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What I learned on my Summer Holiday

France may be the birthplace of Cartesian logic; however, these rationalist roots are nowhere to be seen in President Hollande's proposed economic and tax policies. I have written before in this blog to criticize then candidate Hollande's plan to reduce the retirement age in France from 62 to 60, enforce the 35 hour cap on working hours, and raise the top tax rate to 75% (actually far higher when social charges are included). These are not only fiscally reckless for a nation with a stagnant economy, a huge public debt and generous social benefits promised to an aging population, but they reinforce a view, already all too prevalent in France, that work is some horrible affliction designed by evil plutocrats to interfere with "real life," and which should be restricted to the smallest corner of that life as possible.

I did not expect Francois Hollande, once at home in the Elysee Palace, to suddenly succumb to free market fever, but I did expect him to be consistently socialist. A candidate who declares that he hates "rich people" should stick to his guns. Thus, it came as quite a surprise when I learned this summer that Hollande was proposing to create an exception to the confiscatory 75% tax bracket for professional athletes and creative talents. Now those who know me well can attest to my love of Euro Cup calibre football and French art and film, but I cannot see why Zlatan Ibrahimovic deserves millions at PSG but a self-made man like Maurice Levy who built the advertising agency Publicis into a global power does not.

I do, of course, see the awkward policy position President Hollande backed himself into because it would certainly be embarrassing if French club teams consistently lost against international competition when the talent (including French players) chose to sell their skills elsewhere. But what if it didn't matter? What if the Messis, van Persies and Ballotellis are no more talented than the sub-one million Euro players? Why not tax all workers who earn more than one million Euros at the top rate? This at least would be a consistent policy and would be an interesting experiment to run, with the downside limited to disappointed football fans. If this is not an appealing prospect, then why run the same experiment in the business world when the risk is fielding a second-string team to help grow the economy?

The answer can only be that French society believes that talent matters in sports and the arts (and I agree), but that it does not matter or at least not that much when it comes to running companies and other institutions. Putting aside my reservations about who is competent to deicide which occupations require talent and which do not (what about brain surgeons?), as an investor I do not want to put my money into a company that is at a significant government-imposed disadvantage when hiring and retaining talented staff.

So what I learned on my summer holiday in France is that the country remains a great place to take a vacation.
Published Friday, September 7, 2012 6:07 PM by Tom Glocer



dishap12 said:

nice post
September 16, 2012 5:14 PM

MaFalt1 said:

Hi Tom,
I agree with your comments. France is a country I know well, I have lived and worked there and return there frequently for vacations. The country has such an immense potential and richness, if only proper reform and changes were implemented politically. Unfortunately, the proper political will has really been lacking for such a long time at a national level. There was a lot of positive expectation when J. Chirac came to power after the Mitterand years. Chirac appointed a very able PM A. Juppe, but Chirac lacked the political nerve to implement proper economic reform, he was good in many other ways as head of state. I find it sad to see that so many French people voted for very populist candidates in the first round of this year's Presidential elections (Melenchon on the far left, LePen on the far right). Both these candidates offer to vision at all and have no experience of economic issues. On the issue of taxation and as you write, either you apply the same tax rate for all people earning Euro 1 million a year, you do not create special categories that apply only to some people. F. Holland states that these measures are temporary during a two year duration but I am certain that many people in France do not trust this statement, that it will not be extended after two years or some version of the high rate). All this sends completely the wrong message for entrepreneurs that need to take risks, try and employ more people etc.

BTW, we did not have the opportunity to talk on that occasion but I did attend a meeting a few years ago in London arranged by the Finnish-British Chamber of C. where you spoke. I always remember that your approach was more of a Q&A dialogue with the audience rather than a speech followed by questions, a refreshing approach that more business leaders should adopt when they are invited to speak to a wider audience! Best rgds, Marc
September 17, 2012 3:45 AM

joshuafolges said:

September 20, 2012 2:39 AM

Lisawhite said:

nice blog
November 8, 2012 8:14 AM

Lisawhite said:

nice post
November 8, 2012 8:15 AM

deivid said:

Francia, es bonito y amigable pero dias muy tristes
November 14, 2012 10:26 AM

ninakpoole said:

Fantastic Info!!!!
November 24, 2012 2:44 AM

joseluis said:

Buen blog, muy completo
December 3, 2012 11:18 AM

alicecooper said:

I like france, maybe one day, i will go to there, is a good post, wich give me some help.
December 5, 2012 11:10 PM

frank said:

good blog thanks for sharing
December 27, 2012 8:34 AM

hoteles en cancun said:

I want to share with you thanks to this forum, so nice and happy I came to Cancun, a magnificent hotel in great detail and exceptional treatment. I recommend the truth.
Have you visited you cancun?
January 6, 2013 3:49 PM

terencejimmy said:

France is really a good country and paris is the most beautiful city to live and also for holidays.

February 1, 2013 1:28 AM

dave12 said:

Hello known France in 2008 is a country so beautiful and rich. Right now passing it may be affected by the crisis badly and Hollande decisions but will resist no matter what something is one of the leading countries of the European Union. The economy is handled by Germany and France.
July 18, 2013 1:59 PM
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