The shocking images on Monday evening of Notre Dame, the world-famous Parisian landmark, being engulfed in flames moved virtually everyone that saw them.
Clearly, the task of rebuilding the cathedral must wait until the cause of the fire is established and the structure is passed as safe for construction workers to enter. Similarly, the cost of rebuilding the iconic structure, (especially if, as President Macron hopes it will be ready by the time of the Paris Olympics in 2024), will be staggeringly high.
The President of the European Union (EU) Council, Donald Tusk called upon EU members to help with the rebuilding. That comes at a state level. What has been most moving is the action of wealthy individuals.
The sum of €100 Million ($112 Million) was donated by François-Henri Pinault, France’s second-richest man early on Tuesday morning. This was swiftly followed by Bernard Arnault, the Chairman and Chief Executive Officer (CEO) of LVMH, the world's largest luxury-goods company. He is the richest person in Europe and the fourth-richest person in the world and he donated €200 Million ($224 Million).
By the end of Wednesday, the French government had received over €850 Million ($956 Million) from wealthy French families, French companies and international corporations.
One could be cynical and suggest that the wealthy se Notre Dame as a piece of “Charity Vanity” as they seek to incur favour by donating such large sums to one of the highest visibility causes in recent memory. Or one could argue why so much for a building when human needs go unnoticed?
There are some who have overlooked the generosity and argued that the donation graphically illustrates a disgusting gap between the haves and have nots. This type of thinking was behind the protests over tax and inequality that have been son highly viable during the protests of the Yellow Vest movement.
Such arguments about inequality and class divide have flared up just as President Macron hoped to establish an air of national unity in this time of national tragedy.
Philippe Martinez, leader of the militant CGT labor union said:
“...Can you imagine, 100 million, 200 million in one click! It really shows the inequalities in this country. ... If they’re able to give dozens of millions to rebuild Notre Dame they should stop telling us that there is no money to pay for social inequalities. ...”
Ollivier Pourriol, a French philosopher and novelist added:
“...Victor Hugo thanks all the generous donors ready to save Notre Dame and proposes that they do the same thing with Les Misérables...,”
This really is the politics and economics of envy and resentment. Why the attacks on the custodians of wealth creating private sector companies. Let us just remember that globally Renault employs 118,334 people and LVMH offers employment to 136,633.
Critics of the wealthy donors may contend that the corporations should be taxed more and the extremely wealthy should pay more tax. They may also look to amend the sales tax rates that are imposed on goods and services. So, let me provides a sample of the tax rates in the four largest economies of the Eurozone, plus those in the U.K. and the U.S.
The listing will be given as...
Country: Corporation Tax Highest Income Tax...Sales Tax...GDP Growth
Germany: 33% 47.475% 19% 0.6%
France: 30% 49% 20% 1.0%
Italy: 27.9% 45.8% 22% 0.0%
Spain: 25% 45% 21% 2.3%
U.K.: 19% 47% 20% 1.4%
U.S.: 21% 32% 10.2% * 3.0%
*Louisiana Highest in U.S.
Before looking at taxing more, France should pay attention to these metrics and see that the nations that are growing faster than itself, actually have lower tax rates.
Growth is the key for economic development. Following the fall of the Soviet Union in 1991 the world went through a wave of globalised development. Capitalism spread and free markets were adopted in numerous countries. Industries became a focus of countries everywhere.
Thirty years ago, 50% percent of people in poor nations were living in extreme poverty. In the intervening years since the development of global markets, this figure has declined to 21%. The reason for this decline has been the use of free enterprise, capitalist-based economics.
Free markets open trade opportunities resulting in a higher quality of goods and services being available for consumption. The free market increases competition for both industrial activity and jobs which lead to an increase in overall life expectancy.
When countries use free markets, they immediately become a global partner in trade. They are more able to import and export their products to a larger market, thus increasing their economic wealth greatly. Countries with higher economic success generally see less poverty in their citizens.
Impose too high a burden of tax and the wealth creators will move away, so leaving the former host nation far worse off.
In a capitalistic system, jobs are given to those who work for them, and the workers only get paid when they complete their requirements. When there are more people than positions available, people will increase their efforts to rise above the rest and claim that position.
This creates a competitive environment that can increase the effort people put forward. Efforts to alleviate poverty must come from a system that rewards productivity and industriousness.
I accept that economic growth generated by the free enterprise system alone will not necessarily solve unemployment. For example, growth cannot solve structural and frictional unemployment. There is a role for the state...not through higher taxation. In fact through less by offering enhanced tax breaks and supply side incentives.
When it comes to charitable giving the U.S. reached a generous milestone in 2017 and 2018, with Americans donating a record amount to charity. Charities received $410.2 Billion from generous Americans last year, much of that money came from the richest households, according Giving USA’s annual report on philanthropy.
In the U.K. the wealthy have not been as generous, however, in February steps were being taken to remedy this. Numerous bankers, lawyers, heads of foundations and philanthropists discussed the Beacon Collaborative, a new philanthropic movement targeted to encourage the U.K.’s wealthiest to be more generous and double the amount they donate to reach £4bn a year. This would be desirable as doubling their donations would make a big impact on numerous good and worthy causes and not dent the lifestyle of the very wealthy.
The World Giving Index published by the Charities Aid foundation used Gallup surveys of 195,000 people in 153 nations, and asked people whether they had given money to charity or volunteered or helped a stranger in the last month. It also asked respondents to rank how happy they are with life.
Consider the countries I listed earlier, where do they rank in terms of national giving:
Germany 18th, France 91st, Italy 29th, Spain 90th, U.K. 8th and U.S. 5th
Let that sink in.... France is ranked 91st of 153...deep in the third quartile.
So, before the economic inept red flag brigade start claiming the need for more taxes, please ask what creates wealth? The answer is growth. That is sustainable growth from the private sector, not false growth that is driven by the state spending endless sums of lame duck industries.
Where is the best growth to be found? The answer is in low tax economies and it is not surprising to note that the low taxation nations book better charitable donations.
