The Fall of France
By Janine di Giovanni / January 03 2014 11:08 AM
Sky-high taxes and overprotective labor laws are driving out the country's best and brightest.
It’s a stretch, but what is happening today in France is being compared to the revocation of 1685. In that year, Louis XIV, the Sun King who built the Palace of Versailles, revoked the Edict of Nantes, which had protected French Protestants – the Huguenots. Trying to unite his kingdom by a common religion, 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.
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.
And it’s a tragedy for such a historically rich country. As they say, the problem with the French is they have no word for entrepreneur. Where is the Richard Branson of France? Where is the Bill Gates?
“Do you see that man in the corner? I’m going to kill him. He’s ruined my life!”
This angry outburst came from a lawyer friend who is leaving France to move to Britain to escape the 70 percent tax he pays. He says he is working like a dog for nothing – to hand out money to the profligate state. The man he was pointing to, in a swanky Japanese restaurant in the Sixth Arrondissement, is Pierre Moscovici, the much-loathed minister of finance. Moscovici was looking very happy with himself. Does he realize Rome is burning?
Granted, there is much to be grateful for in France. An economy that boasts successful infrastructure such as its high-speed rail service, the TGV, and Airbus, as well as international businesses like the luxury goods conglomerate LMVH, all of which define French excellence. It has the best agricultural industry in Europe. Its tourism industry is one of the best in the world.
But 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 cost of everyday living is astronomical. Paris now beats London as one of the world’s most expensive cities. A half liter of milk in Paris, for instance, costs nearly $4 – the price of a gallon in an American store.
Part of this is the fault of the suffocating nanny state. Ten years ago this week, I left my home in London for a new life in Paris. Having married a Frenchman and expecting our child, I was happily trading in my flat in Notting Hill for one on the Luxembourg Gardens.
At that time, prices were such that I could trade a gritty but charming single-girl London flat for a broken-down family apartment in the center of Paris. Then prices began to steadily climb. With the end of the reign of Gaullist (conservative) Nicolas Sarkozy (the French hated his flashy bling-bling approach) the French ushered in the rotund, staid Hollande.
Almost immediately, taxes began to rise.
I did not mind, initially, paying higher taxes than in Britain in exchange for excellent health care, and for masterful state-subsidized schools like the one my son attends (L’Ecole Alsacienne – founded by some of the few remaining Huguenots at the end of the 19th century).
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.” My son’s school lunch consists of three courses, plus a cheese plate.
But some of it is pure waste. 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. Essentially it was seen as a baby-making opportunity (your husband is not going to touch you if you still have your baby fat – how very French!) after World War I, when so many young men were killed in the trenches.
When I began to look around, I saw people taking wild advantage of the system. 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.” Hers is an attitude widely shared.
When you retire, you are well cared for. There are 36 special retirement regimes – which means, for example, a female hospital worker or a train driver can retire earlier than those in the private sector because of their “harsh working conditions,” even though they can never be fired.
But all this handing out of money left the state bankrupt.
Also, France, being a nation of navel-gazers à la Jean-Paul Sartre, refuses to look outward, toward the global village. Who cares about the BRICS – the emerging markets of Brazil, Russia, India, China, and South Africa – when we have Paris? It is a tunnel-vision philosophy that will kill France.
At the World Economic Forum each year at Davos, France is always noticeably underrepresented. Last year, one junior minister, Fleur Pellerin, came because, apparently, she is the only fluent English speaker in the government. “The French don’t like to speak English,” one of her aides admitted wearily. “So they don’t like to come to Davos.”
The most brilliant minds of France are escaping to London, Brussels, and New York rather than stultify at home. Walk down a street in South Kensington – the new Sixth Arrondissement of London – and try not to hear French spoken. The French lycee there has a long waiting list for French children whose families have emigrated.
I grimly listen to my French friends on this topic.
From a senior United Nations official who is now based in Africa: “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. It’s like a rich old family being unable to give up the servants. Think Downton Abbey.”
From a French publisher: “In the past 10 years, the global village has become a reality. The world economy has become so important that a nation-state can no longer play the role that it did 10 years ago. The French have not woken up to that.”
To wake up, France has to rid itself of the old guard, and reinvent itself.
François Hollande made his first trip to China only when he became head of state in 2012 – and he’s 58 years old. The government is so inward looking and the state fonctionnaires who run it are so divorced from reality that it has become a country in denial.
This is partly the fault of the education system, Les Grandes Ecoles – the essential training ground for elite civil servants. Graduates like Hollande; his ex-wife, Segolene Royal, who was the Socialist presidential candidate in 2007; former president Jacques Chirac; and almost all former prime ministers since 1958 still think of France as a superpower. The sad truth is, France is closer to Spain or Italy these days than to the U.K. or Germany.
There are some business visionaries, like Christophe de Margerie, the CEO of multinational oil and gas company Total, who speaks the Queen’s English and spends much of his time working on deals outside of France. But de Margerie is rare.
I love my adopted country. And I don’t want to leave. I want my son to finish his French education, and I don’t want him to run away to work on Wall Street or in the City of London (Britain’s financial district) but to stay and try to build a better France.
To do that, however, politicians like Hollande have to let the people breathe. Creativity and prosperity can only come about when citizens can build, create, and thrive.
