CAPITALISTS USE MONEY, SOCIALISTS THROW IT AWAY

Winston Churchill said

“The best argument against democracy is a five minute conversation with the average voter”.

The average voter in France appears to be heading towards handing over the country to the Socialists, seemingly more as a way of showing their distaste for Nicolas Sarkozy, the Centre-Right incumbent President, rather than any specific appeal of the Socialist agenda nor its candidate Francois Hollande, nicknamed Monsieur Flamby (Mr. Pudding), as much for his flabby political beliefs as for his long time rotundness. (See “A Dummy’s Guide to French Politics” posted 28th November, 2011).

By David Monniaux; via Wikimedia Commons


If he does win it will mean that France will join the only four other countries in the world who currently openly describe themselves as Socialist being China, Laos, Vietnam and Cuba … a great club to join, and with even some other French speakers in the group.

Author: Jake Choules; via Wikimedia Commons


Hollande’s answer to solving France’s economic difficulties, like all socialist governments worldwide before him, is to increase taxes and to massively increase the number of public sector employees, seemingly in an attempt to ensure that any incremental tax trove is spent without delivering any increase in productive useable output nor any nett national value.To make it even harder for France economically he has also said that he will roll back the retirement age from 62 to 60, heading in the opposite direction to every other country in the world generally moving to 67 based on inreasing life expectancies and diminishing workforces.

Author: Jackolan1 (own work); via Wikimedia Commons


Earners over € 1 million annually in France will be taxed at 75% but not in an attempt to “soak” high income earners, but as a way of allowing them to be patriotic (Hollande’s words not mine). The standard marginal tax rate will also be increased from 41% to 45%, as well as proposed increases in Capital Gains tax and Wealth tax, which I consider to be one of the greatest despicable examples of state sponsored theft.

Taxes will also be raised on evil (but as yet undefined) “big business” to ensure that they do not have the ability to generate any jobs that would actually add to the country’s wealth or long term well-being, and which will ensure that businesses keep moving everything that can be moved to overseas locations, including their executive teams who will be branded as non-Patriots because they do not wish to pay 75% in income tax.

Interestingly, I believe it will also have quite some impact on France’s second most popular sport of soccer (the first being the holding of national worker’s strikes) as high paid French soccer stars have to weigh up the price of this new definition of patriotism, being the right to pay the 75% income tax on their inflated salaries(which only they and a diminishing number of executives will have to pay).

I had always believed that patriotism needed to be a widespread national initiative rather than just the sorting out of some individuals from the herd for a sacrifice that others will not be asked to make.
London already has a French expatriate population of 400,000 making it France’s sixth largest city, and Hong Kong which had a handful of French expatriates 10 years ago, now has over 10,000 and is growing at an estimated rate of 60% annually. In fact whereas the French long had a reputation of not readily leaving home, beyond the occasional colonial foray, France now has nearly 3 million expatriates globally, who I am sure will think twice before rushing back home, despite the strong attraction of foiegras and boudin noir, which can now be sourced anywhere in the world anyway.

Hollande’s fundamental platform also includes hiring 210,000 additional civil servants including creating 60,000 new teaching positions, as well as rescinding the Sarkozy government initiative of allowing only one replacement for every two civil servants who retire. In a country where over 20% of French workers are in government sponsored jobs, with another 20% in the educational sector, plus more in government owned enterprises (compared with 8% total in US), it is hard to understand the benefit to the country in increasing the number of jobs somehow paid for by the taxpayers.

The last time the Socialists had control of the country was when Francois Mitterand became President in 1981 and the Socialists dominated all aspects of French politics after having been in opposition since 1958. They immediately nationalised 12 of the largest industrial companies in France giving the government control of industries as diverse as telephone and telecommunications, iron and steel, electric power, pharmaceuticals and chemicals, electronics, aeronautics, gas, coal, railways and transportation as well as large parts of the banking sector such as the BNP. They also implemented a major spending spree that quickly brought the country to its knees and by 1983 had to be curtailed and replaced with an era of austerity to try and bring the country back to some measure of fiscal stability.

Author: Tangopaso; via Wikimedia Commons


After having seen so many socialist governments get it so very wrong so many times, in so many countries, how can the French people not see past Hollande’s crash diet, new suit and hyped up marketing, and remember that socialists always tend to fatten up again when they do get their snouts into the trough? (See “Are we Students or Prisoners of History?” posted 13 February, 2012).

It is unfortunate that Sarkozy managed to create an image that made him look like a lightweight playboy to French voters, as he has shown considerable leadership in many ways including attempts to contain the euro crisis and to keep France afloat despite the loss of the AAA rating during his term. The Socialists, in contrast, have already announced that they will renegotiate the EU Fiscal Compact which will deal another blow to weakened European unity and to the health of the ailing Eurozone currency.

Author: Wilson Dias/Agência Brasil; via Wikimedia Commons


Francois Hollande has also said that he will pass legislation that will allow euthanasia for the terminally ill.
Unfortunately, in France, euthanasia may also become one viable exit option for more than just the terminally ill, as the socialists never seem to learn that there will never be enough tax-take that can be squeezed from its citizens nor from a diminishing and penalised business community needed to support an exploding public sector with its incumbent spiralling costs and bottomless pensions pit.

David Horowitz, American writer and reformed Leftist, said it best

“In practice, socialism didn’t work. But socialism could never have worked because it is based on false premises about human psychology and society, and gross ignorance of human economy”

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12 Responses to CAPITALISTS USE MONEY, SOCIALISTS THROW IT AWAY

  1. Les, it might be a good idea to start packing…
    See you in Switzerland!

    BTW, there is a beautiful villa for sale in Geneva.

    • leshayman says:

      Caroline, thanks for the advice on Geneva, but for a move to Switzerland I would rather have someplace with skiiable slopes rather than expensive jewellers . 🙂

  2. Les, it sounds like an retirement at… 60 ;-). In that case, see you in Saas-Fee.

  3. Scott says:

    While Robin hood on steroids maybe Hollande’s idea of socialism i think competing with socialism Tianamen square style might just catch him off balance.
    Ironic that socialism seems to work best with appalling human rights!
    I know you have said we get the leaders we deserve but i have been told you reap what you sow not here’s 25% after your harvest.
    Regards Scott

  4. lucas says:

    This article is very representative of somebody writing about something he doesn’t understand anything about.

    “If he does win it will mean that France will join the only four other countries in the world who currently openly describe themselves as Socialist being China, Laos, Vietnam and Cuba … a great club to join, and with even some other French speakers in the group.”

    Are you really comparing Socialism in Cuba, Vietnam, Laos and China with French socialists’ program? I won’t talk about the reference to French language, it’s not worth it.
    I think there’s a vocabulary mistake here.

    Socialism is not communism, it is not the contrary of capitalism, it is not the fact that the capital and the productive power is owned and shared by the community as a whole, it is not class war, it is not dictatorship of proletariat…
    Socialism (i.e. left-wing parties, and not extreme left-wing parties) in France can be compared to democrats in the States, or to the labour party in the UK, and many more, with varieties of course, all around the world.

    Socialism is by essence the will to create a more egalitarian society with a higher median level of well being for the people. Socialism in France has always been in favor of democracy, republic, progress and social harmony. The idea is that humans can be less egoistic and share more for the benefit of the society.

    It’s not a very stupid idea knowing that in 2000 only, it got worse since then, the richest 1% of the adult world’s population owned 44% of total wealth, the richest 2% owned 85% of total wealth. Meanwhile, the poorest 50% owned 1% of global wealth. Does that sound normal to you? Are you going to say it is their fault because they didn’t work enough?

    Right-wing parties were always conservative, more inegalitarian, more egoistic in the way they view the human being, and often anti republican in France (pro monarchy, anti laicity…).

    Socialism is trying, after 30 years of errance, to go back to its cited roots. Then we can debate on the legitimacy of this or that reform. But let’s not compare them to claimed COMMUNIST political systems that embraced capitalism but without democracy.

    And you forgot North Corea in your list.

    Check your facts before writing and take some distance with already thought theories about politics, otherwise you will never be convincing and always appear as a fool.

    Best regards,
    a centrist,
    Lucas.

    • leshayman says:

      Lucas, I find it amazing that the only point you pick up on and take seriously in this blog piece is the one which is tongue-in-cheek sarcasm. I did not compare French socialism to communism, just that there are now only 4 countries left in the world that OPENLY describe themselves as being socialist, which even North Korea does not actually do.

      The whole point of my arguement is that one cannot redistribute wealth if there is not enough wealth generated to redistribute, and it has been shown repeatedly that just taxing the rich more and more is self defeating, and that just adding more public servants does nothing for national wealth and only increases the burden on the tax payer.

      By the way, I disgaree totally with your statement that socialism is ” …the will to create a more egalitarian society with a higher median level of well being …”, when it is in reality the will to bring everyone down to the lowest common denominator possible, hence the fact that socialist governments always just increase taxes and simultaneously increase government spending, which did not work under the UK or Australian Labour governments, for example, nor anywhere else in the long term.

      As a last point, you cannot be serious about believing that the American Democratic party is the same as the French Socialist party !!! A poor US democrat looks at a wealthy person and says “with hard work I can become like you”, whereas a poor French socialist looks at a wealthy person and says “with hard work I can make you become like me”. Les

  5. Bruce Rankin says:

    Hello Les,

    very well put…… it took Margaret Thatcher the best part of a decade to get rid of most of the entrenched socialism in the UK and restore the UK to relative economic health. Now we see a French candidate wanting to apply more of the socialist medicine to make a bad situation inevitably worse for France. Quel horreur!

    By the way I think I heard your title in a slightly different form by James Martin at one of his Sydney seminars circa 1979: “Business generates wealth, governments consume wealth” so it all gets frittered away. They never learn.

    Best, Bruce

    • First let me say that although my name sounds French I am not but these remarks grabbed my attention as they seemed incorrect or exagerated :

      “only four other countries in the world who currently openly describe themselves as Socialist being China, Laos, Vietnam and Cuba …” I don´t believe France will start calling itself the “Socialist Republic of France” if the socialists were to get elected, comparing France to this set of countries seems well .. heu an hyperbole maybe ? The tax rates you mention are relatively comparable across Western Europe except maybe Switzerland.

      “(the first being the holding of national worker’s strikes)” : I am afraid this is stereotype, please have a look at these statistics from the Economist : http://www.economist.com/node/16976532 or http://media.economist.com/images/images-magazine/2010/09/11/NA/20100911_NAC229.gif

      Personally I find all French candidates, and in general most Western Europeans leaders pretty unsuited for the current Globalizing and European situation/challenges. Is it caused by lobbies, the market grabbing the biggest talents for better payed positions, a general decadence of democratic institutions I do not know but I felt more confident when European leaders were of the generation that had known the war.

      • Actually I had a second look at the stats and they are not as good as I recalled reading them a few years back, it accounts for days of work lost in millions and this way the picture does not look fantastic for France although it does not take advantage of the country´s side ( per capita days of work lost ) so Canada and Spain are doing pretty bad it seems. A clearer picture should show per capita days of work lost.

      • leshayman says:

        Thierry, thanks for your input.

        The 2 comments you pick on were just “tongue-in-cheek”. I do not REALLY believe that French Socialism can actually be directly compared to these 4 communist countries, as was the reference to the French penchant for strikes. I just thought that they were “interesting” references, even if they pushed reality somewhat.

        What I am serious about is the fact that just raising taxes and adding public sector jobs does not create long term benefit for the country, just makes it harder for everyone eventually.
        Firstly I beleieve that 75% tax for high income earners will just accelerate the departure of wealthier people from France, which is already significant anyway.
        Secondly, I believe that it would be better for France for the ruling powers to make it easier for the private sector to create jobs, maybe even with some tax breaks for those that hire and seriously train young people for example, than just increasing taxes on “big business”. France also cannot support retirement at 60 when life expectancy has grown so dramatically since its inception, nor the number of public sector employees with jobs for life, and then state funded retirement, that it has now, without the added burden of another 210,000.
        I believe that the French actually love to work, rather than the image they have in Europe, but that they are badly managed. Unfortunately this is as true in Government as it is in the corporates. Les

  6. Thanks for the reply Les. Agree with you on the government jobs although I am less of a liberal market extremist then a few years back ( Pre lehmann ) and believe we need strong institutions to guarantee equity ( as usual paying some price with a loss of efficiency ) or otherwise we will have a political problem, just look at the resurgence of extreme right across Europe … So as usual the problem is getting the right balance … France could be a little high, I am not sure how to judge this.

    Regarding the high 75% tax rate on revenues above 1 million, well in principle I actually agree with the idea although in practice it cannot be implemented at a national level, people will leave or France has to adopt a US style citizenship based taxation system ( versus domiciled based ) which Sarkozy has already mentioned as well as a few other European countries. Some French will sore at the idea of having to loose there french nationality like most Americans.

    I agree with the idea because the effects of Globalization has been to push the revenues of the top 1/1000 up while leaving the others in the dust or worse in some cases and this inequity is proven to lead to social / political tensions. Globalization which from an “efficient allocation of capital and labor” perspective is a good thing since the global utility ( GDP ) is thereby enhanced should therefore benefit to all (including those that are sacrificed for the general well being).

    ( Its interesting that thinking about the old worn out notion of equity to efficiency tradeoffs i.e. a simple linear relationship whereby increasing one decreases the other, the developments of Globalization now make me thing that this relationship is only linear at the extremes, but in fact some increase in efficiency will lead to increase in equity and vice versa at relatively low levels of both ? Just a thought but seems to make sens if you take a country such as India with a very low equity and improve water distribution to increase it, this would also result in a higher efficiency )

    From a Geo economical perspective, France and most western countries are going through tough times ( the workers at least ) simply because the end of the cold war and the introduction of 2,5 billion BRIC members on the labor market has shifted the bargaining power from “workers to the capital”. In addition there is also the demographic issue with an aging European population. I don’t want to talk about the debt problem because it is only a proxy in fact for the above two. One of the available solutions is to increase Europe in Europe thus allowing returns of scales ( defense costs for example ), improved labor mobility across the Union and International “bargaining power” on major Ecological, Energy etc … decisions at the Global level ( Patents, WTO etc … ).

    To conclude on a pesonal note and in regards to your perspective which I fully understand thanks to having both Latin and Germanic roots as well as a healthy dose of “Anglo Saxon” influence I think I can summarize by saying that I could not work in France but I could not live in the US ( with exceptions on both sides of course ).

  7. leshayman says:

    I came across a wonderful quote from Winston Chruchill about socialism ….

    “Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.”

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