in French presidential elections

March 3, 2012

All democracies are vulnerable to the ‘soak the rich’ mentality of those who envy the front-runners and who vote to handicap or hobble them in order to hide their own relative poor performance on the national race-track.Not all back-running laggards are prepared to participate in rejoicing the victories of the Seabiscuits of this world.

Only rarely, however, does a major presidential candidate find a strong less- than- silent majority in favor of completely capping the earning potential of the most successful citizens.  Francois Hollande, the socialist party presidential candidate in the 2012 French elections, has decisively bucked that reluctance.

Last week, Hollande proposed, if elected, to impose a 75 percent marginal tax on all incomes above E1million per annum.  When other taxes and social charges are added to this marginal rate, the effective marginal tax rate will exceed 100 percent. Those who earn more than E1million per annum will pay more in additional  taxes than they earn. Jean Dujardin, the first Frenchman ever to win an Oscar for best actor for his lead role in The Artist no doubt will quickly migrate to Hollywood.

So no rational wealth maximizing individual would remain in France, while earning in excess of that absolute cap.  The marginal tax rate would generate zero tax revenues except for monies extracted from irrational fools. The wealth of the nation would surely decline as the most productive French citizens migrated out of France to enjoy more friendly fiscal treatment.

Yet, two polls published yesterday indicate that between 61 and 65 percent of the French electorate approve of Mr. Hollande’s earnings cap, despite strongly articulated objections by President Nicolas Sarkozy and his center-right UMP party. Mr. Hollande now leads President Sarkozy by an increased margin of 58 to 41 in the national opinion polls.

Poll responses such as this scarcely bode well for the future of France – at least while it remains a democracy. Many public choice schoilars – myself included – view many voters as being rationally ignorant – there is a negative return to becoming well-informed about political elections.. A few of my more sceptical colleagues at George Mason University – Bryan Caplan* foremost among them –  argue that many voters are rationally irrational and vote as though they are  simply stupid. Reluctantly, at least in the case of Gallic voters, I now have to give greater credence to this harsher judgment of intellectual capacity in the political market-place.

*Bryan Caplan, The Myth of the Rational Voter: Why Democracies Choose Bad Policies. Princeton University Press 2007


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