If this passed the companies they tax would just pass it on to the consumer. e.g. Apple products are regularly claimed to be much more expensive in the UK but it's mainly due to VAT.
Yep. Which will marginally decrease the purchase of smartphones, which will marginally decrease the revenue to the french telecoms, which would force jobs to be lost, but <sarcasm>thankfully</sarcasm>, french companies aren't really allowed to fire people.
French officials are also pushing to ensure that French cultural products, and notably the audiovisual sector, remain exempt from free trade rules during talks on a planned trade agreement between the European Union and the United States.
I.e., tax American/Foreign products only. I.e. a tariff. I.e. illegal under the WTO.
While manufacturing's been on a downwards trend during the recession, almost 20% of France's GDP comes from manufacturing - greater than USA or UK - similar to Germany and Japan.
Maybe, but what kind of manufacturing are we talking about, and how much is really privately-owned and not state-owned or state-subsidized? That is the real question to determine if it is comparable with US or Japan for that matter.
If the WTO treaty was a one-liner saying "No tariffs, no subsidies" you'd be right. But in fact provisions for films have been in WTO treaties since at least 1947 [1] and France just doesn't want to remove them.
Weird-but-legal tariffs and subsidies are nothing new - look at all the agricultural subsidies that are permitted, for example.
France is weird. Much of the world embraced French culture, then added local flavor and developed all kinds of great stuff. Now it's time for France to do the same. When France cooperates a little, awesome fun and exciting things come from it.
Language, it's not like you had a choice in the matter. The invasion of England by the French-Norman in 11th century did a lot more to implant French language into English than whatever cultural influence France had after that. https://en.wikipedia.org/wiki/Norman_conquest_of_England#Lan...
Just because you are invaded does not mean one culture is forced to Russia and France would be a good example. Another example: Japanese has taken a lot of french words as well, without having been invaded by France: http://www.sljfaq.org/afaq/french.html
Please, don't compare the french influence in Japanese to the French influence in English. The french influence in Japanese is a best anecdotal, while French's influence in the English language was phenomenal. Look at what the English language look like in Beowulf and see how much french vocabulary has been borrowed from French since then. Now there's probably between 30 to 40% of words derived or directly taken from Old French in English. Nothing common with Japanese in that regard, and I speak Japanese myself so I know this matter fairly well enough.
Well, no other country did a "revolution" and had their rulers decapitated (women included) following the French Revolution. Strange huh ? And the French Revolution was an utter failure within a couple of years, in case you had not noticed.
How is that relevant?
Liberalism and Republicanism are part of French culture, the revolution spread those elements of French political thought and they were embraced in most of Europe and North America (and to some degree in the rest of the world).
PS. I can't for the life of me understand why having TV equals culture. Honestly, IMO they should impose a tax on televisions so people buy less of them so there is LESS TV if they really want culture.
You don't get to decide what's culture and what's not. The world would be a much bleaker place without the likes of Buffy: The Vampire Slayer, The X-Files, Lost, or Adventure Time.
(I read through your comments to work out if you're american so this may be off, but..) An American who wasn't raised with a culture of high quality, non-commercial cultural production would say that.
If you read the article, you'll notice that there is already a tax on "television users". This proposal is about extending that tax to cover other devices that carry cultural entertainment.
Not that I agree with this or any other narrow taxation. If cultural funding is deemed important, it should be funded through broad taxation like any other service that is considered important.
In some countries public broadcasters don't have to stop the program every 15 minutes to beg for money, like the PBS does.
See: the CBC and BBC.
There are ways for television to surpass the lowest-common-denominator - we just don't see this often in the USA, but it does happen elsewhere. Government funded art need not be limited to crazy modernist sculptures sitting in front of government buildings.
Title appears inaccurate, according to the article itself:
> on technology giants like Apple and Google
> taxes on sales of smart-phones and tablets
> The proposed tax would mirror fees already paid by television users, TV and radio broadcasters and Internet service providers
So it's nothing specific towards Apple or Google, or "anti-American", as far as I can tell from the article. It's just a device tax. So, seems a bit sensationalist.
The government is desperately out of cash, they will be looking for new taxes everywhere possible (instead of cutting their expenses, as usual), especially on what's popular. It's a wonder they have not touched at Smartphones and similar devices yet.
Maybe the French government is out of money, and they might be even desperate, but first of all this money will be earmarked for the production of independent movies and the like. Secondly and more importantly when the French elected a socialist president they where expecting more actions like this one and many commentators think the government is not doing enough and is still too enterprise-friendly.
Indeed, and it's not like the tech giants will pay for the tax anyway. It will be the french citizenry who pay in the form of higher prices on goods (to some extent, depending on elasticity, YMMV, no purchase necessary, etc.).
Well they can earmark it where they like, it does not change the fact the country's first budget (even before Education) is dedicated to debt repayment. And things will only get worse as the confidence in the Eurozone erodes, sending future debt rates to the roof. They won't be solving much by raising taxes, and at one point raising taxes will definitely have a negative effect (i.e. significantly hurt consumption and therefore reduce the government revenues - we may already be at that point).
On the other hand, cutting expenses (as you seemed to be suggesting in another comment) is not the solution either. Remember how we got in this mess in the first place:
(1) Stop creating money directly, but borrow from private parties instead. They will effectively create the money –fractional reserve banking and such.
(2) Keep a slight deficit on your budget every year.
If I recall correctly, the current French debt is 80% interests fees. If we had borrowed from our central bank instead of Rothschild&co, our current debt would have been only 20% of what it is now –well, assuming we didn't borrow even more.
So, now, mainstream politics is all about the raise taxes / cut expenses false dichotomy. Our governance doesn't seem to see the obvious third alternative: stop borrowing from the market, start borrowing from the central banks at nearly 0% instead. (It can be done indirectly, despite the current EU constitution/setting: let some public agency borrow from the central bank, then let the states borrow from this agency. Of course, it requires some impossible coordination from all states)
>On the other hand, cutting expenses (as you seemed to be suggesting in another comment) is not the solution either. Remember how we got in this mess in the first place:
Depends what you mean by 'this mess' if this mess is a high level of debt without the productive economic activities to service it, I'd suggest that it was by spending too much on things that didn't provide a return on investment.
>They will effectively create the money –fractional reserve banking and such.
No, that is not fractional reserve banking, in fact what would happen if they did just print more money? Lets pretend they could do it without breaking away from the euro. Inflation would rise sharply? Would that lead to a better economic situation? Some people say it does, hence the UKs policy on QE.
>If we had borrowed from our central bank instead of Rothschild&co, our current debt would have been only 20% of what it is now –well, assuming we didn't borrow even more.
That is just a gross oversimplification, and really Rothschild&co? What are we, angry I learnt economics from youtube socialists?
>start borrowing from the central banks at nearly 0% instead.
Historically, this action hasn't worked well. Ultimately they have debt obligations as is, they need to settle that with something, where would that something come from? They could deflate the debt, which would be the effect of creating a synthetic entity which would loan at 0%. To deflate this much debt would seriously hurt people. They could potentially try and bond default, Russia kinda got away with it (some people say it was a good idea), but then Argentina really showed the problems that can happen doing this.
This is why people come down to taxation and spending, ultimately they are the only options, because any kind of inflationary policy is a cruel tax, as it is often felt more by the poorest, due to the commodities which tend to rise. Meanwhile the super rich can make money of the back of it and even increase their worth leveraged thanks to the inflation bonds and the like.
On Rothschild&co: I'm quite serious: President Pompidou used to work for them, prior to the 73 law that forbade the state from borrowing to the central bank (there were no Euro, back then). The only alternative was to borrow from private banks, of course. and Rothschild conveniently happened to be one of the big players, and happened to finance a significant part of the French debt.
Well, as far as I know. My sources are mainly Pierre Larouturrou, and Étiène Chouard, left-sided French economists.
On deflating the debt: I doubt the solution would be to do it at once. On the other hand, why not keep the budget as it is, and just stop borrowing from the market altogether? It would progressively Lower the payments on the interests, freeing some budget to actually lower the debt, or doing some other investments. I did not however measured the impact of not borrowing from rich people any more.
This line of reasoning makes sense, but so far the evidence has been contradicting it completely... France is borrowing at the cheapest rates it ever has.
They've cut expenses enormously, and the amplifying effect on growth is 1.6 (that means that the government saved 17 billions and it cost us 30 billions in lost GDP). Cutting expenses in a recession is stupid.
Well, I don't know the ins and outs, but that's what came from the ministry of Finance, IMF and OECD economists. I suppose they know what they're talking about. IIRC France state spendings represent more than 40% of GDP.
First, they are not cutting expenses "enormously" (enormously would be halving the yearly deficit, they haven't even started to stop its growth! So they are still digging further into debt every year), and then you need to spend less when your budget goes to debt repayment, if not you are going right in the wall while accelerating.
Having a huge debt means the population / the whole country is living on credit, and therefore ABOVE their means. It's natural a recession would take place, whether you like it or not. Take it as a reality check.
> Having a huge debt means the population / the whole country is living on credit, and therefore ABOVE their means.
A country is not a household. The difference is not merely of scale. A country can create the freaking money. Well, except since they decided to stop that around the seventies, and borrow at a hefty interest rate instead. (By the way, thanks to things such as Fractional Reserve Banking, the money is created out of thin air anyway.)
Did you know that about 80% of our (French) debt is made up of interests we paid in the past? It's hardly about a whole country living above its means. More likely, it's about a government playing Robin Hood, only in reverse –taking from the people to give to a few rich entities.
Even the 20 remaining percent may not represent 20 percent too much. A part of it arguably represents actual wealth that has been created, such as transports or schools.
Now I agree that we are in deep. I disagree however with the suggestion that it could be the people's fault. It's the government's fault, which is not the same thing at all. Because, we don't live in a democracy. Instead, we elect representatives based on what mass media tell us, and once elected, they hardly listen to the people. (Take the European Constitution, for instance: the people once voted "no" by referendum at about 60%. No matter, they reordered the paragraphs, and made the parliament vote instead. Basically, the government acted against the will of the people —maybe for its own good, but that's not the point.)
A country can print money, but it can't create value to back them at will: the national workforce at their productivity rate create only so much added value at any time.
Yes if a government wants to live beyond its means, it can either print more money, with inflation following shortly; or borrow money, and hope the future generations sort out the downpayments somehow. If a country has enough assets and reputation on the market it can borrow for decades, but eventually the risk of piling up the debt becomes unacceptable to usual investors, and it's payback time.
Create vs print: I was indeed talking about printing money (which doesn't necessarily mean actually printing notes).
If I recall correctly, inflation is hardly a bad thing. Okay, super-inflation is a bad thing, but I'm talking 5-15% a year. As if controlling inflation would ultimately cause unemployment. As long as we keep it smooth, and the salaries rise along with the prices, then it's only a tax on savings. Plus, inflation seems to be heavily and negatively correlated with unemployment (I'm not sold on that idea, but as far as I know, it seems plausible).
I also agree that there is such a thing as living above one means, even if it's a whole country. I disagree however that printing money (with the intention of destroying most of it later) instead of borrowing it at a significant interest rate would necessarily cause inflation. Or are you implying that your government is by nature unreasonable, and will systematically abuse its power to print?
Possibly. But then, if I can't trust my government with that, I can't trust it with anything (starting with taxes). If it's a problem with this particular government, we have elections. If it's a problem with any possibly elected government, then maybe it's time to change the governance itself.
The idea that inflation is always and forever a bad thing, PERIOD, is religious dogma for some people; they will not be budged, nor swayed, nor convinced to look at any evidence that inflation is part of a healthy, growing economy.
> Or are you implying that your government is by nature unreasonable, and will systematically abuse its power to print?
No, and indeed the governments use printing press as a last resort. However when it becomes necessary to inflate in a last ditch attempt of saving economy, we're not speaking of 5-15%.
Greece without external bailout, were it not in Eurozone, would've taken perhaps 500-1000% annual, with most loss concentrated within few initial months. People's savings would've been wiped and confidence in the currency lost for at least a decade. Likewise for Iceland, Cyprus and other borrowing bubble zones.
Wait, shouldn't we be trying to discourage cultural creation by the media and instead encourage peer-to-peer cultural development? I'm assuming that, although this mentions the funds would be widely distibuted, it would end up in the hands of major media companies.
Of course, this is France we are talking about :) So either large politically connected media companies or large state bureaucracies will benefit from this.
No, it's a double penalty system. You use a storage media, you are guilty per definition, but you will get additional punishment if you are caught illegally downloading copyrighted material.
At least a nice pretense to tax those company which regularly escaping tax.
As far as I remember there was a digital storage tax in France for that purpose (blank media, extended to HDD, and finally extended to computer )
Instead of understanding what needs to change to enable tech entrepreneurism in France (such as changes to bankruptcy and labor laws), they tax it to encourage the things that they're good at -- that don't make any money.
Or... they could make the fundamental changes that will yield additional domestic tax revenue and use that to pay for art. Nah... that'd be "un-French."
Europe is slipping down the wrong path. Instead of embracing the new, it's holding tighter and tighter the old. In Italy there are many commercials about the good old days that is frightening. And the very bad thing is that those that are below 40 or 30 or 20 are aiming at what the "old" people have or had, so they stay quite, they don't complain, and wait for their turn to be rich.
This is an extremely dangerous situation. There is no way in the world that with that kind of thinking we get out of the debt crisis. There is no way in the world that we even can keep up our promises of a welfare State in the future. This will create higher and higher social friction; somehow France is showing this earlier than other countries (must be a French thing, like the French revolution, they always come first).
I mean, increasing taxation, without spending cuts, ends up mostly affecting the young. But if the young stay quiet and wait, who is going to fight this back? That's probably 1 of the biggest problems we have in Europe nowadays: the people that should fight for change and a liberal economy are not, they actually want a protected economy because they want the old to stay healthy, so they will be when they replace them.
59 comments
[ 3.8 ms ] story [ 135 ms ] threadThis is a classic deadweight loss. http://en.wikipedia.org/wiki/Deadweight_loss
which means each person gets paid proportionate less, so essentially the French pay for this in lower wages.
Weird-but-legal tariffs and subsidies are nothing new - look at all the agricultural subsidies that are permitted, for example.
[1] http://www.wto.org/english/docs_e/legal_e/gatt47_01_e.htm#ar...
http://en.wikipedia.org/wiki/The_fifth_element
Right, Liberalism and Republicanism never really caught on following the French revolution.
PS. I can't for the life of me understand why having TV equals culture. Honestly, IMO they should impose a tax on televisions so people buy less of them so there is LESS TV if they really want culture.
If you read the article, you'll notice that there is already a tax on "television users". This proposal is about extending that tax to cover other devices that carry cultural entertainment.
Not that I agree with this or any other narrow taxation. If cultural funding is deemed important, it should be funded through broad taxation like any other service that is considered important.
See: the CBC and BBC.
There are ways for television to surpass the lowest-common-denominator - we just don't see this often in the USA, but it does happen elsewhere. Government funded art need not be limited to crazy modernist sculptures sitting in front of government buildings.
PBS only does this during short periods.
> on technology giants like Apple and Google
> taxes on sales of smart-phones and tablets
> The proposed tax would mirror fees already paid by television users, TV and radio broadcasters and Internet service providers
So it's nothing specific towards Apple or Google, or "anti-American", as far as I can tell from the article. It's just a device tax. So, seems a bit sensationalist.
(1) Stop creating money directly, but borrow from private parties instead. They will effectively create the money –fractional reserve banking and such.
(2) Keep a slight deficit on your budget every year.
If I recall correctly, the current French debt is 80% interests fees. If we had borrowed from our central bank instead of Rothschild&co, our current debt would have been only 20% of what it is now –well, assuming we didn't borrow even more.
So, now, mainstream politics is all about the raise taxes / cut expenses false dichotomy. Our governance doesn't seem to see the obvious third alternative: stop borrowing from the market, start borrowing from the central banks at nearly 0% instead. (It can be done indirectly, despite the current EU constitution/setting: let some public agency borrow from the central bank, then let the states borrow from this agency. Of course, it requires some impossible coordination from all states)
Depends what you mean by 'this mess' if this mess is a high level of debt without the productive economic activities to service it, I'd suggest that it was by spending too much on things that didn't provide a return on investment.
>They will effectively create the money –fractional reserve banking and such.
No, that is not fractional reserve banking, in fact what would happen if they did just print more money? Lets pretend they could do it without breaking away from the euro. Inflation would rise sharply? Would that lead to a better economic situation? Some people say it does, hence the UKs policy on QE.
>If we had borrowed from our central bank instead of Rothschild&co, our current debt would have been only 20% of what it is now –well, assuming we didn't borrow even more.
That is just a gross oversimplification, and really Rothschild&co? What are we, angry I learnt economics from youtube socialists?
>start borrowing from the central banks at nearly 0% instead.
Historically, this action hasn't worked well. Ultimately they have debt obligations as is, they need to settle that with something, where would that something come from? They could deflate the debt, which would be the effect of creating a synthetic entity which would loan at 0%. To deflate this much debt would seriously hurt people. They could potentially try and bond default, Russia kinda got away with it (some people say it was a good idea), but then Argentina really showed the problems that can happen doing this.
This is why people come down to taxation and spending, ultimately they are the only options, because any kind of inflationary policy is a cruel tax, as it is often felt more by the poorest, due to the commodities which tend to rise. Meanwhile the super rich can make money of the back of it and even increase their worth leveraged thanks to the inflation bonds and the like.
On Rothschild&co: I'm quite serious: President Pompidou used to work for them, prior to the 73 law that forbade the state from borrowing to the central bank (there were no Euro, back then). The only alternative was to borrow from private banks, of course. and Rothschild conveniently happened to be one of the big players, and happened to finance a significant part of the French debt.
Well, as far as I know. My sources are mainly Pierre Larouturrou, and Étiène Chouard, left-sided French economists.
On deflating the debt: I doubt the solution would be to do it at once. On the other hand, why not keep the budget as it is, and just stop borrowing from the market altogether? It would progressively Lower the payments on the interests, freeing some budget to actually lower the debt, or doing some other investments. I did not however measured the impact of not borrowing from rich people any more.
See for instance: http://www.reuters.com/article/2013/04/30/markets-bonds-idUS...
First, they are not cutting expenses "enormously" (enormously would be halving the yearly deficit, they haven't even started to stop its growth! So they are still digging further into debt every year), and then you need to spend less when your budget goes to debt repayment, if not you are going right in the wall while accelerating.
Having a huge debt means the population / the whole country is living on credit, and therefore ABOVE their means. It's natural a recession would take place, whether you like it or not. Take it as a reality check.
A country is not a household. The difference is not merely of scale. A country can create the freaking money. Well, except since they decided to stop that around the seventies, and borrow at a hefty interest rate instead. (By the way, thanks to things such as Fractional Reserve Banking, the money is created out of thin air anyway.)
Did you know that about 80% of our (French) debt is made up of interests we paid in the past? It's hardly about a whole country living above its means. More likely, it's about a government playing Robin Hood, only in reverse –taking from the people to give to a few rich entities.
Even the 20 remaining percent may not represent 20 percent too much. A part of it arguably represents actual wealth that has been created, such as transports or schools.
Now I agree that we are in deep. I disagree however with the suggestion that it could be the people's fault. It's the government's fault, which is not the same thing at all. Because, we don't live in a democracy. Instead, we elect representatives based on what mass media tell us, and once elected, they hardly listen to the people. (Take the European Constitution, for instance: the people once voted "no" by referendum at about 60%. No matter, they reordered the paragraphs, and made the parliament vote instead. Basically, the government acted against the will of the people —maybe for its own good, but that's not the point.)
A country can print money, but it can't create value to back them at will: the national workforce at their productivity rate create only so much added value at any time.
Yes if a government wants to live beyond its means, it can either print more money, with inflation following shortly; or borrow money, and hope the future generations sort out the downpayments somehow. If a country has enough assets and reputation on the market it can borrow for decades, but eventually the risk of piling up the debt becomes unacceptable to usual investors, and it's payback time.
If I recall correctly, inflation is hardly a bad thing. Okay, super-inflation is a bad thing, but I'm talking 5-15% a year. As if controlling inflation would ultimately cause unemployment. As long as we keep it smooth, and the salaries rise along with the prices, then it's only a tax on savings. Plus, inflation seems to be heavily and negatively correlated with unemployment (I'm not sold on that idea, but as far as I know, it seems plausible).
I also agree that there is such a thing as living above one means, even if it's a whole country. I disagree however that printing money (with the intention of destroying most of it later) instead of borrowing it at a significant interest rate would necessarily cause inflation. Or are you implying that your government is by nature unreasonable, and will systematically abuse its power to print?
Possibly. But then, if I can't trust my government with that, I can't trust it with anything (starting with taxes). If it's a problem with this particular government, we have elections. If it's a problem with any possibly elected government, then maybe it's time to change the governance itself.
The idea that inflation is always and forever a bad thing, PERIOD, is religious dogma for some people; they will not be budged, nor swayed, nor convinced to look at any evidence that inflation is part of a healthy, growing economy.
No, and indeed the governments use printing press as a last resort. However when it becomes necessary to inflate in a last ditch attempt of saving economy, we're not speaking of 5-15%.
Greece without external bailout, were it not in Eurozone, would've taken perhaps 500-1000% annual, with most loss concentrated within few initial months. People's savings would've been wiped and confidence in the currency lost for at least a decade. Likewise for Iceland, Cyprus and other borrowing bubble zones.
Or... they could make the fundamental changes that will yield additional domestic tax revenue and use that to pay for art. Nah... that'd be "un-French."
This is an extremely dangerous situation. There is no way in the world that with that kind of thinking we get out of the debt crisis. There is no way in the world that we even can keep up our promises of a welfare State in the future. This will create higher and higher social friction; somehow France is showing this earlier than other countries (must be a French thing, like the French revolution, they always come first).
I mean, increasing taxation, without spending cuts, ends up mostly affecting the young. But if the young stay quiet and wait, who is going to fight this back? That's probably 1 of the biggest problems we have in Europe nowadays: the people that should fight for change and a liberal economy are not, they actually want a protected economy because they want the old to stay healthy, so they will be when they replace them.