Swans Commentary » swans.com September 10, 2012  



Blips #128
 From The Martian Desk


by Gilles d'Aymery





"What a fine comedy this world would be if one did not play a part in it." —Diderot, Letters to Sophie Volland


(Swans - September 10, 2012)   THE ART OF GOVERNING: Last February 27, 2012, the then socialist candidate to the French presidential election, François Hollande, feeling that the campaign had reached a plateau, came up with a PR and political coup: He announced that if elected he would impose a marginal tax of 75 percent for people who make over €1 million a year (he first said over 1 million a month...but corrected himself. He meant a year). On May 6, he was elected and took power on May 15. Since then his government has been struggling with many issues -- a tanking economy, rising unemployment, deep budget and trade deficits. Hollande and his prime minister, Jean Marc Ayrault, have been besieged by the top wealthy employers during the summer who kept hammering that his super-tax would be detrimental to the French economy. Still, they want to "strictly implement" the fiscal measure -- an electoral promise -- but they are facing a few hiccups.

MONEY IS NOT PATRIOTIC as I suggested in "France: Change Is Now?" (June 4, 2012) and is borderless. Most people make decisions according to their self-interest, and the wealthy class argues that the rich cannot alone take care of the budget deficit. Feeling targeted and despised, they are slowly making choices to get out of what they consider is a hornet's net. One entrepreneur in Haute Savoie who had planned to build a new plant that would create 500 local jobs has rescinded his decision. He's going to build the plant in Morocco instead. The honorary president of L'Oréal moved to Lugano, Switzerland, in June. Lawyers' offices are filled with people researching the possibility of relocating to other countries or even changing nationality. There is an ongoing rumor that the Peugeot family may relocalize in Asia (which I think is malarkey). A few days ago, however (and this is not baloney), Bernard Arnault, the chairman and CEO of LVMH Moët Hennessy - Louis Vuitton S.A. met with Prime Minister Jean-Marc Ayrault to express his worries about, and opposition to, the 75% tax. It's just been revealed that Arnault applied for Belgian citizenship last month.

BERNARD ARNAULT is an interesting character with a brilliant mind and great business acumen. He has built and developed LVMH, the largest luxury goods and services company in the world with a current value of close to 70 billion euros. Arnault and his family own over 45 percent of all the shares. He is the wealthiest individual in France and in Europe, and according to Forbes is the fourth wealthiest person in the world with an estimated net worth of $41 billion. He also was the highest-paid executive in France last year (over €10 billion plus countless dividends). When François Mitterrand became president in 1981, Arnault left France, relocating to New York City. He came back to France in 1984 when the Mitterrand administration began embracing neoliberalism. (It is little known that the wall between investment banking and commercial banking was dismantled first in France in 1984 under "socialist" Mitterrand, then in Great Britain under Margaret "TNA" Thatcher, and eventually led to the repeal of the 1933 Glass-Steagall act in 1999 in the U.S. through the Gramm-Leach-Bliley Act signed by Bill "Third-Way-Democrat" Clinton.)

BACK IN FRANCE in 1984, under a now-socialist-neoliberal regime, Bernard Arnault went on to build his conglomerate and become a very powerful man in both business and politics. His decision to seek Belgian citizenship is bad news for the Hollande administration, for he sends a clear signal to the high-revenue crowd -- time to get out. Arnault's company porte-parole was quick to assert that the reason for that decision was unrelated to French fiscal policies. He wants to develop his business in Belgium in association with his close friend Albert Frère, Belgium's wealthiest individual. He will keep paying taxes in France, the communiqué asserted. But will he?

ACCORDING TO an analysis in the French magazine Le nouvel observateur (75% : ces "pleureuses" qui ont fait le forcing auprès d'Hollande, by Odile Benyahia-Kouider, 9/7/12), Mr. Arnault's lifestyle costs €40 million a year. He owns multiple real estate properties -- an island, houses, apartments, etc. -- that must be maintained. Hard to fathom and impossible to verify... Anyway, the journalist says that Arnault will forego his salary and dividends and will borrow €40 million from a bank in order to avoid all taxes. He will pay back the bank not in cash but with shares of LVMH, of which he owns a considerable amount.

THIS SEEMS PRETTY far-fetched, but these various stories and facts tend to demonstrate what I've often said: The body politic has become helpless in the face of the moneyed class. President Hollande may show some hardened spine, which he has not shown just as yet, and he can implement his surtax. He will have won a political battle, but he will lose the war. As Warren Buffett once said (I paraphrase): "There is a class war, and our class has won." A 75% marginal tax will not work as long as the wider -- not just national -- socioeconomic system is changed. How? That is the question.


THE ART OF EMOTIONALISM: Ann Romney and Michelle Obama spoke to their respective flocks at the Republican and Democratic conventions. Both were slated to deliver a tribute to their respective husbands. Both were highly successful, though Mrs. Obama was more electrifying (Republicans will disagree, of course). They ended their speeches with the sempiternal "god bless you, and god bless America." But their speeches were awfully similar. It had nothing to do with politics -- just lovely tirades about their husbands. It was all about America, family, and love. Mrs. Romney mentioned America (or country) 19 times; Mrs. Obama ten times. Family was a big hit: Mrs. Obama pronounced the word 59 times; Mrs. Romney, 50. And what would America be without love? Fourteen times for Mrs. Romney; 13 for Mrs. Obama. They had a very "modest" beginning together. The dining room table, according to Mrs. Romney, was "a fold-down ironing board in the kitchen." (Mrs. Romney forgot to mention that her husband was the son of the president of the American Motors Corporation and former governor of Michigan and they lived off stock options...) For Mrs. Obama, her husband's "proudest possession was the coffee table he found in a dumpster," leaving aside the subsidies he received to study at Harvard. The moral of the fable is, as always in America, if you work hard and play by the rules you can make it. Enjoy the spectacle. I do not watch it.


FINALLY, THE ART OF NOTHINGNESS: Someone wrote to me (anonymously) that I had been much too severe and critical of Alex Cockburn, and that I had impugned his character. I certainly did not impugn his character. I simply stated that I did not care much about him and his nutty positions, and did not read him often. I've even included links to pieces that were positive about him. I have, however, noticed much hypocrisy. There was this writer who used to tell me privately that Alex was a piece of s***, and Jeffrey St. Clair had no spine. Then, he published a piece on his Blog, writing how much Cockburn had been instrumental to his life, and posted a video on no-spine St. Clair eulogizing Cockburn. Try to understand... Anyhow, if you wish to read a serious criticism of Alexander Cockburn, see David Walsh's "Radical journalist Alexander Cockburn, 1941-2012." And for the nostalgia crowd and the sentimentalists out there, check out the Jeffrey St. Clair 10-minute tribute to Alex Cockburn. It will provide you with an appreciation of their close friendship.

 . . . . .

C'est la vie...

And so it goes...


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Swans -- ISSN: 1554-4915
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Published September 10, 2012