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Archive for the ‘France’ Category

As part of my collection of honest leftists, I have a bunch of columns highlighting how some advocates of big government (including, to their credit, Bernie Sanders and Andrew Yang) don’t hide from reality.

I’m unalterably opposed to their policies, but at least they openly admit that huge tax increases on ordinary people are needed in order to finance a European-style welfare state.

Now we have two more honest statists to add to our list.

In a column for the Washington Post, Eric Harris Bernstein and Ben Spielberg openly embrace huge tax increases on Americans with modest incomes.

They start by complaining that the tax burden is lower in the United States compared to other western nations.

A no-new-middle-class-taxes pledge…is seriously misguided. Middle-class taxes are a necessary and desirable part of a comprehensive, progressive policy framework… Democratic presidential candidates should make the case for middle-class taxes, not run from them. Here is a basic fact: The United States is a low-tax country. In 2018, the most recent year for which data is available, the United States ranked fourth-lowest in the Organization for Economic Cooperation and Development (a consortium of 36 economically developed countries) in terms of tax revenue collected as a percentage of the economy — behind nations like Germany, Israel, Latvia and Canada. The gap between U.S. and average OECD revenue has widened over time, from 1.3 percentage points of gross domestic product in 1965 to 10 percentage points more recently. That’s nearly $2 trillion per year in forgone revenue from lower tax rates.

Interestingly (though not surprisingly), they don’t acknowledge that Americans are far richer than people in other advanced nations.

So maybe, just maybe, there’s a relationship between tax policy and economic outcomes.

The authors then complain that Reagan triggered an era of lower taxes for the non-rich. Oh, the horror!

In 1979, the year before Ronald Reagan was elected president, the average household in the middle quintile of the income distribution paid 19.1 percent of its income in federal taxes, according to data from the Congressional Budget Office. By 2016, that rate had dropped 5.2 percentage points, more than a quarter, to 13.9 percent. The story is similar for the second and fourth quintiles, which saw their rates decline by 5.6 and 3.8 percentage points respectively over the same period.

Here’s a graphic that accompanied the column.

As you can see, readers are supposed to conclude that the United States is “below average” compared to other developed nations.

What would it mean if politicians reversed all the tax cuts that started under Reagan?

The most revealing factoid from the column is their calculation that middle-income families should be paying $3800 more to the IRS every year.

In 2016, middle-quintile families paid $3,800 less in taxes than they would have at 1979 rates… Low middle-class taxes in the United States stand in stark contrast to the approach in other developed countries, which raise more revenue from the middle class through some combination of taxes on goods and services, payroll taxes, and income taxes.

And don’t forget that the authors don’t just want to go back to 1979 tax rates.

They want America to become another France.

Somehow, I suspect America’s middle-class does not want to be pillaged like their European counterparts.

Amazingly, it gets even worse. The authors want more debt-financed spending and they even endorse the perpetual motion machine of “modern monetary theory.”

Of course, middle-class tax increases are not the only means of providing these public goods. Trillions of dollars can be raised through various taxes on the rich… And funding public investments with government debt, which modern monetary theory’s adherents recommend, is a far better approach than requiring every program to have a designated “payfor.” The government is uniquely positioned to borrow money, and we shouldn’t let unsubstantiated, theoretical concerns about debt levels prevent us from addressing the concrete and urgent needs of today.

I could end the column at this point and simply observe that it’s good to find honest folks on the left, even if they’re wildly wrong.

But the authors of the column unintentionally have given me an excuse to make a key point about taxes, growth, the economy, and the Laffer Curve.

Their graphic inserted above reveals that the overall tax burden in France consumes 46.1 percent of GDP in France, nearly twice as high as the United States.

But high tax rates don’t necessarily produce high tax revenues.

Indeed, I crunched data from the International Monetary Fund and found that per-capita revenues in France are only about 10 percent higher than they are in the United States.

I’m sure Art Laffer won’t be surprised by these results. Neither would Ibn Khaldun.

The bottom line is that most people in Europe are subject to much higher tax rates, which leads to lower living standards and weaker economies, which means there’s not even a lot of tax revenue to spend.

Would your family be willing to give up $10,000, $15,000, or $20,000 of income just so politicians could spend an extra $2,000 per household?

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The Tax Foundation churns out lots of good information, but I especially look forward to their International Tax Competitiveness Index.

It shows how nations rank based on key tax variables such as corporate taxation, personal income tax, and international tax rules.

The latest edition shows good news and bad news for the United States. The good news, as you see in this chart, is that the 2017 tax reform improved America’s ranking from 28 to 21.

The bad news is that the United States is still in the bottom half of industrialized nations.

We should copy Estonia, which has been in first place for six consecutive years.

For the sixth year in a row, Estonia has the best tax code in the OECD. Its top score is driven by four positive features of its tax code. First, it has a 20 percent tax rate on corporate income that is only applied to distributed profits. Second, it has a flat 20 percent tax on individual income that does not apply to personal dividend income. Third, its property tax applies only to the value of land, rather than to the value of real property or capital. Finally, it has a territorial tax system that exempts 100 percent of foreign profits earned by domestic corporations from domestic taxation, with few restrictions. …For the sixth year in a row, France has the least competitive tax system in the OECD. It has one of the highest corporate income tax rates in the OECD (34.4 percent), high property taxes, a net tax on real estate wealth, a financial transaction tax, and an estate tax. France also has high, progressive, individual income taxes that apply to both dividend and capital gains income.

Here are some other important observations from the report, including mostly positive news on wealth taxation as well as more information on France’s fiscal decay.

…some countries like the United States and Belgium have reduced their corporate income tax rates by several percentage points, others, like Korea and Portugal, have increased them. Corporate tax base improvements have been put in place in the United States, United Kingdom, and Canada, while tax bases were made less competitive in Chile and Korea. Several EU countries have recently adopted international tax regulations like Controlled Foreign Corporation rules that can have negative economic impacts. Additionally, while many countries have removed their net wealth taxes in recent decades, Belgium recently adopted a new tax on net wealth. …Over the last few decades, France has introduced several reforms that have significantly increased marginal tax rates on work, saving, and investment.

For those who like data, here are the complete rankings, which also show how countries score in the various component variables.

Notice that the United States (highlighted in red) gets very bad scores for property taxation and international tax rules. But that bad news is somewhat offset by getting a very good score on consumption taxation (let’s hope politicians never achieve their dream of imposing a value-added tax!).

And it’s no big surprise to see countries like New Zealand and Switzerland get high scores.

P.S. My only complaint about the International Tax Competitiveness Index is that I would like it to include even more information. There presumably would be challenges in finding apples-to-apples comparative data, but I’d be curious to find out whether Hong Kong and Singapore would beat out Estonia. And would zero-tax jurisdictions such as Monaco and the Cayman Islands get the highest scores of all? Also, what would happen if a variable on the aggregate tax burden was added to the equation? I’m guessing some nations such as Sweden and the Netherlands might fall, while other countries such as Chile and Poland (and probably the U.S.) would climb.

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I admired the Tea Party because it was made up of people who were upset by the bipartisan waste and corruption of Washington. And I think they even had a positive – albeit only temporary – effect.

But the “Yellow Vest” protesters in France, as I explain in this interview, are much less coherent.

Needless to say, I’m glad the Yellow Vests are upset about France’s oppressive tax regime. In that sense, they are like the Tea Party in America.

But the Tea Party also wanted smaller government. That doesn’t seem to be the case in France.

Which means the Yellow Vests are either ignorant or hypocritical. After all, the burden of government spending is very onerous in France, and the country also has high levels of debt. So how is the government supposed to lower taxes unless there’s at least some degree of spending restraint?!?

Some of the Yellow Vests seem to think that class-warfare taxes on the rich could be a silver bullet, but that didn’t work for Francois Hollande and there’s no reason to think it would work for Emmanuel Macron.

Ironically, some American politicians think America should copy France.

Veronique de Rugy, who was born and raised in France but is now an American, explained for FEE why her former nation is not a role model.

…what Sanders and AOC actually have in mind is a regime more like that of France. …That’s because there is one aspect in particular that the AOCs and Sanders of the world fail to mention to their followers when they talk about their socialist dream: all of the goodies that they believe the American people are entitled to receive in fact come at a great cost—and so the only way to pay for these goodies is with oppressive and regressive taxes (i.e., taxes heaped on to the backs of the middle class and the poor). …Paris relies disproportionately on social-insurance, payroll and property taxes. …In France, VAT and other consumption taxes make up 24% of revenue… Consumption taxes often fall hardest on the poor and middle class, who devote a greater proportion of their income to consumption.

Amen.

Big government means stifling taxes on lower-income and middle-class taxpayers. This is the point I’ve made, over and over again.

But Veronique notes that France also suffers from excessive regulation and other forms of intervention.

France has all sorts of labor regulations on the books: some preventing firms from firing workers and, hence, creating a disincentive to hire workers in the first place. …the French also have all sorts of “generous” family friendly laws that end up backfiring and penalizing female employment. …All of these policies make the lives of lower and middle-class people harder… The bottom line is this: All those people in America who currently fall for the socialism soup that AOC and Sanders are selling need to realize that if their dream came to pass, they, not the rich—not the bankers and politicians—will be ones suffering the most from the high taxes, high unemployment, and slow growth that go hand in hand with the level of public spending they want.

Interestingly, Bloomberg recently reported that the French want tax cuts.

The French want to pay less tax. That was the clear message that emerged from a two-month “Great Debate” that saw voters present their grievances and suggest remedies to President Emmanuel Macron. …Prime Minister Edouard Philippe said…“The clear message is that taxes must fall and fall fast.” …Macron announced the “Great Debate” in December to respond to the Yellow Vest protests… Among the findings, valued added tax and income tax were the levies that most people listed as needing reduction. …For 75 percent of the participants, the lower taxes must be accompanied by cutting government spending, though they were vague about where the cuts should come, with 75 percent citing “the lifestyle of the state.”

This is all good news. And it does echo polling data I shared back in 2013.

But I’m nonetheless skeptical. I suspect the French (including the Yellow Vests) would be rioting in the streets if the government proposed to curtail the nation’s bloated welfare state.

Though I hope I’m wrong.

In any event, there are signs that President Macron actually does want to move policy in the right direction.

He’s already gone after some bad tax and regulatory barriers to prosperity.

And the Wall Street Journal recently opined about his effort to trim the country’s massive bureaucracy.

The French President is still reeling from months of “yellow vest” protests against his poorly conceived fuel-tax hike, but now he has a much better idea to take on France’s infamously bloated civil service. …Bureaucrats would lose much of their extra time off and instead work the 35-hour week that’s standard in the private economy. The plan would streamline staff reassignments within the civil service and make it easier for local officials to reorganize government departments. …if the reforms happen, they’ll still be a long-overdue step in a country where 5.5 million government employees out of a population of 67 million consume around 13% of GDP in wages. …The political test will be whether Mr. Macron can dust himself off from his fuel follies and persuade French voters to embrace another crucial reform.

I’ll close with the pessimistic observation that France may have passed the tipping point.

Simply stated, government is so big and there’s so much dependency that real reform is politically impossible.

Heck, I worry the United States is on the same trajectory.

P.S. Veronique has a must-watch video explaining why America shouldn’t become another France.

P.P.S. While I’m sympathetic to Macron’s domestic agenda, he’s very bad on European-wide policy issues.

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Much to the consternation of some Republicans, I periodically explain that the Trump Administration is – at best – a mixed blessing for supporters of limited government.

It’s not just that Trump is the most protectionist president since Herbert Hoover, though that’s certainly a damning indictment.

The Trump White House also has been very weak on government spending, and the track record on that issue could get even worse since the President supports a new entitlement for childcare.

Yes, there are issues where Trump has been a net plus for economic liberty.

The overall regulatory burden is declining (though the Administration’s record is far from perfect when looking at anti-market interventions).

And the President gets a good mark on tax policy thanks to the Tax Cut and Jobs Act.

But Trump’s grade on that issue may be about to drop thanks to horribly misguided actions by his Treasury Secretary, Steven Mnuchin. Here are some excerpts from a report by France 24.

US Treasury Secretary Steven Mnuchin said Wednesday that the US supported a push by France for a minimum corporate tax rate for developed countries worldwide… “It’s something we absolutely support, that there’s not a chase to the bottom on taxation,” Mnuchin said in Paris after talks with Finance Minister Bruno Le Maire. Le Maire said last month a minimum tax rate would be a priority for France during its presidency of the G7 nations this year. …France in particular has railed against Amazon, Google and other technology giants that declare their European income in low-tax countries like Ireland or Luxembourg.

Needless to say, it’s utterly depressing that a Republican (in name only?) Treasury Secretary explicitly condemns tax competition.

Politicians and their flunkies grouse about a “race to the bottom” when tax competition exists, not because tax rates would ever drop to zero (we should be so lucky), but because they don’t like it when the geese with the golden eggs have the ability to fly away.

They like having the option of ever-higher taxes.

In reality, the world desperately needs tax competition to reduce the danger of “goldfish government,” which occurs when vote-seeking politicians can’t resist the temptation to destroy an economy with too much government (see Greece, Venezuela, Zimbabwe, etc).

I’ll close with a remarkable observation.

The Obama Administration supported a scheme that would have required American companies to pay a tax of at least 19 percent on income earned in other jurisdictions, even if tax rates were lower (as in Ireland) or zero (as in Cayman).

This was very bad policy, completely contrary to the principle of “territorial taxation” that is part of all market-friendly tax reforms such as the flat tax.

Yet Trump’s Treasury Secretary, by prioritizing tax revenue over prosperity, is supporting a proposal for global minimum tax rates that is much worse than what the Obama Administration wanted.

And even further to the left compared to the policy supported by Bill Clinton.

P.S. I’m sure the bureaucrats at the European Commission and Organization for Economic Cooperation and Development are delighted with Mnuchin’s policy, especially since American companies will be the ones most disadvantaged.

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My multi-part series on Socialism in the Modern World has featured Venezuela, the Nordic nations, and Greece.

But no discussion of dirigiste policy would be complete without a look at France.

After all, not only does France have a history of imposing 100-percent-plus tax rates, it also hold the dubious honor of being Europe’s biggest welfare state.

And it has the highest overall burden of government spending.

These are not good numbers, especially when you consider the demographic changes that are happening in Europe.

Sadly, there’s a long history of French statism. Andras Toth of the Carl Menger Institute explained some of the France’s grim economic history.

If there is an example of a dirigiste, interventionist state, then that is France in Europe. France was the birthplace of the mercantilist, absolutist monarchy in the early modern period. …the practice of mercantilist protection and monopolization of key industries, including the state-mandated “industrial development policies” …Under the rule of the famous finance minister, Jean-Baptiste Colbert… France sank into a series of crises and lost her preeminent position in Europe. …The modern French state is the stepchild of the political culture of the Bourbons. It is the prime example of dirigisme. It redistributes as much as 56 percent of annual GDP and imposes the highest tax burden in Europe. The French state directly manages key industries and sustains one of the largest welfare states in Europe. It also imposes complicated bureaucratic red tape on economic actors, trailing way behind the Scandinavian states and Germany as far as ease of business is concerned.

Though he also explains that the current president seems to understand that France needs less government and more economic freedom.

Macron was the first French politician to build his election campaign on reform and competitiveness in order to keep up France’s position in the world. Those who voted for him knew what to expect. As a member of Hollande’s team, he proposed increasing the work week from 35 to 37 hours to lessen the tax burden on higher incomes, and the competitiveness package he developed aimed to lessen the protection of workers and companies in order to promote growth. …France is again at a crossroads: She has to choose between the policies of Jean-Baptiste Colbert and those of Anne-Robert-Jacques Turgot, the great French liberal economist who was the economic minister of France between 1774 and 1776 and who argued for free trade, less taxation, and less regulation.

I also sympathize with what Macron is trying to achieve (at least with regard to domestic reforms).

But I fear it may be too little and too late.

Especially since the New York Times reports that Macron is increasingly unpopular.

…attacks…that Mr. Macron is a self-seeking servant of society’s fortunate… The undisguised hostility has made clear that, less than a year into this new presidency, anti-Macron sentiment is emerging as a potent force. It is being fueled by a pervasive sense that Mr. Macron is pushing too far, too fast in too many areas — nicking at the benefits of pensioners and low earners, giving dollops to the well-off and slashing sacred worker privileges.

Though he does deserve some of his unpopularity. He imposed green taxes late last year that triggered nationwide riots from motorists and other unhappy citizens.

But he’s also unpopular for some of his good policies, which leads me to fear that France may be past the tipping point, meaning that genuine and meaningful reform no longer is possible because too many voters are on the government teat.

I hope that’s not the case. France used to be one of the most wealthy and powerful nations in the world. But now its living standards are barely average according to the OECD’s AIC numbers.

Because of the ongoing debate about what the term actually means, it’s unclear whether France’s tepid economic performance can be blamed on socialism.

But we shouldn’t doubt that the country is paying a considerable price for having too much government.

P.S. My favorite cartoon about French socialism actually features Barack Obama.

P.P.S. One of the world’s greatest economists was French, but politicians in France obviously ignored Bastiat just like they ignored Turgot.

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Maybe there’s hope for France. When Greeks, Belgians, and the Brits riot, it’s because they want more handouts.

The French, by contrast, have taken to the streets to protest higher taxes. And they have plenty of reasons to be upset, as the Wall Street Journal reports.

France became the most heavily taxed of the world’s rich countries in 2017… The Organization for Economic Cooperation and Development’s annual review of taxes in its 36 members published on Wednesday showed the French government’s tax revenues were the equivalent of 46.2% of economic output, up from 45.5% in 2016 and 43.4% in 2000. The Danish government’s tax take, which was the highest among OECD members between 2002 and 2016, fell to 46% of gross domestic product from 46.2% in the previous year and 46.9% in 2000. …The rise in French tax revenues was in line with a longstanding trend… The average tax take across the organization’s members edged up to 34.2% of GDP in 2017 from 34% in 2016 and 33.8% in 2000.

I suppose we should applaud Denmark for no longer being at the top of this list.

The tax burden on Danes is still absurdly high, but at least there is a small bit of progress (presumably because of a modest amount of long-overdue spending restraint).

Shifting back to France, the WSJ story mentions that the French president had to retreat on his plan for higher fuel taxes.

President Emmanuel Macron backed off a fuel-tax increase that enraged much of the nation and sparked a grass-roots protest movement against his government. …Before Tuesday’s climb down, Mr. Macron’s government had planned to raise fuel taxes in an effort to cut automobile pollution. …But the planned move sparked the worst riots to hit Paris in decades on Saturday, leaving the city’s shopping and tourist center dotted with burning cars and damaged storefronts. Protesters vandalized the Arc de Triomphe, rattling Mr. Macron’s administration and the country.

For what it’s worth, I’m glad Macron backed down. He actually has some good proposals to liberalize the French economy. That’s where he should be focused, not on concocting new ways to fleece citizens.

To be sure, over-taxation is not limited to France. Here are the most heavily taxed nations according to the OECD report.

Income taxes and payroll taxes generate most of the revenue, as you can see. But keep in mind that all of these countries also have onerous (and ever-increasing) value-added taxes, as well as other levies.

If I was in France (or any of these nations), the first thing I would point out is that people are getting ripped off.

A huge chunk of their income is seized by tax collectors, yet they’re not getting better services in exchange.

Are schools, roads, and healthcare in France better than they are in Switzerland or New Zealand, where the burden of government is much lower?

Or are they better in France than they are in Hong Kong and Singapore, where the fiscal burden is much, much lower?

The European Central Bank confirms that the answer is no.

Here is the data on taxes and spending for OECD member nations. For some reason, not all countries in the OECD’s tax database are included in the OECD’s spending database. Regardless, the obvious takeaway is that big welfare states require confiscatory tax regimes (with the middle class getting pillaged).

A few closing observations on this data.

  • Governments also have non-tax revenues, so red ink is only a partial explanation for the gap between spending and taxes in various nations.
  • Because of somewhat distorted GDP data, the actual tax burden in Ireland and Luxembourg is worse than shown in these numbers.
  • From 1965-present, the tax burden has increased the most in Greece. Needless to say, that has not been a recipe for economic or fiscal success.
  • The U.S. has a modest fiscal burden compared to other industrialized nations, which helps to explain why living standards are higher in America.
  • Mexico is not a low-tax nation. Like many developing economies, its government is simply too incompetent and corrupt to enforce onerous tax laws.

Circling back to our main topic, I joked years ago that the French national sport is taxation. It’s so bad that thousand of taxpayers have faced effective tax rates of more than 100 percent. Indeed, taxes are so onerous that even EU bureaucrats have warned taxes are excessive.

P.S. I guess we shouldn’t be surprised that more than half the population would flee to America if they had the opportunity.

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Assuming elected officials care about the consequences of their actions, the obvious answer to a question isn’t always the right answer.

  • Q: Why should a (sensible) politician oppose the minimum wage, especially since some workers will get a pay hike?

A: Because the bottom rungs of the economic ladder will disappear and marginally skilled people will lose a chance to find employment and develop work skills.

  • Q: Why should a (sensible) politician oppose so-called employment-protection legislation, especially since some employees will be protected from dismissal?

A: Because employers will be less likely to hire workers if they don’t have the freedom to fire them if circumstances change.

  • Q: Why should a (sensible) politician oppose class-warfare taxation, especially since they could redistribute money to 90 percent of voters?

A: Because the short-run benefits of buying votes will be offset by long-run damage to investment, competitiveness, and job creation.

Many politicians are not sensible, of course, which is why bad policy is so common.

So it’s worth noting when someone actually makes the right decision, especially if they do it for the right reason.

With that in mind, President Emmanuel Macron deserves praise for gutting his country’s punitive “exit tax.” The U.K.-based Financial Times has the key details.

French president Emmanuel Macron said that he would remove the so-called exit tax as it was damaging for France’s image as a place to do business. The tax requires those entrepreneurs or investors who hold more than €800,000 in financial assets or at least 50 per cent of a company to pay capital gains up to 15 years after leaving France.  …A finance ministry spokesperson on Saturday confirmed “the removal of the exit tax as it existed.” …”The exit tax sends a negative message to entrepreneurs in France, more than to investors. Why? Because it means that beyond a certain threshold, you are penalised if you leave,” Mr Macron had said… “I don’t want any exit tax. It doesn’t make sense. People are free to invest where they want. I mean, if you are able to attract [investment], good for you, but if not, one should be free to divorce,” added the French president.

Kudos to Macron. He not only points out that such a tax discourages investment and entrepreneurship, but he also makes the moral argument that people should be free to leave a jurisdiction that mistreats them.

To be sure, the proposal isn’t perfect.

Mr Macron has now decided to introduce a new “anti-abuse” tax targeted at assets sold within two years of someone leaving the country. …“The new system will henceforth target divestments occurring shortly after leaving France — two years — to avoid letting people make short trips abroad in order to optimise tax efficiencies,” added the spokesperson.

This is why I gave the plan two-plus cheers instead of three cheers.  Though I understand the political calculation. It would create a lot of controversy if a rich person moved for one year to one of the several European nations that have no capital gains tax (Netherlands, Belgium, Switzerland, etc), sold their assets, and then immediately moved back to France the following year.

The right policy, needless to say, is for there to be no capital gains tax, period.

But let’s not get sidetracked. Here are a few additional details from Reuters.

France imposed the so-called “Exit Tax” in 2011 during the presidency of Nicolas Sarkozy. …Its aim was to stop individuals temporarily changing their tax domicile in order to skirt French taxes but pro-business President Emmanuel Macron says it damages France’s attractiveness as an investment destination.

Yes, you read correctly, the class-warfare policy wasn’t imposed by the hard-left Francois Hollande, but by the Nicolas Sarkozy, the supposed conservative but de-facto leftist who preceded him.

What’s particularly bizarre is that Macron was a senior official for Hollande, yet he is the pro-market reformer who is trying to save France.

P.S. I’m embarrassed to admit that the United States has a very punitive exit tax (which Hillary Clinton wanted to make even worse).

P.P.S. Since one of my three examples at the beginning of today’s column dealt with the perverse consequences of “employment-protection laws,” I suppose it’s worth noting that’s another area where Macron is trying to reduce government intervention.

P.P.P.S. While Macron is a pro-market reformer at the national level, he advocates very bad ideas for the European Union.

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In last year’s French presidential election between Emmanuel Macron and Marine Le Pen, I joked that voters should choose the socialist over the socialist, but made a serious point that Macron – despite having been part of Hollande’s disastrous government – was preferable since there was at least a hope of market-oriented reform.

…the chance of Macron being good are greater than zero. After all, it was the left-wing parties that started the process of pro-market reforms in Australia and New Zealand. And it was a Social Democrat government in Germany that enacted the labor-market reforms that have been so beneficial for that nation.

And after Macron won the election, I reviewed some of his initiatives to restrain government, including plans to reduce the burden of government spending, lower France’s corporate tax rate, and to shrink the size of the bureaucracy.

His ideas sounded so good that I wrote – only partly in jest – that “I wish the Republicans in Washington were as sensible as these French socialists.”

We’re not quite to the one-year anniversary of his election, but let’s take a look at Macron’s track record. And we’ll start with a very encouraging report from the New York Times.

…if France’s young president, Emmanuel Macron, has made one thing clear, it is that he is not afraid to shake up France and take on its venerable institutions. Now it is the turn of the heavily subsidized and deeply indebted French rail system. Mr. Macron says he wants to erase the railway workers’ special status, which gives them more generous benefits than almost any other workers, including a guarantee of early retirement. In doing so, he has set himself a new and formidable challenge in his expanding campaign to reshape France’s society and economy, which started last year with a law that made it easier for private companies to hire and fire workers, a near revolution for France.

Macron has a difficult task.

…the railway workers are a public-sector work force, one of the most powerful in the country, with a chokehold on as many as five million riders daily. When they go on strike, the whole country feels it. …rail unions have already pledged to join a strike by public-sector employees planned for Thursday… The rail workers then plan weeks of strikes starting in April that will be staged on a rolling basis.

Here’s some of what Macron wants to fix.

French rail workers’ current, ample benefits — including in some cases, the option of retiring at 52 — date to the first half of the 20th century, when many railway jobs involved hard, physical labor… Mr. Macron…to push for a broader overhaul that, for new hires, would end advantages like guaranteed jobs, automatic pay raises and generous social security benefits. …The French rail system is both heavily subsidized and deeply in debt, to the tune of 55 billion euros, or about $68 billion.

And if the French President succeeds, there are other reforms on the horizon.

Mr. Macron has pledged to follow the railway plan with an overhaul of the unemployment system later in the year. Next year he intends to take on the French pension system. …changing the employment terms for railway workers appears to be part of a larger crusade to push French workers into the 21st century.

Good. Similar reforms were very beneficial for German workers and the German economy, so I’m sure Macron’s proposals will produce good results in France.

Writing last October for CapX, Diego Zuluaga expressed optimism about Macron’s agenda.

…it is the French government that is tackling the big barriers to growth and dynamism that have stifled their economy since 1975. …Emmanuel Macron…has vowed to attack this status quo. He aims to deconstruct the onerous French labour market law, the infamous Code du travail. This is a 1,600-page, 10,000-article gargantuan piece of legislation which is blamed for clobbering employment in France over the past 25 years. …Macron may be able to deliver considerable reforms when it comes to the labour market. His cabinet intends to move a larger share of collective bargaining to the firm level, remove the requirement of union representation for small- and medium-sized businesses, limit severance pay – right now it averages €24,000 per dismissal – to give employers greater certainty about the costs of hiring… Spain reformed its dysfunctional hiring and firing regulations in 2012, and robust employment growth followed. Now, it is long-ossified France that is taking up the baton.

If you stopped reading at this point, you might conclude that Macron is a French version of Ronald Reagan or Margaret Thatcher.

But that would be a considerable exaggeration. The French President also is pushing some questionable policies, such as higher taxes on luxury goods. But, in Macron’s defense, those class-warfare taxes are an offset for the abolition of the wealth tax, which was a very good reform.

Emmanuel Macron’s administration will propose a tax on luxury yachts, supercars and precious metals in France’s 2018 budget. Lawmakers will propose amendments after critics attacked the President’s move to scrap the wealth tax in France. Mr Macron abolished the tax, which has been seen as a symbol of social justice for the left but blamed by others for driving thousands of millionaires abroad. …The wealth tax, introduced by the Socialists in the 1980s, was levied on individuals with assets above 1.3 million euros (£1.2 million).

Since I’m not familiar with the details (i.e., do these changes result in a revenue-neutral shift, a net tax cut, or a net tax increase?), there’s no way to determine if swapping the wealth tax for luxury taxes is a net positive or a negative. Though I assume the overall effect is positive because wealth taxes are a very bad idea and luxury taxes, while self-destructive, generally are futile.

But this doesn’t let Macron off the hook. Even if we decide that he’s a pro-market reformer inside his country, he has a very bad habit of promoting statism at the European level.

The Wall Street Journal opined unfavorably last year on his plan for greater centralization.

…the French President issued a call for more, more and more Europe. …His EU would be responsible for many of the functions traditionally performed by a nation-state, such as defense, taxation, migration control and economic regulation. …The problem is…Mr. Macron’s dreams of fiscal and economic union. He wants to create an EU finance ministry, funded by corporate and other taxes, that can spend money across the bloc with minimal interference from national capitals. Mr. Macron also wants to harmonize—eurospeak for raise—corporate taxes across the EU. He’d further establish Franco-German regulatory excess as the benchmark for the rest of the EU… This is a recipe for political failure because Europeans already know these policies are economic duds.

Writing for the New York Times, a German journalist poured cold water on Macron’s plan to give redistribution powers to the European Union.

It would be funny if it weren’t dangerous — the solution offered by the new, pro-Europe president, Emmanuel Macron, is to create a eurozone budget, with its own finance minister. …Mr. Macron’s proposal is a disaster in the making. It will only further alienate Europeans from one another and weaken the bloc economically. …Brussels’s money has often been Europe’s curse. The Greek government, for instance, knew it could take for granted the support of the other euro members for its unsustainable budget after Chancellor Angela Merkel of Germany recklessly declared, “If the euro fails, Europe fails.” Athens slowed down on reform, knowing Brussels would bail it out, and northern Europeans grew angry. In the worst case, Mr. Macron’s plan could turn this disincentive into a characteristic feature of the European Union. …Brussels would end up holding the purse but not the purse strings.

So what’s the story with Macron’s schizophrenic approach? Why is he a pro-market Dr. Jekyll for French policy but a statist Mr. Hyde for European policy?

I don’t have the answer, but Diego Zuluaga wrote about this dichotomy for CapX.

The puzzle of Macronism is that it tends to advocate dynamism at home, but stasis abroad. The French President, both during his tenure in Hollande’s cabinet and in his new office, has championed reform of the country’s bewilderingly byzantine employment code, which has promoted social exclusion and led to a high rate of structural unemployment. …But Macron’s liberalism seemingly stops at France’s borders. On the EU level, he has called for increased risk-sharing among euro member states, a eurozone budget and finance minister… Whatever one makes of his climate-change activism, it is nothing if not dirigiste in the extreme, wishing to curb carbon emissions through bureaucratic pacts on a global level. What we are left with is the pro-market equivalent of Stalin’s pre-WWII economic policy of  “socialism in one country”. Liberalism in one country acknowledges the need for economic flexibility and a greater reliance on market forces at home. It champions tax reform and deregulation of industry and hiring. But it shuns those principles on the international level.

By the way, Mr. Zuluaga is using “liberalism” in the classic sense, meaning pro-market policies.

Let’s close with a couple of items that show France still has a long way to go.

First, a leftist columnist wants us to believe that recent riots, caused by a sale on Nutella, are symbolic of a dystopian future.

You may have seen the videos: in French supermarkets Intermarché, customers are rushing towards shelves of Nutella jars. They’re running, shouting, fighting, rummaging to grab a jar of the chocolate flavoured paste… This mess happened simultaneously in various French supermarkets when grocery chain Intermarché advertised a massive sale on 1kg Nutella jars, priced at €1,41 instead of the usual €4,50. …I don’t find this news funny, not even remotely. …it is telling of a France that is more and more divided… The massive response to this sale shines light…on the precarious position in which many French workers, and shoppers, find themselves. …And it’s not going to get any better for them. Macron’s looming labour reform is already eroding French workers’ rights… Macron’s great vision for France increasingly looks like a country where only the rich and “successful” will be able to afford Nutella – and those who “are nothing” will be left to fight for sale prices.

This type of over-wrought analysis makes me want to cheer for Macron.

Why? Because I understand that the best hope for workers is faster growth, not “labor-protection policies” that actually undermine job creation and cause wages to stagnate.

Second, we have a story that highlights the impossible regulatory burden in France.

A French boulanger has been ordered to pay a €3,000 fine for working too hard after he failed to close his shop for one day a week last summer. …Under local employment law, two separate regulations from 1994 and 2000 require bakers’ shops to close once a week… He has been advised the only way to get around the regulations would be to open a second boulangerie with different opening hours. …The federation of Aube boulangeries and patisseries questioned 126 members at the end of last year: the majority were in favour of maintaining the obligatory one-day closure. Eric Scherrer of the retail union CLIC-P, said French employment laws were there to protect workers and employers and had to be respected. …“These people need to have a rest day each week. We can’t just allow them to work non-stop. It’s absolutely necessary that both bosses and employees have a day of rest.”

The bottom line is that Macron should drop his statist European-wide proposals and put all of his focus on fixing France.

If you look at his country’s scores from Economic Freedom of the World, he should be working day and night to reduce the fiscal burden of government.

And lowering the regulatory burden should be the second-most important priority.

P.S. If the numbers in this poll are still accurate, Macron better fix his nation’s bad policies or his productive citizens will escape to America. After all, France is a great place to live if you’re already rich, but not so good if you aspire to become rich.

P.P.S. Here’s a story highlighting the lavish government-financed benefits for the privileged class in France.

P.P.P.S. My favorite French-themed cartoon features Obama and Hollande.

P.P.P.P.S. And let’s not forget Paul Krugman’s conspiracy theory about a “plot against France.”

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Since it’s the last day of the year, let’s look back on 2017 and highlight the biggest victories and losses for liberty.

For last year’s column, we had an impressive list of overseas victories in 2016, including the United Kingdom’s Brexit from the European Union, the vote against basic income in Switzerland, the adoption of constitutional spending caps in Brazil, and even the abolition of the income tax in Antigua and Barbuda.

The only good policies I could find in the United States, by contrast, were food stamp reforms in Maine, Wisconsin, and Kansas.

This year has a depressingly small list of victories. Indeed, the only good thing I had on my initial list was the tax bill. So to make 2017 appear better, I’m turning that victory into three victories.

  • A lower corporate tax rate – Dropping the federal corporate tax rate from 35 percent to 21 percent will boost investment, wages, and competitiveness, while also pressuring other nations to drop their corporate rates in a virtuous cycle of tax competition. An unambiguous victory.
  • Limits on the deductibility of state and local taxes – It would have been preferable to totally abolish the deduction for state and local taxes, but a $10,000 cap will substantially curtail the federal tax subsidy for higher taxes by state and local government. The provision is only temporary, so it’s not an unambiguous win, but the whining and complaining from class-warfare politicians in New York and California is music to my ears.
  • No border-adjustment tax – Early in 2017, I was worried that tax reform was going to be tax deform. House Republicans may have had good intentions, but their proposed border-adjustment tax would have set the stage for a value-added tax. I like to think I played at least a small role in killing this bad idea.
  • Regulatory Rollback – The other bit of (modest) good news is that the Trump Administration has taken some steps to curtail and limit red tape. A journey of a thousand miles begins with a first step.

Now let’s look elsewhere in the world for a victory. Once again, there’s not much.

  • Macron’s election in France – As I scoured my archives for some good foreign news, the only thing I could find was that a socialist beat a socialist in the French presidential election. But since I have some vague hope that Emanuel Macron will cut red tape and reduce the fiscal burden in France, I’m going to list this as good news. Yes, I’m grading on a curve.

Now let’s look at the bad news.

Last year, my list included growing GOP support for a VAT, eroding support for open trade, and the leftward shift of the Democratic Party.

Here are five examples of policy defeats in 2017.

  • Illinois tax increase – If there was a contest for bad state fiscal policy, Illinois would be a strong contender. That was true even before 2017. And now that the state legislature rammed through a big tax increase, Illinois is trying even harder to be the nation’s most uncompetitive state.
  • Kansas tax clawback – The big-government wing of the Kansas Republican Party joined forces with Democrats to undo a significant portion of the Brownback tax cuts. Since this was really a fight over whether there would be spending restraint or business-as-usual in Kansas, this was a double defeat.
  • Botched Obamacare repeal – After winning numerous elections by promising to repeal Obamacare, Republicans finally got total control of Washington and then proceeded to produce a bill that repealed only portions. And even that effort flopped. This was a very sad confirmation of my Second Theorem of Government.
  • Failure to control spending – I pointed out early in the year that it would be easy to cut taxes, control spending, and balance the budget. And I did the same thing late in the year. Unfortunately, there is no desire in Washington to restrain the growth of Leviathan. Sooner or later, this is going to generate very bad economic and political developments.
  • Venezuela’s tyrannical regime is still standing – Since I had hoped the awful socialist government would collapse, the fact that nothing has changed in Venezuela counts as bad news. Actually, some things have changed. The economy is getting worse and worse.
  • The Export-Import Bank is still alive – With total GOP control of Washington, one would hope this egregious dispenser of corporate welfare would be gone. Sadly, the swamp is winning this battle.

Tomorrow, I’ll do a new version of my annual hopes-and-fears column.

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I like France, in part because it’s a nice place to visit, but also because I’ve been able to use the country as an example of bad public policy.

It’s hard to pick which policy does the most damage. As a fiscal policy wonk, I’m tempted to blame France’s woes on high taxes and wasteful spending.

However, there’s a strong case that labor law is the worst feature of economic policy. France has all sorts of rules that “protect” employees, but the net effect is that workers suffer because these laws discourage entrepreneurs from creating jobs.

And even though I get a lot of mileage out of making France a bad example, I actually hope that the nation’s new government will move policy in the right direction. Indeed, this is why I wanted France’s current President, Emmanuel Macron, to get elected.

Yes, he used to be part of the previous socialist government that sought to make things worse rather than better. But I figured he was most likely to enact some pro-market reforms. And it appears my hopes may be realized, at least with regard to labor policy.

The BBC reports on why Macron wants reform, what he wants to do, and what likely will happen.

President Emmanuel Macron’s government has begun its drive to overhaul France’s rigid labour laws, vowing to “free up the energy of the workforce”. …France has an unemployment rate of 9.5%, double that of the other big European economies and Mr Macron has vowed to cut it to 7% by 2022.

Here’s what he is proposing.

The reforms aim to make it easier for bosses to hire and fire. …France’s labour code is some 3,000 pages long and is seen by many as a straitjacket for business. Among the biggest reforms, individual firms are to be offered more flexibility in negotiating wages and conditions. …If a business reached a deal with the majority of its workforce on working hours and pay that agreement would trump any agreement in the wider industry. …The government wants to facilitate deals at local level by encouraging companies with fewer than 50 employees to set up workers’ committees that can bypass unions. One of the thorniest problems for the government is how to make it easier for companies to dismiss staff. There is to be a cap on damages that can be awarded to workers for unfair dismissal. However, after months of consultations, ministers have agreed to increase the cap from their original proposal. The cap would be limited to three months’ pay for two years of work and 20 months’ pay for 30 years. Until now the minimum pay-out for two years’ employment was six months of salary.

And he’ll probably get what he wants, both because some of the bigger unions have decided to play ball and also because he’s been granted authority to unilaterally make changes.

Protests against the plan are expected next month, but two of the biggest unions say they will not take part. Jean-Claude Mailly, the leader of Force Ouvrière (FO), said that while the reforms were far from perfect, the government had carried out “real consultation” and FO would play no role in demonstrations on 12 September. The union with the biggest presence in the private sector, CFDT, said its members would not take to the streets either, although it was ultimately disappointed that its position was not reflected in the final text. …Mr Macron has already won parliamentary backing to push these reforms through by decree. An opinion poll on Wednesday showed that nine out of 10 French people agreed that their country’s labour code had to be reformed.

Dalibor Rohac of the American Enterprise Institute has some analysis of what’s been proposed.

…the National Assembly and Senate…authorized France’s government to amend the country’s byzantine labor code by executive orders… Prime Minister Édouard Philippe unveiled the details of the reform, divided into five decrees, on Thursday. So what exactly are they seeking to achieve? Perhaps most important is the introduction of caps on redundancy pay to those whose employment has been terminated without a just cause…stricter caps are introduced for small companies, for which large redundancy payments can be ruinous. It will also become easier for multinational companies to justify termination of employment on economic grounds. …it will be possible to downsize or close down French operations without having to subsidize them first from profits made overseas. …Companies with fewer than 20 employees will not have to rely on labor union representatives for their collective contracts. Subsidiaries of companies will have more freedom to offer temporary work contracts.

Dalibor is not overly impressed by this collection of changes.

…measured by the standards of what France needs, it is not much… The extent to which the reform elicits a strong reaction reflects purely the overregulated status quo, rather than the revolutionary nature of the proposed measures. …the government is doing something right, however timid.

The Wall Street Journal‘s editorial is a bit more optimistic.

French voters this spring gave themselves their best shot in a generation at reviving their moribund economy, and President Emmanuel Macron is now taking advantage of the opportunity. …the labor-market reforms he unveiled Thursday could remake the eurozone’s second-largest economy. …Mr. Macron will limit the severance payouts courts can mandate for fired workers. He will free small companies with nonunion workers from the straitjacket of national collective-bargaining agreements covering working hours, overtime pay, vacation benefits and the like. Companies will have more scope to negotiate labor deals at the firm level rather than being forced to abide by national agreements.

By reducing the potential cost of employing workers, the reforms will lead to more employment.

The severance overhaul will go a long way toward inducing businesses to hire more workers. Small- and medium-size French companies report pervasive fear of expanding their workforce lest they be stuck with problem employees or face ruinous expenses to lay off workers if economic conditions change.

And France desperately needs reform.

French unemployment is still 9.5% even at its five-year low. That’s double the rate in Germany, and French unemployment has become a social crisis, especially for young people frozen out of the job market. The jobless rate for French between age 15 and 24 is 25%—for those who haven’t moved to London or the U.S.

Though the WSJ does recognize that the reforms are merely a modest step in the right direction.

France isn’t becoming a laissez-faire paradise. Even if Mr. Macron’s labor overhaul takes effect, the French workplace will still be considerably more regulated than America’s.

Let’s close with some excerpts from a story in the New York Times.

…the government announced sweeping changes on Thursday with the potential to radically shift the balance of power from workers to employers. …an invigorated France is considered critical to the survival of a European Union that is finally showing signs of revival after a lost decade. …Economists in France and across Europe expressed optimism about the new law… France has stagnated for years under chronically elevated unemployment and slow growth. The country’s strong worker protections and expensive benefits have been blamed by some for being at least partly at the root of the problem.

Wow, it must be bad if even the NYT is acknowledging that government is causing the economy to stutter.

Amazingly, the story even admits that economic liberalization is the right way to get more job creation.

Germany crossed that Rubicon in the 1990s under Chancellor Gerhard Schröder. …Roughly 15 years ago, “France and Germany had economies that were more or less comparable, and that ceased to be the case because the Germans wisely did micro-reforms and the French did not,” said Sebastian Mallaby, senior fellow for international economics at the Council on Foreign Relations. So the French ended up with “high unemployment, which fed populism, and getting out of that trap is vital

For what it’s worth, I think the reference to German reforms is key.

Under a left-leaning government, Germany liberalized labor markets. The so-called Hartz reforms were a huge success, slashing the jobless rate by more than 50 percent.

I don’t know whether Macron’s reforms are as bold as what happened in Germany, but any movement in the right direction will create more employment.

P.S. If Macron wants to save France, he better deal with the tax system as well. The problems are nicely captured by two videos, one about how young people are fleeing the nation and another showing a Hollywood celebrity reacting when told about the tax burden.

P.P.S. Whenever I give a speech in France, I ask the audience whether their government (which consumes for the half of economic output) gives them more and better services than the Swiss government (which consumes about one-third of economic output). The answer is always an overwhelmingly no.

P.P.P.S. I (sort of) agreed with Paul Krugman in 2013 that there is a plot against France.

P.P.P.P.S. Last but not least, the French people occasionally do support good policy (and they’re willing to escape to America if things don’t get better).

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Back in April, I looked at the candidates running for the French presidency and half-jokingly wondered which one would win the right to preside over the country’s decline.

But once the field was winnowed to two candidates, Emmanuel Macron and Marine Le Pen, I wrote that voters should pick the socialist over the socialist. My title was sarcastic, but I was making a serious point that Marine Le Pen had a very statist platform, whereas I cited evidence that Macron had some sensible proposals.

Mr. Macron aims to rebalance the economy by cutting 120,000 public sector jobs, streamlining the pension system and dropping state spending back to 52 percent of G.D.P. Mr. Macron leads an emerging centrist consensus that recognizes that…the main obstacle retarding France’s economy is its attachment to a welfare state culture of…generous benefits. …Mr. Macron…once said that stifling taxes threaten to turn France into “Cuba without the sun”.

Indeed, in addition to the reforms listed in the Macron has proposed to lower France’s corporate tax rate to 25 percent, and he also want to liberalize labor markets.

All of which seems rather surreal. After all, Macron was a minister in the failed socialist government of Francois Hollande, so who would have thought that we would be the one to lead an effort to shrink the burden of government?

Yet consider the fiscal agenda President Macron is pushing.

France’s 2018 budget will focus on cutting taxes to boost economic activity as the government seeks to cement its support among the business community, Prime Minister Edouard Philippe said. …Philippe told RTL Radio on Wednesday he wants to lower levies that “hurt the competitiveness of our country.” Government ministries this week received letters setting out their spending limits for 2018. President Emmanuel Macron is seeking cuts of 20 billion euros ($23 billion) and tax reductions of 11 billion euros next year… “We have to get out of the spiral of public spending,” government spokesman Christophe Castaner said in a separate interview on France Inter. “France has been addicted to ever increasing spending, paid for by taxes.”

Wow. I wish the Republicans in Washington were as sensible as these French socialists (actually, since they created a new party, it would be more accurate to say they are former socialists).

But there is precedent for this kind of surprise. It was the left-wing parties that started the process of pro-market reforms in Australia and New Zealand. And it was a Social Democrat government in Germany that enacted the labor-market reforms that have been so beneficial for that nation.

That’s the good news.

The bad news is that French voters may have buyer’s regret.

The Wall Street Journal recently opined on this topic.

…the question isn’t whether Emmanuel Macron can save France. The question is whether France can save itself. Voters have the best chance in a generation to revive an economy in decline, yet they seem to quail at the critical moment. …voters are having second thoughts about economic reform. Mr. Macron’s approval started falling in July after he announced plans to cut housing benefits—by €5 a month for each recipient. Feminists are in arms over his plan to reduce the government’s women’s-rights budget to €20 million ($23.6 million) from €30 million. That’s before he gets to the labor reforms that will dominate the autumn.

Shifting from the editorial page, the WSJ has a report on the growing opposition to reform.

As Emmanuel Macron sets out to shake up France’s rigid labor market, the young president is losing the public support he may need to weather protests by the country’s powerful unions. …Mr. Macron will have to tread carefully in rolling out his labor reforms in September. For months, the 39-year-old president has been in talks with powerful labor unions in a bid to contain planned street protests. Now the prospect is growing that the ranks of those demonstrations could swell with students, retirees and other segments of French society… Mr. Macron’s government wants to make it easier for French firms to hire and fire workers. …The hard-left General Confederation of Labor, France’s most militant union, is already calling for strikes and demonstrations.

It’s not surprising, of course, to see opposition from those seeking to protect their privileges.

Though it theoretically shouldn’t matter since Macron’s party has a huge majority in the French Assembly.

That being said, politicians do have a habit of buckling when faced with voter unrest.

And Macron is committing some unforced errors, as reported by the U.K.-based Telegraph.

Emmanuel Macron spent €26,000 (£24,000) on makeup during his first three months as president of France, it has emerged. …Le Point reported that his personal makeup artist – referred to only as Natacha M – put in two bills, one for €10,000 and another for €16,000.The Elysee Palace defended the high fee saying: “We called in a contracter as a matter of urgency”. The same makeup artist also applied foundation to Mr Macron during his presidential campaign. Aides said that spending on makeup would be “significantly reduced”. …Le Point put the overall figure for Mr Hollande’s makeup at €30,000 per quarter. Nicolas Sarkozy, meanwhile, paid a whopping €8,000 per month for his, according to Vanity Fair.

Since it appears that these costs are borne by taxpayers, this is all rather depressing.

Macron, however, at least can claim that he’s not the most frivolous with other people’s money. Monsieur Hollande won the prize for waste when you add his hairdresser to the equation.

…all these sums pale into comparison with the £99,000 Mr Hollande paid his personal barber. The huge amount sparked accusations of “shampoo Socialism”. …The hairdresser, Olivier Benhamou, was hired to work at the Elysée Palace in 2012 for the duration of Mr Hollande’s five-year term.  Mr Benhamou also reportedly enjoyed a housing allowance and family benefits.

As I wrote about this last year and suggested that this narcissistic waste made Hollande eligible to win the “Politician of the Year” contest.

But let’s shift back to the serious issue of economic liberalization.

To be blunt, France’s economy is suffocating from statism. I’m not even sure what’s the biggest problem.

The answer is “all of the above,” with is why France desperately needs pro-market reform.

We’ll learn later this year whether Macron can save his country.

P.S. The story that tells you everything you need to know about France was the poll last decade revealing that more than half the population would flee to America if they had the opportunity.

P.P.S. If it wasn’t for France, we never would have had the opportunity to enjoy this very clever and amusing Scott Stantis cartoon.

P.P.P.S. Or watch this rather revealing Will Smith interview about French taxation.

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Remember John Kerry, the former Secretary of State and Massachusetts Senator, the guy who routinely advocated higher taxes but then made sure to protect his own wealth? Not only did he protect much of his fortune in so-called tax havens, he even went through the trouble of domiciling his yacht outside of his home state to minimize his tax burden.

I didn’t object to Kerry’s tax avoidance, but I was irked by his hypocrisy. If taxes are supposed to be so wonderful, shouldn’t he have led by example?

At the risk of understatement, folks on the left are not very good about practicing what they preach.

But let’s not dwell on John Kerry. Instead, let’s focus on other yacht owners so we can learn an important lesson about tax policy.

And, as is so often the case, France is an example of the policies to avoid.

Where have all the superyachts gone? That is the question that locals and business owners in the south of France are asking this summer. And the answer appears to be: Italy, Greece, Turkey, and Spain. …While the ongoing presence of €10 cups of coffee and €1000 bottles of Champagne might serve to reassure the casual observer that the region is still as attractive to the sun-loving super-rich as it ever was, appearances can be deceptive. Talk to locals involved in the multibillion-euro yachting sector—and in the south of France that’s nearly everyone, in some trickle-down shape or form, as yachting is by some measures the biggest earner in the region after hotels and wine—and you detect a sinking feeling. …More and more yachting money is draining away…washing up in other European countries such as Spain, Italy, Greece, and Turkey.

Having once paid the equivalent of $11 for a diet coke in Monaco, I can confirm that it is a painfully expensive region.

But let’s focus on the more important issue: Why are the big yachts staying away from the French Riviera?

Apparently they’re avoiding France for the same reason that entrepreneurs are avoiding France. The tax burden is excessive.

The core reason for the superyacht exodus is financial; France has tightened…tax regulations for the captains and crew members of yachts who officially reside in France, and often have families on the mainland, but traditionally have evaded all tax by claiming they were earning their salary offshore. The country has also taken a hard line on imposing 20 percent VAT on yacht fuel sales, which often used to be dodged. Given that a typical fill can be around €100,000, it is understandable that many captains are simply sailing around the corner.

I don’t share this story because I feel sorry for wealthy people.

Instead, the real lesson to be learned is that when politicians aim at the rich, it’s the rest of us that get victimized.

Ordinary workers, whether at marinas or on board the yachts, are the ones who are losing out.

Revenue at the iconic marina in Saint-Tropez has…fallen by 30 percent since the beginning of the year, while Toulon, a less glamorous destination, has suffered a 40 percent decline. …They stated that refueling a 42-meter yacht in Italy (instead of France) “gives a saving of nearly €21,000 a week because of the difference in tax.” Sales by the four largest marine fuel vendors has fallen by 50 percent this summer, the letter said, adding that French “yachties”—an inexperienced 19-year-old deckhand makes around €2,000 per month and a good Captain can command €300,000—were being laid off in droves, as, due to the new tax rules, national insurance, health and other compulsory contributions which boat owners pay for crew members have increased from 15 to 55 percent of their wages. The letter stated that “the additional cost of maintaining a seven-person crew in France is €300,000 (£268,000) a year.”

All of this is – or should have been – totally predictable.

French tax authorities should have learned from what happened a few years ago in Italy.

Or from what happened in France a few decades ago.

…the French have been down this avenue before. “It happened in France about 30 years ago, so people moved their boats to Italy… Yachting is huge revenue earner for the region. …we contribute huge sums in social security alone. “But the bigger issue is that people holidaying on yachts here go ashore and spend money—and a lot of it.” Says Heslin: “The possibility of this happening if taxes and fees were increased has actually been talked about for the last two years, and everyone warned what would happen. “But this where the French government so often goes wrong, this attitude of, ‘Well, we are France, people will always come here.’” This time, it appears, they have called it wrong. Edmiston says, “Yachting is very important to local economy, but if people are not made to feel welcome here, there are plenty of other places where they will be.”

Incidentally, we have similar examples of counterproductive class warfare in the United States. Florida politicians shot themselves in the foot a number of years ago with high taxes on yachts.

And the luxury tax on yachts, which was part of President George H.W. Bush’s disastrous tax-hike deal in 1990, hurt middle-class boat builders much more than upper-income boat buyers.

But let’s zoom out and make a broader point about public finance and tax policy.

Harsh taxes on yachts backfire because the people being targeted have considerable ability to escape the tax by simply choosing to buy yachts, staff yachts, and sail yachts where taxes aren’t so onerous.

Let’s now apply this insight to something far more important than yachts.

Investment is a key for long-run growth and higher living standards. All economic theories – even Marxism ans socialism – agree that capital formation is necessary to increase productivity and thus boost wages.

Yet people don’t have to save and invest. They can choose to immediately enjoy their earnings, especially if there are harsh taxes on income that is saved and invested.

Or they can choose to (mis)allocate capital in ways that make sense from a tax perspective, but might not be very beneficial for the economy.

And upper-income taxpayers have a lot of latitude over how much of their money is saved and invested, as well as how it is saved and invested.

So when politicians impose high taxes on income that is saved and invested, they can expect big supply-side responses, just as there are big responses when they impose punitive taxes on yachts.

But here’s the bottom line. When they over-tax yachts, the damage isn’t that great. Yes, some local workers are out of jobs, but that tends to be offset by more job creation in other jurisdictions that now have more business from big boats.

Over-taxing saving and investment, by contrast, can permanently lower a nation’s prosperity by reducing capital formation. And to the extent that this policy is imposed on the entire world (which is basically what the OECD is seeking), then there’s no additional growth in other jurisdictions to offset the suffering caused by bad tax policy in one jurisdiction.

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A couple of weeks ago, I reviewed the four major candidates running in the French presidential election and expressed general pessimism.

This Sunday, Emmanuel Macron and Marine Le Pen will face each other in the runoff election.

That’s a rather depressing choice. Macron is a former official in the disastrous big-government Hollande Administration and Le Pen is a big-government nativist who wants to preserve the welfare state (though not for immigrants).

Like choosing between Tweedledee and Tweedledum.

Not encouraging since the country needs a Ronald Reagan or Margaret Thatcher.

A column in the Wall Street Journal explains France’s untenable position.

The deeper question is whether French voters accommodate themselves to reality or cling tighter to their economic illusions. …“The French try to erase historical experience,” Pascal Bruckner tells me. The literary journalist is one of a very few classical liberals among French public intellectuals. He says his compatriots “have forgotten the experience of 1989 and only see the bad aspects of capitalism and liberal democracy.” The tragedy of France, Mr. Bruckner says, is that the country never had a Margaret Thatcher or Gerhard Schröder to implement a dramatic pro-growth program. …it wasn’t shadowy globalists who in 1999 imposed a 35-hour workweek to make overtime labor prohibitively expensive. The law was meant to encourage firms to hire more workers, but like most efforts to subjugate markets to politics, it ended up doing more harm than good. Now it’s the main barrier to hiring in a country where the unemployment rate is stuck north of 10%. Nor was it global markets that levied a corporate tax rate of 33% (plus surcharges for larger firms), a top personal rate of 45%, and a wealth tax and other “social fees” that repelled investors and forced the country’s best and brightest to seek refuge in places like London, New York and Silicon Valley. Nor did globalization build a behemoth French bureaucracy that crowds out the private economy.

Yes, France is in a mess because of statism. Hard to argue with that.

The question is whether Macron or Le Pen will make things better or worse.

With pervasive lack of enthusiasm, I suppose Macron is the preferable choice. There’s at least a chance he’ll be a reformer. Let’s look at how some observers view him.

We’ll start with George Will, who is not overly impressed by Macron.

The French…might confer their presidency on a Gallic Barack Obama. …Emmanuel Macron, 39, is a former Paris investment banker, untainted by electoral experience, and a virtuoso of vagueness. …This self-styled centrist is a former minister for the incumbent president, Socialist François Hollande, who in a recent poll enjoyed 4 percent approval. …In 1977, France’s gross domestic product was about 60 percent larger than Britain’s; today it is smaller than Britain’s. In the interval, Britain had Margaret Thatcher, and France resisted (see above: keeping foreigners’ ideas at bay) “neoliberalism.” It would mean dismantling the heavy-handed state direction of the economy known as “dirigisme,” which is French for sclerosis. France’s unemployment rate is 10 percent, and more than twice that for the young. Public-sector spending is more than 56 percent of France’s GDP, higher than any other European nation’s. Macron promises only to nibble at statism’s ragged edges. He will not receive what he is not seeking — a specific mandate to challenge retirement at age 62 or the 35-hour workweek and the rest of France’s 3,500 pages of labor regulations that make it an ordeal to fire a worker and thus make businesses wary about hiring. Instead, he wants a more muscular European Union , which, with its democracy deficit, embodies regulatory arrogance.

Joseph Sternberg of the Wall Street Journal is a bit more optimistic.

Optimistic pundits hope the impending victory of a fresh-faced reformer signals that France’s economy at last can be fixed. But for at least the past decade, France’s problem hasn’t been a lack of understanding in the political class of what the French economy needs. Mr. Macron is not so much a radical change-agent as a photogenic tribune for a political class that is increasingly, albeit belatedly, uniting behind the need for economic overhauls. Formerly of the center left, he won Sunday’s first round on a revitalization platform different more in degree than in kind from that of the main center-right candidate, François Fillon, on matters such as government spending cuts and labor-law reform. The global case of the vapors over Ms. Le Pen obscures how remarkable this pro-reform convergence is. …Margaret Thatcher and Ronald Reagan…remade British and American politics for a generation not through the workings of their legislative programs but through their capacity to shape public opinion. They created a coalition of the optimistic…. If the Macron program is to stick, he’ll have to do the same. He isn’t off to an auspicious start. …His message to those workers—“Take the hit for the good of the country”—lacks a certain Reaganesque resonance.

A columnist for the New York Times offers the most positive spin, portraying Macron as a Reaganite reformer.

Emmanuel Macron…attributes the nation’s woes not to outsiders — European officials and immigrants — but on France’s own “sclerotic” and unsustainable welfare state. …Mr. Macron would work to slim down one of the world’s fattest welfare states, rather than build it up as Ms. Le Pen would do. Of course France has attempted welfare state reform before, without success. The latest effort came last year, when Mr. Macron was a minister in the Socialist government, and wrote the Macron laws, opening regulated industries to competition. Those plans set off mass protests, and were watered down, but Mr. Macron says there is a big difference now: Earlier governments were not elected with a mandate to downsize the welfare state, while his could be. …the case for change has grown more urgent. …Georges Clemenceau, who served twice as prime minister between 1906 and 1920, cracked that his country was very fertile: “You plant bureaucrats and taxes grow.” Over the last decade state spending has grown even more… It’s tough to say how much state spending is too much, but France has clearly fallen out of balance, and Mr. Macron is right that the trend is “no longer sustainable.” The public payroll is similarly bloated, and Mr. Macron aims to rebalance the economy by cutting 120,000 public sector jobs, streamlining the pension system and dropping state spending back to 52 percent of G.D.P. Mr. Macron leads an emerging centrist consensus that recognizes that — more than immigrants or the euro — the main obstacle retarding France’s economy is its attachment to a welfare state culture of short workweeks and generous benefits. …In recent years France’s high income taxes have been chasing artists, executives and entrepreneurs out of the country. Last year, 12,000 millionaires emigrated — the largest millionaire exodus from any country by far. Mr. Macron — who once said that stifling taxes threaten to turn France into “Cuba without the sun” — has strong support among young, professional urban voters who would prefer opportunity at home to an expat life in London.

I hope this last column is accurate.

And the chance of Macron being good are greater than zero.

After all, it was the left-wing parties that started the process of pro-market reforms in Australia and New Zealand.

And it was a Social Democrat government in Germany that enacted the labor-market reforms that have been so beneficial for that nation.

Heck, policy even moved in the right direction when Bill Clinton was in the White House in the 1990s.

So I guess we can keep our fingers cross that Macron plays a similar role in France.

By the way, I can’t resist citing Paul Krugman’s assessment. He actually thinks France is in fairly good shape.

…what’s going on. …how did things get to this point? …France gets an amazing amount of bad press — much of it coming from ideologues who insist that generous welfare states must have disastrous effects — it’s actually a fairly successful economy. …It’s true that the French over all produce about a quarter less per person then we do — but that’s mainly because they take more vacations and retire younger… France offers a social safety net beyond the wildest dreams of U.S. progressives: guaranteed high-quality health care for all, generous paid leave for new parents, universal pre-K, and much more.

That’s an interesting spin, but maybe French people would like to earn more, but don’t have the opportunity because of bad policy?

And if things are so good in France, why are so many French people escaping to other nations?

Moreover, to the extent there are problems, Krugman says the blame belongs to the supposed pro-austerity crowd in Brussels and Berlin.

Even though Brussels and Berlin were wrong again and again about the economics — even though the austerity they imposed was every bit as economically disastrous as critics warned — they continued to act as if they knew all the answers

Yet the nations that actually cut spending – such as the Baltics – have recovered strongly. It’s the big spenders in Europe who are dragging down the continent.

And since Macron’s supposed reform agenda would only reduce the burden of government spending to 52 percent of economic output (from about 57 percent today), that’s not exactly an example of vigorous budget cutting anyway.

But it would be nice to add France to my list of nations that have – for a last a couple of years – restrained the growth of the public sector.

P.S. I have a good track record in France. The candidate I “endorsed” in 2012 won the race.

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The last time there was a presidential election in France, I like to think my endorsement made a difference in the outcome.

Now that another election is about to take place, with a first round this Sunday and a runoff election between the top-2 candidates two week later, it’s time to once again pontificate about the political situation in France. But before looking at the major candidates, let’s consider a couple of pieces of economic data to get a sense of the enormous challenges that will have to be overcome to boost France’s anemic economy.

We’ll start with this measure of implicit pension debt (IPD) in various European nations. France, not surprisingly, has made commitments to spend money that greatly exceed the private sector’s capacity to generate tax revenue.

By the way, the accompany article notes that the numbers for France are even worse than suggested by the chart.

Most tax and accounting codes require companies to report such implicit debts on the liability side of the ledger as obligations. Not so with governments, whose accounting practices would under normal circumstances be considered as falsifying public accounts. …According to a recent study, six European countries – Austria, Finland, France, Germany, Italy and Poland – have an IPD exceeding 300 percent of gross domestic product. …And the kicker? The data cited above are based on the present value of future pensions as of 2006. More up-to-date figures probably won’t be available until the end of 2017. …The issue is no longer when France goes bankrupt, but when Europe does. The level of debt declared in the national accounts is already worrying. With implicit pension liabilities a multiple of that, it appears that a systemic implosion is unavoidable.

Here’s another sobering visual. France is doing a very good job of scaring off the geese that lay the golden eggs. It is losing more millionaires than any other country.

The combined message of these two visuals is that the already-enormous burden of spending in France will get worse, yet the country is chasing away the people who finance the lion’s share of the government’s budget.

And lots of young entrepreneurs also are escaping, which further exacerbates the nation’s long-run troubles.

Now that we’ve looked at where France is heading, let’s contemplate whether the politicians running for President will make the situation better or worse.

We’ll start with this helpful table summarizing the views of the major candidates (though the hard-left vote apparently has consolidated behind Mélenchon, so Hamon can be ignored).

What’s not captured in this table, however, is that the presidential race pits two outsiders (Mélenchon and Le Pen) against two establishment candidates (Macron and Fillon).

And this is leading to some interesting analysis. The establishment point of view is captured by Sebastian Mallaby’s column in the Washington Post. He is very opposed to Fillon, Le Pen, and Mélenchon, and also rather concerned that his preferred candidate – Emmanuel Macron – won’t make it to the runoff.

In the first round of its presidential election, to be held on Sunday, some three-quarters of the French electorate are expected to back candidates who stand variously for corruption, a 100 percent top tax rate, Islamophobia, Russophilia, Holocaust denial, the undermining of NATO and the traumatic breakup of Europe’s political and monetary union. France was once the cradle of the Western Enlightenment. Now it threatens to become a spectacle of decadent collapse.

I disagree with some of Mallaby’s analysis, but enjoyed his depiction of Mélenchon, who bizarrely thinks Venezuela is a role model.

Jean-Luc Mélenchon, the Communist-allied candidate who styles himself after Venezuela’s Hugo Chávez and promises a “citizens’ revolution.” No prizes for guessing that he’s the one who proposes a 100 percent top tax rate… Oblivious to the fact that France has taxed and regulated its way to a 25 percent youth unemployment rate and a government-debt trajectory that threatens Armageddon, he wants further cuts to the French workweek, an additional 10,000 civil servants and a shift in the retirement age from 62 to 60.

To put it in simple terms, Mélenchon is appealing to voters who think Hollande didn’t go far enough.

CNN reports that Mélenchon is even more fixated on class warfare than Bernie Sanders.

Instead of a 90 percent top tax rate, he wants to steal every penny from the supposedly evil rich.

Jean-Luc Mélenchon, who has been endorsed by the French Communist Party, says he would introduce a 100% tax on income above €400,000 ($425,000). …France already has some of the world’s highest rates of income tax, and previous attempts to push them even higher have failed. …Around 10,000 millionaires left the country in 2015, followed by 12,000 last year, according to New World Wealth.

Though maybe he’s the French version of Obama, who also got support from communists.

And, like Obama, he thinks he should get to decide when someone has earned enough money.

“I believe that there is a limit to the accumulation [of wealth],” Mélenchon said in March. “If there are any who want to go abroad, well, goodbye!”

Though at least he has the courage of his convictions. He doesn’t mind if upper-income taxpayers leave. Though I wonder if he’s given any thought to who will then pay the bills?

Anyhow, the 100 percent tax is just one of many crazy ideas.

He also wants to limit pay for CEOs to 20 times the salary of their worst-paid employee. …Here’s a quick look at Mélenchon’s other economic policy proposals: Cut France’s working week to four days…More vacation days for workers…Raise minimum wage by 16%…Increase the tax on inherited wealth…100% renewable energy by 2050…No new free trade agreements…Nationalize French energy company EDF and gas provider Engie.

Now let’s shift to other candidates. I’m irked that Macron generally is portrayed as a centrist and even more irked that Le Pen is portrayed as being on the right.

Prince Michael of Liechtenstein is a very astute observer of European political and economic affairs and his analysis is more accurate. We’ll start with what he wrote about Le Pen’s support for statism.

Ms. Le Pen’s…socialist economic program will continue the ongoing destruction of the French economy, its competitiveness and public finances. …Such a scenario would, however, only accelerate a disaster that was already looming. The present government’s socialist policies, which have shied away from reform and preserved France’s oversized public sector, will eventually bear the same results.

To augment that analysis, Le Pen is considered on the right simply because of her anti-immigrant policy. But on economic policy, she is very much on the left.

Prince Michael also exposed Macron’s support for a more burdensome government.

Mr. Macron…claims that he will bring France’s budget deficit below the European benchmark of 3 percent. …The candidate’s plan…does not appear plausible in light of his intention to further increase government spending. Mr. Macron’s pronouncements indicate an adherence to the Keynesian economic policy approach at the EU level. According to him, Europe should end austerity and introduce a growth model in which additional spending – on top of the already lavish outlays planned by European Commission chief Jean-Claude Juncker – ought to be implemented. The Macron policies boil down to more state and more EU centralization. At the heart of the scheme is the creation of a European Ministry of Finance and Economy, an all-powerful body to plan and monitor the EU economy. …Macron intends to continue treating the French cancer with aspirin and transmit the disease to Germany and the rest of the EU, while demanding that they pay for France’s subsistence in the meantime.

In other words, Macron wants this cartoon to be official French policy. Yet some people actually think of him as a pro-market reformer. Wow.

Let’s conclude with these wise words from an editorial in today’s Wall Street Journal, which is very worried that the runoff may feature two pro-big government outsiders.

All four major candidates are polling at around 20%, but Mr. Mélenchon has momentum and the highest personal favorability. A Le Pen-Mélenchon finale would be a political shock to markets and perhaps to the future of the EU and eurozone. …Mr. Hollande’s Socialists have made France the sickest of Europe’s large economies, with growth of merely 1.1% in 2016, a jobless rate above 10% for most of the past five years, and youth unemployment at nearly 25%. His predecessor Nicolas Sarkozy and the Republicans talked a good reform game but never delivered. …the stage is set for candidates who appeal to nativism or a cost-free welfare state. Let’s hope a French majority steps back from the political brink.

By the way, it’s not yet time for me to make an official endorsement, though I’ll share my leanings.

I confess that I’m torn between Fillon and Mélenchon. By French standards, Fillon is apparently very pro-free market. So I should like him. He could be the Ronald Reagan or Margaret Thatcher of France.

But what if he turns out to be another Sarkozy, a big-government fraud?

If I support Mélenchon, by contrast, at least I can say with great confidence that I will be able to continue using France as an example of bad public policy. I realize that’s not an ideal outcome for the French people, but you know what they say about omelets and eggs.

In any event, I’ll wait until the runoff election before selecting a candidate.

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What best symbolizes France’s statist political culture?

Those are good examples, to be sure, but I’ve actually already shared an everything-you-need-to-know story dealing with lavish perks for France’s protected bureaucrat class.

But there’s no rule that says I can’t have multiple everything-you-need-to-know anecdotes.

Here’s a story that reveals why France is in trouble. The Wall Street Journal reports that a French presidential candidate is arguing people shouldn’t get upset that he used taxpayer money to give his wife a no-show job because a big chunk of the money then went back to the government because of punitive taxes.

François Fillon…apologiz[ed] to the country for having employed his wife and children as parliamentary aides while rejecting accusations the jobs were phony. …Mr. Fillon characterized it as unfair for media reports to state his wife received nearly a million euros over a 15-year period, saying after taxes her monthly average income came to only €3,677 ($3,964). …The privileges traditionally available to France’s ruling class were exposed with rare candor.

So I guess Fillon wants people to think it’s okay to divert funds to family members if they “only” pocket about $48,000 per year after paying taxes.

This is disgusting. At least Fillon should have wasted taxpayer money more elegantly, like France’s current president, who doesn’t have much hair but still gave his stylist big bucks.

What makes Fillon’s story especially amusing is that he is the candidate trying to appeal to French voters who want to reduce the role of the state.

Considering that two of his major opponents are Marine Le Pen, a big-government populist, and Benoît Hamon, a socialist who favors a taxpayer-provided basic income for everyone, maybe Fillon actually is the only choice for French voters with libertarian impulses, but that’s a rather sad commentary on the state of French politics. So I don’t even know if I’ll endorse a candidate, like I did back in 2012.

What makes the situation particularly tragic is that the fiscal mess in France has become so bad that even parts of the government are concluding that some market-based reforms are necessary.

Corporation tax in France is too far above the European average, according to a report by the French Court of Auditors. The experts said a cut from 33.3% to 25% would allow companies to compete with their European counterparts. EurActiv France reports. The amount of tax paid by businesses in France has been steadily climbing for the last two decades. Today, they pay the highest rates in Europe. But this growth has not been good for the country, according to a report published by the Court… France has not always been a high tax jurisdiction, compared to other EU countries. In 1995 it was more or less at the European average. But it has steadily increased over the last 20 years. At the same time, other EU member states have been moving in the opposite direction. According to the report, most member states have lowered tax on business revenues, or have imminent plans to do so. The UK, for example plans to cut corporation tax to 17% by 2020. The average tax rate paid by EU companies fell from 33% in 1999 to 25% in 2015.

France’s suicidal fiscal regime is why – with my tongue planted firmly in cheek – I agreed with Paul Krugman back in 2013 that there is a plot against France. But I pointed out the conspirators against France were the nation’s politicians.

P.S. Actually, perhaps the story that tells you everything you need to know about France was the poll last decade revealing that more than half the population would flee to America if they had the opportunity.

P.P.S. If it wasn’t for France, we never would have had the opportunity to enjoy this very clever and amusing Scott Stantis cartoon.

P.P.P.S. Or watch this rather revealing Will Smith interview about French taxation.

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Two months ago, I decided that the new President of the Philippines was the winner of the 2016 award for politician of the year.

It takes a remarkable amount of chutzpah, after all, to freely admit to having mistresses (yes, more than one). But the icing on the cake is that he then bragged that none of them are on the public payroll. I imagine Filipino taxpayers are very grateful that he self-finances his extracurricular activity.

This is all quite noteworthy, but I may have jumped the gun when giving President Duterte this award.

That’s because we now have another politician who has gone above and beyond the call of duty. This politician, you will see, has displayed a stunning degree of arrogance and elitism, acting as if the normal rules of decorum and prudence don’t apply.

No, I’m not talking about Hillary Clinton getting a free pass for endangering national security. Though that would be a good guess.

Instead, our new contestant for politician of the year is Monsieur Francois Hollande.

And the reason he has vaulted into contention is this amusing story (though presumably very aggravating story for French taxpayers) about the elitist and wasteful habits of France’s socialist leader.

French President François Hollande’s hairdresser earns a gross salary of €9,895 a month, according to a report in French weekly Le Canard Enchaîné, to be published Wednesday. …Over the course of the president’s mandate, which ends next year, the hairdresser will have received a gross salary of more than €590,000. The hairdresser regularly follows Hollande during his travels, according to Le Canard.

I realize I may be a bit old fashioned, and maybe my reactions are influenced by my minimalist approach to hair care (shower, comb with fingers, done), but why does a male politician need an on-staff hairdresser?!?

Especially when he doesn’t have that much hair to begin with!

By the way, it’s not 100 percent clear that taxpayer money is financing Hollande’s hairdresser, though I suspect that’s almost certainly the case. The article mentions that the hairdresser signed the contract with Hollande’s top staffer, which certainly makes it sound as if the French President isn’t spending his own money.

Though maybe the Socialist Party or some other entity is paying the bills, so I will leave open the possibility that Hollande is merely guilty of being a vain clown instead of being a vain clown who wastes taxpayer money.

What makes this story particularly interesting is that Hollande a few years ago publicly cut back on some of the lavish perks he and his cabinet were enjoying. But I guess that was all for show.

Though I’d actually consider it a bargain if politicians spent all their time preening in front of the mirror.

That would leave them less time to tax our earnings.

Or regulate our behavior.

And discourage our productivity.

Or corrupt our nation.

And they’d have less time to reward their donors at our expense!

Or to reward themselves.

Or to be disingenuous hypocrites.

But no need to belabor the point. Maybe now it’s easy to understand why I prefer “do-nothing” politicians.

Heck, I’d be willing to double their pay if they promised to stay home.

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The United Kingdom is getting a lot of attention because voters just chose to leave the European Union.

I think this was the smart choice. Yes, there will be some short-run economic volatility, but the long-run benefits should make it worthwhile. Sort of like chemotherapy being painful, but still being much better than the alternative of cancer.

My main argument for Brexit was that the European Union is a sinking ship. The continent is in trouble because the bureaucrats in Brussels reflexively support centralization, bureaucratization, and harmonization. And it’s in trouble because most member governments support dirigiste policies on the national level.

Consider France. The country is so statist that even some folks from the establishment media have warned that government has too much power. Heck, even some of the people at the European Commission have complained that taxes are too high.

Perhaps most miraculously, there was even a column in the New York Times last month explaining how bad government policy is killing France’s job market.

It’s obvious that the current system isn’t working. …business owners are reluctant to hire employees, because it’s so complicated and expensive to fire them when times are bad. …times are pretty bad: France has 10 percent unemployment, roughly twice the levels in Germany and Britain. For young people, it’s around 24 percent. …While many other European countries have revamped their workplace rules, France has barely budged.

The most important thing to understand is that employers are extremely reluctant to hire full-time workers because it’s nearly impossible to fire them if they don’t do a good job or if the company hits hard times. And that translates into temporary jobs combined with lots of unemployment.

The Hollande government has proposed to tinker with this system.

The new labor bill — weakened after long negotiations — wouldn’t alter the bifurcated system, in which workers either get a permanent contract called a “contrat à durée indéterminée,” known as a C.D.I., or a short-term contract that can be renewed only once or twice. Almost all new jobs have the latter.

But even though the reforms are very timid, the French are protesting.

…it isn’t just unions that oppose the bill. So do more than 60 percent of the population, who fear the bill would strip workers of protections without fixing the problem. Young people took to the streets to oppose it, demanding C.D.I.s, too. Why are the French so wedded to a failing system? …they believe that a job is a basic right — guaranteed in the preamble to their Constitution — and that making it easier to fire people is an affront to that. Without a C.D.I., you’re considered naked before the indifferent forces of capitalism. …young protesters held a banner warning that they were the “génération précaire.”

Here’s the most amazing part of the story. The protesters think that a government-protected job is a rite of passage into adulthood. They want the “right to grow up,” even though their version of adulthood involves complete blindness to economic reality.

They were agitating for the right to grow up. …getting a permanent work contract is a rite of adulthood. Without one, it’s hard to get a mortgage or car loan, or rent an apartment. Mainstream economic arguments can’t compete. “Basic facts of economic science are completely dismissed,” said Étienne Wasmer, a labor economist at Sciences Po. “People don’t see that if you let employers take risks, they’ll hire more people.” Instead, many French people view the workplace as a zero-sum battle between workers and bosses.

The obvious answer is to dramatically reduce government intervention in labor markets. But since that’s a near impossibility in France, high levels of joblessness almost surely will continue and short-term employment contracts will be the norm for those who do manage to find work.

By the way, the system doesn’t even work that well for the workers with the government-protected positions.

Many workers here have permanent contracts that make it very hard to fire them. So some companies resort to an illegal strategy: They try to make someone so miserable, he’ll quit. “What happens next is, I’ll lose my team and my staff, and therefore I’ll have nothing to do,” the man predicted. “You still have to come to work every day, but you have no idea why.” …those lucky enough to have C.D.I.s can struggle at work. In one study, workers with C.D.I.s reported more stress than those with short-term contracts, in part because they felt trapped in their jobs. After all, where else would they get another permanent contract?

No wonder so many people in France want to work for the government. That way they can get lavish pay and benefits with very little pressure to perform.

In any case, the net result is that the French economy is stagnant. Potentially valuable labor (one of the two factors of production) is being sidelined or misallocated.

Writing for Market Watch, Diana Furchtgott-Roth shares her analysis of crazy French labor law.

…reforms are vital because the French economy is stagnant. GDP growth for the latest quarter was 0.6%. Over the past decade, growth has rarely risen above 1%. The unemployment rate is over 10% and the youth unemployment is 25%. Clearly tax and regulatory reform, including more labor flexibility, are needed to encourage employers to hire. …a French court this week ruled that Société Générale rogue trader Jérôme Kerviel, who lost $5.5 billion of the bank’s assets in 2008 and almost caused its bankruptcy, had been unfairly dismissed. Société Générale was ordered to pay Kerviel $511,000 because it decided he was dismissed “without cause.” …When employers cannot fire workers, they are less likely to hire them, leading to a sclerotic labor market and high unemployment. This is what the left-wing Hollande is trying to repair. …Some view France as a worker’s paradise where the government protects workers from abusive employers. The reality is that France is a worker’s nightmare where jobs are scarce and work ethic is prohibited by law.

Ambrose Evans-Pritchard is even more negative in his column for the U.K.-based Telegraph.

An intractable economic crisis has been eating away at the legitimacy of the French governing elites for much of this decade. This has now combined with a collapse in the credibility of the government, and mounting anger… The revolt comes as Paris battles a wave of protest against labour reform, a push that has come close to rupturing the Socialist Party. The measures were rammed through by decree to avoid a vote. Scenes of guerrilla warfare with police on French streets have been a public relations disaster… Rail workers are demanding a maximum 32-hour week. Eric Dor from the IESEG School of Management in Lille says powerful vested interests have made France almost unreformable. …Dor said the labour reforms have been watered down and are a far cry from the Hartz IV laws in Germany in 2004, which made it easier to fire workers and screw down wages.

He points out that the damage of labor-market intervention is exacerbated by a wretched tax system (I’ve written that the national sport of France is taxation rather than soccer).

France’s social model is funded by punitively high taxes on labour. The unintended effect is to create a destructive ‘tax wedge’ that makes it too costly to hire new workers. It protects incumbents but penalizes outsiders, leading to a blighted banlieu culture of mass youth unemployment. There are 360 separate taxes, with 470 tax loopholes. The labour code has tripled… Public spending is 57pc of GDP, a Nordic level without Danish or Swedish levels of labour flexibility. Unemployment is still 10.2pc even at this late stage of the global cycle.

Given the various ways that government discourages employment, is anyone surprised that the French work less than any other nation in Europe? Here’s a blurb from a report in the EU Observer.

French put in the least working hours in the EU, according to the bloc’s statistical office Eurostat. Full-time workers in France clocked up 1,646 hours of labour last year.

By the way, there’s a tiny possibility of change.

There’s an election next year and one of the candidates has a platform that sounds vaguely like he wants to be the Ronald Reagan or Margaret Thatcher of France.

Here are some of the details from a report by Reuters.

French presidential hopeful Alain Juppe, the frontrunner in opinion polls 20 years after serving as a deeply unpopular prime minister, said on Tuesday he would roll back France’s iconic 35-hour working week and scrap a wealth tax if elected next year. In the mid-1990s Juppe triggered France’s worst unrest in decades because he would not budge on pension reforms. He eventually had to drop them after weeks of strikes and protests. …”The French are being kept from working by excessive labor costs. I want to cut those costs,” Juppe told hundreds of supporters as he outlined his economic platform. …Juppe said he would raise the retirement age to 65 from 62 while cutting both taxes and state spending. Juppe said he would aim to cut public spending by 80-100 billion euros over five years and to reduce payroll taxes by 10 billion euros and corporate taxes by 11 billion euros. …Juppe also said he would cap welfare subsidies.

Amazingly, Juppe is the favorite according to the polling data.

So maybe French voters finally realize (notwithstanding the bad advice of Paul Krugman) that becoming another Greece isn’t a good idea.

P.S. My “Frexit” title simply recognizes the reality – as shown in this video – that productive people already are fleeing France. Hollande’s punitive tax policy has driven many of them to other nations. French entrepreneurs in particular have flocked to London.

P.P.S. Watch Will Smith’s reaction after being told France has a top tax rate of 75 percent.

P.P.P.S. France’s effective tax rate actually climbed to more than 100 percent, though Hollande mercifully decided that taxpayers now should never have to pay more than 80 percent of their income to government.

P.P.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, have they elected statists such as Sarkozy and Hollande?!?

P.P.P.P.P.S. In my humble opinion, the most powerful comparison is between France and Switzerland.

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I recently wrote about gun control, noting how there’s less murder in demographically similar U.S. states than there is in matching Canadian provinces.

This is one of the reasons why I’m optimistic about protecting the Second Amendment. The empirical evidence is so strong that law-abiding people are safer in well-armed societies.

But let’s see how the rest of the world is faring on this issue.

Let’s start with a story from Switzerland, a nation that has a very strong tradition of gun rights.

Switzerland is becoming safer. Police recently flagged up that crime rates fell by 7% in 2015, reaching a seven-year low. In 2014, homicide was actually at its lowest level in 30 years. …A survey by swissinfo.ch shows gun permit applications were up almost everywhere in Switzerland in 2015.

Hmmm…, more guns and less crime. The person who slapped the headline on the story seems to think it’s a mystery why that relationship exists.

But anybody capable of passing my IQ test for criminals and liberals understands that the title should be changed to “Lower crime because Swiss have more guns” or something like that.

The article also includes a section on Switzerland’s gun culture.

Switzerland has one of the highest gun ownership rates in the world because of its militia army. The defence ministry estimates that some two million guns are in private hands in a population of 8.3 million. An estimated 750,000 of those guns have been recorded in a local register. Under the militia system soldiers keep their army-issue weapons at home. Voters in recent years have rejected tighter gun controls. In 2011, voters rejected a proposal to restrict access to guns by banning the purchase of automatic weapons and introducing a licensing system for the use of firearms.

Ah, those sensible Swiss voters. Not only are they against tax hikes and regulatory intervention, but they also reject licensing and support the right to purchase automatic weapons.

Now let’s travel Down Under and see what happens when a government takes the wrong approach to guns.

Hillary Clinton says “Australia is a good example”… The man Clinton wants to succeed, Barack Obama, noted, “Australia … imposed very severe, tough gun laws.  And they haven’t had a mass shooting since.” …Maybe it’s time to tell the president and his likely successor that the policies they so admire have been largely flouted… Clinton and Obama tout a 1996 “gun buyback” that was actually a compensated confiscation of self-loading rifles, self-loading shotguns, and pump-action shotguns in response to the Port Arthur mass shooting. The seizure took around 650,000 firearms out of civilian hands and tightened the rules on legal acquisition and ownership of weapons going forward. …What the law couldn’t do—what prohibitions can never accomplish—was eliminate demand for what was forbidden. …The Sporting Shooters’ Association of Australia estimates compliance with the “buyback” at 19 percent. Other researchers agree. In a white paper on the results of gun control efforts around the world, Franz Csaszar, a professor of criminology at the University of Vienna, Austria, gives examples of large-scale non-compliance with the ban. He points out, “In Australia it is estimated that only about 20% of all banned self-loading rifles have been given up to the authorities.”

There is one group benefiting from the attempted gun ban. Criminal gangs are big winners.

“Australians may be more at risk from gun crime than ever before with the country’s underground market for firearms ballooning in the past decade,” the report added. “[T]he national ban on semi-automatic weapons following the Port Arthur massacre had spawned criminal demand for handguns.” …Once you enable organized crime, there are no boundaries. Australia’s criminal gangs supply not just pistols, but weapons up to and including rocket launchers—some of which may have ended up in terrorist hands. …like American bootleggers who supplemented smuggled booze with bathtub gin, Australia’s organized criminal outfits have learned the joy of DIY production. …Australia will have to live with the rise in organized crime for years to come.

Such a disappointment that Australia, which is a role model on some issues, is so anti-civil rights when it comes to guns.

Now let’s travel to France, where there are at least one person doesn’t think it’s a good idea to let terrorists be the only ones with guns.

The leader of the rock band playing the Bataclan in Paris the night ISIS terrorists killed 90 in the concert hall three months ago ripped French gun control laws and urged “everybody” to get a gun. “I can’t let the bad guys win,” said Jesse Hughes of Eagles of Death Metal. …Speaking in a sometimes tearful interview to iTele, Hughes added, “Did your French gun control stop a single fu—– person from dying at the Bataclan? And if anyone can answer yes, I’d like to hear it, because I don’t think so.”

Amen. It’s downright bizarre that European politicians think it’s a good idea for citizens to be disarmed while crazies get to stock up on weapons.

Now let’s turn to America, where New Jersey (again) is a national embarrassment.

A New Jersey actor faces 10 years in prison for firing a prop pellet gun while filming an independent film. Carlo Goias, who uses the stage name Carlo Bellario, was charged with firing the fake gun without a state gun permit as part of the Garden State’s insanely strict gun laws. In New Jersey, all guns require a state permit, even non-lethal airsoft guns like the one Goias was using. …just seeing Goias pretending to fire from a car window prompted neighborhood residents to call the police. “I pretended to shoot out the window; they were going to dub in the sound later,” Goias told the Associated Press. “We get back, and within a couple of minutes we’re surrounded by cop cars.” …being sent away for 10 years over a fake gun is a reminder of just how absurd New Jersey’s gun laws still are.

Speaking of gun control, here’s radio shock jock Howard Stern making mostly sensible comments on the right to keep and bear arms.

It’s a bit disappointing that he supports a national gun registry, but I assume that’s because he doesn’t realize that the left supports registration primarily as a predicate for gun confiscation.

But he atones for that error by mocking leftists who have personal (and well-armed) security guards. Gee, I wonder if we might have an example of such a person.

And it’s also good that Howard mentions that most cops support gun rights, something that we see in the polling data.

P.S. Click here and here for some good gun control humor.

P.P.S. And click here for some entertaining videos mocking gun control.

P.P.P.S. Even some leftists have seen the light on gun rights, as you can see here, here, and here.

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I wrote last year about the moral vacuum that exists in Europe because gun control laws in nations like France make it very difficult for Jews to protect themselves from barbaric attacks.

But the principle applies more broadly. All law-abiding people should have the human right to protect themselves.

Politicians in Denmark don’t seem to understand this principle. Or maybe the do understand the principle, but they are so morally bankrupt that don’t care. Not only do they have gun control, they even have laws against pepper spray. And they are so fanatical in their desire to turn people into sheep that the government apparently will prosecute a girl who used pepper spray to save herself from rape.

Here are some excerpts from a report in the U.K.-based Daily Mail.

A Danish teenager who was sexually assaulted near a migrant asylum centre has been told she will be prosecuted after using pepper spray to fend off her attacker. …she managed to prevent the man from attacking her further by spraying the substance at him. …However, as it is illegal to use pepper spray, the teenage girl is set to face charges.

How disgusting.

And what makes the situation especially frustrating is that the criminals and terrorists in Europe obviously don’t have any problem obtaining firearms.

So the only practical effect of gun control (or bans on pepper spray) is to make life easier for the scum of society.

And the real insult to injury is that a teenage girl who should be hailed as a hero now faces the threat of punishment. Just like the unfortunate British woman who was persecuted for using a knife to deter some thugs.

And here’s some of what the BBC reported about

Italian hospitality for the visiting Iranian President Hassan Rouhani has stretched to covering up nude statues. Italy also chose not to serve wine at official meals

Pathetic. Particularly since the Italians bent over backwards for a truly heinous regime.

Kudos to President Hollande in France, by contrast. The Daily Mail notes that he held firm.

A lunch between the French and Iranian presidents in Paris was scrapped today because France refused to remove wine from the menu.

By the way, there clearly is a role for common courtesy and diplomatic protocol. It obviously would be gratuitously rude for a nation to serve pork at a dinner for officials from Israel or any Muslim nation, just as it would inappropriate and insensitive to serve beef for an event for officials from India.

Moreover, officials from one nation should not make over-the-top demands when visiting other countries. Just as it would be wrong for French officials to demand wine at state dinners in Iran, it’s also wrong for Iranian officials to demand the absence of wine at meals in France. After all, it’s not as if they would be expected to partake.

In the grand scheme of things, though, the kerfuffle about wine and statues doesn’t matter compared to the potentially life-and-death issue of whether Europeans should be allowed to defend themselves.

That’s why Europe isn’t merely in trouble because of fiscal bankruptcy, but also because of moral bankruptcy.

P.S. While having the ability to protect your life or to guard against rape isn’t a human right in most European nations, take a look at some of the things that are “rights.”

All this is amusing…in a very sad way.

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When I wrote back in 2012 that France was committing fiscal suicide, I should have guessed that President Hollande would get impatient and push for even more statism.

Sure enough, the BBC reports that France’s President has a new plan. The ostensible goal is to reduce unemployment, but the practical effect is to expand the size and scope of government.

President Francois Hollande has set out a €2bn (£1.5bn) job creation plan in an attempt to lift France out of what he called a state of “economic emergency”. Under a two-year scheme, firms with fewer than 250 staff will get subsidies if they take on a young or unemployed person for six months or more. In addition, about 500,000 vocational training schemes will be created.

Needless to say, if subsidies and handouts were the key to job creation, France already would have full employment.

In reality, real jobs are created when employers think that new employees will produce profits. But that’s a difficult hurdle in a country like France.

Though, in the interest of fairness, I should acknowledge that Hollande claims this plan will not involve a net increase in the burden of government spending.

Mr Hollande said money for the plan would come from savings in other areas of public spending. “These €2bn will be financed without any new taxes of any kind,” said President Hollande, who announced the details during an annual speech to business leaders.

Though I suspect that this claim is about as believable as Obama’s laughable assertion that government-run healthcare would lower premiums and allow people to keep their health plans.

But the strangest part of the BBC story involves Hollande’s contortions on labor market policy. See if you can decipher this passage.

The president also addressed the issue of labour market flexibility. “Regarding the rules for hiring and laying off, we need to guarantee stability and predictability to both employers and employees. There is room for simplification,” he said. “The goal is also more security for the company to hire, to adapt its workforce when economic circumstances require, but also more security for the employee in the face of change and mobility”.

I gather Hollande wants people to believe he has some sort of magic wand that will magically give companies flexibility while also guaranteeing workers stability.

Put me in the skeptical column. I would be stunned if France actually liberalized its calcified labor markets. The unions are too powerful and too shortsighted to realize that employers will always be reluctant to hire unless they know they have the ability to fire.

Besides, why would unemployed people, particularly those with low skill levels, want jobs when redistribution programs make idleness comparatively attractive?

Meanwhile, those with high skills will continue to escape the country.

So the bottom line is that France’s slow-motion economic suicide will continue. Hollande’s foolish policies simply mean the day of reckoning will come a bit sooner.

Let’s close with something that’s both revealing and amusing. One of America’s movie stars, Will Smith, had a very interesting wake-up moment on French TV.

I wonder what Mr. Smith would say if he knew that some French taxpayers actually have faced tax burdens of more than 100 percent (though Hollande, with his infinite mercy, then decided that the upper limit should be 80 percent).

P.S. My friend Veronique de Rugy (an escapee from France) warns Americans about the dangers of adopting the policies of her former country in this video.

P.P.S. Sadly, American statists have been urging European-type statism in the United States for decades. To see where that leads, check out these cartoons from Michael Ramirez, Glenn Foden, Eric Allie and Chip Bok.

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If you want to pinpoint the leading source of bad economic policy proposals, I would understand if someone suggested the Obama Administration.

But looking to Europe might be even more accurate.

For instance, I’d be hard pressed to identify a policy more misguided than continent-wide eurobonds, which I suggested would be akin to “co-signing a loan for your unemployed alcoholic cousin who has a gambling addiction.”

And now there’s another really foolish idea percolating on the other side of the Atlantic Ocean.

The U.K.-based Financial Times has a story about calls for greater European centralization from Italy.

Italy’s finance minister has called for deeper eurozone integration in the aftermath of the Greek crisis, saying a move “straight towards political union” is the only way to ensure the survival of the common currency. …Italy and France have traditionally been among the most forceful backers of deeper European integration but other countries are sceptical about supporting a greater degree of political convergence. …Italy is calling for a wide set of measures — including the swift completion of banking union, the establishment of a common eurozone budget and the launch of a common unemployment insurance scheme — to reinforce the common currency. He said an elected eurozone parliament alongside the existing European Parliament and a European finance minister should also be considered. “To have a full-fledged economic and monetary union, you need a fiscal union and you need a fiscal policy,” Mr Padoan said.

This is nonsense.

The United States has a monetary union and an economic union, yet our fiscal policy was very decentralized for much of our nation’s history.

And Switzerland has a monetary and economic union, and its fiscal policy is still very decentralized.

Heck, the evidence is very strong that decentralized fiscal systems lead to much better outcomes.

So why is Europe’s political elite so enamored with a fiscal union and so opposed to genuine federalism?

There’s an ideological reason and a practical reason for this bias.

The ideological reason is that statists strongly prefer one-size-fits-all systems because government has more power and there’s no jurisdictional competition (which they view as a “race to the bottom“).

The practical reason is that politicians from the weaker European nations see a fiscal union as a way of getting more transfers and redistribution from nations such as Germany, Finland, and the Netherlands.

In the case of Italy, both reasons probably apply. Government debt already is very high in Italy and growth is virtually nonexistent, so it’s presumably just a matter of time before the Italians will be looking for Greek-style bailouts.

But the Italian political elite also has a statist ideological perspective. And the best evidence for that is the fact that Signore Padoan used to be a senior bureaucrat at the Paris-based OECD.

The Italian finance minister…served as former chief economist of the OECD.

You won’t be surprised to learn that French politicians also have been urging a supranational government for the eurozone. And presumably for the same reasons of ideology and self-interest.

But here’s the man-bites-dog part of the story.

The German government also seems open to the idea, as reported by the U.K.-based Independent.

France and Germany have agreed a new plan for closer eurozone political unionThe new Franco-German agreement would see closer cooperation between the 19 countries.

Wow, don’t the politicians in Berlin know that a fiscal union is just a scheme to extract more money from German taxpayers?!?

As I wrote three years ago, this approach “would involve putting German taxpayers at risk for the reckless fiscal policies in nations such as Greece, Italy, and Spain.

But maybe the Germans aren’t completely insane. Writing for Bloomberg, Leonid Bershidsky explains that the current German position is to have a supranational authority with the power to reject national budgets.

The German perspective on a political and fiscal union is a little more cautious. Last year, German Finance Minister Wolfgang Schaeuble and a fellow high-ranking member of the CDU party, Karl Lamers, called for a euro zone parliament (not elected, but comprising European Parliament members from euro area countries) and a budget commissioner with the power to reject national budgets if they contravene a certain set of rules agreed by euro members.

And since the German approach is disliked by the Greeks, then it can’t be all bad.

Former Greek finance minister Yanis Varoufakis, Schaeuble’s most eloquent hater, pointed out in a recent article for Germany’s Die Zeit that, in the Schaeuble-Lamers plan, the budget commissioner is endowed only with “negative” powers, while a true federation — like Germany itself — elects a parliament and a government to formulate positive policies.

But “can’t be all bad” isn’t the same as good.

Simply stated, any sort of eurozone government almost surely will morph over time into a transfer union. And that means more handouts, more subsidies, more harmonization, more bailouts, more centralization, and more bureaucracy.

So you can see why Europe’s political elite may be even more foolish than their American counterparts.

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For understandable reasons, the fiscal mess in Greece has dominated the European economic headlines.

But there are other developments that deserve attention. Amazingly, some politicians think Europe’s stagnant economy can be improved with more harmonization, more bureaucratization, and more centralization.

The EU Observer has a story about a French scheme to transform the eurozone into a supranational government.

French president Francois Hollande has called for a stronger more harmonised eurozone… “What threatens us is not too much Europe, but too little Europe,” he said in a letter published in the Journal du Dimanche. He called for a vanguard of countries that would lead the eurozone, which should have its own government, a “specific budget” and its own parliament. …French prime minister Manuel Valls Sunday said…France would prepare “concrete proposals” in the coming weeks. “We must learn the lessons and go much further,” he added, referring to the Greek crisis.

I’m not sure what lessons Monsieur Valls wants people to learn. Greece got in trouble because of big government and excessive intervention.

So why is anyone supposed to believe that adding a new layer of government is going to make Europe more prosperous?

In all likelihood, the French are pursuing this agenda for two selfish reasons.

  1. A “harmonised eurozone” means that all affected nations would have to abide by the same rules, and that inevitably means taxes and regulations are set at the most onerous levels. The French think that’s a good idea because it’s a way of undermining the competitiveness of other eurozone nations.
  2. A eurozone government with a “specific budget” sets the stage for more intergovernmental transfers in Europe. The French think that’s a good idea since they presumably could prop up their decrepit welfare state with money from taxpayers in nations such as Germany, Finland, and the Netherlands.

By the way,not all French politicians are totally misguided.

At least one of them is expressing more sensible ideas, as reported by the U.K.-based Telegraph.

France is “the sick man of Europe”, François Fillon, the former centre-Right prime minister, has said in an open letter to French president Francois Hollande, calling for urgent economic reforms.“The Greek tragedy shows that the threat of bankruptcy is not abstract,” according to Mr Fillon… French commentators writing about the Greek crisis in recent days have pointed out that France’s own national debt of more than €2 trillion (£1.4 trillion), amounting to 97.5 per cent of GDP, places it in the same league as Spain and other southern European countries.

By the way, the commentators who are fretting about French debt are focused on the wrong variable. The French disease is big government. High levels of debt are simply a symptom of that disease.

Moreover, I’m not sure that Monsieur Fillon is a credible spokesman for smaller government and free markets since he served during the statist tenure of President Sarkozy.

In any event, if there are any serious reformers in France, they face an uphill battle. As I’ve previously noted, many successful people and aspiring entrepreneurs have left France.

Here’s a news report on the phenomenon.

And just in case you think this is merely anecdotal data, here’s a table showing the nations that lost the most millionaires since 2000.

In the case of China and India, rich people leave because they want to establish a domicile in a developed nation.

But successful people escape France in spite of its first-world attributes.

Let’s now cross the Pyrenees and see what’s happening in Spain.

Our Keynesian friends, as well as other big spenders, are always trumpeting the value of infrastructure projects because they ostensibly pump money into an economy.

I’ve made the point that such outlays should be judged using cost-benefit analysis. Well, it appears that Spain listened to the wrong people. It got a €10,000 return on an infrastructure “investment” of €1,100,000,000.

One of Spain’s “ghost airports”—expensive projects that were virtually unused—received just one bid in a bankruptcy auction after costing about €1.1 billion ($1.2 billion) to build. The buyer’s offer: €10,000. Ciudad Real’s Central airport, about 235 kilometers south of Madrid, became a symbol of the country’s wasteful spending.

Wow, and I thought Social Security was a bad deal.

But Spanish politicians should be known for more than just misguided boondoggles.

Some of them also are working hard to make sure citizens don’t work too hard. Here’s a story from an English-language news outlet in Spain (h/t: Commentator).

Between the hours of 2pm and 5pm you will struggle to find anyone in the Valencian town of Ador; the town’s inhabitants will have taken to their beds to catch their mandatory forty winks. The town’s summer siesta tradition is so deep-rooted the mayor has enshrined his citizen’s right to an afternoon snooze in law. …Ador could be the first town in Spain to actually make taking a siesta obligatory by law. …The new rules also stipulate that children should remain indoors:

One imagines the next step will be mandatory bed checks by new bureaucrats hired for just that purpose.

Though maybe they would need special permission to take their mandatory siestas from 11:00-2:00 so they would be free to harass the rest of the population between 2:00-5:00.

In any event, we can add mandatory siestas to our list of bizarre government-granted human rights.

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When I wrote about the media, it’s generally to criticize sloppy and/or biased reporting

But maybe I need to have a new category that features misleading headlines.

For instance, here’s a report by Fox Business News that grabbed my attention because of the headline. The story is about the arrest of an IRS bureaucrat.

The main reason I was startled by the story is that it didn’t seem at all newsworthy.

To be blunt, isn’t it the job of IRS employees to use our Social Security numbers to steal our money? That’s certainly what goes through my mind as I fill out my tax return.

So why was this bureaucrat arrested?

Was it for being a slacker, I wondered? The federal government confiscates about $3.5 trillion of our money each year, after all, which means the 95,000 IRS bureaucrats generate an average haul of more than $35 million. By contrast, $326 thousand is a mere pittance.

But then I read the story and realized that the story was about a completely different kind of theft. It appears that the bureaucrat was getting in on the nationwide scam of filing false claims to get EIC handouts.

An IRS employee who worked in the agency’s St. Louis, MO., office pled guilty this week to charges of tax fraud. Demetria Brown netted $326,000 in a fraud in which she stole taxpayer identities and created fake tax returns to steal refunds. …The scheme lasted seven years from 2008 to 2001.

So my first instinct was correct. There isn’t really anything newsworthy in that story. After all, nobody should be surprised that income-redistribution programs such as the EIC attract a lot of fraud. Nobody should be surprised that an IRS bureaucrat decided to take other people’s money (above and beyond the excessive salary the rest of us paid for). And nobody should be surprised that the other bureaucrats at the IRS were so incompetent that the scam was successful for seven years.

By the way, this isn’t the first time a thieving IRS bureaucrat generated a story with a misleading headline.

Speaking of which, here’s our second example of a headline that creates a completely false impression. It’s from a story in the Toronto Star.

Needless to say, I was completely shocked at first. After all, France is the nation where the national sport is taxation. It’s the country where taxes are so onerous that even the European Commission warns about over-taxation. It’s the nation where thousands of people have to pay more than 100 percent of their income to the tax authorities. It’s the country where high taxes are equated to patriotism. And it’s the nation that pushes tax policies that are so radical than even the Obama Administration sometimes says no.

So is it true? Is France going to become a Libertopia? The Galt’s Gulch of Europe?

But then my bubble burst. It turns out the story is about a technical shift in how taxes are collected.

The government wants to shift to a system of automatic withholding, similar to that in Canada and much of the rest of the world. Employees in France currently pay taxes a year after their income is earned. Christian Eckert, France’s budget secretary, said Wednesday that the government will not double-tax workers in 2018, the year automatic withholding is to begin. So 2017 incomes could effectively be tax-free for regular salaries. Taxpayers won’t actually feel much of a difference though — they would still spend 2017 paying for the previous year.

Though this might create an interesting social science experiment.

Depending on how rigorously France decides to be with its definition of “regular salaries,” this might be an opportunity for long-suffering French taxpayers to figure out ways of delaying 2016 income until 2017 and accelerating 2018 income so it’s received in 2017.

This could be a particularly useful strategy for investors, entrepreneurs, and small business owners, all of whom (if they’re like their American counterparts) presumably have some control over the timing, level, and composition of their income.

But I suspect the French government already is contemplating ways of making sure that every possible penny is being taxed at the highest possible rate, so I won’t hold my breath.

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There’s a Terror Wing in the Moocher Hall of Fame, so I guess it stands to reason that I should create a French Wing of the Bureaucrat Hall of Fame.

After all, few nations can compete with France in the contest to over-tax and over-spend.

And a lot of that spending goes to subsidize a bloated bureaucracy.

Moreover, I suspect many members of that bureaucracy work in jobs that shouldn’t exist and get wildly over-compensated.

Just last month, for instance, I honored one of those bureaucrats with membership in the Hall of Fame because she managed to squander an average of $145 of other people’s money on taxis each and every day (including weekends) even though she also had a taxpayer-provided car and chauffeur!

Wow. And she wasted that much money while working in a position (archivist for the country’s government-run media operation) that never should have been created.

Speaking of which, here are some amusing (only amusing because I’m not a French taxpayer) snippets from a story in the U.K.-based Times about some other ultra-spoiled French bureaucrats.

The 40 members of the Académie Française have…lavish perks… Their remuneration arrangements…include free flats in some of Paris’s most sought-after districts… The report, by the Court of Accounts, is likely to add to widespread resentment of a Parisian elite seen as clinging to its privileges.

The pay levels for these über-bureaucrats are absurd, but the perks are downright astounding.

Many [flats] were made available without justification to the intellectuals who belonged to the academies and their staff, the report said.Hélène Carrère d’Encausse, the historian who is its “permanent secretary”, received €104,768 a year and a free flat in Paris, the report said. The academy justifies her remuneration on the ground that her work is so great that she has to “renounce all literary work”. However, Mrs Carrère d’Encausse has produced nine books, largely on Russia, her specialist subject, since being given the post in 1999. …There is also criticism of Hugues Galls, the opera director who sits on the Academy of Fine Arts and runs one of its properties — the house and gardens where Claude Monet lived. The report said he received a BMW 125i, bought by the academy for €40,461. His garage fees of €1,700 a month are paid by the institution.

Hey, nice “work” if you can get it.

No wonder the OECD is based in Paris. The culture is perfect for elitist leeches.

And it shows that my First Theorem of Government applies in France as well as the United States.

The only silver lining to this dark cloud is that the French elite is slowly waking up to the reality that the government is running out of victims to finance such special-interest perks.

P.S. I rarely get to celebrate good news, so let’s enjoy this moment because the government thugs who stole $107,000 from Lyndon McLellan are being forced to return the money.

Reason has the wonderful details.

…the federal prosecutor assigned to the case was peeved. “Your client needs to resolve this or litigate it,” Assistant U.S. Attorney Steve West wrote in an email message. “But publicity about it doesn’t help. It just ratchets up feelings in the agency. My offer is to return 50% of the money. The offer is good until March 30th COB.” That deadline came and went, but Lyndon McLellan, the convenience store owner who lost $107,000 to the IRS because it considered his bank deposits suspiciously small, refused to fold. That turned out to be a smart move, because West was bluffing. Yesterday the government agreed to drop the case and return all of McLellan’s money.

This is great news, but notice what happened. The Assistant U.S. Attorney initially tried to threaten this innocent man.

But as the case got more publicity, the hack bureaucrat was forced to relent, in much the same way cockroaches scurry into crevices when the kitchen light is turned on.

By the way, if anyone knows Steve West, make sure to let him know that he’s a despicable human being. I bet he’s friends with Robert Murphy and Michael Wolfensohn.

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Economists generally like competition because it promotes economic efficiency, more prosperity, lower prices, and higher wages.

But some types of competition can be misguided.

For instance, Americans used to dominate membership in the Bureaucrat Hall of Fame.

Now, however, government employees in other nations have risen to the challenge and shown they can be just as spectacularly unproductive and wasteful as their American counterparts.

Maybe even more so.

Consider the doctor for Italy’s government-run healthcare system who only worked 15 days over a nine-year period.

Even more impressive, how about the bureaucrat in India who managed to go 24 years without showing up for work.

Now we have another foreign honoree.

Here are some blurbs from a BBC report about one French bureaucrat who went above and beyond the call of duty.

A top French civil servant has been forced to resign after spending more than €40,000 (£29,000; $44,000) on taxis in 10 months. Agnes Saal stepped down as head of France’s TV and radio archives at the demand of the culture minister. She had previously argued she needed to travel by taxi, despite having a chauffeur as well as a private car. But she admitted her son was responsible for €6,700 of the bill… She said giving him her reservation number was a “silly mistake”.

Yes, there was a “silly mistake,” but that mistake took place when France decided to create a Ministry of Culture.

Then another “silly mistake” was creating a sub-bureaucracy to be in charge of archives.

And then an additional “silly mistake” was to give the head bureaucrat of that useless division a credit card.

And perhaps the biggest “silly mistake” was to assign a chauffeur to a person holding a job that shouldn’t even exist.

All that being said, Ms. Saal deserves to be in the Bureaucrat Hall of Fame because it takes a special sense of entitlement to have a chauffeur yet still run up a $44,000 taxi bill in just 10 months.

That’s nearly $145 per day she foisted on overburdened French taxpayers, which doesn’t even count the cost of the car and chauffeur!

And I suppose we should give an “honorable mention” award to Ms. Saal’s predecessor. In his new position, he has also demonstrated an unwavering commitment to waste, fraud, and abuse.

She replaced Mathieu Gallet, who is now head of French public radio and is himself at the centre of a scandal after reportedly spending €100,000 on renovating his office and hiring a €90,000 PR consultant, just as he was preparing a cost-cutting plan.

Oh, and will anybody be surprised to learn that the over-paid bureaucrats at France’s taxpayer-subsidized radio network just finished a record-long strike?

Employees at Radio France ended their longest ever strike earlier this month, after walking out for 28 days.

Sigh. I can’t wait for the day when France will be forced to reconsider whether state-run and state-financed media networks are a proper function of government (like has already happened in Greece).

P.S. On another topic, I wrote a few days ago about the types of policies that lead to more “SuperEntrepreneurs” in a nation.

Well, the World Economic Forum has published related research about the impact of taxes on “superstar inventors.”

They start by looking at some of the research about taxation and labor mobility.

There is currently heated public debate about whether higher top tax rates will cause an exodus of valuable, high income and highly skilled economic agents. …Kleven et al. (2014) study a Danish tax reform that temporarily reduced top tax rates on high income foreigners and they find very strong effects on the inflow of migrants. In another recent paper Kleven, Landais, and Saez (2013) show that highly paid football players react to top tax rates when choosing in which country to work. …A group of highly valuable economic agents that policymakers perhaps might worry about is inventors, the creators of innovations and potential drivers of technological progress. Inventors may well be important factors for a country’s development and competitiveness – highly skilled migration has been shown to be both beneficial for a receiving country’s economy and to disproportionately contribute to innovation (Kerr 2013).

Then they focus specifically on highly productive inventors and how they migrate to places where the tax burden is less onerous.

…the average top 1% inventor has hundreds of times more citations. Among top inventors, some are highly successful migrants. In general, higher quality inventors are more mobile than lower quality inventors. …In recent research (Akcigit, Baslandze, and Stantcheva 2015) we study the international migration responses of superstar inventors to top income tax rates for the period 1977-2003 using data from the European and US Patent offices, as well as from the Patent Cooperation Treaty (Miguelez and Fink 2013). …From outside survey evidence, we know that superstar inventors are highly likely to be in the top tax bracket and, hence, directly subject to top tax rates. …There has is a strong and significant correlation between top tax rates and those inventors who remain in their home countries. The relation is strongest for superstar inventors. Figures 2 and 3 show that superstar inventors are highly sensitive to top tax rates. The elasticities imply that for a ten percentage point reduction of top tax rates from 50% to 40%, a country would be able to retain on average 3.3% more of its top 1% superstar inventors. …our results suggest that, given a ten percentage point decrease in top tax rates, the average country would be able to…attract 38% more foreign superstar inventors.

Here’s the bottom line.

The loss of highly skilled agents such as inventors might entail significant economic costs, not just in terms of tax revenues lost but also in terms of reduced positive spillovers from inventors and, ultimately, less innovation in a country.

In other words, class-warfare tax policy ultimately is very destructive for the jurisdictions that practice the politics of hate and envy.

P.P.S. I wrote a few years ago about legal tank ownership in America.

But there’s a catch. You theoretically have to disarm the gun, which would take away part of the fun.

Well, maybe you can make up for that loss of firepower by owning a flamethrower, which apparently is legal in 48 states.

Not sure I would want one of these, but I bet the answers to my IQ test for criminals and liberals would be even more interesting if homeowners added some their arsenals.

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According to Gallup, Americans now identify “government” as the most important problem facing the United States.

That doesn’t surprise. Gallup also found last year that big government is considered a far greater danger to the nation that big business or big labor.

Moreover, a poll from NPR earlier this year found that government was the leading cause of stress in people’s lives.

And Gallup discovered earlier this year that a record number of Americans think that government is corrupt.

So why do Americans have such a dour view of officialdom?

Well, let’s look at one example. The Wall Street Journal has a devastating editorial about dishonest and unethical behavior by federal and state bureaucracies.

The column starts with a strong assertion.

Prosecutorial misconduct has become an ugly commonplace of modern government, manipulating the legal system to attack easy political targets. 

It’s one that many people recognize is accurate, and probably helps to explain why pollsters now find the kinds of results cited above.

But if you think the WSJ is exaggerating or that people are misguided for being hostile to government, just check out how Andy Johnson, Anthony Smelley, Charlie Engle, Tammy Cooper, Nancy Black, Russ Caswell, Jacques Wajsfelner, Jeff Councelller, Eric Garner, Martha Boneta, Carole Hinders, Salvatore Culosi, and James Lieto were victimized by bureaucrats run amok.

But I’m digressing. Let’s get to this newest case. It deals with a forest fire in California and subsequent efforts for federal and state bureaucracies to blame a private company and extort some of the firm’s cash and land.

The story began in 2007 with the Moonlight Fire in California that burned some 65,000 acres, about two-thirds on federal land. Within 48 hours and while the flames were still burning, the state’s department of forestry and fire protection, known as Cal Fire, and the U.S. Forest Service blamed the disaster on Sierra Pacific, a Redding-based company that owns some 1.2 million acres of timberland. In 2009 a federal-state task force brought official complaints against the company and nearby landowners. California officials filed an action in state court while prosecutors sued for $1 billion in federal court. Sierra Pacific has insisted it didn’t start the fire but, faced with an open-ended legal fight, the company in 2012 settled the federal case for $55 million and a deed of some 22,500 acres to the U.S. government.

So far, so good, at least from the federal government’s perspective.

But there was still the case that was filed in state court, which presumably represented another attempt to extort more money from Sierra Pacific.

And this is where the government screwed up, whether through greed or incompetence (probably both). The WSJ has some of the sordid details that have been unearthed.

…the state case continued, and it has exposed a fiasco of fraud and corruption… Among other problems, government investigators and prosecutors doctored reports, misrepresented facts and retaliated against employees whose questions threatened their strategy. …According to the theory implicating the company, the fire started when the blade of a Sierra Pacific bulldozer hit a rock and created a spark. Government investigators pinpointed a location and claimed they had confirmation from a bulldozer driver. Problem was, both the fire’s alleged point of origin and the scenario to buttress it were fraudulent. When the company questioned the bulldozer driver, he denied having made the statement and admitted he couldn’t have confirmed the statement prosecutors had him sign because he didn’t know how to read. Prosecutors were also dishonest about where the fire started. Overhead videos have shown that the point of origin marked by the government was well outside the visual boundaries of the burning forest nearly an hour after the fire started.

I’m tempted at this point to make some snarky joke, but this issue is far too serious. When the government prevaricates in legal proceedings, that undermines the rule of law and call into question the integrity of the entire system.

And the column reveals that there was corruption and mendacity at both the state and federal level.

A second federal prosecutor, Eric Overby, joined the case in 2011, only to withdraw promptly on discovering what he called prosecutorial abuse directed squarely at raising revenue. He told defense counsel that in “my entire career, I have never seen anything like this. Never.” In February 2014, California state Judge Leslie Nichols assailed the federal and state government for abuses of discovery so “reprehensible” and “egregious” that they “threatened the integrity of the judicial process.” He threw out the case and awarded Sierra Pacific $30 million in sanctions against Cal Fire.

There are still reverberations from the case as Sierra Pacific is seeking to void the agreement that was made (based on lies) with the federal government. Needless to say, one hopes the company will win.

But there’s something else that needs to happen. The corrupt government officials need to be penalized, ideally with criminal sanctions including jail time. The government’s lawyers also should be disbarred and lose their jobs.

Punishment is the right approach, both because it is deserved and because it’s the only way of sending an effective signal to other bureaucrats that there is a personal risk to government malfeasance.

I also think Sierra Pacific, like any other victimized party, deserves compensation. Unfortunately, that money would come from taxpayers when it should be deducted from the budgets of the misbehaving bureaucracies (and the salaries of the bureaucrats).

P.S. I noted at the end of last year that President Hollande in France has decided to get rid of his class-warfare 75 percent top tax rate.

That’s a sign of progress, to be sure, but I wasn’t nearly as eloquent on the issue as Dan Hannan. The British MEP has some very wise words in today’s Washington Examiner.

I was living in Brussels when François Hollande, the President of France, introduced his 75 percent top rate tax in 2012. Immediately, my quartier began to fill with French exiles, who could commute to Paris in just over an hour.  …Three years on, President Hollande is shame-facedly scrapping the 75 percent rate, having forcibly re-learned an ancient truth: Wealth taxes don’t redistribute wealth; they redistribute people. Thousands of well-off Frenchmen made the easy journey north, including the country’s richest man, Bernard Arnault. …Hollande’s tax, levied on incomes above one million euros, has been a miserable failure. Over its lifespan, it raised around $500 million, a tiny fraction of the original projections. Why? Well, the Paris bureaucrats who made those projections overlooked something rather important. Rich people don’t sit around waiting to be taxed. They have all sorts of ways of beating the system… A lot of politicians don’t want to hear this. Instead of accepting international competition, they legislate against it — by, for example, imposing international rules on tax harmonization.

Amen to all these excerpts. Hollande’s class-warfare scheme was an economic failure and a revenue failure.

I also like what Hannan wrote about tax competition, and you can watch two very brief speeches he made on that topic by clicking here.

P.S. If you enjoy short Dan Hannan speeches, here’s one about the European bureaucracy racket and here’s one on the hypocrisy of European politicians.

P.P.S. My favorite item from Hannan, though, is his column about the socialist part of Germany’s National Socialists.

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I’ve written extensively about gun control, but mostly because of practical and moral objections to the notion that government should have the power to disarm law-abiding people.

But I hadn’t realized that some of the earliest gun control initiatives were designed to oppress blacks.

As Dave Kopel explains in Reason, the white power structure in many post-Civil War states was very anxious to disarm former slaves.

After the Civil War, the defeated Southern states aimed to preserve slavery in fact if not in law. The states enacted Black Codes which barred the black freedmen from exercising basic civil rights, including the right to bear arms. Mississippi’s provision was typical: No freedman “shall keep or carry fire-arms of any kind, or any ammunition.” …The Klansmen, unlike the freedmen, had horses, and thus the tactical advantages of mobility. In a few months, the Klan triumph was complete. One freedman recalled that the night riders, after reasserting white control, “took the weapons from might near all the colored people in the neighborhood.” …Sometimes militias consisting of freedmen or Unionists were able to resist the Klan or other white forces. In places like the South Carolina back-country, where the blacks were a numerical majority, the black militias kept white terrorists at bay for long periods. …In areas where the black militias lost and the Klan or other white groups took control, “almost universally the first thing done was to disarm the negroes and leave them defenseless,” wrote Albion Tourgeé in his 1880 book The Invisible Empire. …As Jim Crow intensified, other Southern states enacted gun registration and handgun permit laws. Registration came to Mississippi (1906), Georgia (1913), and North Carolina (1917). Handgun permits were passed in North Carolina (1917), Missouri (1919), and Arkansas (1923). As one Florida judge explained, the licensing laws were “passed for the purpose of disarming the negro laborers… [and] never intended to be applied to the white population.”

With this historical knowledge, this poster now makes a lot of sense.

It quotes the infamous Dred Scott decision, which also was predicated on the state-sanctioned oppression of African-Americans.

While I wasn’t aware of the racist history of gun control, I did have some familiarity with the fact that totalitarian governments traditionally have wanted to disarm citizens.

I wrote, for instance, about gun control initiatives by the Venezuelan dictatorship.

And this superb poster from Jews for the Preservation of Firearms Ownership is the 4th-most viewed post in the history of my blog.

So this image is in that tradition.

Now let me make an important point.

I don’t think advocates of gun control in the United States are racists or fascists. I assume that 99 percent of them are guilty instead of being naive.

Which is why I’m always delighted to share admissions from honest leftists that gun control simply doesn’t make sense.

P.S. Switching to a different topic, a French economist (no, that’s not a contradiction in terms) was awarded the Nobel Prize about a week ago.

He’s apparently considered to be on the left of the philosophical spectrum, yet it’s worthwhile that even he thinks there’s too much statism in his home nation.

Hours after he won the economics Nobel Prize, Tirole said he felt “sad” the French economy was experiencing difficulties despite having “a lot of assets”. “We haven’t succeeded in France to undertake the labour market reforms that are similar to those in Germany, Scandinavia and so on,” he said in telephone interview from the French city of Toulouse, where he teaches. France is plagued by record unemployment and Tirole described the French job market as “catastrophic” earlier on Monday, arguing that the excessive protection for employees had frozen the country’s job market. “We haven’t succeeded also in downsizing the state, which is an issue because we have a social model that I approve of – I’m very much in favour of this social model – but it won’t be sustainable if the state is too big,” he added. Tirole remarked that northern European countries, as well as Canada and Australia, had proven you could keep a welfare social model with smaller government. In contrast, he said France’s “big state” threatened its social policies because there will not be “enough money to pay for it in the long run”.

He’s exactly right. I’m a libertarian, so I don’t want the government involved in areas such as housing, healthcare and income redistribution.

But even if you favor larger government, there’s a giant difference between having the public sector consume 57 percent of economic output (as in France) or a more reasonable amount, such as what’s found in Canada or Australia (as Professor Tirole mentioned).

By the way, I made the same point as Tirole when I spoke last year in Paris. I asked my audience whether they thought they got better and/or more services than the citizens of Switzerland, where the burden of government spending is far less onerous.

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Remember when Paul Krugman warned that there was a plot against France? He asserted that critics wanted to undermine the great success of France’s social model.

I agreed with Krugman, at least in the limited sense that there is a plot against France. But I explained that the conspiracy to hurt the nation was being led by French politicians.

Simply stated, my view has been that the French political elite have been taxing the nation into stagnation and decline and there is every reason to think that the nation is heading toward a severe self-inflicted fiscal crisis.

But it turns out I may have been too optimistic. Let’s look at some updates from Krugmantopia.

We’ll start with a report from the Financial Times, which captures the nation’s sense of despair.

…if the country’s embattled socialist president was hoping for some respite from what has been a testing year, he can probably think again. … the French economy barely expanded during the second quarter of this year after stagnating in the first. …the result will make it all but impossible to achieve the government’s growth forecast for 2014 of 1 per cent… Bruno Cavalier, chief economist at Oddo & Cie, the Paris-based bank, says one reason is the huge constraint on disposable income posed by France’s tax burden, which has risen from 41 per cent of GDP in 2009 to 45.7 per cent last year – one of the highest in the eurozone.

The government has responded by rearranging the deck chairs on the political Titanic.

French President Francois Hollande dissolved the government on Monday after open feuding among his Cabinet over the country’s stagnant economy. …France has had effectively no economic growth this year, unemployment is hovering around 10 percent and Hollande’s approval ratings are sunk in the teens. …Hollande’s promises to cut taxes and make it easier for businesses to open and operate have stalled, in large part because of the divisions among his Socialist party.

For what it’s worth, Hollande’s commitment to tax cuts and deregulation is about as sincere and genuine as my support for the Florida Gators.

After all, he’s the guy who imposed a new top tax rate of 75 percent (which he said was “patriotic”)

And that’s just the personal income tax. When you add other taxes to the mix, you get a system that is so onerous that more than 8,000 households paid more than 100 percent of their income to the French government!

No wonder successful people are escaping to other nations.

By the way, if you’re wondering why Hollande is appointing new people to his government, it’s because some of his ministers were complaining that so-called austerity was inhibiting Keynesian spending policies that would make government even bigger!

Austerity measures being pursued by France and elsewhere in the euro zone are quashing growth, FrenchEconomy Minister Arnaud Montebourg was quoted saying on Saturday… The outspoken minister, a fierce critic of budget austerity, is known for frequent attacks on big business and the European Commission, which he accuses of strangling economic recovery with its prioritization of deficit reduction. …While not as strident as the comments by Montebourg, French Finance Minister Michel Sapin similarly argued for moderated deficit reduction in an interview published in Italian newspaper La Repubblica. “The euro zone is at risk of getting stuck in a spiral of weak or negative growth. We absolutely must slow down the rate of deficit reduction,” Sapin was quoted as saying.

In other words, the French policy debate is between the far left and the crazy left.

Which is why this dour assessment from across the English Channel probably understates the depth of the problem.

Since Francois Hollande was elected President in 2012, French GDP per capita has fallen. Its economy is expected to grow by just 0.7 per cent this year. …the country now looks set for stagnation – with its unemployment rate entrenched above 10 per cent (and youth unemployment double that). …the problems are obvious. The French government accounts for a massive 57.1 per cent of the economy in state spending and transfers. The tax burden is so high at 57 per cent for French employees (the sum of income, payroll taxes, VAT, and social security contributions as a proportion of the gross employment cost)… The World Economic Forum says that France is near the worst performer on a host of measures: positioned 130 out of 148 countries for its regulatory burden, 134 for the tax rates on profits, 135 on cooperation in labour-employer relations, and 144 on hiring and firing practices. …No wonder investors have voted with their wallets. FDI into France is estimated to have fallen by 95 per cent in the last decade.

Wow. No wonder the French people are so glum about the economy, as reported by the EU Observer.

…in France, the eurozone’s second biggest economy, eight percent felt the country’s economy was good. …Only 34 percent feel the jobs crisis has peaked compared with 60 percent who are bracing themselves for a darker economic future.

Which raises a good question. If the French people are so pessimistic about the future, why do they keep electing socialists?!?

Particularly when they tell pollsters they support smaller government!

Last but not least, we have a story from the New York Times about the mind-boggling regulation and protectionism that , mostly because it illustrates the pervasive statism that is strangling France.

Alexandre Chartier and Benjamin Gaignault work off Apple computers and have no intention of ever using the DVD player tucked in the corner of their airy office. But French regulations demand that all driving schools have one, so they got one. Mr. Chartier, 28, and his partner, Mr. Gaignault, 25, are trying to break into the driving school business here… But they are not having an easy time. The other driving schools have sued them, saying their innovations break the rules. …their struggle highlights how the myriad rules governing driving schools — and 36 other highly regulated professions — stifle competition and inflate prices in France.

And what are these rules and regulations, other than the bizarre requirement to own a DVD player?

“The system is absurd,” said Mr. Koenig, who was a speechwriter for Christine Lagarde when she was the French finance minister. …he has been campaigning for changes, including calling for an overhaul of the written test, which he says goes far beyond making sure that a person knows the rules of the road. Instead, he said, it seems intended to trip students up with ridiculous questions, such as: If you run headlong into a wall, would you be safer if you were in a tank or in a car? (The answer: a car, because it has air bags.) …Some studies have concluded that the French are probably paying 20 percent more than they should for the services they get from regulated professions, which include notaries, lawyers, bailiffs, ambulance drivers, court clerks, driving instructors and more. …Francis Kramarz, an economist who has studied the French licensing system, says that barriers to getting a license are so high that about one million French people, who should have licenses, have never been able to get them. …Mr. Kramarz said that it often costs 3,000 euros, or about $3,900, to get a license. But others said the average was closer to 1,500 to 2,000 euros.

Gee, isn’t big government wonderful!

The statists say it helps the less fortunate, but it seems the poor are the ones most hurt by regulations that push the cost of getting a license to $2,000 or above.

P.S. In an uncharacteristic expression of mercy, President Hollande has announced that he wants to limit the fiscal burden so that no taxpayer has to surrender more than 80 percent  of their income to the government.

P.P.S. No wonder Obama will never make America as bad as France, regardless of how hard he tries.

P.P.P.S. Here’s the best-ever cartoon about French economic policy, though this cartoon deserves honorable mention.

P.P.P.P.S. Even the establishment, as indicated by stories in Newsweek and the New York Times (as well as The Economist and the BBC), is noticing that the French economy is dismal.

P.P.P.P.P.S. No matter how much I mock France, there are places in Europe with even worse economic policy.

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If you appreciate the common-sense notion of the Laffer Curve, you’re in for a treat. Today’s column will discuss the revelation that Francois Hollande’s class-warfare tax hikes have not raised nearly as much money as predicted.

And after the recent evidence about the failure of tax hikes in Hungary, Ireland, Detroit, Italy, Portugal, the United Kingdom, and the United States, this news from the BBC probably should be filed in the category of “least surprising story, ever.”

The French government faces a 14bn-euro black hole in its public finances after overestimating tax income for the last financial year. French President Francois Hollande has raised income tax, VAT and corporation tax since he was elected two years ago. The Court of Auditors said receipts from all three taxes amounted to an extra 16bn euros in 2013. That was a little more than half the government’s forecast of 30bn euros of extra tax income.

And why have revenues been sluggish, generating barely half as much money as the politicians wanted? For the simple reason that Hollande and the other greedy politicians in France failed to properly anticipate that higher tax rates on work, saving, investment, and entrepreneurship would discourage productive behavior and thus lead to less taxable income.

…economic growth has been inconsistent and the unemployment rate hit a record high of 11% at the end of 2013. The French economy saw zero growth in the first three months of 2014, compared with 0.2% growth three months earlier. The income tax threshold for France’s wealthiest citizens was raised to 75% last year, prompting some French citizens, including the actor Gerard Depardieu, to leave the country and seek citizenship elsewhere in Europe.

But we do have some good news. A French politician is acknowledging the Laffer Curve!

French Prime Minister Manuel Valls, who was appointed in March following the poor showing of Mr Hollande’s Socialists in municipal elections, appeared to criticise the president’s tax policy by saying that “too much tax kills tax”.

By the way, France’s national auditor also admitted that tax hikes were no longer practical because of the Laffer Curve. Heck, taxes in France are so onerous that even the EU’s Economic Affairs Commissioner came to the conclusion that tax hikes were reducing taxable income.

Though here’s the most surprising thing that’s ever been said about the Laffer Curve.

…taxation may be so high as to defeat its object… given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget.

And I bet you’ll never guess who wrote those words. For the answer, go to the 6:37 mark of the video embedded in this post.

P.S. Just in case you’re not convinced by the aforementioned anecdotes, there is lots of empirical evidence for the Laffer Curve.

  • Such as this study by economists from the University of Chicago and Federal Reserve.
  • Or this study by the IMF, which not only acknowledges the Laffer Curve, but even suggests that the turbo-charged version exists.
  • Or this European Central Bank study showing substantial Laffer-Curve effects.
  • Or this research from the American Enterprise Institute about the Laffer Curve for the corporate income tax.

P.P.S. For other examples of the Laffer Curve in France, click here and here.

P.P.P.S. To read about taxpayers escaping France, click here and here.

P.P.P.P.S. On a completely different subject, here’s the most persuasive political ad for 2014.

I realize the ad doesn’t include much-needed promises by the candidate to rein in the burden of government, but I’m a bit biased. And in a very admirable way, so is Jack Kingston.

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While I mostly focus on bad government policy in the United States, I also think we can learn lessons from what’s happening in other nations.

In some cases, I share positive stories, such as the success of privatized Social Security in Australia, nationwide school choice in Sweden, and genuine spending cuts in the Baltic nations.

In most cases, though, I’m pointing out bad policy.

Some topics deserve special treatment, such as the ongoing horror story of government-run healthcare in the United Kingdom.

In other cases, though, I share one-off stories about government incompetence and stupidity.

*Such as taxpayer-financed friends for mass murderers in Norway.

*Financing a giant “Burger Boy” in the United Kingdom.

*Promoting welfare tourism in the European Union.

*Spending $30 to collect $1 of tax in Germany.

*Regulation of coffee enemas in Japan.

Today, we’re going to share more stories of feckless behavior by foreign politicians and bureaucrats.

From Canada, we learn that the government of Manitoba is micro-managing daycare lunches in such bizarre ways that a family was fined because “grains” weren’t included in their kids’ meals.

Kristin Barkiw of Rossburn, Manitoba, Canada brought two of her children home from Little Cub’s Den daycare when she saw that her kids were sent home with a note. …the message told the mom she had failed to provide a nutritionally balanced lunch for her children, 5-year-old Logan and 3-year-old Natalie.  Not only that, Kristin was fined $10, $5 per child, for missing grains in their lunch of leftover roast beef, carrots, potatoes, an orange and milk. Further, the note said that the daycare staff gave Logan and Natalie Ritz crackers to fulfill the nutritional requirement of grains, which some see as a less than nutritious option. The nutritional regulation for daycare lunches is actually law in the province. The Manitoba government’s Early Learning and Child Care lunch regulations state that daycare programs must ensure children are given a lunch with a meat, a grain, a milk product and two servings of fruit and vegetables and any missing food groups must be supplemented by the care provider.

Heaven forbid that parents actually be in charge of what their kids eat!

You won’t be surprised to learn that France is on the list. It appears the government’s rail system is staffed by numbskulls.

France’s SNCF rail company has ordered 2,000 trains for an expanded regional network that are too wide for many station platforms, entailing costly repairs, the national rail operator said on Tuesday. A spokesman for the RFF national rail operator confirmed the error, first reported by satirical weekly Canard Enchaine in its Wednesday edition. …Construction work has already begun to displace equipment and widen hundreds of train platforms to accommodate the new trains, but hundreds more remain to be fixed, he added. …The RFF only gave the dimensions of platforms built less than 30 years ago, but most of France’s 1,200 platforms were built more than 50 years ago. Repair work has already cost 80 million euros ($110 million).

I guess I’m not surprised by that story since the French once built an aircraft carrier with a flight deck that was too small.

In Sweden, a novelty tourist hotel made of ice will have to install fire alarms.

The Ice Hotel, which is rebuilt every year in northern Sweden out of enormous chunks of ice from the Torne River in Jukkasjärvi, Kiruna, will this year come equipped with fire alarms – and the irony isn’t lost on the staff. “We were a little surprised when we found out,” hotel spokeswoman Beatrice Karlsson told The Local. …While it might sound crazy that a building made of water needs to be equipped with fire alarms, the fact that the hotel is built from scratch every year means it needs to abide by the rules that apply to every new building, rules set by the National Housing Board (Boverket).

If I had to pick a prize from today’s list, this might win the prize. It’s a stunning display of government in action. Though probably not as bad as the time it took a local government in the U.S. two days to notice a dead body in a community swimming pool.

And from Germany, we have a story about massive cost overruns incurred by a pan-European bureaucracy that supposedly helps encourage fiscal discipline.

“Do as we say, not as we do”

It was meant to cost £420m of European taxpayers’ money but the bill for the new headquarters of the European Central Bank (ECB) has more than doubled to £960m and could rise even further. The bank is the key enforcer of austerity measures in the troubled eurozone nations, but appears to be having trouble keeping its own finances in order. The 45-storey glass and steel building, made up of two joined towers, will be more than 600ft tall when it is finished. But it has already been under construction for a decade and is three years behind schedule.

Of course, it goes without saying that cost overruns and delays are par for the course with government.

Just in case anyone thinks I’m picking on foreigners, here’s a story that makes me ashamed to be American. Or, to be more precise, it makes me ashamed that we have some of the world’s most pathetic bureaucrats.

Honors Night at Cole Middle School is no more. Parents got an email from Principal Alexis Meyer over the weekend saying some members of the school community “have long expressed concerns related to the exclusive nature of Honors Night.” The email goes on to say students will be recognized in other ways. …Parents and students are not happy with the change. “How else are they suppose to learn coping skills, not just based on success, but relative failure, it might not be failure, but understand what it takes to achieve high levels,” said parent Joe Kosloski. …“That made me wanna work harder and a lot of other people work harder, so just the fact you can’t work towards it anymore then there is no goal,” said 8th grade student Kaitlyn Kosloski. Changes are also being made to the middle school’s sports awards.

You read correctly. They also won’t recognize athletic success.

I guess everyone gets a participation medal.

Except, of course, we still single out kids who commit horrible crimes in school. Such as having toy army men, eating a pop tart the wrong way, building a motion detector for a school science experiment, or countless other “offenses” that trigger anti-gun lunacy by brainless bureaucrats.

The moral of these stories, both from America and around the world, it that government is not the answer. Unless, of course, you’ve asked a really strange question.

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