B (3:00)

A useful minimum to start with. Is it going to happen? Is that what is going to be needed in order to pass a budget in France?

C (3:09)

Well, basically there are two possibilities for the people in power in France now. Either they side with the right, so with a side with the left, and then they need to do this tax. They have to choose. I mean, in a way the problem is that they, they want to pretend that they don't have to choose, that they can continue to govern on their own, except that they don't have a majority. And it's like that everywhere. I would say your pure sort of pro business policy does not win you a majority anywhere. Broadly speaking, there's a sort of nationalist strategy or you have a more redistributive and more egalitarian redistributive strategy. And so that's, this is the choice of the future in general. And my take is that, okay, I don't know which side the French government is going to take. I think for them it's more natural to go with the right. You know, they already voted. I mean, to be very concrete, the macro members of Parliament already voted a law in immigration two years ago which gave a lot of what Le Pen is asking for. It was not entirely passed for technical jurisdictional reasons, but they had actually voted, noted a change in particular in the law of nationality, how you become French, which was cancelling a lot of the automatic acquisition of nationality for people born in France. So that's really a core issue that Le Pen is asking for. They could go in this direction. That's one way to get a majority.

B (4:39)

But that's a debate.

C (4:40)

But that's not the way I prefer and I don't think there's a way that will solve the problem we have to solve in the long run.

B (4:46)

The 2% tax, there's a big debate about how much it's really going to raise. You say that it's inevitable, that it has to be done. And if you want to stay in power or be in power in European countries and in France included, you need it. But there's a massive debate about how much annually. That 2% wealth tax would actually raise the high numbers of 15 to 20 billion, but actually as low as 3.8 or below 5 billion a year, you're obviously in the higher camp. But what happens if it's rates much, much less.

C (5:14)

The only way you can divide it by 4 from 20 to 5 is, is if you start from the assumption that top wealth holders can evade 75% of the tax and there is nothing we can do about it. But if you start from this assumption, you put yourself first. This is not a natural law. You cannot say, oh, this is a law coming from the sky. This is economic. Science has told me that people can escape 75% of the tax. There's nothing you can do about it. But you, you have to be very careful because when you make this kind of claim and you pretend you talk in the name of science, of rationality, and you tell people there's just no way we can make these people pay the tax on them. Because everybody agrees, let's be very clear in terms of numbers, everybody agrees that the top 500 wealth holders in France, which are exactly the people who are targeted by the tax, have a total wealth of over 1,000 billion euro, 1,200 billion. So everybody agrees that 2% of this is going to make 20, 25. So if you want to reduce this tax revenue estimate to 5, if you want to divide it by 4, you have to say in one way or another that you will be able to tax only one quarter of the wealth of these people. So you have to make the claim that there's just no way.

B (6:34)

But then if those people leave the country, that's the issue. If the people. People leave the country, but then they.

C (6:41)

Can still be liable to the tax.

B (6:43)

Yes. So then that's the idea of the five year plan. Even if you were to leave France, you'd still be liable.

C (6:49)

Yeah. I think the simplest way to do it, you know, in the US they say as long as you keep the US citizenship, it's forever. I don't think that's one possibility, but I don't think that's the best way. I think a better way to do it is more in proportion to the number of years of residence you've spent in the country. So basically, it's a very simple logic. You, you've spent your first 50 years in France, you've used French public infrastructure, public education system, public health, public transport, the legal system. How can you accumulate your wealth without the legal system? Then you go one year to Switzerland. Okay, that's fine, but you still have to pay 51st fraction, close to 95% of the tax that you would be paying if you had stayed in France. It's as simple as that. And then if you don't want to pay it. The thing is that it's not as if these people have no relation with France. They have lots of relation with France. They typically own buildings there. They have family there. So if you don't pay it, you put yourself in the same position as anyone who decides not to pay a tax. So your assets can be frozen, you can be arrested at the airport. That's the life of normal people. Normal people cannot decide that 3/4 of the tax they're supposed to pay, they can do away with it. I mean, you would love to do that. I would love. Everybody would love to do that.

B (8:09)

But that's the point, isn't it? Everybody would love to do it, but the wealth can.

C (8:13)

No, they can't.

B (8:14)

They can.

C (8:15)

Only if you let them.

B (8:15)

Well, hang on. Is there any support, in your view, amongst the wealthy individuals? I mean, you can name, you know, Bernard Arnault has a large family. Lvmh, you know, Francoise Beton Courmayers. Are they in favor of that? Some of the big American.

C (8:28)

Why would they be?

B (8:30)

Well, because some of the big American business people talk about philanthropy. Is there any support from these individuals?

C (8:36)

There's a lot of hypocrisy in these claims. You know, these claims. People would like to get everything. They would like to keep the power and be viewed as generous, but they don't want to lose control. Look, that's perfectly humane. I don't blame them. You know, that's fine. I mean, that's okay. You know, it's not a question of individual, you know, it's only a question of money. You know, it's not the individual as such. The dignity of individuals, the virtue of individual is not at stake. You know, there are lots of nice people, I'm sure, in this group, like in every occupational group. So, you know, it's just a question of money. But you cannot expect that people naturally want to give up their money and poor. You know, this never happened like this. But let's put things in perspective because this is not the first time history that we talk about tax reform. You know, we've had tax reform forever. You know, we've had the abolition of the privilege of the aristocracy at the.

B (9:28)

Time, but it's about creation of the.

C (9:30)

Income tax point where it has never been voluntary. So that's. So I don't know why. If you set this as a standard, then none of this reform would have happened. So this makes no sense.

B (9:39)

I'm sorry, I'm only interrupting you because we have so little time. But your point about the. The inflection point about whether we are at a point in history where things are going to become more equal or less equal, I mean, to some minds, the contrarian mind might Be actually, we're in an exceptional phase. You know, the world has been dominated by robber barons, by very wealthy individuals, and perhaps we are returning to that. I don't know. In terms of whether my other question is about the uk, Rachel Reeves is also talking about tax increases here. Much more nebulous, the idea of wealth taxes in the uk. If you were giving her advice ahead of the budget, what would you say she should do?

C (10:23)

The same as what is being discussed in France as a starting point. I think it's a good starting point. This was also proposed at the G20 summit by Brazil. So this idea of a minimum 2% tax for people above a very high threshold, say 100 million euros in net wealth, I think is a good starting point because it's. You need to demonstrate to public opinion and to the rest of the population that it's possible to have a tax with no tax loophole, with no exemptions for people who are really wealthy. Otherwise how can you ask people who are just millionaire or people £500,000 that they should pay? If people above 100, you are not sure that they pay. So I think you have to start there with very high threshold and a relatively low tax rate. Look, when I wrote in capitol in the 21st century, that was 10 years ago that we should have a world wealth tax, well, I was talking already of higher tax rate, 5, 10%, or now I'm saying more 90%, but even 2%. It's an interesting starting point, but when I was Talking about this 10 years ago, you know, most people will say this is crazy, this will never happen. Ten years left, you have a G20 summit where, you know, government in Brazil is supporting this. Most European governments are sort of saying, oh yes, why not, if we all do it? But we don't know, we are not sure. But you know, they are having a serious discussion.

B (11:55)

To business. To business investment. The consequences, I mean, for example. Well, the other US view perhaps, or the more capitalist view would be that you squash any, you know, the desire to make outsized profits, to create artificial intelligence, to make those enormous leaps in.

C (12:14)

Business the middle class can save and invest. I mean, the idea that the investment has to come from a few individual geniuses and that the rest of us just has to watch them and upload is a sort of monarchical view of economic structure which is completely at odds with our economic realities, which is that we have hundreds of thousands of engineers, technicians, high skilled people who actually can and want to participate to economic decision making, to investment. And historically, let me make clear that in fact in the 20th century what happened was a massive deconcentration of wealth. So just to put numbers up Until World War I, 90% of the wealth belong to the top 10% in including 60% to the top 12%. This was reduced enormously over the course of the 20th century. You had the rise of a gigantic wealth middle class. Did it hurt growth? Did it hurt investment? This was exactly the opposite because you had.

B (13:17)

But we're living in the world of President Trump now, aren't we? President Trump has already made threats against countries who want to impose a digital services tax. I mean, and this, the wealth is also being generated out of the U.S. the truth is taxing French people would not actually generate wealth from the digital economy that is being driven out of.

C (13:37)

The US the tax base that we are talking about for high wealth individuals who have built their wealth in France or in Britain is very, very large already. So just with a 2% tax rate, you get quite significant tax revenue. And this is why this has been building up in France and why now there's 90% support in opinion polls for this tax. By the way, you also have huge popular support in the US for billionaire tax, including among Republican voters. So the reason this is happening is just because you have a small group of Republican elite, Democratic elite, all political and financial elite, particularly in the US which really are defending their privileges in effect, and their power with a lot of energy. This is not the first time in history this happens. But the general lesson from history is that at the end of the day, the movement towards more democracy and more equality has been going on for two centuries and it's not going to stop right now.

B (14:45)

In terms of just very Briefly, if the 2% tax does happen, consequences for the stock market in France, for bond investors in France. Do you think that it will spook markets? Will it just. Will investors simply swallow it and move forward or will there be instant reaction? That's, you know, a lot of my listeners are going to be thinking about this. They're investors now, not, you know, in 50 or 100 years time they want to. That 2% tax comes in, would it have no consequence on French stocks, French bonds, the euro?

C (15:13)

You know, this is not a very big change as compared to the volume of transaction in general. So you know, frankly, there are so many other factors that affect asset prices. So in the long run this is irrelevant because there are so many other factors that are more important for the prosperity of the economy. How much you invest in education, in infrastructure. You sold the energy crisis. This Is what determines prosperity in the long run. In the short run, lots of things can happen. Some people would say asset prices, for instance. Housing prices are actually too high. So many people would not complain if.

B (15:52)

They were going down 10 or 20% or 30%. Drop in house prices in France would not bother anyone.

C (15:57)

Oh, I think in Paris and London they should go down by 50% if you want a middle class to be able to find housing. So why do you have such high housing prices in Paris or London? Well, probably because you have too many people with too much money that they don't know what to do with it. So they just drive up the prices for apartments that they don't even use. So if you can get these prices to go down, that's the best policy you can do to help people, normal people, access housing. So don't panic is the general answer. Be cool. Look, there's been, again, if you look, if I look at my data in long run perspective, the income scale between if I the top 1% and the bottom 10% was 1 to 100, 100 years ago. It is maybe 1 to 10 today. It has been divided by 10. If you had told that to people 100 years ago because you already had business journalists and business people 100 years ago, if you had told them, okay, you're going to have a progressive income income tax with top tax rate going to 50, 60, 70, 80%, size of government going from 10% of GDP to 40%, they would have told you 100 years ago, okay, this is communism. The sky is going to fall, the world is going to disappear. No economic prosperity anymore. What did we have? We had the biggest period of prosperity ever observed in history.

B (17:25)

So you need a longer perspective.

C (17:27)

Exactly. Kind of statement. Yeah.

B (17:30)

One last thought. Your ideas to my mind confront those of somebody like Elon Musk, you know, the world's richest person with all of his clout. He wants to influence as a billionaire not just a whole host of businesses, but also politics, also the way that people think about the world. And that is the challenge, isn't it? It's how to.

C (17:50)

You know what's interesting is that the billionaire class, so to speak, outside business class in general now they know that they cannot stay in power just by having a pro business discourse because in fact they lose power very soon if they do that. So they need to have this sort of very nationalist, anti migrant discourse if they want to be in power. Look at Trump, look at the Conservative Party today in Britain. If they don't get to do something with reform and Anti migrant, et cetera. It's going to be very difficult just on the basis of pro business, a pro business billionaire policy to be elected, just because for most people this is not very appealing. So the choice is not really between whether you go for the billionaire most favored policy, because people just don't want that. The choice is more and more between sort of nationalism and more sort of egalitarian universal policy. I like to talk about democratic socialism, social. Some people prefer to talk about social democracy for the 21st century. That's fine with me. As long as we are talking about the same thing. Is this going to be an easy fight? No, because I think the nationalist discourse has a lot of strength also in a way, because this is telling people, look, we don't need this big complicated international coalition. We don't need. We just need to eat the migrants, to eat the foreigners, to say that we are the best in the world. And if you are a powerful state, particularly in the United States, but to a lesser extent British state or the French state, you can sort of have the illusion that this nationalist discourse is going to get you somewhere. The reality is that it's not going to get you anywhere in the long run. It's just not going to solve any of the problems. Is that going to solve the climate problem in the us? Is this going to solve the education problem problem? The housing problem, The Earls problem is not going to solve any problem. So I'm not saying the fight is going to be easy, it's going to be complicated. It's always been complicated. You know, every political fight in the past which has driven us to a more equal world has been very complicated. You know, the creation of National Health service in Britain, 1945, you know, you would have told that to people 30 years before. 40 years before, they would have to know. No way. The end of the House of Lord budgetary power in 1910, you would have told that 40 years before. No way. It's always been complicated. But what are the alternative, the nationalist rhetoric that's not going to solve any of the social problems that they pretend.

B (20:21)

We'Re planning for some big changes that.

C (20:23)

They pretend they will solve. But this is a big fight. But the billionaire class, why have they all become so reactionary? Trump? Because they know that with a pure pro business discourse, they actually cannot win. So they have to find something else. And this something else is quite ugly, unfortunately. Sometimes it's working. In the long run, it's not going to be working.

A (20:48)

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