A Capitalist Revolt in Socialist France

Wolf Richter's picture

Wolf Richter   www.testosteronepit.com

The French government is trying to reign in its deficit by jacking up taxes, including the capital gains tax, which it wants to bring to the same level as the tax on income earned by the sweat of your brow—an old philosophical pillar of the French left. But an explosive essay published last Friday hit a nerve with entrepreneurs, venture capital investors, artisans, and mom-and-pop business owners. And their anger, which spread across the social media, the papers, and finally TV news, turned into an open revolt.

The trigger was an editorial in La Tribune by John-David Chamboredon, Executive President of ISAI, an internet startup fund. After the Finance Law 2013 was proposed during the presidential elections, he wrote, “la France du business stopped breathing.” Investments and hiring were put on hold. The cause: the capital-gains tax provisions. An entrepreneur, for example, who risked his savings, spent 10 years growing his business, created perhaps hundreds of jobs, survived all the challenges, and then wanted to cash out, would have to pay two layers of taxes on the capital gains, totaling, according to his calculations, 60.5%. And so would investors.

It would kill entrepreneurship. Funding for startups would dry up. And growth in the private sector would wither. “If the fiscal maelstrom is confirmed, the sequence of events is quite clear,” he wrote. “Instead of hiring people and developing the business, owners threatened by this confiscation would spend the rest of 2012 imagining ways to escape it.”

There are legal ways, he said, for example by creating a holding company in Luxembourg that would retain the shares of the startup, or by relocating top management to London (which is rolling out the red carpet). Startups funded by large funds could do this. Small operations would be stuck in France. For them, it’s going to be tough. And it would put a damper on job creation in France, he said.

Articles in La Tribune are normally tweeted a few times and liked on Facebook a few more times. But this one was tweeted 1,576 times and liked 5,601 times. Over the weekend, it gave rise to the movement of the Pigeons—which in French also means “sucker.” The revolt of the bosses was born.

“We are the result of the anti-economic policy of the government that has decided to take the thousands of entrepreneurs in this country for suckers (pigeons) and annihilate entrepreneurship,” their manifesto explains. And a demonstration of the bosses in front of the National Assembly was organized on Facebook for October 7.

Anger against the “fiscal overkill” continues to grow. Entrepreneurs and those who invest in them see this law “as an act of vengeance by those who run the government or who live off it!” said Philippe Villin, an investment banker close to the entrepreneurs. “The France that is taking risks and is investing their own money in the jobs of tomorrow, and might lose everything, has the feeling of being rejected by the France that is more protected,” added Agnes Verdier-Molini, Director of iFRAP, a public policy think tank.

Money is already drying up. “We had three deals going. Since Friday, everything is suspended, because with taxes this confiscatory, it doesn’t work anymore for the business leaders,” said Bertrand Rambaud, President of Siparex, an investment fund.

La France du business stopped breathing,” as Chamboredon wrote, has already occurred. The Services Activity Index dropped to an 11-month low. Orders plunged, and companies responded by cutting their work force at the fastest rate since December 2009. The Draghi-Bernanke effect kicked them in the teeth with higher input costs that they couldn’t pass on. And the Composite Index, which combines the service and manufacturing indices, plunged to 43.2, the lowest since March 2009—the depth of the financial crisis.

It couldn’t have come at a worse time for President François Hollande. Since his election in May, according to the latest poll, voter confidence in his ability to handle the crisis dropped from 55% to 41%. And those who were “not confident” shot up to 56%. He has become unpopular in less than six month—which in France has never happened before.

He can’t afford an open revolt by small business owners—or the label “anti-startup,” when unemployment is at a 13-year high, and when every job counts. So the government decided to do some fence-mending. It has offered to listen to the “Pigeons” and apparently is studying “solutions” to the capital-gains tax debacle to “return to the situation as it was before.” And unnamed members of the government might perhaps negotiate with the Pigeons—who in return cancelled the demonstration.

The Paris auto show, which took place at the same time, should have been exciting. Over 100 new models. Chicks next to some of them. Nausea-inducing colors, downsized motors. Something for everyone. But it had been preceded by supplier events loaded with the dire verbiage of an industry on a death march. Particularly in France, whose private sector is veering into economic fiasco. And now it became official. Read..... Worse Than The Infamous Lehman September: France’s Private Sector Gets Kicked Off A Cliff.

And here is Chriss Street’s Global Militarization Follows “9/11 Squared.” On 9-11, the US’s role to provide peace in the Western World was challenged for the first time since the collapse of the Soviet Union, he writes. But with the assassination of America’s Ambassador to Libya, that role was terminated. Read the article here.

As for me, it all started in France ... with a Japanese girl—a “funny as hell nonfiction book about wanderlust and traveling abroad,” a reader tweeted. Read the first few chapters for free on Amazon, where it’s one of the bestsellers under Japan.... BIG LIKE: CASCADE INTO AN ODYSSEY.

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sbenard's picture

John Galt is in open rebellion, en français, of course!

nah's picture

we need a global government equality tax

Tombstone's picture

Proof once again, that socialists, like The Dictator, are dumber than donuts.  More taxes equals the opportunity for governments to waste more.

BinAround's picture

A great opportunity for Montreal, Canada.  Time to wine and dine the French entrepreneurs.  Turn on the welcome sign.  Free trade with USA provides a great market, while living in a French speaking city.

There's lots to dispise about Quebec politics, but it is still not as crazy as what is happening in France.

AnAnonymous's picture

Ethnical tensions between the french and the english... The other day, one english shot a french guy, when being arrested, he started shouting "the english are awakening"

Might be the ethnical french in Canada look for strengthening their side.

akak's picture

Citizenism, citizenism, wherefore art thou citizenism?

orangegeek's picture

Stupid French vote for a socialist dictator and then the dictator enacts his socialist crap.


So where's the news here?


The real news is how stupid French voters really are.


Have fun with that utopian socialist society France.  You deserve it.

Joebloinvestor's picture

That's the French for ya.

Their answer for a failing socialist state was to elect a bigger socialist.

Stuck on Zero's picture

Paging Robespierre.


malikai's picture

What I want to know is which side Talleyrand will be on.

myptofvu's picture

Moving their biz offshore will work for now, but once the Doers from more countries are forced to start doing this goverments will collude and draft a treaty making this option null and void. I am wondering when a new country will spring up that appreciates the productive class.

rikoder's picture

Hey guys,

This law is meant  for the richer  investors that buy  PMEs (petites et moyennes entreprise - small and average companies)  to resell it afterwards..

ohh and by the way , the group called "pigeons" is a bunch of rich investors.

Smoke screen here... The opposition is meant to be seen as little intrepreneurs as the people behind this contestation are much bigger investors.......

In case you guys forgot (seems the case) most entrepreneurs are not building up a company to sell it as fast as possible to get rich...Non sense, that only is the most absurd and idealist extrem US capitalist think tanks we see that, not in Europe PME environments.. 


a french independant

Thisson's picture

That's the point - we know what it's meant for, but it has unforseen consequences, n'est pas?

Stoploss's picture

Yall keep up on your cock sucking skills, You are going to need them.

GMadScientist's picture

Perhaps the business climate in France is better off with these speculative whining nancies out of the way.


Quinvarius's picture

Are you listening Obama?

XitSam's picture

Obama: "I think when you spread the wealth around, it's good for everybody."

Thisson's picture

Obama is confused: spreading opportunity around is good for everybody.  Redistributing wealth, in the long term, means the pie gets smaller and everyone has less.

LawsofPhysics's picture

That's a good sheep, keep believing in the "left" versus "right" paradigm.  Your real owners thank you.

Baron Robber's picture

exactly. good sheep, it's all the Left/Right's fault

dmger14's picture

Fortunately, Atlas Shrugs.  Expect more of it across the globe over the next few years.

DavidC's picture

"The French government is trying to reign in its deficit"

No it's not, it's trying to REIN in its deficit. How many more times?


edifice's picture

Actually, it is reign-ing while there is a deficit, so therefore... They're trying to rein in the deficit by making it rain?

lakecity55's picture

Yeah, a great answer to their problems is more socialism.

"Free iphones for everyone!"

"Socialism is Communism by the drink."

-P J O'Rourke

AnAnonymous's picture

"Free land for everyone"
As long as you've got generous sponsors dazzled like the Indians to support your 'american' freedom, truth and justice project...

s0lspot's picture

During the last 30 years capital gains share of national GDP have grown 10% whilst labor share shrunk by 10%. In other words they're taking 10% more to the tax-paying citizens. They still have room to adjust. Stop whining & scaremonging. I don't like Hollande but these entrepreneur protests are ridicule, it's like bankers publicly protesting for more QE...

Thisson's picture

The correct solution is to lower the income tax rates for labor until they are at parity with the capital gains rate.  Of course, this would also mean downsizing government, which they are loath to do.

Heyoka Bianco's picture

I don't quite understand why there's so much hate for AnAnonymous 'round heah. I have yet figure out exactly what the fuck he's on about in the first place, other than the fact that in his native language of Retard, 'american' is some sort of insult.

AnAnonymous's picture

have yet figure out exactly what the fuck he's on about in the first place


That might explain the lack of understanding about others' behaviour...

ebworthen's picture

The West is veering at a high rate of speed into the rocks of mediocrity.

I know people have leanings of left and right, of socialism versus capitalism, but those are the old arguments.

Keeping us busy arguing about either is how the bankers and financial engineers have robbed us blind so that neither is possible.

Until the return of the rule of law, and of public hangings of the malfeasant, we will continue on the road to medicroty, and Rome.

AnAnonymous's picture

The West is veering at a high rate of speed into the rocks of mediocrity.

The West is veering at a high rate of speed, propelled by 'Americanism'...

new game's picture

no distraction here, what debate? here anyone talk about the fiscal cliff and the sacrafice in real terms to deal with the simple math and reality. no, because that would not get these fuckers elected.  but it is coming and since these motherfucking bastrdfucks could care less about you and i, i say fuckem and prepare accordingly. until a canidate advocates ending the fed madness, reforming/instilling glassman stegal(sp)/bankster reform, campaign finance reform, andmilitary spending madness, i say (again)fuckem...

still wondering why ron paul ran with repucklican party...

it s fucking hopeless and i'm being positive, seriously  :)

AnAnonymous's picture

If the book promoted by this 'american' author every time he posts on here is of the same vein, it might be a good investment to dive into an 'american' fantasy world.

It is funny how 'americans' can create their own job and revenue by simply spouting things that are doomed to happen and never happen eventually.

Oh, yes, that is what 'american' economy is all about, monopolize resources consumption so you can consume them in every possible manners...

falak pema's picture

lol, you don't give the guy his merit for providing us with "citizenism" comedy. 

He can be pertinent; every so seldom; its a real event.

I prefer his stilted, psychorigid, naive comedy, which is contemptuous but not hateful like that comedy jihad joker!

BTW : here is a definition of the word "citizenism". It was scratching my subconscious, so I looked it up! 

By "citizenism" we mean an ideology of which the principal traits are 1) the belief in democracy as something capable of opposing capitalism, 2) the project of reinforcing the State (the States) so as to put this politics in place, [and] 3) the citizen as the active basis for this politics.

A Critique of Citizenism

PPS : Coming to think of it, the notion of citizenism is at the heart of the French "social" construct, so heavily biased for historic reasons going back to 1789 against free enterprise; as the current post so eloquently points out! 

If the French want to modernise further their state, they will have to make their "citizenism" more effective in finding a balance with entrepreneurial initiative, so as to stop the brain drain hemmorhage, and find a decent place for France in the global economic race; all the while protecting civil liberties and social fabric against the ravages of rampant oligarchy financial greed.

AnAnonymous's picture

By "citizenism" we mean an ideology of which the principal traits are


Who is that 'we'? Kind of 'american' to hijack a whole set while speaking on one's own behalf...

Story of 'americanism', "we the people", the natural rights theory and stuff...

AnAnonymous's picture

Once a thief, always a thief.

Now in the business of stealing handles... good grief, what's the monetization of? Or simply stealing to meet an 'american' nature urge?

Intoxicologist's picture

OnAndOnymous enjoyed another shit sammich, by the sounds of it. 

Jealous much?

OnAndOnymous would like to be a US Citicizenism author and promote it to kingdom come, only his grammatical resources consume his toilet bowl.....errr, roadside....errr, possible manners of the pluralistic Chinese Shiticizenism nonsensical Dr. Seuss only without cartoon characters consumption spouting function of the mandibular typey keyboardy salavitating goo.

What's not to understand?  Sheesh!

Rock on, AnOn.  There's some electrodes with your, uh, "name" on them.



AnAnonymous's picture

Being an american author, the dream of every man, every woman on Earth. Because we, americans, provide the best.

Signed: an American.

Joe A's picture

Yes, but of course these French entrepreneurs did make their companies and moneys themselves. Obama did that.

kumquatsunite's picture

The point is...why work hard when you can take a government (US) job and make $200,000 per year, and run your internet business on the government paycheck. PBS, a short while back, had a round table where they were saying the ONLY middle class in America is the government workers with their perks, benefits, and paychecks...so far beyond what an entrepreneur can make in the early years, or the late years if all does not go real well.

Problem in America: risk is not rewarded. Being a government employee is the best gig in the country.

My neighbor is a "retired" cop who took disability his last year, so he receives $95,000 retirement pay PLUS disability PLUS medical. Sheesh.

Why aren't govt workers allowed to look out the window in the morning? Answer: What would they do in the afternoon.

LawsofPhysics's picture

You are an idot.  Forget the risk issue.  AIG took risks, the fucking taxpayer bailed them out.

Yeah that retired cop took risk, as in risking his fucking life.  How often in your career does that happen douchebag?

Wake the fuck up and smell the fascism, I think what you meant to say is that it is about time to restore real fucking consequences for bad behavior  AT ALL LEVELS OF SOCIETY.

The number of junks will reveal how people really feel about real consequences for bad behavior, stupid fucking sheep will get exactly what they deserve.

Thisson's picture

In your anger, you overlook his legitimate point.  Workers are not compensated because of the risks they take.  If that were so, coal miners would make much more money than policemen.  There are many more jobs that are more dangerous.  Public workers are excessively compensated because their wages are not set by supply and demand.  Hmm, now who was it that said we should market test the true value of everyone's labor?  Oh yeah, it was you.

fonzannoon's picture

Laws I did not junk you and I hope you spare me a verbal beating but I don't know about speaking in absolutes. What I mean is I would not assume that cop risked his life at any point. I know there are plenty that give parking tickets to maserati's all day in the hamptons and make 150k with a 125k tax free pension because they bruised their knee on their last day of service. Sure some cops risk their lives and do their job and put a hell of a lot more on the line than most of us ever will...but the the fraud in that system is as rempant as anywhere else.

LawsofPhysics's picture

Then address the fucking fraud.  You are essentially saying that there are bad apples in every profession.

Well no shit, address the real issue then and stop with the my team against that other "bad" team horseshit. 

Bicycle Repairman's picture

They can print money, so they don't need your savings.  They are not allowed to fail, so who cares about risk takers?

They don't want your opinion, either.

MisterMousePotato's picture

Oddly, my neighbor, too, is a retired cop who took disability his last year (at age 54), so he receives $95,000 retirement pay PLUS disability PLUS medical. And ... just to top it all off, he is, quite possibly, the biggest fucking asshole on the planet.

I sometimes think that, come the collapse, people will be less interested in stringing up Warren Buffet than they will be all these fucking assholes. With 20 or 30 million of them, it will certainly be a target rich environment.

fonzannoon's picture

I see it around me with the teachers. Ironically a lot of them are huge Romney people (not that it matters). The point is they are so self assured that their pensions could never be touched that they just want to "help the next generation" because Obama is evil. Suggest that their pension could at some point be on the table and watch their claws come out.

Shizzmoney's picture

MBTA employees here in Boston are the same way.  Good pay.  Highest pension plan in America, with excellent benefits, and forced retirement by 52.  And 80% of them are so completely rude to you, and 30% of them are out of shape and hate their lives while having one of the most secure jobs in America.

The idea of assembly is liberating; the execution today by unions is just the opposite of rent seeking (almost parasitical).  

I love the whole "redistribution" talk from the right: there IS no capital to redistribute.  All the proles get is chicken feed.  It's just propaganda to distract people from bankers and big corporate looting America and reinstituting the Serfdom State.

fonzannoon's picture

The elite would love to see these complaints. Makes them feel warm and fuzzy knowing we will tear each other apart before we work our way up the ladder.