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France Sets a New (Bad) Record

Posted by kdadmin on December 1st, 2014.

Let’s consider President Hollande’s current economic policies:

  1. Raise taxes to record-high levels.
  2. Target these taxes primarily at those people who make a considerable amount of money and/or those people trying to start/run small businesses.
  3. Create a HUGE and ESCALATING number of pensioners, retiring in their mid 50’s, who are dependent upon the state.

The result?

  1. THE RICH LEFT. They’re rich, remember? So, they can, and will, move to greener pastures.
  2. THE INVESTORS LEFT. Many with the necessary capital to start a company, hire people, and stimulate the economy decided it was way too expensive to do business in France and promptly moved over the border to any of the neighboring countries with better tax laws.
  3. THE SMALL BUSINESSES FAILED. Or got smaller as they were crushed under the tax burden.
  4. FRANCE SET A NEW RECORD for the highest unemployment rate EVER!!

Now, wasn’t it obvious this would happen? Who was this guy’s economic advisor?

Have a look at this chart since President Hollande’s election on May 15, 2012. France’s unemployment rate has actually gone up by nearly 3%, while Europe as a whole has dropped by 2.5%, Germany’s rate has dropped by 7.5%, and the USA’s rate has dropped by a whopping 26.6%.

Political party rhetoric aside, in order to grow an economy, you need people with money, resources, know how and interest to build companies, employ people, and keep the economy humming. Playing Robin Hood by stealing from the rich and giving to the poor short circuits the reason the rich will stay in the community. While it’s easier, politically, to pander to the those with less money, ultimately, when the business move away, it only impoverishes them further.

Take the old adage, “Give a man a fish, you feed him for a day. Teach a man to fish, you feed him for a lifetime.” Giving a man a fish is akin to playing Robin Hood. Teaching a man to fish is akin employing him in a company that was started, and remained, in the community, because of favorable local tax laws.

SO, just because my two previous economic posts highlighted potential opportunities in the European Union, doesn’t mean that it’s all rosy over there. To low inflation, high unemployment, and recessionary warnings, add twenty-eight countries, twelve currencies, a total hodgepodge of tax and business law, then percolate over a thousand years of localized nationalism and two world wars.

Investing in Europe is not for amateurs or the faint of heart.

In other words, “Don’t try this at home. Professional Driver. Closed Course. Do Not Attempt.”

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