Dan Perry
"I don't mind a reasonable amount of trouble"

Inequality is driving people mad, but less so in France

Plus ca change, plus c'est la meme chose (Dan Perry photo)
Plus ca change, plus c'est la meme chose (Dan Perry photo)

A visit to unionized, statist and much-ridiculed France has me reflecting on inequality in the world, and the craziness it seems to be so ridiculously begetting.

After all,  France is the home country of economist Thomas Piketty, who reenergized the global discourse on this problem with his 2013 book “Capital in the Twenty-First Century” underscoring its dimensions.

It’s easy enough to mock the French, some of whom still walk around Paris with a beret on their heads, a skeptical specter on their face and a baguette sticking wildly out of their bag.

When I was AP’s Europe & Africa editor, based in London, I would dread summons to Paris to meet with the restive staff of the French Service for a “reunion syndicale.” I was hardly the only bureaucrat to sniff at the French: the taxes are too high; the business atmosphere stifles; the inmates have taken over the asylum. A reporter once refused to cover President Sarkozy’s divorce, informing me on the phone that he could not possibly comply on account of being contractually obligated to cover “politique, not ‘people.’”

In Israel, right-wing politics compel a hysteria about “the Muslims” supposedly taking over France, driven to heights of anti-Semitism by the jackals of BDS. The truth is that while there indeed is a problem there, their proportion is perhaps 8%, the number of converts would not fill the stands of Paris Saint-Germain, and the streets are full of immigrants that mostly seem to hail from Africa.

Yes, the benighted “banlieues” outskirts are grim (one can see this even from the taxis to and from the airport), but the city center still gleams, for miles, perhaps even more so than London.

France also has an astounding number of companies on the global Fortune 500, clocking in at number 5 in the world with 28, right behind Germany with 32, and therefore with more of them per capita. These include global brands like Total, BNP Paribas, Peugeot, and Dior. In fact, it would lead the world in the number of such companies on a per capita basis, about tied with the more populated #1 U.S. and #3 Japan, and would be way ahead of #2 China (as, to be fair, would many). In simple nominal terms it leads countries like South Korea, Canada, Italy, and even more respected (until Brexit) Britain.

How funny is that?

The place has its problems. Unemployment stands at 9%, over twice the American level (but that figure is problematic, usually filtering out people who have given up looking for work or never started – like, say, a large group of Israeli Haredim).  A union of extremists from both ends are hounding the government with “Yellow Vest” protests and angry dissatisfactions. Beer is also too expensive, which upsets.

Still in all, and despite occasional rounds in which bands of derelicts torch parked cars, the place has not yet lost its mind. Moreover, romance is still in the air, the old are not hidden away, and a liquid lunch is still permissible.

A liquid lunch is still permissible (Dan Perry)

The most recent presidential election was won by Emmanuel Macron, who seems sane if slightly strange, and definitely not someone who might be torching cars himself.  Compare that outcome to what has happened in the U.S., Britain, Brazil, Russia, Ukraine, Italy, Hungary, Poland – and in Israel (what, honestly, can you even say about Israel).

Why has France not yet collectively lost its mind?

A lesser degree of inequality may well be the key. France is one of only five countries out of 36 in the OECD where income inequality and poverty have fallen  over the past 20 years and which are in both cases below the average in this club of developed nations. See this report, which is a decade old, and this one, by Bertrand Garbinti, Jonathan Goupille-Lebret and Piketty, from last year: it shows the income share of the richest 10 percent to be at around 32%, about the same as in 1990, 5% lower than in 1960, and much lower than in 1900.

  Compare that to what happened in the United States, where the top decile dominates more and more.


By almost every measure, including income, equity and influence, the level of inequality in most  developed nations (especially Israel and the U.S.) has gone through the roof in the past 40 years or so.

And in the developing world the situation is far worse still, leading Oxfam to assess that the global top 1% now have half the wealth.

Source: Oxfam

Think for a second about whether the skills and essentialness of the top 1% make this anything other than a howling laughingstock.

It is a consequence of globalization, technological disruption, and economic liberalization (in many ways and in most places except usually France and the Nordics). Taxes have been lowered, movement of capital eased, international commerce encouraged, inheritances left alone, barriers to entry swept aside, protectionism decried, labor restrictions eased. It has become axiomatic that the goal is shareholder value, and that such wealth will trickle down, as opposed to, say, hoarded and used to speculate on property in London.

As a computer engineering graduate and son of Jewish immigrants who fled Nazism and Communism and landed me in the West, I have long supported all three. But I am noticing, in my dotage, that the insane inequality it has created is driving people berserk. That, along with racism and anger at political correctness, is why they vote for Donald Trump.

Some will argue that expectations are too high, and that modernity provides a host of unquantifiable benefits that should factor into the contentment equation – like having the encyclopedia and every conceivable video in your pocket while living much longer than before in most places.

That might resonate more if the basics were accounted for.

All over Europe 30-year-olds are living with their parents. In Israel people spend lifetimes paying off mortgages on middling properties because of a massive imbalance between property prices and salaries caused in part by a government stranglehold on land; in America, according to bankrate.com, almost two-thirds of the people cannot find $500 to rub together. In much of the West including the U.S. and Britain, pensions are becoming a thing of the past. Steady jobs may soon be extinct; the gig economy has turned a huge proportion of the public into day laborers.

Young people widely feel hopeless about their prospects and have turned to apathy; in Britain their low participation (apparently about a third) in the 2016 referendum has given them an outcome they overwhelmingly detest, but so great is their disengagement that one cannot be sure the lesson has even been learned.

We are told to prize all this as the inevitable outcome of free markets. But much of it, as we have seen, is actually the result of policies and tax regimes that can be tweaked. The wealthy supercitizens of the post-industrial world have successfully manipulated public opinion to preserve their privilege. The levers at their beck and call, from lobbyists to pressures exerted and outcomes effected through political donations, are profound.

What to do? I have a few suggestions:

  • There is no reason that capital should be more convenient than labor. Capital gains defined properly – essentially, the profits on trade of assets, commodities, real estate – should be treated no differently from the fruits of labor. Is it logical for a billionaire to pay little off financial dealings (in Trump’s case, reportedly, sometimes nothing at all) while a middle class person pays in some countries marginal rates of 50% in income tax from labor (plus indirect taxes), and this kicks in at salaries around $100,000/year? It is absurd.
  • Leave the he middle class alone, for they are the engine of spending, as they actually want to buy more stuff they at present can’t afford. Lower their taxes dramatically and see consumption rise, creating jobs. Most middle class people would be happy to pay tax on rents and stock windfalls if these were logically treated as the same as income, the rich had to do the same, and the taxation level was reasonable on average.
  • Raise taxes dramatically on the truly wealthy. Income and capital gains should be fair game on people earning enough to have almost nothing reasonable that they cannot afford – say, arbitrarily, those raking in $1m/year through either channel.

That there is not an outcry demanding this very thing should fill every person with awe for the lobbying ability of the financial upper class. It is inspiring.

I encountered this first-hand in a recent conversation in Cairo with some middle-class fellows who hated Bernie Sanders. “The guy’s a communist!” said one, an American-Egyptian dual national. “He wants to soak the rich. Can you believe it? I wanna be rich one day. He wants the rich to not only pay more, but pay a higher percentage!”

I was forced to explain that progressive taxation was a principle that prevails everywhere except in the mind of Rand Paul. Even the U.S. Republicans agree. Therefore the question is one of not principle but degree. Whenever a question is one of degree there are tradeoffs, and the balance is the key. The balance in most of the West right now is not right. And those who want to fix it are being done a great disservice by countries that levy prohibitive income taxes on the aspirant middle class, which is most, including Israel. They are giving redistribution a bad name and helping the super-rich bamboozle the people into opposing it on principle.

Anger at this is why the world is not balanced on its axis.

As with most things, Pink Floyd puts it best: “With, without. And who’ll deny that’s what the fighting’s all about?”

Café life, apres tout, will go on (Dan Perry photo)
About the Author
Dan Perry, a media and tech innovator, was the Cairo-based Middle East Editor of the AP, and chairman of the Foreign Press Association in Israel. Previously he led AP in Europe, Africa and the Caribbean. Follow him at: twitter.com/perry_dan www.linkedin.com/in/danperry1 www.instagram.com/danperry63 https://www.facebook.com/DanPerryWriter/
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