Endangered Species: An Entrepreneur In France

Wolf Richter's picture

Wolf Richter   www.testosteronepit.com   www.amazon.com/author/wolfrichter

“I need to hire more people, but the government won’t let me,” said my friend, an internet entrepreneur in France, one of the intrepid figures still slugging it out over there—in a country whose relentlessly deteriorating unemployment problem is gnawing at the very fabric of society.

We spent an hour and a half on Skype, talking about topics that were a bit, let’s say, delicate under the current regime in France. So he and his company, both well known, will remain unnamed. He has been successful in the startup sense: his company has had two solid rounds of funding from venture capital investors. VCs are another phenomenon that hasn’t gone extinct in France yet, testimony to the mind-boggling human capacity to adapt and survive no matter how hostile the environment.

The public got an inkling of it last October. The government was jacking up taxes left and right to rein in the deficit for 2013. So the capital gains tax would be raised to the same astronomical level as the tax on earned income. But an explosive editorial by the exasperated head of an internet VC fund resonated with entrepreneurs, investors, artisans, and mom-and-pop business owners. Their anger flooded the social media and eventually even prime-time TV and turned into a successful revolt [read A Capitalist Revolt in Socialist France].

Early on, he’d hired an expensive law firm to draft the required labor contract for his future employees. When the document was finished, they tried to get it approved by the administration, the catch-all word for any of the thousands of governmental entities that impact every part of life in France, sometimes in a Kafkaesque manner. “When you go there, they treat you like a criminal,” he said. And they turned it down. When he asked for suggestions, they refused to help. It would be up to him to come up with an acceptable document.

Which they eventually did—after considerable time and expense. Now 15 people work in his company, and he’d like to hire more, but he is afraid of the administration, and particularly the labor code, that unwieldy, impenetrable monster of thousands of pages, plus innumerable texts, decrees, and orders that drown every little detail of the employer-employee relationship in a sea of inscrutable complexity. “I have to violate some of these terms,” he said. It’s not like he has a legal staff on board.

And if it didn’t work out and he needed to let someone go, the employee would drag him before the prud’hommes (elected industrial tribunal) where 80% of the cases were decided in favor of the employee, “because even they don’t understand the labor code,” he said. That would get expensive. So he doesn’t hire anymore and uses free-lancers as much as possible.

Why not incorporate the business, like so many French entrepreneurs, in a more hospitable country? “I’m too French for that,” he laughed.

France needed to be reformed, he said, but instead of fundamental reform, for example of the labor code, they just tweak it by adding amendments, which make it even more complex and contradictory. “They need to throw it out and start over,” he said. “It needs to be simple, like in Switzerland.”

Sarkozy tried to push through reforms, he said, but when he told the top functionaries of the administration what he wanted, they told him, “Yes, Monsieur le Président, but we can’t do that.” They’re all énarques, graduates from the École Nationale d’Administration, an elite university where the kids of the elite learn how to run the country. They all know each other, they know the CAC-40 CEOs who they went to school with and who get recycled as ministers. “They all think alike,” he said. They need each other to progress in their careers, so they stick together. Sarkozy, who wasn’t an énarque and didn’t think like them, didn’t have a chance. “They just stonewalled him,” he said.

Over the last few days, the media have talked about nothing but the tax fraud debacle of ex-budget minister Jérôme Cahuzac, but the French don’t care if politicians lie about taxes, he said. What they care about are jobs. “And no one is talking about jobs, not the way they should,” he said. “People like me want to create jobs, but the administration makes it impossible.”

So the mood has become dark and has turned away from politics, he said. People always expressed their hatred for certain politicians, but now they express their hatred for the system. The comments online were getting more violent. They’re looking for a strong voice that can pull them out. “When the Fourth Republic collapsed, we had de Gaulle,” he said. “Now we have no one.” And then he wondered, “What if the wrong person came along?”

The French media might not even notice if the Eurozone fell apart—that’s how tangled up they are in the Cahuzac fiasco that blew up with phenomenal effect. Former Presidents Chirac and Sarkozy were dogged by investigations and trials that laid bare misdeeds they personally had been involved in. By contrast, the Cahuzac fiasco doesn’t implicate President Hollande. Not yet. But it’s tearing up his government. Read.... The French Government Spirals Elegantly Into Self-Destruction

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3x2's picture

[...] So he doesn’t hire anymore and uses free-lancers as much as possible.

Much the same in the UK. It's an EU thing. They have made it so difficult to employ any individual that only the most reckless or desperate SME would go there.

Let that employee go, for whatever reason, and I guarantee that some (EU)(un)employment law specialist will figure out just which paragraph of the 'Encyclopedia Europa' one has contravened.

Said ex-employee walks away with a bundle of cash and, as a potential employer, you have learned your lesson - don't employ again. Sad but all too true.

Winston Churchill's picture

Been hearing that from family, and friends.Most everything is part time

or subcontract to get around those rules.

Just like its going here bacause of Obozocare.

Beginning to think humans are the dumbest, not smartest,in the animal kingdom.

Just keep repeating the same old failed crap.

shovelhead's picture

I like to think of the Capitol as 535 monkeys with hammers that you pay for their work product.

Enjoy the result of their hard work.

IamtheREALmario's picture

If it has been said once, it has been said a million times: "Governments create laws so that people will break them" ... and then when the laws are broken the the government uses its power to selectively enforce the laws to its benefit and the detriment of its citizens. This is why so many laws are created ... not because they are needed to run a prosperous and healthy society. It is all about power.

The larger the government gets and the more parasites it takes to run it, the worse it has historically been for the people. 

lakecity55's picture

Hey, Frenchie, just Bribe the guy.

Problem solved.

La Mordida.

Nassim's picture

The odd thing about Cahuzac- something which no one seems to mention - is that he and his wife made their money by selling their surgical/dermatological services. He was a surgeon and his wife a dermatologist. Yes, he actually produced "wealth" of a sort. He was not entirely a bureaucrat. Guys like Hollande, Sarkozy and Chirac never did anything useful in their entire lives.

In another country, he may have produced a chain of clinics for helping people feel better about their appearances.

Of course, all of this does not excuse his hypocriscy.

IamtheREALmario's picture

Yes, people who have never done anything productive always seem to find ways to tell people who are productive how they must do things... for the betterment of society of course.

For someone who wants to create and produce it must be awful to work in a government setting. Once upon a time, I had the misfortune, through a series of promotions and acquisitions to become a mid-level executive at a large defense contractor. My background was commercial and going from the majority of my prior existence to the then current one, I had gone from doing 80% productive work and 20% maintenance of the system to roughly 90% maintenance of the system and 10% productive. There were tons of people who, if they sat in on meetings all day, not saying a single word or taking anything out of the meeting to apply thought that they had a full and busy day. It was disgusting and very frustrating.

Not the life for my well being and self image, so when the opportunity arose, I left.

My only thought is that  it must be very rough for perma-government employees. No wonder they go wackers and create ficticious reasons for existence. It is all they have. How could anyone ever get excited about serving the people by applying unnecessary and counterproductive laws?

Joe A's picture

The Germans actually didn't have to do much to become the boss in Europe. They let the Frenchies do it for them. Germany had labor reform and kept wage increases low while the French gave in to wage increase demands and increased laborers rights. I am in favor for rights of laborers and such but the French went over the top with it and basically competed themselves out of the market.

sethstorm's picture

So you're saying that Germany is generally worker-hostile while France is overly worker-friendly?

Joe A's picture

I am saying that Germany's current economic succes compared to countries such as France lies in the facts -among others- that Germany kepts salary increases modest and introduced labor reform while France lowered the working week and increased salaries. That coupled to Germany quality of products made Germany more competitive than other countries. They supported their export by lending Euros to whomever wanted to borrow them in order to by 'Made in Germany'. That is how Germany went from being the sick man of Europe to the one calling the shots.

France is a very centrally led state and burocracy just like in this article is strangling businesses.

sethstorm's picture

Mind that labor market reform is often an euphemism for anti-worker policies(i.e. temporary/on-call/agency labor usage in those countries). 

(Using a sports term doesn't magically make it any better)


BigJim's picture

Raising workers' minimum legal wage doesn't automagickally increase the value of what they produce.

LawsofPhysics's picture

Stop everyone, you're being stupid.  Realize that in order to actually "produce" anything of real value, you need real fucking inputs.  Real inputs are finite, yet everybody wants to grow.  So tell me, let's be optimistic and say the entire planet becomes an efficient producer like Germany.  Tell me, who would the earth be selling to then, and what would we recieve in exchange for our goods (and resources) of real value?  Wake the fuck up, humanity isn't just another ponzi, it's the ponzi.  Hedge accordingly.

sethstorm's picture

The government isn't blocking him, just that he is too cowardly (even for a Frenchman) to try.



tom a taxpayer's picture

Ouigo is the Southwest Airlines of trains. 

sethstorm's picture

That implies better service, not less or worse service as in the case of Ouigo.

robobbob's picture

don't worry about the wrong person coming along frenchie, the nwo have everything already worked out. once the mobs tire themselves out burning everything in sight, they'll make sure only the "right" kind of person steps up for the job.

johnQpublic's picture

burning everything in sight is a wet dream of one certain krugman if'n i'm not mistaken

bullish as it gets

talk about grass roots job creation


QQQBall's picture

Jobs? Just stop counting all the unemployed and put them as "Not in Workforce". Then claim making progress, but we still have more work to do...  Real jobs are so 1980's... Just change the definitions.

Poor Grogman's picture

It a wonder someone in government didn't try that already?
Oh hang on a minute...

knukles's picture

Illegal Aliens = Unregistered Democrats

steve from virginia's picture




There is nothing the French can do entrepreneurs or no, bureaucrats or no. The problem is (lack of) energy not policies.


Nothing the bosses can do to bring into the market what does not exist ... like $20/barrel crude. France is bankrupted by its massive, voracious fleet of automobiles.


If the French economy 'works' there is less and less fuel ... which causes collapse a bit further down the road. Unsurprisingly the French auto business is unraveling ...



gould's fisker's picture

Are you fucking kidding me--do you really believe the drivel you write? French government gobbles up 60% of French GDP annually which the remaining 40% have to try and overcome like an obstacle course to conduct business.  The French auto "industry" which is comprised by companies like GM has been dying for years.  And as another commenter on this thread noted while Germany undertook labor reforms, France did nothing except hiking taxes even higher.  Steve, it's clear you like government because your posts always find something else to blame except government, but if you can't see what has, HAS, caused France to sink to the depth is has you truly will never get it--the French collapse has been in the making for at least 30 years--we're in the endgame--and it wasn't automobiles. How ludicrous.

Joebloinvestor's picture

They can start overhauling the notairs first.

Bunch of CORRUPT POWER MAD FUCKERS that ought to lined up and shot.

Joebloinvestor's picture

They can start overhauling the notairs first.

Bunch of CORRUPT POWER MAD FUCKERS that ought to lined up and shot.

TuffsNotEnuff's picture

Bad lawyers. Very bad indeed.

We have had no problems in France. Since 2005 the head count is up by a dozen full-time for regional expansions and several contract people.

Anyone can find example contracts. Buy lunch for any HR manager at a non-competing business and hire her as a consultant.


sethstorm's picture

The problem is that contract labor(read: less-than-FT/FTE) can be used as a condition of accepting work.


q99x2's picture

Why don't things stop somewhere between the infinite divisions between seconds. Because by the time reality takes place they've already happened.

Iconoclast's picture

How well does entrepreneurship work in a depression for small businesses other than for bailiffs, debt collectors and pawnbrokers etc? Web based businesses (particularly retail) have a better chance of survival due to lower and at times close on zero overheads, but IMHO there's very little "left to do" in terms of commerce and I doubt a little bit more red tape is putting off many entrepreneurs from 'having a go'.

pashley1411's picture

I can't but think that the Germans burning Cyprus wasn't more a warning shot at Germany's once-and-forever-rival, France.

Sure, France, can sail into the storm of their latest intellectual socialiste fantasyland  (again?).      The Germans must be telling France, again and again, EU or not, "we aren't going to bail you out".  

TPTB_r_TBTF's picture

There will be no more bail outs.  That was the old model.

The new model is bail in.


The Germans are taking an alternate route into France again.

Recently Luxembourg was forced to open their secret bank books to allow the Germans to sniff around for bail-in money.

aleph0's picture

Get rid of ALL bEUrocrats ... and things will get better quickly -

Desert Irish's picture

One could draw parallels with the student roits in '68 when "the liberator" De Gaulle fled France fearing for his life. At the end of the day nothing changed and the Gaullist party emerged with a greater mandate. Borrowing a phrase from the bard it's simply another "much ado about nothing".

Savvy's picture

Government exists to grow ever more powerfull and rich, like any corporation, and eventually will consume it's host until it falls off like a glutted wood tick and dies. rinse repeat.

TuffsNotEnuff's picture

Flaming paranoia ???

A trip through The Federalist Papers is one effective paliative.

JOYFUL's picture

... Sarkozy, who wasn’t an énarque and didn’t think like them, didn’t have a chance. “They just stonewalled him,”

Sometimes it's only possible to see the truth when looking through the lense of other's experience. And with France, we have a window upon the West with which to draw inescapable conclusions to be applied closer to home.

After a phase of flirting with despicable (mis)characterizations of the peoples of Southern Europe as profligate and lazy purveyors of their own problems(a thesis now thoroughly trashed and discarded in the wake of the Cyprus imbroglio~fo'ever!)our author settled down into a long period of trenchant reporting and solid reflections upon the current state of affairs.

Now, like a trapeze artist suddenly wavering on their line above the crowd, this week Wolf revisits old follies, and seems to know not which way to go...except down.

Sarkozy was an alternative to the culture of corruption and crony state-capitalist control?  That's like calling the Vatican Bank an alternative to corrupt usury banking and shadowy drug\weapons\child prostitution networks! The Hungarian-Jewish orphan raised in the very household of sio-nazi\alCIAda honcho Frank Wisner was the very definition of "Manchurian Candidate" and puppet prince of the moneychangers...

until they were ready to unleash the Kenyan upon that other Republic of Virtue...and complete their conquest of the West with satellites safely installed from Ankara to Washington...and all points in between! Everywhere, a culmination of duplicious doublespeak in which 'markets' and 'market economies' are paid lip service publicly, whilst being trashed and corrupted behind the curtains of power. And always with the support of dupes who buy into the old talmudist trick of divide n rule, phony oppositions, left vs right, 'capitalism vs communism, etcetera...

Enough of this dialectic of dancing puppets! They are all of a piece, and all pieces of the machine which advances war upon us instead of a just peace...and which deceives the dupes with hoary histories of 'free enterprise' versus socialism and other talmudic myths. Wake up and smell the Kenyan/Sumatran\Guatemalan\Columbian aroma of betrayal and "Secret Government" Wolf!

archon's picture

coming soon to a "democracy" near you...

Bicycle Repairman's picture

"The Hungarian-Jewish orphan raised in the very household of sio-nazi\alCIAda honcho Frank Wisner was the very definition of "Manchurian Candidate" and puppet prince of the moneychangers."


new game's picture

calling the spirits of john galt> where and why did you just up and leave?

echo from the spirits of sanity<i couldn't take it anymore; life is too short.

i have emerged as a common citizen and go boating to my favorite gps'd spot for

regular withdrawls from the depths below.  some day you will join me...>

Sockeye's picture

"They’re all énarques, graduates from the École Nationale d’Administration, an elite university where the kids of the elite learn how to run the country."

I used to work for one of those guys, quite the cross cultural experience for this unilingual grandson of a Calvinist Midwest farmer/preacher.