

French Entrepreneurs Revolt - Cbasedlifeform
http://www.mondaynote.com/2012/10/07/french-entrepreneurs-revolt/

======
GuiA
In the past 5 years, I haven't regretted leaving France once. I am thankful
for having grown up there, but as an entrepreneur/engineer adult it would make
no logical sense for me to stay there.

The government complains about "la fuite des cerveaux" (brain drain), but
they're not doing much to prevent it (whether it is for entrepreneurs or
researchers— I've been in both camps).

~~~
lloeki
The startup scene in France is glacial. During the presidential elections, the
only political figure who seem to get it and bound to fix this mess was
François Bayrou, while the remainder were focusing on saving what remains of
our heavy industries.

I randomly watch news/docs about some French "startup", and the spread mean
size seems to be 20 to 100 employees. That's enough to make you think what
"bootstrapping" means here.

Even without talking about that side of things, it's extremely hard to find
anyone technically truly competent to sidekick with, let alone in technologies
compatible with startup rhythms (even Rails and Django are a rarity, the huge
flock only knows C# and Java at a very, _ahem_ , academic level). Not exactly
helpful if you want to build your MVP quickly.

I'm not even talking about the legal paperworks that would sink a founder's
time like your nearby blackhole. I'm contemplating doing this myself since a
few years and the amount of crap you have to wade through is astounding. The
sanest solution is moving to the UK (but my personal situation prevents that,
for now).

The whole ecosystem is heavyweight and not nimble at all.

~~~
subsystem
I don't see how that's different from everywhere else.

~~~
michaelochurch
Excellent point. The idea that the U.S. is an entrepreneurial hotbed outside
of a few small areas (in which costs of living are absurd and real estate
parasites take most of the benefit) is laughable. "The U.S." is a leader in
technology because of Silicon Valley, and in finance because of Wall Street.
Take those two locations away and you have an average European country: not
terrible, but not something that other countries would go out of their way to
emulate.

~~~
hga
I don't think the facts support your position at all.

For starters, there's a _lot_ of biomedical entrepreneurial technology work
done outside of these two area.

Or look at the mini-mill revolution in steel production
(<http://en.wikipedia.org/wiki/Minimill>).

Those are just two examples where the state of the art is being pushed hard.
Less technologically advanced (often disruptive innovations (which mini-mills
sort of are due to their feedstocks vs. equipment)) happen all over the place,
I could dig up a bunch of examples in firearms, especially accessories (e.g.
EOTech in Ann Arbor, Michigan). Or my parents in the early '80s when consumer
use of C-band transmissions took off (for people in areas not served by cable
companies; this is now down in the K-band by Direct TV and Dish):

They first helped the first company to develop remote control systems that
would move your dish from satellite to satellite. One eventual extension of
this or spinoff was small (e.g. 4 feet) dishes that would fold down for
travel, e.g you could put one on top of your RV.

But the more interesting work was in LNBs
(<http://en.wikipedia.org/wiki/Low_noise_block-downconverter>), which combine
a low noise amplifier with down conversion for easy signal transmission to the
receiver inside the home. This was fairly advanced stuff for the era, the
usual analog stuff, surface mount construction way before it was (widely) used
in computers, they'd put them in a freezer and bake them, etc.

All done in the deepest of Red State SW Missouri, in the Joplin area.

There's lots more entrepreneurial stuff my family did from this location,
that's just one of the the highest tech examples.

Also look at where US job growth comes from in modern times. Smaller companies
that were startups, not big established companies.

~~~
michaelochurch
I didn't mean to imply that there's _no_ entrepreneurial activity in the rest
of the country. Of course there is, just as there's plenty of it in Europe.
I'm saying that the edge that "the U.S." seems to have over European social
democracies is really due to the prominence of two star locations, and goes to
zero (no difference in levels of activity and opportunity, not no activity) if
you take those out.

------
jdangu
> the new Socialist administration proposed to tax an entrepreneur’s capital
> gains as ordinary income

Actually, they plan to tax all capital gains as ordinary income, most of that
comes from stock/financial investments. The article doesn't mention that this
was not meant to impact entrepreneurs but is merely a side effect. As I
understand it, there will most likely be an exemption for this case.

~~~
pandaassembly
Thanks for this, the link posted is more of a rant than a careful analysis of
the french environment for start ups.

------
ori_b
The fact is that -- at least percentagewise -- the rich tend to be taxed far
less than the middle class, precisely because capital gains tax tends to be so
much lower. I'm not sure why this is considered a good thing, other than the
assertion that it attracts rich people.

I'm no economist, so maybe there's another good reason to give the highest
earners a lower effective tax rate, but I don't see it.

~~~
twoodfin
> The fact is that -- at least percentagewise -- the rich tend to be taxed far
> less than the middle class...

If you're talking about Federal income taxes, that isn't true. _Marginal_
rates for the middle class can exceed 15% (a married couple would have to earn
~$80K jointly before that happened), but the effective income tax rate for the
median household is much lower than, say, Mitt Romney's.[1]

Payroll taxes make this a closer run thing, but that's another story, and the
trend since the Medicare reforms of the '90's (removing the FICA tax cap) and
the ACA today (higher FICA tax on high income, new cap gains tax) has been to
push the costs of broad social welfare programs onto high earners.

[1]
[http://www.cbpp.org/cms/index.cfm?fa=view&id=3151](http://www.cbpp.org/cms/index.cfm?fa=view&id=3151)

~~~
loup-vaillant
No, he's talking about total effective taxes in France. That includes things
such as VAT.

Basically, the lower classes pay around 40% taxes (compared to their income).
The middle class pay around 50%. Rich people pay around 30%, and the riches
pay even much less (percentage wise). Apparently, wealthy people are better at
exploiting loopholes in our tax system.

~~~
twoodfin
That the VAT taxes consumption, something the rich do proportionally less of,
is not a "loophole". It's fundamental to the design of the tax.

~~~
loup-vaillant
Good point.

It doesn't explain everything however: The top 2% (or is it 0.2%?) pay less
than 10% taxes. Direct income tax alone is supposed to approach 50% for those
incomes.

------
guelo
The problem in all of Europe is that the ECB has insanely decided to maintain
tight money during a recession. This is slowing down economies across the
continent and forcing governments into austerity budgeting which acts as a
pro-cyclical intensifier of the recessions.

So being forced into an austerity budget you have two levers, cutting spending
or increasing taxes. Both will hurt the economy, the question is which is
worse. France being richer than, for example, Spain has a little more room to
maneuver. Entrepreneurs like to look at the so-called supply-side arguments
but the mirror demand-side argument is frequently ignored, if people don't
have money to spend they're not going to buy what you're selling. Economics
being the joke science that it is these issues are argued endlessly without
resolution, though there is some evidence that tax policy does not have that
big of an effect on economic growth. But what we can say for sure about
cutting social services is that lower and middle class people will suffer more
from these cuts than the entrepreneurs will suffer from tax hikes since
normally the entrepreneur will have more personal money to absorb the hit.

Again, this could be avoided if ECB would adopt more pro-growth monetary
policy.

~~~
fauigerzigerk
When you say "entrepreneurs" you must be thinking of the L'Oreal or Hilton
heirs. I see lots of heavily indebted entrepreneurs in Europe taking on big
personal risk, both financially and in terms of career risk. European
entrepreneurs rely on bank loans much more than the typical U.S business.
There's very little equity in many small businesses.

Enrepreneurs who are now wealthy often had to struggle for many years in
poverty without much social security before they achieved that kind of
success. Many fail as well. I think you're mixing up entrepreneurs and big
corporations. Big corporations can absorb or avoid paying taxes in any
particular country, but entrepreneurs often can't.

I do agree with you that monetary policy should be counter cyclical and it is.
The ECB has tripled its balance sheet since 2007 and it has lowered interest
rates to 0.75%, which is way below CPI. I agree that they should have been
even more aggressive but there's a political reality as well.

Monetary policy is not the issue here. The problem is counter cyclical fiscal
policy. It has to stand on both legs. If you don't run a surplus in boom times
you're not going to be able to spend enough during downturns.

But our political systems seem to be structually pro cyclical. During boom
times, the right wants to cut taxes or fund wars and the left wants to extend
benefits. Nobody wants to run a surplus and pay down debt.

------
gadders
Fortunately, there is a free [1] enterprise zone just a few hundred miles from
Paris where many French entrepreneurs and businessmen can locate to. It's
called London [2]

[1] Relatively speaking

[2] [http://www.dailymail.co.uk/news/article-2174704/Wealthy-
Fren...](http://www.dailymail.co.uk/news/article-2174704/Wealthy-French-
moving-Britain-escape-Hollandes-plan-75-cent-tax-rich.html)

~~~
rmc
I would not trust the Daily Mail when it comes to how great the UK is and how
terrible other EU countries are.

~~~
gadders
First link I could find. Have a similar one from the BBC:

<http://www.bbc.co.uk/news/magazine-18234930>

~~~
rmc
Now, how many British people live in Paris?

According to Eurostat there are more British people in France than French
people in UK (
[http://www.guardian.co.uk/news/datablog/2012/jan/26/europe-p...](http://www.guardian.co.uk/news/datablog/2012/jan/26/europe-
population-who-lives-where) ). Not to mention the coast of Spain which is
"England in the Sun". I can't find figures on cities.

There are always people who move around./

~~~
gadders
Not sure about Paris, but the Brits moving to Spain aren't moving to start
businesses (unless you count "Lineker's UK Fun Pub" and similar).

------
mathieuh
This is why neo-liberalism and social democracy do not work. You can reform
capitalism all you like, right up until the upper class decides they'd quite
like to go back to being many times richer than the working class.

~~~
eli_gottlieb
Social democracy should never work, in theory. It works fairly well, in
practice.

But frankly, saying that social democracy can't ever work _because
neoliberalism murdered it_ is not exactly a good theory.

Hey, though, I'm as in favor of smashing capitalism once-and-for-all as you
are.

------
mmariani
I sincerely hope that other EU members don't follow suit on this outrageously
stupid idea. Because if so, it'll be the beginning of the end for Europe.

------
DanielBMarkham
From what I understand, when it comes to policy, many on the left seem focused
on the _person_ first, the money second. Is a rich person unfairly profiting
from our great country? Couldn't we take that money and do something better
with it? After all, aren't the needs of many people greater than the needs of
just one? Let's look at people, decide how fair they are treated, then make
the money do that.

Others (including myself) focus on the _money_. Is the money being used
efficiently for things the population wants? How can people more efficiently
allocate money so that we all benefit. After all, if the money is being used
to its maximum effectiveness, shouldn't all the people benefit? Let's look at
the money, decide how efficiently we can get that to move around, then the
people will follow along behind that.

Capital gains is where this difference in philosophy hits hardest. Do we want
rich folks paying the same as wage earners? Or do we want people who are
better at allocating money to things that advance the species in general to
have more ability to do more of that?

There's no right or wrong answer. People on both sides take the arguments too
far. But when you have no entrepreneurial community and the few that you have
are publicly screaming at you to slack off, perhaps you've gone a little too
far in one direction.

My question is "How do governments learn what is a happy medium?" I think the
answer is regularly changing up who is in charge, because there is no exact
and unchanging answer. Here's hoping the French will have a chance to adjust
before they destroy what little is left of their startup economy.

I'd also note that laws and policy many times are made based on the public's
caricatured idea of something instead of the thing that actually exists. In
the U.S., it's common to hear politicians rail against "big corporations"
while proposing policies that would sack the local stock broker or web startup
guy. Meanwhile the truly large corporations have lawyered up and done enough
regulatory capture that they skate through. There can be a huge difference
between what's advertised and what the public actually gets.

~~~
gadders
I think a lot of people confuse _corporatism_ with _capitalism_.

Big businesses get subsidies, tax breaks, bank bailouts etc: Corporatism

Corporatism is good for businesses, capitalism is good for consumers.

~~~
sageikosa
Corporations provide predefined guidance on how multiple business partners
share risks, rewards, liabilities and profits, allowing larger enterprises
than individuals alone might be able to afford or risk.

What you describe is closer to an oligarchy or plutocracy, with corporate
indirection acting as a shield to scrutiny, rather than a shield from
unfettered associative liability.

But yes, capitalism is good for consumers (and capitalists and entrepreneurs).

~~~
gadders
I'm not against corporations existing, just the fact that they are able to
"buy" influence and special favours in government.

~~~
sageikosa
That's a corruption of government, and isn't endemic to corporations. If the
government had fewer favors to dole out which mostly is in granting government
contracts for socialized services, "stimulus" (ie, subsidies), or providing
exceptions to regulations, there'd be less of a need to grease the wheels of
government (either via direct graft, or indirect campaign contributions).

Big government has big contracts that need big companies to deliver and manage
them; solution, smaller government. (Corporate) welfare government wants to
make sure everyone gets a fair chance (via stimulus), including enterprises
that productive capital markets find too risky; solution, smaller governmental
budgets. Utopian governments believe that society and the world can be
engineered to a certain "perfection" (insert megalomaniacal vision here) if
just enough constraints (ie, regulations) are placed upon it, like choke
collars; solution, fewer constraints.

Big corporations provide the anonimity and scale to meet the needs of large
contracts, be non-personal recipients of stimulus (as "job creators"), and
have enough contentrated power to scale or bypass the regulatory walls. Small
organizations and individuals cannot meet any of these needs effectively.

The solution is to get rid of big government. :-)

~~~
gadders
I think we are violently agreeing.

------
anovikov
Stupid move in an economy so (internally) open as EU. Companies will just move
somewhere nearby, and the commies will suffer.

~~~
ucee054
_"Commies"?_

Really?

You don't understand the difference between putting up taxes and running the
_Gulag Archipelago?_

------
chrismealy
Getting all the rich creeps to leave is a feature.

~~~
paulhauggis
It's crazy how so many people in this generation believe that getting rich is
evil and wrong..but being forced to give up 60-80% of your earnings to a
government that will most likely squander it is not.

Don't worry though. When all of the rich leave, there will be nobody left to
tax.

~~~
michaelochurch
France has universal healthcare, tougher environmental regulations, and 5
weeks of paid vacation for all working people. I hardly call that a
"squandering" of resources.

Fighting an oil war in the desert is closer to that.

~~~
paulhauggis
"universal healthcare"

Since when has a monopoly ever been a good thing?

"tougher environmental regulations"

France also based many of them on the idea that we have man-made global
warming.

"5 weeks of paid vacation for all working people"

I would rather leave that up to companies and have 30%+ more of my taxes.

"Fighting an oil war in the desert is closer to that."

You gave me 3 simple examples. Every government in every country is
inefficient. France somehow believes that those inefficiencies will go away by
taking away more money from its citizens.

~~~
bokonist
_Since when has a monopoly ever been a good thing?_

In the U.S., it is the healthcare providers who form for-profit monopolies
that jack up the prices and screw over the consumer - see for example:
[http://runningahospital.blogspot.com/2012/07/well-done-
partn...](http://runningahospital.blogspot.com/2012/07/well-done-
partners.html)

I'm not a fan of monopoly, but I'd rather have a monopoly that works in the
interest of getting all patients healthcare and bargaining down consumer
prices, rather than a monopoly that creates higher costs to feed the profits
of providers.

 _5 weeks of paid vacation for all working people ... I would rather leave
that up to companies_

I would rather have the vacation time. The problem is that most companies
exist in a competive market, productivity is not absolute, but relative. If
our company unilaterally allowed everyone to take 5 weeks vacation, the
revenue would not fall 5% based on the lost productivity. It might fall 20 or
30% or more, because we would lose market share to our competitors, and we are
fighting in a winner-takes-all market. But if all companies in our market had
to offer 5 weeks vacation, and this was enforced, then we would all be on the
same footing, and all would be better off. It's a classic collective action
problem. And the way to solve a collective action problem is that you form an
organization and agree on binding rules with punishment for defecting - this
is called a government.

------
StefanKarpinski
Title would have been much better link bait as "Revolting French
Entrepreneurs".

