Andy Street, CEO of John Lewis Partnership, Britain’s most successful retailer,recently told an awards audience that France “is finished. Don’t invest there. Nothing works… it’s sclerotic, hopeless and downbeat.” Whereas London is “a bubbling cauldron of activity and change, where a coffee shop seems to open every week. Owing to planning constraints a Parisian patisserie, for instance, can only be replaced by an identical establishment. Foreign companies, and change, are discouraged. Whereas the British have embraced markets, the French remain deeply suspicious of them”. (based on an article by Matthew Gwyther, Management Today).
Mr. Street’s job is to make money, and he does that well, with more than adequate help from a fawning government. But I heartily disagree with him. Get out of Paris and you can still find the old way of life, alive and well in smaller French towns and villages. A countryside protected from sale to all (foreign) comers, unlike Britain where all the investments previously made with taxpayer’s money have either been sold or are up for sale. Good food and time to enjoy it, instead of gobbling a Big Mac at your desk in the ten minutes allotted for lunch. Andy Street loves London’s “bubbling cauldron of activity”, but then he has a good job and the money to enjoy it. His out-of-work fellow countrymen can no longer afford to live in London on the low wages offered to foreign students living four to a room (many only in the UK to learn English). Wine and sunshine and and a slower pace of life are Epicurean; France may be struggling, but at heart it is also Epicurean. Vive la France!
What would be an Epicurean solution to France’s struggling economy? And how would you fix London’s unaffordability?
Very good questions! If I might address the London question first, one of the few enlightened things the British government has recently suggested is the imposition of a ” mansion tax” on property worth over, I think, two million pounds. Property owners in Central London pay a derisory amount of Council Tax, the cost of a couple of meals in a fancy restaurant. If such a tax dampened down the demand for expensive property that would be a start. Many of the people concerned probably pay little or no tax at all.; it would do them good to contribute something.
The French education system is supposed to be better than the US and the UK. But the French economy itself is far too rigid, with sky-high costs of employment and extraordinarily generous social benefits that are making unemployment steadily worse. The French work shorter hours, take longer holidays, and retire earlier than in other European economies ( although productivity is high). It is un- Epicurean to have a two track system, where some people have a job for life and can’t be sacked ( plus a great pension at 60) and others cannot get a job at all. French companies should be allowed to try out new employees for a year or two and replace them if the new person doesn’t work out. There are other reforms one could introduce without going as far as the exploitative neo- liberal system we have in the US and the UK: one could reform local government to make it less bureaucratic; one could ease regulations to allow new companies to be formed with less hassle; one could reduce the 43% payroll tax, the highest in Europe (in the UK it is 11%), which is starting to encourage companies to move offshore and discouraging small companies. Does this sound sensible? What would you do?
All of that sounds great! In response to London’s unaffordability, I would prevent Russian oligarchs and other tycoons from buying London property, driving the locals out in the process. A house is to live in, not an investment for the worlds super rich. In addition to the mansion tax, I would have a Financial Transactions Tax- the proceeds of which would be used to build affordable housing for locals, and improved public transport.
As for France, I would make the payroll taxes voluntary, so business and employees could choose as to whether they want less money but the super generous pension and early retirement, or whether they would like to go it alone. I suspect most people would continue to pay in, as the system is an extraordinarily good deal. I would also lower France’s corporation tax from 33% to 25%, but replace that with a mansion tax similar to the one you proposed for London. This would discourage investment in property, but encourage more businesses. However, I do not believe the Conservative argument that France is in permanent decline because they give their workers a good deal. Such social security is increasingly rare in our globalised world- it is important to preserve it.