It is important for social democracies to allow the accumulation of individual wealth. But how that wealth is spent matters too
Gérard Depardieu, one of the world’s most famous Frenchmen, is now a Russian, after Vladimir Putin personally granted him citizenship on 3 January. It’s fairly clear the main attraction of Depardieu’s new domicile is its 13% flat income tax rate, since the actor has been flamboyantly fulminating for ages about French president François Hollande’s plans to introduce a supertax. He announced that he intended to hand in his French passport in December, after buying a house in Belgium and taking up residency there.
But Depardieu is not the only one who isn’t keen on Hollande’s redistributive ideas. This week, France’s constitutional council struck down Hollande’s plan to impose a 75% tax on earnings over ¤1m as “confiscatory”. It’s not going to happen after all. Hollande is now seeking to put together a watered-down variant of the levy.
None of this should surprise British observers. It’s much easier to elect a left-of-centre party than it is to stand applauding as they seamlessly introduce left-of-centre policies. No government minister here has dared even to dream about introducing a wealth tax so high since the 1970s. Under Blair, Labour conceded that high wealth taxes were bad for the economy, preferring a tax regime that attracted the wealthy from overseas to one that sent them fleeing. Their 50% rate was introduced only temporarily, in response to the credit crash. David Cameron and George Osborne may be more comfortable referring to the Laffer curve – which illustrates the theory that lower taxes generate greater government revenue – but New Labour were similarly obsequious to it in their policy-making.
Yet, beloved as the Laffer curve is by people who argue against high taxation for the wealthy, few would go as far as to say that personal motivation against wealth taxes are animated by a heartfelt desire for the state to obtain more revenue. I’d certainly bet the farm, if I had one, that nothing is further from the mind of Monsieur Depardieu.
In the UK at present it is fashionable for the left to believe that it is posh people such as Cameron and Osborne – with no understanding of what it is like to live on a typical income, or to start out in life without family advantage or privilege – who refuse to see the benefits of redistributive taxation. Millions of Republican Americans on modest incomes give the lie to such assumptions, and so does Depardieu. His father was a metal worker, and he formally left school at 15, having barely turned up for some years. The idea is that such experience offers insight into the moral rectitude of socialism, and in many cases this holds true. But, by no means always.
In fact, it would be understandable for Depardieu to nurse an active animus against the state and the way it spends its revenue. Admired as the French education system may be, it did Depardieu no favours. And admired as its health system may be, Depardieu can be forgiven for distrusting it. His only son, Guillaume, died in 2008, at the age of 37, after years of pain and a leg amputation. He blamed the destruction of his health on treatment he received for a hospital infection picked up during one of many operations he underwent after a motorbike crash in 1995.
This is not to say Depardieu is right to be so furious at the prospect of the state taking such a hefty proportion of his above-million income. It’s simply to say that the political opinions that people form tend to be based on their emotional perceptions of how the system has served them and those close to them, rather than the sort of supposedly objective theorising offered by economic and political ideology.
The French prime minister, Jean-Marc Ayrault, has called Depardieu’s machinations “unpatriotic” and “pathetic”. One can’t help feeling Ayrault’s approach isn’t very statesmanlike. Simply berating the wealthy for not being noble and unselfish enough to put others before themselves is a less than perfect practical approach, despite its popularity.
The truth is that it is important for social democracies to allow and foster the accumulation of significant wealth in individual hands. The French government is being typically ambivalent in despising Depardieu for leaving, while desiring to enact the policies that are driving him away. The usual argument is that individual wealth must be encouraged because it stimulates economic activity and creates jobs. But I often think that such soulless pragmatism misses a very important point.
The trouble with the idea of economic equality is that its logical conclusion is a kind of barter system, in which what everyone has to sell is of similar value to what everyone wants to buy. This encourages mass production, with its economies of scale, which may be no bad thing for the ordinary consumer, but tends to generate boring, repetitive jobs for the ordinary producer – the two groups being one and the same. One may think it’s scandalous that children starve while men buy hand-made suits on Savile Row, or women purchase couture dress from the ateliers of Paris. But the artisans who make them tend, quite understandably, to love their work.
The leftwing dichotomy is that in improving standards of living, socialism sometimes debases the quality of the work available to those whose lot is supposedly being improved. Much of the time, the profit motive is blamed for the proliferation of low-paid, low-skilled work. Less attention is paid to the fact that a person benefiting from the profit in turn provides skilled work, by purchasing luxury goods. The workers providing those goods are often not highly paid either, but people tend to be more content with modest wages when they are doing something that they love.
Perhaps what’s missing from the debate about taxing the rich is a dimension that examines ways of encouraging the wealthy to lavish their money on things more worthwhile than FSTE shares or offshore bank accounts. Perhaps it would be a good idea to offer tax breaks for investment in skilled craft, for example, whether as an individual investment or as part of, say, a building project that included the input of stonemasons rather than cladding-panel manufacturers, or commissioned the integral inclusion of unique and artistically valuable features.
I realise that the idea of bribing the wealthy to surround themselves with lovely, valuable things sounds hard to take. But it’s the making of lovely, valuable things rather than the owning of them, that is really important to humans and humanity. Anyway, an approach that expects the wealthy to be exemplary in their generosity to strangers through interaction with the welfare state is crucial but also clearly limited. There will always be plenty of Depardieus, unwilling or unable to see that humans are social animals, and stand or fall together.
Guillaume Depardieu did not get on with his father. In his autobiography, Tout Donner (Giving Everything), Guillaume said: “I love him and I detest him for the same reasons. For his impotence. For his way of fleeing life, and existence, and fighting against it at the same time. He is stupid. He is hopeless. He surrounds himself too much with people who bring him nothing.” Guillaume also criticised his father, says the Independent’s distinuished Paris correspondent, John Lichfield, for squandering his talent on poor movies in pursuit of easy money. Despite his wealth and success, it’s not always fun being Gérard Depardieu. Money, it’s all too easy to forget, isn’t everything.