Some things in life are very dependable. Every year, for instance, the swallows return to Capistrano.
And you can also count on Dan Mitchell to wax poetic about the looming collapse of French statism.
Back in 2011, I said France was engaged in economic self-destruction.
In September 2012, I wrote that it was time to start the countdown for France’s fiscal crisis.
In October of that year, I pontificated about France’s looming fiscal suicide.
Last April, I warned that the fuse was burning on France’s fiscal time bomb.
In June of 2013, I stated that the looters and moochers in France were running out of victims to plunder.
And in October of last year, I expounded on France’s economic death spiral.
Geesh, looking at that list, I guess I’m guilty of – in the words of Paul Krugman – being part of the “plot against France” by trying to discredit that nation’s economy.
Or maybe I’m just ahead of my time because we’re now seeing articles that almost sound like they could have been written by me appearing in establishment outlets such as Newsweek. Check out some amazing excerpts from an article by Janine di Giovanni, who lives in France and serves as the magazine’s Middle East Editor.
…what is happening today in France is being compared to the revocation of 1685. …the king closed churches and persecuted the Huguenots. As a result, nearly 700,000 of them fled France, seeking asylum in England, Sweden, Switzerland, South Africa and other countries. The Huguenots, nearly a million strong before 1685, were thought of as the worker bees of France. They left without money, but took with them their many and various skills. They left France with a noticeable brain drain.
It’s happening again, except this time the cause is fiscal persecution rather than religious persecution. French politicians have changed the national sport from soccer to taxation!
Since the arrival of Socialist President François Hollande in 2012, income tax and social security contributions in France have skyrocketed. The top tax rate is 75 percent, and a great many pay in excess of 70 percent. As a result, there has been a frantic bolt for the border by the very people who create economic growth – business leaders, innovators, creative thinkers, and top executives. They are all leaving France to develop their talents elsewhere.
It’s an exaggeration to say “they are all leaving,” but France is turning Atlas Shrugged from fiction to reality.
Many of the nation’s most capable people are escaping – ranging from movie stars to top entrepreneurs.
What I find most amusing is that France’s parasitical political elite is whining and complaining that these people won’t remain immobile so they can be plundered.
And when the people who have the greatest ability leave, that has an impact on economic performance – and ordinary people are the ones who suffer the most.
…the past two years have seen a steady, noticeable decline in France. There is a grayness that the heavy hand of socialism casts. It is increasingly difficult to start a small business when you cannot fire useless employees and hire fresh new talent. Like the Huguenots, young graduates see no future and plan their escape to London. The official unemployment figure is more than 3 million; unofficially it’s more like 5 million.
The article also gives some details that will help you understand why the tax burden is so stifling. Simply stated, the government is far too big and pays for things that should not be even remotely connected to the public sector.
Part of this is the fault of the suffocating nanny state. …As a new mother, I was surprised at the many state benefits to be had if you filled out all the forms: Diapers were free; nannies were tax-deductible; free nurseries existed in every neighborhood. State social workers arrived at my door to help me “organize my nursery.” …The French state also paid for all new mothers, including me, to see a physical therapist twice a week to get our stomachs toned again.
Government-subsidized “toned” stomachs. Hey, maybe big government isn’t all bad. Sort of reminds me of the taxpayer-financed boob jobs in the United Kingdom (British taxpayers also pay for sex trips to Amsterdam).
More seriously, all the wasteful spending in France erodes the work ethic and creates a perverse form of dependency.
I had friends who belonged to trade unions, which allowed them to take entire summers off and collect 55 percent unemployment pay. From the time he was an able-bodied 30-year-old, a cameraman friend worked five months a year and spent the remaining seven months collecting state subsidies from the comfort of his house in the south of France. Another banker friend spent her three-month paid maternity leave sailing around Guadeloupe – as it is part of France, she continued to receive all the benefits. Yet another banker friend got fired, then took off nearly three years to find a new job, because the state was paying her so long as she had no job. “Why not? I deserve it,” she said when I questioned her. “I paid my benefits into the system.”
So what’s the bottom line? Well, the author sums up the issue quite nicely.
…all this handing out of money left the state bankrupt. …The most brilliant minds of France are escaping to London, Brussels, and New York rather than stultify at home. …“The best thinkers in France have left the country. What is now left is mediocrity.” From a chief legal counsel at a major French company: “France is dying a slow death. Socialism is killing it…”
As the old saying goes, this won’t end well. Maybe France will suffer a Greek-style meltdown, but perhaps it will “merely” suffer long-run stagnation and decline.
Which is a shame because France is a beautiful country and is ranked as one of the best places to live if you happen to already have a considerable amount of hard-to-tax wealth (and the French also were ranked among the top-10 most attractive people).
But bad government can screw up a country, even if it does have lots of natural advantages.
And that’s exactly what generations of French politicians have done to France. The tax system has become so bad that more than 8,000 French households had to pay more than 100 percent of their income to the government in 2012.
The French government has announced, by the way, that it intends to cap taxes so that no household ever pays more than 80 percent to the state. Gee, how merciful, particularly since the French President has echoed America’s Vice President and asserted that it’s patriotic to pay higher taxes.
That’s why I’ll stand by my prediction that President Obama will never be able to make America as bad as France. Heck, France has such a bad approach on taxes that Obama has felt compelled to oppose some of that country’s statist initiatives.
P.S. The prize for silliest example of government intervention in France goes to the law that makes it a crime to insult your spouse’s personal appearance.
P.P.S. The big puzzle is why the French put up with so much statism. Polling data from both 2010 and 2013 shows strong support for smaller government, and an astounding 52 percent of French citizens said they would consider moving to the United States if they got the opportunity. So why, then, do they elect statists such as Sarkozy and Hollande?!?
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“Do you hear that, Mr. Anderson? That is the sound of inevitability.”
let them eat fish dumplings…………………
Except for the fact that no free nappies are officially offered in France, and that the article has been thoroughly fisked and found wanting on factual accuracy (the price of milk for one), your piece is fine and dandy. Sober observers including many of the French are fully aware the country is mired in a huge economic crisis much worsened since Hollande’s election, but Newsweek’s superficial froggie-bash is unworthy. France is not alone in this. The entire eurozone remains in trouble thanks to the bankster/politician nexus and the crisis remains a long way from resolution but that is the nature of banker-captured governance in the 27-member “union”. How this will all pan out is of great concern to Europe’s democracies as the grassroots have made clear now for some 5 years. No point in crowing either if Europe were to collapse the US would not escape unscathed.
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“The big puzzle is why the French put up with so much statism…”
In a nutshell, because they are deep into the vicious cycle that America has just entered.
Because when it actually comes time to vote, the dream that someone smarter, someone more competent or someone simply harder working will wake up every morning and leave his family to close himself in an office in order to help me outcompete four billion emerging world souls and maintain my French middle class standard of living (perhaps in the top 20% of world) never dies in the French voter-lemmings’s mind. As a matter of fact, as very slow growing French prosperity is ever more submerged by a much faster growing worldwide tide of prosperity, the French voter-lemming becomes ever more desperate and thus ever more needy of redistribution. The vicious cycle of decline has closed for French voter-lemmings, and they will ride the decline all the way to the bottom – a decline of their own making.
Then come the Paul Krugmans who assert: “Don’t worry that nobody wants to work at a motivation level capable of competing on the world stage — because of the flat effort-reward curves. Don’t worry that the competent lack the motivation to outcompete four billion emerging world souls when 60% of their work is harvested to support the public. Don’t worry that the public does not want to work at competitive motivation levels either, since they are more or less insulated from the consequences of mediocrity. I will turn your two fish and five loaves of motivation into prosperity for all through the magic and perpetual motion machine of macro-economic manipulation. Yes, energy cannot be created from nothing, but in politics and economics it can! It is different! and here are a few bogus complicated equations that circumvent common sense but are too complex for the common folk to question.
So, the dream hangs on and the decline continues. But the real tragedy is the situation’s irreversibility. As the decline intensifies, the desperation also intensifies, and, in this environment, letting go of state support and the prosperity-through-redistribution dream is the last thing the voter-lemming will go for. “You mean let go of state support, the only salvage boat left, for the distant promise of a more vibrant high growth economy based on self-reliance? NO WAY. I’m digging my heels into the socialist dream, I’ll keep shifting hope from the Sarcozys to the Hollandes and vice versa, until a successful system of coercive collectivism is finally found — and ride my delusion all the way to the bottom”.
And this is not just France’s problem. France is just behind Greece, Italy, Spain in the unfolding series of European decline. Being labelled a “tiger” economy in Europe means being on a 1-2% annual growth trendline. That, in a world where total prosperity is expanding along a 4-5% annual trendline. Thus, a 3-4% annual growth deficit is what Europe’s best economies can hope for. Anyone who fails to see the simple arithmetic conclusion of these trajectories is living in a delusion. The European Union is the world’s new Soviet Union. With subpar growth, nothing, NOTHING I sustainable. But there is still a long road to catharsis, dissolution and rebirth. The Soviets lasted seventy years. While things move much faster in this 21st century, Europeans still have a long way of suffering in their delusional dreams ahead. Apparently Americans are adopting the same dreams…
So Obama cannot make America into France in a mere two terms. But he can set in motion the vicious cycle that inevitably and irreversibly leads in that direction. Once the feedback loop of: “Slower growth, Oh geez I’m stressed, I think I’ll vote for more redistribution” sets in, then, there is no return. France did not get to its current point in a mere one or two presidential terms. That point of no return, in my view, has also passed for the United States. 9/11 was the pivotal event that propelled coercive collectivism into majoritarian territory. First in the form of the war on terror and other forms of conservative coercive collectivism. That then set the stage for liberal coercive collectivism. The fact that Americans in 2008 voted to fix the failures of coercive collectivism with even more coercive collectivism demarcated the entrance into the inescapable vicious cycle. The collectivist hit that America took in the last twelve years is too great to reverse. The American voter-lemmings are now on autopilot to Avenue Francais. It is a road of their own making. They will dig in their heels until their once enviable prosperity is dismantled. From this vantage point, American voter-lemmings are poised to take the country down the road to Argentina.
P.P.S. The big puzzle is why the French put up with so much statism. Polling data from both 2010 and 2013 shows strong support for smaller government, and an astounding 52 percent of French citizens said they would consider moving to the United States if they got the opportunity. So why, then, do they elect statists such as Sarkozy and Hollande?!?
Despite knowing that smaller government is better (no government is best) people are reluctant to voluntarily give up the benefits they derive from it. The politicians, bureaucrats and special interests know this – once a government policy is established it is very difficult to get rid of it. So a proposed law or regulation is announced to provide free nappies – all prospective mothers support this.
Behind the scenes the nappy manufacturing/distribution channel are elated, unionists are happy because this will encourage more women to stay at home during their most potentially productive (in the work force) time of life, government bureaucrats required to manage the program will be happy as will all those expecting to derive business from more babies and children (eg baby food, playpens, baby trolleys, baby clothes, nurseries, baby toys, etc not to mention educators, bankers (demand for more housing) etc. Announce the intention to shutdown the free nappies and all these beneficiaries organise a tidal wave of opposition.
The professional modern day politician jumps on the band wagon of the opposition and the smart politicians comes out in support of ending the nappy give away and waits for the money to come in from the opposition then switches in favour of the opposition and comes out against ending the free nappy program. Now multiply this times the thousands and millions of similar policies, programs, laws and regulations in various areas of society in the countries of the world and you have the answer why getting rid of socialism is so, so, so difficult. Only when the society has collapsed or when it is near collapse (and the ruling elite realises it) will such socialism be removed.
They are following Nazi (NAtional soZIalistische – National Socialist) policies using notorious Nazi dictator Adolf Hitler’s dictum: “The End Justifies the Means.” Which means that any means to achieve anything – not just outright lies and taxes over 100% – are okay and legally justified provided the end is sufficiently high-minded and vague…
“So why, then, do they elect statists such as Sarkozy and Hollande?!?”
Very simple. Politicians lie for a living and the populace rely on other liars (the media) to tell them who is lying.