Simone Wapler – La Chronique Agora (France) –
Despite investment on credit, corporate profitability is falling. Taxation, redistribution and public services can not increase wealth.
Detained in the Congo by Air France strikes (and its highest-paid pilots in the world), I have plenty of time to meditate on the public service and our taxes.
In principle, our taxes are used to fund public services, that is, services that the private sector can not afford because they are not profitable.
France is the champion of the world of the tax pressure in all categories, we should be “users” pampered platinum or diamond processing to use popular marketing names.
Alas, it is not so because in France, the tax finances everything and anyone. Just add the adjective “social” to a name to see a tax come up.
Recently, Contrepoints was criticizing a program of France 3 “Bernard Arnault: the art of paying less taxes”.
“The billionaire, presented as a sort of fiscal predator, was condemned to the groans by a militant journalist, persuaded to lead a crusade, happy to play detective under the sun of Malta, then somewhere in Belgium.
The testimonies of lawyers, neighbors, onlookers, whose faces were blurred – as in the sensational surveys on sexual predators – told us that Bernard Arnault, at the head of an industrial empire, owned many companies, articulated between them by learned montages with complex legal inspirations. A sort of lawyer specializing in large fortunes tried to show us that these imbroglios hid intentions not laudable, but ended up admitting that the situation was perfectly legal.
Whether we admire Bernard Arnault or hate him, we must recognize that this man has built one of the finest jewels of French luxury, and that in this respect, it is pathetic to treat him as a vulgar tax predator without giving the colossal figures of public revenue generated by its industrial empire, including VAT, social security contributions, property taxes, corporate taxes, etc. “
Bernard Arnault is the proud owner of the newspaper Les Echos . His son Xavier Niel is a shareholder of the World .
It may seem odd that it is an independent online media that endorses a critical attitude towards taxes.
Why the big media owned by these ultra-rich (we could add the group Le Figaro held by Dassault) carefully avoid talking about the reduction of the grip of the state on the economy, the decrease in public spending , of the lowering of taxes, and abstain from criticizing the absurd French taxation?
They prefer to relay as the media “public service” stories of zealous officials, solidarity, defense of privileged status, publish carefully angled photos so that five to 10 CGT activists give a mass effect …
These media owned by the ultra-rich, indifferent to the fate of the middle class, are the first to castigate the populists.
The ultra-rich do not need the middle class
Since the advent of modern capitalism, the ultra-rich do not need the savings of the middle class to invest or an increase in its purchasing power to have customers.
They have access to almost free credit whose quantity is limited only by the obscure regulation of thousands of pages of Basel 3 or Basel 4.
They do not need real capital. The debt and leverage provided by their banker friends are enough.
They do not need customers with real purchasing power. Money from redistribution gives them customers to sell their products.
They fear neither the maquis of subsidies, nor the jungle of regulation, nor the fiscal hell. They have the means to pay for effective counselors.
Their newspapers serve and defend their interests and they have adapted to the subsidy-taxation-redistribution system that stifles the middle class.
Margaret Thatcher had said that socialism always came short of the money of others. But she had not foreseen the quasi-free and almost infinite system of credit.
A cog that gets on
This beautiful mechanics could however meet a pitfall.
In the United States, the Bureau of Economic Analysis (*) has announced that business cash flow has plummeted from $ 2.2 trillion in the third quarter of 2017 to $ 1.4 trillion in the fourth quarter of 2017. A drop of 36% in a country expected to experience a vigorous recovery and full employment.
Here is a chart built by the management company Alhambra:
The cash flow represents cash generated by operating activities. This chart means that companies’ own funds, their productive capital, earn less.
In these conditions, where will the future earnings growth be? Nowhere. Investors are willing to pay more and more for increasingly lean profitability, simply because they recycle the free credit of monetary operations. [Editor’s note: If you want to put your savings in the service of the productive economy and aim for capital gains inaccessible to normal stock investors, it’s here .]
We do not have equivalent figures from INSEE or Eurostat but in general, the same causes produce the same effects.
The ultra-rich can despise true capital but if profitability decreases, the market will adjust one day.
(*) Corporate Net Cash Flow plummeted 36% in Q4. From $ 2.2 trillion (SAAR) in Q3, the current estimate of $ 1.4 trillion indicated a radical departure