France discourages Job Creation with a Short Workweek, Confiscatory Tax Rates and Banning Emails after 6 PM

Posted by PITHOCRATES - April 12th, 2014

Week in Review

For socialism to work you need businesses to provide jobs.  Because without people working the government can’t have confiscatory tax rates to fund a massive socialist state.  You’ve got to have jobs.  Which confiscatory tax rates tend to discourage.  For business and rich investors don’t want to pay confiscatory tax rates.  François Hollande ran on a socialist platform in France.  Promising to raise taxes to bring down the deficit.  Which he did.  Raise taxes.  But it didn’t lower an unemployment rate stubbornly staying above 10%.

High taxes and a poor economy caused the socialists to lose elections.  So Hollande is putting together a tax-cutting package.  To reverse their electoral losses.  You’d think the socialists would have learned their lessons that the people want jobs.  And to have jobs you need a business-friendly environment.  Which something like this is not going to help (see France bans work e-mail after 6 p.m. by John Johnson, Newser, posted 4/11/2014 on USA Today).

France already has a 35-hour work week, and a new rule is designed to make sure that it doesn’t start shading toward 40 hours because of work-related e-mail.

The Guardian reports that the rule forbids workers from checking their phones or computers for work stuff after 6 p.m., and it forbids employers from pressuring them to do so.

The move apparently doesn’t affect all workers in France, but it does cover about 1 million workers in the tech industry — including French employees of Google and Facebook…

At Fox Business, a U.S. labor expert finds it hard to believe the IT industry can manage such a draconian shut-off time.

“There’s always something going wrong off the clock — when a computer goes down, it doesn’t go down between 8 a.m. and 5 p.m.”

It’s yet another thing to discourage business.  Things happen after hours.  Can you imagine a business wanting to open themselves to that kind of liability?  Having someone in the company send out an email without checking the clock first?  Or someone working late into the evening to catch up on a project.  Sending out a bunch of emails so people could read them first thing in the morning.  If someone else is working late do they read this email?  Perhaps this person was waiting for this email and would like to address it that evening to reduce his or her workload the following day.  Would this worker have been pressured into reading the email knowing his or her boss would have appreciated the extra effort?

There’s a reason why General Motors (GM) went bankrupt.  Well, there are a few of them.  But one of them was costly workplace rules.  Such as only allowing an electrician to change a light bulb at a work station.  Even if the person at that workstation could have changed that bulb in a couple of minutes.  Instead of waiting an hour or so for skilled trades to come around to unscrew the burnt out lamp and screw in a new lamp.

These little workplace rules add up.  And though seemingly harmless when you look at them one at a time in the aggregate they increase the cost of business.  A lot.  Just ask GM.  Something businesses look at when they are considering the location of a new factory.  Whether to expand production at an existing factory.  Or whether to shut down a factory and move production out of the country to a more business-friendly environment.  Thus killing job creation.  Jobs the socialists need for people to have so they can pay confiscatory taxes on their earnings.

A business unfriendly environment will never lower the unemployment rate.  As the socialists in France have proven.  And left-leaning governments everywhere have proven.  Confiscatory tax rates do not attract businesses.  Or rich investors.  They discourage them.  And encourage them to take their money and invest it elsewhere.  And create jobs elsewhere.  In another country that is a little kinder to business.  And job creation.

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Venezuela may put People before Profits but they have no Toilet Paper

Posted by PITHOCRATES - May 18th, 2013

Week in Review

The American left wants to have the economic system they have in Venezuela.  Where they put people before profits.  To prevent evil corporations from getting rich.  While exploiting their workers.  And overcharging their customers.  You see, that kind of thing just doesn’t happen in Venezuela.  Because they put people before profits (see So, Venezuela Has a Toilet-Paper Shortage (Don’t Laugh. Seriously.) by Jordan Weissmann posted 5/16/2013 on The Atlantic).

Venezuela is now suffering from a government-induced toilet paper shortage. The situation has become politically dire enough that the government has promised to import 50 million rolls to calm shoppers.

For those familiar with the Bolivarian Republic’s less-than-sterling economic record of late, this won’t come as a surprise. The country, while relatively wealthy by developing-world standards, has been suffering through a chronic shortfall of everything from groceries to asthma inhalers, resulting in desperate lines of shoppers and a healthy black market trade in kitchen staples like flour.

In the United States about the only toilet paper shortage people are familiar with is when they drop trou in a public restroom without looking to see if there was toilet paper first.  Why do people do this in the United States?  Because we take toilet paper for granted.  And always expect it to be there.  Because we are not socialists.  We’re capitalists.  And being a capitalist means you never have to see an empty shelf when buying toilet paper.

So why do socialists have such a difficult time buying toilet paper?  Because they put people before profits.  Which sounds good but is only code for dictatorship.  Where the dictator lives well.  As there is always enough for the privileged few.  But to sustain this privileged position a dictator has to steal from his people.

In 2003, then President Hugo Chavez slammed currency controls into place to prevent money from fleeing the country while government seized land and corporate assets. Those rules have made it harder to buy imports. Meanwhile, price caps meant to make basic staples affordable to the poor are so low that, for many products, they don’t pay for the cost of production.

Nobody’s going to make toilet paper if they’ll lose money selling it.

Price caps make things cost less than the prevailing market price.  Which encourages people to over consume.  Just as Nixon’s price controls led to gas shortages in the United States.  While at the same time the price caps force suppliers to sell below the prevailing market price.  Which is often below their costs.  So while people are clearing shelves off suppliers are not replenishing those shelves.  Leading to shortages.

To buy imports you have to first exchange your currency for the currency of the country you’re buying from.  For U.S. companies accept the U.S. dollar for its exports.  Not the bolívar fuerte.  Venezuela’s currency controls prevent Venezuelan businesses from exchanging their currency.  Making it impossible for them to buy the imports they need.  So they have to throttle back production.  Making it more difficult to restock those empty shelves.  Forcing the people to go without toilet paper.  While Hugo Chavez died a billionaire.

This is what happens when you put people before profits.  You make it possible for a charismatic dictator to impoverish the people he champions.  Which is impossible under laissez-faire capitalism.  For businesses can buy the imports they need.  And they can sell at a price that covers their costs.  Which keeps the shelves in capitalist countries overflowing with the goods people want to buy.  While wannabe dictators can’t seize land and corporate assets.  But have to work for a living.  Like everyone else.

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France’s New Socialist Policies are pushing France back into Recession

Posted by PITHOCRATES - March 24th, 2013

Week in Review

The French brought back the Socialists to power in France with their election of Francois Hollande.  And they voted for him because he was going to stick it to the rich.  Raising the top marginal tax rate to 75%.  All the Keynesian economists said this would solve all of France’s problems.  It would reduce the deficit.  And increase confidence in the business sector.  Boosting the economy.  When critics of the move said this would drive the wealthy and their money out of France they said pish tosh.  They are patriots.  And will simply whistle a happy tune and pay this new high tax rate.  Time has passed.  And now we can see the economic results of the new Socialist policies (see Recession stalks France as business slump hits crisis levels by Leigh Thomas posted 3/21/2013 on Reuters).

French business activity shrank in March at the fastest pace in four years, defying expectations for an improvement and probably plunging the euro zone’s second-biggest economy into a recession, a survey showed on Thursday…

Separate figures for the services and manufacturing sectors showed that business activity was retreating even faster than economists polled by Reuters had forecast…

That would mean that France, which has already abandoned its 2013 deficit target due to the lack of growth, has entered its third recession since the financial crisis…

The increasingly dire state of French business is all the more alarming as consumers, traditionally a major driver of the economy, are in no place to pick up the slack.

Unemployment is above 10 percent and there is no sign that it will fall any time soon, which is weighing on consumer spending.

It also explains in large measure why President Francois Hollande’s approval ratings are at record lows less than a year into his term in office, which he won on promises to revive growth and boost jobs.

Apparently the Socialists and the Keynesian economists were wrong.

You don’t create economic activity by increasing the cost of business.  And lower the rate of return on investment.  You create economic activity by lowering the cost of business to making it attractive to expand business.  You increase the rate of return on investment capital to encourage investors to take more chances on new startup companies.  It’s not rocket science.  If you increase the price of groceries people buy less groceries.  If you increase the cost of gasoline people by less gasoline.  Because people have limited disposable income.  And the higher the prices are the less that disposable income can buy.

If you increase the cost of business it raises the prices on the goods and services they sell.  The higher prices cause people to buy less.  And if you raise the cost of investment capital by taxing rich people more that will increase the cost of financing for businesses.  Which they will pass on to the consumer in higher prices.  Somehow Keynesian economists just don’t understand this.  But people living under their bad economic policies do.  Because they are always getting by on less because of these rising tax rates.

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The High Taxes of French Governing Socialists are driving French Tax Exiles to London

Posted by PITHOCRATES - March 3rd, 2013

Week in Review

The Left says over and over again people aren’t going to move to escape high tax rates.  Well, as it turns out, they will.  The socialists recently took back the presidency of France.  Basically running on the platform of raising taxes to confiscatory rates.  Assuming that the rich will just smile and say, “Merci.  J’aime être taxés.  Il me fait sentir patriotique.  Vive la France.”  Which translates to “Thank you.  I like to be taxed.  It makes me feel patriotic.  Long live France.”  Which is how governing officials believe rich people should feel about paying higher taxes.  And get righteously peeved when they don’t.  Such as when Gérard Depardieu moved out of France, renounced his French citizenship and became a Russian citizen to avoid paying those confiscatory tax rates.  Becoming a tax exile.  And he wasn’t the only French national to leave France for more friendly tax shores.  As a net migration from Paris to London followed the socialists return to power in France (see Paris mayoral candidate Nathalie Kosciusko-Morizet: I want to lure the French back from London posted 3/1/2013 on The Telegraph).

The French Right’s brightest hope to reclaim Paris after a dozen years of Socialist rule wants to woo back London’s burgeoning Gallic population by making the City of Light Europe’s cutting-edge, family-friendly “place to be”.

In an interview with The Daily Telegraph, Nathalie Kosciusko-Morizet, 39, warned that Paris must reclaim its “historical role of leading the way” if it wants to stop the “gap widening” with London.

A third French lycée is due to open in London to cope with the rising demand from the city’s French population – estimated at 400,000 as a growing number flee the Socialist government’s tax rises.

This led Boris Johnson to exclaim: “Bienvenue à Londres. If your own president does not want the jobs, the opportunities and the economic growth that you generate, we do…”

After 10 years of Socialist rule in Paris, NKM hopes to seduce both the city’s conservatives and a chunk of “bobos” (bourgeois bohemians), pointing to Boris Johnson as proof that the Right can win major cities.

“I don’t buy the prevailing theory that capitals are becoming increasingly Left-wing,” she said…

Paris was not business-friendly enough, she claimed, as the city was “not an early adopter” in providing new solutions to help them develop.

So many French are becoming British that they had to open a third French school in London to handle the burgeoning Gallic population.  In fact, the British are welcoming the French invasion.  Any student of history will find the irony in that.  (Here’s a hint. The French and the British were at war with each other for much of their history.)  Swelling the French population in London to about 400,000.  Because of those high socialist tax rates.

Not only are they working and paying taxes in Britain now but they are also doing something else.  They are NOT paying taxes in France.  So raising tax rates in France did what?  It chased jobs out of the country.  As well as taxpayers.  Ultimately reducing tax revenue.  The exact opposite of the intended outcome of their new tax policy.  For when it comes to confiscatory tax rates people will not say, “Merci.  J’aime être taxés.  Il me fait sentir patriotique.  Vive la France.”  But, instead, they’ll simply say, “Au revoir.”

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The French Socialists to Advance Policies that will drive the Wealth Creators out of France

Posted by PITHOCRATES - July 1st, 2012

Week in Review

No one likes austerity.  Even the nations who agreed to it to join the Eurozone.  Back when they were joining they all said they would keep their deficits and debt within Eurozone requirements.  But after a prolonged recession few are willing to cut back on government spending.  In fact, in France, they’re going to increase government spending by beating up on the rich (see Adieu, la France posted 6/23/2012 on The Economist).

AFTER the French Socialists last came to power in 1981, under François Mitterrand, the new government went on a spree of nationalisations, taking over 36 banks and several industrial groups, before quietly abandoning the policy and even reprivatising a few firms. Small wonder that French bosses greeted François Hollande’s election as president with more than a frisson of foreboding. What would the Socialists do this time…?

Even before the parliamentary elections on June 17th, at which the Socialists won a majority of seats, rhetoric against factory closures had been mounting…

Michel Sapin, the labour minister, has promised to make it so expensive for companies to lay off workers that it will no longer be worth their while. Firms that fire people while still paying dividends may be penalised. Another planned ruse is to force companies to sell factories, presumably along with the brands manufactured there, to competitors rather than close them down…

[The Socialist] party’s most popular campaign promises was to tax incomes of more than €1m at a marginal rate of 75%. The likely consequences will be much less admired. Some big companies will leave France or move management abroad in order to shield their executives from the tax. That will lead them to invest and hire more overseas rather than at home. Already, top foreign executives no longer want to join French firms. A new extra tax on dividends has further angered the business world…

But the most important consequence of stratospheric taxes will be less visible, at least at first. Marc Simoncini is one of France’s best-known entrepreneurs—and one of the few business leaders to denounce the new measures publicly. Why, he recently asked, would anyone want to start a business, invest and succeed in the most taxed country in the world?

Tax is not the only threat to executive pay. Last week Pierre Moscovici, the finance minister, announced that pay for bosses of companies in which the French state holds the majority of shares will be capped at a flat rate of €450,000, or roughly 20 times the wage of the lowest-paid worker… In some cases it will lead to a 70% pay cut… Measures to limit pay at fully private firms are expected before long.

Most French business leaders don’t think that the government is deliberately targeting them. They reckon that its motives are purely political—and that the Socialists are simply not aware of the damage their plans will do (most ministers have hardly any experience of business).

Behold class warfare on a grand scale.  This is socialism.  This is what being ‘fair’ is.  This is egalitarianism.  Everyone is equal.  Except the rich and successful.  Who the state enslaves.  To serve the people.  By forcing these executives to continue to do what so few people can do.  Run these big corporations profitably.  But they won’t reward them for their unique talents.  No.  Instead, they’ll enslave them.  Force them to keep producing wealth.  To keep creating jobs.  But to do so for a paycheck that’s less than most sports stars, movie stars, singers, writers, reality stars, etc., get.  Because these executives don’t earn their pay like these people who contribute so much to the world’s economies.

The Socialists believe these rich executives don’t do anything worthy for their pay.  That these corporations run themselves and only create wealth because of the workers in the trenches.  These are the important people.  Of course if they don’t need these rich executives why not just fire them?  Let these corporations spontaneously produce wealth and create jobs?  Because even the Socialists know that these rich executives are the only ones who can run these corporations and produce the wealth they so want to confiscate.  And if they fired these rich executives and tried to run these corporations themselves there would be no wealth to confiscate.  Because they have no business experience.  And they would only run these companies into the ground.  Just like the Soviet state planners did in the Soviet Union.

How did they get here?  Their social democracies.  Cradle to grave state welfare.  The people like it.  They love the free stuff.  The problem is it’s free only to them.  Someone has to pay for it.  Primarily those who work for the rich executives.  And the rich executives themselves.  Via confiscatory tax rates on the wealth they create.  But as they drive out these wealth creators from the country what will they tax?  As populations age there are more people consuming government benefits than there are paying for them.  Which means they need to raise tax rates ever higher.  Going so far as to nationalizing businesses.  Eventually there comes a point where even class warfare won’t work anymore.  Because there just won’t be enough wealth left in the country to tax.

These policies are not likely to make things better in France.  It may feel good for a little while to punish the rich.  But punishing the rich won’t reduce your taxes.  Or improve the economy so you can advance into a better and higher paying job.  But it makes good politics.  Which is why these politicians can win elections.  In Europe.  And in the United States. 

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LESSONS LEARNED #15: “Most people would rather hear a pleasant lie than an unpleasant truth.” -Old Pithy.

Posted by PITHOCRATES - May 27th, 2010

NO ONE LIKES bad news.  That’s why when someone says, “I’ve got good news and bad news, which do you want to hear first?” most people want to hear the bad news first.  Get the sting over.  Then hear the good news to help get over the sting of the bad.

People are so adverse to bad news they’ll even look for ways to ignore it as long as they can.  They’ll believe lies if the lies keep their pleasant little world pleasant.  Almost to any cost.  In 1944, the Germans were beaten.  There was a chance some soldiers would be home before Christmas.  So when some scattered reports came of movements on the German front towards the Eifel Region just east of the Ardennes, SHAEF (Supreme Headquarters Allied Expeditionary Force) discounted them.  Explained them away as nothing.  Because the Germans didn’t launch winter offensives.

Until 1944, that is.  The Schnee Eifel battle, at the beginning of the center prong of a 3-prong attack, was the greatest American defeat in 1944/1945 Europe.  But this was only one of many battles known as the Battle of the Bulge.  This German winter offensive through the Ardennes was the biggest American battle of World War II.  And bloodiest.  In all, the Germans killed about 20,000 American soldiers.  Some after they surrendered.  Kampfgruppe Peiper spearheaded the Sixth SS Panzer Division.  Joachim Peiper would eventually lead this force through the Baugnez crossroads near Malmedy.  And into infamy.  The Malmedy Massacre wasn’t the only war crime, though.  There were others.

In the movie Patton, General Patton predicted this German offensive.  And there was some truth in that.  Third Army DID predict this.  But it was his chief of intelligence, Colonel Oscar Koch, who figured this out.  Patton’s battlefield successes were the result of strong intelligence.  And Colonel Koch gave him some of the best intelligence available on the Western Front.  In November 1944, he gathered the intelligence, analyzed it and predicted a time and place.  Of course, SHAEF discounted his findings.  They were sure the Germans were beaten.  Besides, the Germans didn’t launch winter offensives.

THE BATTLE OF the Bulge was only a small part of World War II, the biggest and meanest war in the history of mankind.  Nations mobilized their military, economic, industrial, and scientific forces to wage total war.  Civilians died, too.  En masse.  Whether by bombing of enemy cities or by organized genocide in occupied lands, civilians felt the horrors of war as they never had before.

So how did such a horrific war come to be?  It’s complicated.  Did it have to be as bad as it was?  No.  At least, France could have stopped Hitler earlier.  Before his military buildup.  But to understand this story, you have to go back in time. 

THE GREAT WAR, World War I, was the culmination of a series of disputes over European power and control of the Balkans.

The Crimean War of 1853–1856, the Austro-Sardinian War of 1859 and the Austro-Prussian War of 1866 stirred the pot up in the Balkans.  The Franco-Prussian War of 1870-1871 established a new unified Germany as the dominant power of Europe as Great Britain and France were in decline (and ceded the Loraine-Alsace region from France to Germany).  And the Russo-Turkish War of 1877–1878 exploited the Balkan tempest.

Weaker nations formed treaties with stronger nations.  Entangling treaties.  Imperial interests in the Balkans of both the great and not so great powers further fermented the Balkan tempest.  Minority rule of the majority led to nationalist rebellion.  To quench this rebellion, the Austro-Hungarian Empire annexed Serbia.

This is a very cursory history but you get the picture.  There was a lot of anger.  And a lot of wrongs to right.  And territory to regain.  Or to simply gain.  And then on Sunday, the 28th of June 1914, Archduke Franz Ferdinand of Austria visited Sarajevo.  There a Yugoslav nationalist, Gavrilo Princip, assassinated him.  And then all of those entangling treaties kicked in and a world was at war.

IT WAS THE bloodiest and costliest war to date.  No one thought it would be, though.  You see, they learned a lot from the Prussians during the Franco-Prussian War of 1870-1871.  Which was swift and conclusive.  Unfortunately, they learned little from the American Civil War (1861-1865).  For 4 bloody years the Americans demonstrated warfare where technology was ahead of military tactics.  And World War I was to look more like the American Civil War than the Franco-Prussian War of 1870-1871.  Long.  And bloody.  A war of attrition where you don’t necessarily win a decisive battle.  The other side just runs out of soldiers to kill.

World War I (1914 to 1918) saw horrific killing fields.  Artillery bombardments that would last for days.  Attacks through barbed wire into raking machine-gun fire.  Poison gas.  The death toll was staggering.  Great Britain and her Imperial forces lost over a million killed, over 2 million maimed and wounded.  France lost slightly more killed and almost twice in maimed and wounded.  Civilians were not untouched by war, either.  Blockade starved civilian populations.

The War devastated and impoverished these two countries.  They won the war, but only barely.  The entry of America was just too much.  More soldiers and material.  The killing could go on indefinitely.  So all sides sued for peace.  With the Americans on the Allied side, though, they were in a position to dictate the terms of the peace.  And boy did they.

THE TREATY OF VERSAILLES was punitive.  In the run up to war, there were really no innocents.  But to the victors go the spoils.  Official blame for the war fell on Germany.  She lost territory (France got back the Loraine-Alsace region) and all her colonies.  And she had to pay reparations.  The Germans were pissed. 

The Allies hoped to mitigate their war losses by German tribute.  But it was too much.  Even a member of the British delegation at Versailles, economist John Maynard Keynes, thought so.  In an effort to restore Great Britain and France as the dominant European powers, the allies probably went too far.  The economic burdens on Germany were too great.  Then hyper-inflation met Great Depression.  Angry socialists, communists and nationalists tore the nation asunder.  Until a uniter came along.  Adolf Hitler.

HITLER ROSE TO power legally.  Then he consolidated his power ruthlessly.  He renounced the Versailles Treaty.  And did a lot of things that showed his ultimate intentions.  Including writing a book years earlier about his ultimate intentions.  Mein Kampf.  Which was pretty detailed.  To anyone who read it. 

One of his first provocative acts was to place a negligible military force into the Rhineland in 1936.  The German High Command was a little skittish about this idea for they did not believe they had sufficient strength to successfully fight off a French response.  The French had superior numbers in military power.  But they were financially weak.  They had poured a fortune into the line of fortresses known as the Maginot Line.  They could not afford all out war with Germany, too, and they thought a military conflict in the Rhineland may lead to that.  And after going through the horrors of the Great War, they had no desire to do it again.  Whether it was a question of could or would is still debated.  But had they, one wonders how such action would have altered the course of history.

Hitler continued in a string of actions, explaining away each as harmless with no higher purpose.  Great Britain and France were growing uneasy but accepted his statements.  They wanted to believe.  They would do just about anything to avoid a return to war.  Even give away another sovereign nation’s land.

THE SUDETENLAND WAS an area along the Czechoslovakia side of their border with Germany with German inhabitants.  Hitler wanted to reincorporate them into the German state.  He promised this would be his last territorial acquisition.  And, at Munich in September of 1938, Great Britain and France took him at his word.  With Czechoslovakia not even present at this conference, they concluded the pact that ceded the Sudetenland to Germany.  All’s well that ends well.

British Prime Minister Neville Chamberlain returned to London with a copy of the Munich Pact.  He would give a speech declaring they got “peace for our time.”  But they didn’t.  Hitler soon took the rest of Czechoslovakia.  With his two flanks protected, Hitler invaded Poland in 1939 and launched the world into war.  Again.  Only this time, it would be worse.

IT IS HARD to blame France and Great Britain’s reluctance to return to war with Germany after the devastation of World War I.  And those who do usually do so with the advantage of hindsight.  However, we know what the costs added up to in stopping Adolf Hitler in 1945.  And few would say that all out war with Germany in 1936 would have cost more.

Here’s the ugly truth.  The truth can be ugly.  And we hide from it at our own peril.

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