France's discomfort with capitalism

December 02, 2012|Robert L. Ehrlich Jr

Historians note the American alliance with King Louis XVI sustained the American cause during the darkest days of the Revolution.

The history is impossible to escape. But for the deal struck in February 1778, General Washington and his Continental Army would likely not have survived.

Nevertheless, and despite a successful alliance in two world wars, taking the French to task has become a popular American sport.

French resistance to U.S. foreign policy moves is one reason. Some may recall France's refusal to allow American fighter bombers into its airspace during Reagan-era bombing runs on Moammar Gadhafi's Libya (this in response to Libya's role in the terrorist bombing of a West German discotheque in 1986). And who could forget the re-labeled "Freedom fries" (in lieu of French fries) served in Capitol Hill restaurants and snack bars in the aftermath of the French refusal to join coalition forces in Iraq?

Other examples of French opposition to U.S. foreign policy may come to mind; suffice to say France has proven to be a rather unreliable ally since the end of World War II.

But it's not just differences in foreign policy decisions that separate the two democracies. It's the intersection of economics and culture that represents the major chasm.

I was reminded of this phenomenon while reviewing media reactions to President Francois Hollande's plans to raise France's top income tax rate to 75 percent, a rate that would surpass Sweden as the world's highest. (Similar to Maryland competing with California for highest-taxed state, but I digress.)

One potentially dire consequence is also the most predictable. Media reports indicate some wealthy citizens are making plans to move, and (in some cases) take their businesses with them. It's a scene straight out of the 1980s, when former French President Francois Mitterrand's tax increases caused a number of prominent French citizens to leave for more friendly venues.

That France's corporate tax rate is a business-unfriendly 35 percent represents a double whammy for enterprising entrepreneurs. No wonder other European countries are posting the welcome wagon signs. Alas, it is a repercussion of no great importance, according to Mr. Hollande's new government.

And herein lies a huge cultural divide.

In America — despite the best efforts of countercultural enthusiasts to expand federal power into every nook and cranny of the U.S. economy and the constant progressive drumbeat against the inequities of capitalism — most still support an "up by the bootstraps" work ethic. It embraces hard work and sacrifice. At its core, it celebrates individual sweat equity and the wealth it often produces. Indeed, this focus on individualism and the attainment of pecuniary rewards is the primary reason President Barack Obama's "You didn't build that" narrative was abandoned on the campaign trail. It appears that even this ardently progressive White House recognized that many successful Americans cling to the notion "they did build that."

The contrast with French culture and economics could not be clearer. A prominent French tax lawyer phrased it succinctly: "French people have an uncomfortable relationship with money. Here, someone who is a self-made man, creating jobs and ending up a millionaire, is viewed with suspicion. This is [a] big cultural difference between France and the United States."

You think?

Americans (still) tend to place entrepreneurs on a pedestal; many of us continue to value risk-taking, success and the attainment of wealth.

Across the pond, high tax rates support a gigantic government bureaucracy that promotes dependency and supervises an all-encompassing social safety net. Government promises are quite attractive to boot: guaranteed workplace benefits, extended vacations and a generous pension. Oh, and any talk of givebacks or benefit cuts generates great political unrest. In 2011, it produced Mr. Hollande and his new tax regime.

Periodically, French voters try a conservative, such as Jacques Chirac. But the right-wing governments invariably attempt to control spending or cut taxes. And they always pay a steep price. You see, the decks are stacked against the French right. The bureaucracy is too large. The safety net too comfortable. The public unions too powerful. And the status quo soon returns — with a vengeance.

Fortunately, America remains strong, but trend lines are worrisome. The twin slippery slopes of dependency and entitlement are on the march. So, next time you hear a politician complain that America's increasingly intrusive welfare state is akin to France's, pay attention. It is not a comparison we should invite — or welcome.

Robert L. Ehrlich Jr.'s column appears Sundays. The former Maryland governor and member of Congress is a partner at the law firm King & Spalding and the author of "Turn this Car Around," a book about national politics. His email is

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