As French President François Hollande outlined new taxes and spending cuts while promoting reforms to turn the economy around – word leaked out that France’s wealthiest man, Bernard Arnault, was heading for Belgium in a rumored tax dodge.
At first, the timing could not appear to have been worse for the national morale and Mr. Hollande. His tax hikes run 20 billion euros, his spending cuts number 10 billion euros, and his Socialist government must cut public service jobs. In addition, he will hit those with direct salaries over 1 million euros ($1.3 million) with a 75 percent tax.
The French have not forgotten the national shame when British Prime Minister David Cameron told the world from Mexico in early summer that London was “rolling out the red carpet” for wealthy French seeking tax havens.
Yet, instead, in a national spasm of pique, France spent all day making accusations of "traitor" and "ingrate" at the rich guy – Mr. Arnault, worth $41 billion. Citizenry and media launched from all directions a full egalitarian, patriotic attack on the CEO of Louis Vuitton, who said he was seeking dual citizenship in Belgium.
The anti-Arnault frenzy spurred far-left guru Jean-Luc Mélenchon to call him a “parasite,” and far-right darling Marianne Le Pen to proclaim “scandalous" what appears to be a financial exile.
A screaming headline in Libération – “Get Lost You Rich Idiot” – was enough to bring Arnault, who claims he is not leaving France for tax purposes, to call the headline “vulgar” and bring a lawsuit against the newspaper.
Meanwhile, Hollande is moving – plodding, his critics say – on a plan to reform the economy through greater flexibility in hiring and firing, an overhaul of social security, and to do it all in two years.
The core idea is austerity with the added element of growth, seen in Scandinavian-style “flex-work” plans that cut the amount of time French workers stay unemployed.
The labor market and financing of social security are “the two structural weaknesses of the French economy,” says Philippe Waechter, senior head of economic research at Natixis Asset Management in Paris. “The question is whether the environment, the will, and the spirit of cooperation here will allow these reforms to be successful. I’m still pretty skeptical.”
Mr. Waechter dismissed the German comparison, arguing that Mr. Schroeder conducted his focused reforms at a time Germany was still flooding former East Germany with cash, before the euro crisis, and when other nations in Europe were buying German exports at a rapid rate.
“In 2002 to 2004, Schroeder benefited from growth and exports from Germany by Europe and countries such as Spain, Italy, or France," he says. “Now we are in a situation where activity is low everywhere….”
Yet in France, patriotic activity seemed to get a boost, at least at the expense of Arnault. Hollande yesterday said the fashion tycoon, who also left France for the US during the last Socialist government of François Mitterand, "should have measured what it means to apply for citizenship to another country. In this period, we need to appeal to patriotism."