Hollande Must Betray His Supporters to Save Them — Entrepreneurs in France Flee From Hollande’s Rejection of Wealth

This is a follow-up on the post I wrote on the 7th of May: Holland Elected the First President to Never Have Held A Real Elected Position Previously While Sarkozy Becomes First French President in 30 Years to Be Ousted

After all the non-sense I read in French newspapers — remember, France is close to be communist country as possible, and even Sarkozy qualifies as a far-left candidate in the whole range of political ideas, even though he considers himself to be in the right wing, he's in the right wing of the far left — here are quotes from a couple of sensible reports, courtesy of Bloomberg.

(Bloomberg) May 9, 2012 — French voters are deluding themselves if they think the man they just elected president offers a viable alternative to the departing Nicolas Sarkozy. 

Francois Hollande’s socialist program is inoperable. Let’s hope he understands that. If he doesn’t already, he soon will. 

Hollande’s campaign was a throwback to Francois Mitterrand’s failed socialist experiment of the early 1980s. The new president doesn’t oppose Europe’s fiscal pact because it needlessly imposes too much austerity too soon -- which is true. He opposes the very idea of structural reform. In France the government already spends 56 percent of gross domestic product. Hollande now promises, among other things, to hire tens of thousands of extra civil servants and roll back Sarkozy’s increase in the retirement age from 60 to 62. 

He can’t think of a public spending program he doesn’t like. His rhetoric is stridently anti-capitalist. And he proposes to pay for this further expansion of government with higher taxes -- including a new top income tax rate of 75 percent. 

France isn’t starting from a position of fiscal or financial strength. Capital markets were already nervous about its prospects. They will stamp on any conscientious attempt by Hollande to keep his crazy promises -- and if that happens, the wider crisis in the euro area will flare again. The question isn’t whether the crowds in Paris celebrating the return of good old-fashioned socialism will get what they want -- they won’t. The question is whether Hollande will row back from his campaign pledges quickly enough to avert disaster. 

The mood of jubilation among France’s unreconstructed leftists will make it difficult. And Hollande doesn’t have much time. Mitterrand took from 1981 to 1983 to discover that his policies constituted the alternative that Margaret Thatcher had in mind when she said, “There is no alternative.” Hollande may have just days to come to the same revelation. Looming parliamentary elections complicate the tactical judgment. Hollande needs voters to give him the majority in next month’s vote for the legislature. He can’t betray his supporters before then. 

Whether it’s sooner or later, Hollande will be forced to acknowledge reality, and the disillusionment of the French left will be terrible. 

[...] Wisely, Hollande’s campaign was more about posture than specifics. We know he’s against austerity and for taxing the rich -- but he hasn’t drawn up a budget. That must wait, he says, until auditors have checked the government’s books. This could give the new president cover to rethink his position on longer-term fiscal control and structural reform. If he does that and insists on short-term fiscal moderation, whether this is deemed a renegotiation of the fiscal pact or merely a supplement to it, his election might help Europe.
But Hollande can’t be a good thing without letting his supporters down. That’s a hard truth to contemplate in your first week in office. 

And, the following one. I couldn't agree more with Jeremie Le Febvre.

Jeremie Le Febvre, the 30-year-old founder of private equity marketing-services firm TBG Capital Advisors, plans to move to Singapore from Paris this year. 

Not because of President-elect Francois Hollande’s pledge to boost taxes; rather for what Hollande’s victory says about how wealth is viewed in France, the entrepreneur said. 

“What’s really driving my departure is the fact that I don’t share the values that emerged during the election, the rejection of ambition and success,” he said in an interview. “It’s part of France’s difficult relationship with money, but it has reached a new level. Even if it’s utopian, I need to believe for me and my descendents that the sky is the limit.” 

France, the fifth-richest country and home to some of world’s wealthiest, including LVMH Moet Hennessy Louis Vuitton SA Chief Executive Officer Bernard Arnault, doesn’t celebrate its affluent. Hollande, a Socialist who once said “I don’t like the rich,” and who plans to slap a 75 percent tax on income of more than 1 million euros ($1.29 million), reinforces the sentiment that in France to be rich is not glorious. 

“Hollande is using the 75 percent tax as a symbol to convey certain values through stigmatization,” Le Febvre said. 

Hollande’s rhetoric against wealth and finance is prompting some in France to consider leaving, and European rivals are welcoming them. “Bienvenue a Londres,” or welcome to London, Mayor Boris Johnson quipped in January. Switzerland and Belgium have been just as warm. 

Julien Berckmans, a real estate agent at Brussels-based Best Home Consult, took five calls from French citizens seeking to buy property in the Belgian capital after Hollande defeated President Nicolas Sarkozy on May 6. 

“They had come and visited houses in the previous weeks, telling us their decision depended on the outcome of the presidential election,” Berckmans said. “They called on the morning after to say they were serious about moving.” 

Berckmans said there’s been a steady flow of house hunters in areas such as Ixelles and Uccle -- near the French school. 

Abdallah Chatila, a Geneva-based realtor who specializes in properties worth more than 3 million euros, said he received several enquiries from lawyers on behalf of French clients. 

“It’s difficult to determine, but we’ll know in the next three months how many are willing to confirm,” he said. 

Hollande’s millionaire tax announcement during this year’s election campaign triggered a 30 percent spike in searches from France for prime properties in wealthy London neighborhoods such as South Kensington and Chelsea, according to real estate agent Knight Frank LLP.

“Seen from abroad, France is the last country where an entrepreneur wants to go,” Marc Simoncini, the founder of French dating site Meetic.com, said in an interview on BFM TV yesterday. “I don’t know of any British person who’s come to set up a business in France. But I know plenty of young French people who’ve gone to London to do that.” 

The attacks on the moneyed class intensified during the presidential race, leaving entrepreneurs and other wealth creators feeling like pariahs, said Michel Collet, a tax lawyer at Paris-based law firm CMS Bureau Francis Lefebvre. 

“The rich are fed up with being stigmatized,” he said. “Beyond the expectation of higher taxes, another important reason why our clients say they want to move abroad is that the negative perception of wealth has mounted in the past weeks.” 

The attitude toward business and wealth creators is driving people away, said Diane Segalen, founder of Segalen & Associes, an executive search firm specializing in top management and board members. 

“It’s not only for people who don’t want to be taxed 75 percent, but people who want to be in a country where they think they can do business,” she said. “They want to be in a country where there’s stability in taxes and labor laws, and where they aren’t at risk when they try to set up a business.” 

Talent and skills will go where they are welcome, she said. 

[...] Collet said he noticed increasing expatriation-related queries about a year ago, when Sarkozy started increasing taxes and ended a concession that capped all taxes at 50 percent of income. The so-called tax shield had been one of Sarkozy’s first measures after being elected president in 2007. 

About 1.6 million French citizens were registered in French consulates abroad as of Dec. 31, a 6 percent increase from 2010, beating both the 2.3 percent rise the previous year and the 3 percent average annual increase in the French population living overseas, according to the Ministry of International Affairs. 

The U.K. had an 8.5 percent jump, while Switzerland and Belgium recorded 7.3 percent and 8.1 percent respectively. The surge is partly explained by the 2012 vote, which generally boosts registrations, the ministry said. 

Still, although most of the people aren’t tax exiles, for those fleeing stifling fiscal rules, the decision to move is disruptive and not taken lightly, Collet said. The destination depends on what phase of their lives they are in, he said.
[...] 
Hollande’s millionaire levy would hit between 10,000 and 20,000 households, according to estimates by the tax-collectors’ union, SNUI. It needs to be approved by France’s constitutional council, which may find it confiscatory, according to Collet.
Meetic founder Simoncini, who, with 16 other high earners, signed a letter vowing to pay more taxes, was among the few people in France to openly criticize Hollande’s plan.
“I don’t approve of this measure,” Simoncini wrote in a column published by weekly magazine Nouvel Observateur on March 5. “It would affect only a few dozen chief executive officers with unusual compensation while sending a calamitous signal to the world. How could we possibly attract people to set up businesses, create, invest and succeed in a country that would be in effect the most taxed in the world?” 

Simoncini wrote that his wealth tax would amount to 100 times his current salary because most of his fortune is invested in small businesses that don’t yet generate income for him.
On the other side of the Channel, Conservative London Mayor Johnson laid out the welcome carpet. 

“This is the global capital of finance,” he said. “It’s on your doorstep and if your own president does not want the jobs, the opportunities and the economic growth that you generate, we do.”