This morning, French President François Hollande declared that the GE offer for Alstom was “unacceptable”. While the need for state review due to the nuclear technology is understandable, extraordinary scrutiny regarding the rest of the deal—which seems to be the point of contention—is one more data point that feeds a larger narrative of the French government’s inhospitable attitude towards the business sector.
Along with Hollande’s 75% millionaire tax proposal—which was incidentally ruled unconstitutional—particularly worrying is the current Economy Minister Arnaud Montebourg’s history of calls for nationalization of assets of private companies.
But this inhospitableness does not stop at protection of old assets. There has been outright opposition to new companies. When Uber entered the French market, it wasn’t long until there were cases of vandalism against the new entrant.
Historical, political, and cultural opposition against business sector in France has led quite a few entrepreneurs to decamp for more business-friendly countries. The New York Times recently had a piece about entrepreneur flight to the United Kingdom. That Times article further cited Le Monde’s discussion on whether youth must leave France to succeed.
The Centre for Policy Studies recently released a paper that compared the propensity of a country to generate “SuperEntrepreneurs”. That is, not looking merely at the self-employment statistics, which could include your corner barber or your accountant. Rather, it looked at countries that had a large number of entrepreneurs building multibillion dollar global companies. In other words, those entrepreneurs who create most of the new jobs.
When they compared incidence of high-impact entrepreneurship they found, “The lowest share is found amongst nations with French legal origins, which is less than one-fifth of that of nations with English legal origins.”
When the stability of the rule of law has become uncertain due to the its co-optation by the political process, then executives think twice about doing business in that environment. That is, why go to France, when you can just go next door to Germany or across the Channel to England?