Did the French just elect a self-described socialist who wants to raise taxes on the rich? Yes, they did. Is President Barack Obama asking for four more years with an economic philosophy similar to that of the new French president? Yes, he is.
In France, those earning over a million euros would face a tax rate of 75 percent. And one of Francois Hollande’s first acts as new president of France was to reverse his predecessor’s course and lower the retirement age from 62 to 60 — this in a country whose projected unfunded pension liabilities for its living citizens are about $8.37 trillion, or 300 percent of its $2.774 trillion gross domestic product. The United States’ unfunded Social Security, Medicare and prescription drug benefits liability for its living citizens is about $50 trillion, or 333 percent of our current $15 trillion GDP.
France is a county whose debt is 90 percent of its GDP (U.S. debt-to-GDP ratio is over 100 percent). It had zero GDP growth in the first quarter of 2012 and has an unemployment rate of 10.2 percent. Taxes, as a percent of GDP, are 56 percent. (U.S. state, local and federal tax take is 33 percent of GDP, excluding the dollar value of government-issued mandates on the private sector).
France is a mess. Hollande, like Obama, pays no attention to the many examples of government-controlled economies versus those where government takes less from people and relies on the private sector to create jobs.
Let’s look at just one such example. Hong Kong became a British colony following the first Opium War in the mid-1800s. As mainland China fell to communist control a century later, many Chinese migrants and corporations fled to the island. In 1961, Britain named Sir John Cowperthwaite, a proponent of the Austrian school of free-market economics, as financial secretary of Hong Kong. Residents of Hong Kong faced a maximum 15 percent in personal taxes, no tariffs, no subsidies, no government borrowing and minimal red tape. Cowperthwaite called it “positive non-intervention.”
Hong Kong, under his guidance, saw a 50 percent rise in wages and a two-thirds fall in the number of households in acute poverty. Exports rose by 14 percent a year, as Hong Kong evolved from a trading post to a major regional hub and manufacturing base. Hong Kong is a water-surrounded rock with no natural resources– other than the industry of its people.
In his first budget speech, Cowperthwaite said: “In the long run, the aggregate of decisions of individual businessmen, exercising individual judgment in a free economy, even if often mistaken, is less likely to do harm than the centralized decisions of a government, and certainly the harm is likely to be counteracted faster.”
About Hong Kong, economist Milton Friedman wrote: “At the end of World War II, Hong Kong was a dirt-poor island with a per-capita income about one-quarter that of Britain’s. By 1997, when sovereignty was transferred to China, its per-capita income was roughly equal to that of the departing colonial power….That was a striking demonstration of the productivity of freedom, of what people can do when they are left free to pursue their own interests.”
In the U.S., we watch the spectacle of Jamie Dimon, the CEO of JPMorgan Chase, explaining to Congress why his company lost $2 billion in private money. Meanwhile, the federal government squanders many times more by “investing” public money in now-bankrupt or soon-to-be bankrupt “green” companies.
After nearly four years of spending with dismal results, Obama blames the results on an “inherited” economy that was worse than he thought. He also blames the dastardly Republicans for stopping him from spending the requisite amount of money to get things right.
Bill Clinton, too, pushed for a federal takeover of health care. In fact, everything ObamaCare purports to achieve HillaryCare set out to do. But when Clinton saw negative polls on HillaryCare and realized he overreached, he backed up.
Obama saw that parts of ObamaCare polled well, like refusing to allow rejection based on pre-existing illness and requiring insurance companies to cover the “children” of policyholders. To keep the costs down, Obama called for an individual mandate, believing that to “bend the cost curve” he must require young, healthy types to get insurance or pay a fee for not doing so. Obama assumed that once people took a closer look at ObamaCare, resistance would fade. It hasn’t. If anything, ObamaCare is more unpopular now than ever.
In France, not only did the voters elect a socialist, they gave him enough seats in parliament so that his agenda can get passed without compromise. For two years, Obama had that kind of power. It gave us ObamaCare, “stimulus” and a tepid recovery.