Some things in life are very dependable. Every year, for instance, the swallows return to Capistrano.
And you can also count on Dan Mitchell to wax poetic about the looming collapse of French statism.
- Back in 2011, I said France was engaged in economic self-destruction.
- In September 2012, I wrote that it was time to start the countdown for France's fiscal crisis.
- In October of that year, I pontificated about France's looming fiscal suicide.
- Last April, I warned that the fuse was burning on France's fiscal time bomb.
- In June of 2013, I stated that the looters and moochers in France were running out of victims to plunder.
- And in October of last year, I expounded on France's economic death spiral.
Geesh, looking at that list, I guess I'm guilty of - in the words of Paul Krugman - being part of the "plot against France" by trying to discredit that nation's economy.
Or maybe I'm just ahead of my time because we're now seeing articles that almost sound like they could have been written by me appearing in establishment outlets such as Newsweek. Check out some amazing excerpts from an article by Janine di Giovanni, who lives in France and serves as the magazine's Middle East Editor.
...what is happening today in France is being compared to the revocation of 1685. ...the king closed churches and persecuted the Huguenots. As a result, nearly 700,000 of them fled France, seeking asylum in England, Sweden, Switzerland, South Africa and other countries. The Huguenots, nearly a million strong before 1685, were thought of as the worker bees of France. They left without money, but took with them their many and various skills. They left France with a noticeable brain drain.
It's happening again, except this time the cause is fiscal persecution rather than religious persecution. French politicians have changed the national sport from soccer to taxation!
Since the arrival of Socialist President François Hollande in 2012, income tax and social security contributions in France have skyrocketed. The top tax rate is 75 percent, and a great many pay in excess of 70 percent. As a result, there has been a frantic bolt for the border by the very people who create economic growth – business leaders, innovators, creative thinkers, and top executives. They are all leaving France to develop their talents elsewhere.
It's an exaggeration to say "they are all leaving," but France is turning Atlas Shrugged from fiction to reality.
Many of the nation's most capable people are escaping - ranging from movie stars to top entrepreneurs.
What I find most amusing is that France's parasitical political elite is whining and complaining that these people won't remain immobile so they can be plundered.
And when the people who have the greatest ability leave, that has an impact on economic performance - and ordinary people are the ones who suffer the most.
...the past two years have seen a steady, noticeable decline in France. There is a grayness that the heavy hand of socialism casts. It is increasingly difficult to start a small business when you cannot fire useless employees and hire fresh new talent. Like the Huguenots, young graduates see no future and plan their escape to London. The official unemployment figure is more than 3 million; unofficially it’s more like 5 million.
The article also gives some details that will help you understand why the tax burden is so stifling. Simply stated, the government is far too big and pays for things that should not be even remotely connected to the public sector.
Part of this is the fault of the suffocating nanny state. ...As a new mother, I was surprised at the many state benefits to be had if you filled out all the forms: Diapers were free; nannies were tax-deductible; free nurseries existed in every neighborhood. State social workers arrived at my door to help me “organize my nursery.” ...The French state also paid for all new mothers, including me, to see a physical therapist twice a week to get our stomachs toned again.
Government-subsidized "toned" stomachs. Hey, maybe big government isn't all bad. Sort of reminds me of the taxpayer-financed breast augmentation in the United Kingdom (British taxpayers also have paid for sex trips to Amsterdam).
More seriously, all the wasteful spending in France erodes the work ethic and creates a perverse form of dependency.
I had friends who belonged to trade unions, which allowed them to take entire summers off and collect 55 percent unemployment pay. From the time he was an able-bodied 30-year-old, a cameraman friend worked five months a year and spent the remaining seven months collecting state subsidies from the comfort of his house in the south of France. Another banker friend spent her three-month paid maternity leave sailing around Guadeloupe – as it is part of France, she continued to receive all the benefits. Yet another banker friend got fired, then took off nearly three years to find a new job, because the state was paying her so long as she had no job. “Why not? I deserve it,” she said when I questioned her. “I paid my benefits into the system."
So what's the bottom line? Well, the author sums up the issue quite nicely.
...all this handing out of money left the state bankrupt. ...The most brilliant minds of France are escaping to London, Brussels, and New York rather than stultify at home. ...“The best thinkers in France have left the country. What is now left is mediocrity.” From a chief legal counsel at a major French company: “France is dying a slow death. Socialism is killing it..."
As the old saying goes, this won't end well. Maybe France will suffer a Greek-style meltdown, but perhaps it will "merely" suffer long-run stagnation and decline.
Which is a shame because France is a beautiful country and is ranked as one of the best places to live, at least if you happen to already have a considerable amount of hard-to-tax wealth.
But bad government can screw up a country, even if it does have lots of natural advantages.
And that's exactly what generations of French politicians have done to France. The tax system has become so bad that more than 8,000 French households had to pay more than 100 percent of their income to the government in 2012.
The French government has announced, by the way, that it intends to cap taxes so that no household ever pays more than 80 percent to the state. Gee, how merciful, particularly since the French President has echoed America's Vice President and asserted that it's patriotic to pay higher taxes.
That's why I'll stand by my prediction that President Obama will never be able to make America as bad as France. Heck, France has such a bad approach on taxes that Obama has felt compelled to oppose some of that country's statist initiatives.
P.S. The big puzzle is why the French put up with so much statism. Polling data from both 2010 and 2013 shows strong support for smaller government, and an astounding 52 percent of French citizens said they would consider moving to the United States if they got the opportunity. So why, then, do they elect statists such as Sarkozy and Hollande?!?