Did the French just elect a self-described socialist who wants to raise taxes on the rich? Yes, they did. Is President Barack Obama asking for four more years with an economic philosophy similar to that of the new French president? Yes, he is.
In France, those earning over a million euros would face a tax rate of 75 percent. And one of Francois Hollande's first acts as new president of France was to reverse his predecessor's course and lower the retirement age from 62 to 60 -- this in a country whose projected unfunded pension liabilities for its living citizens are about $8.37 trillion, or 300 percent of its $2.774 trillion gross domestic product. The United States' unfunded Social Security, Medicare and prescription drug benefits liability for its living citizens is about $50 trillion, or 333 percent of our current $15 trillion GDP.
France is a county whose debt is 90 percent of its GDP (U.S. debt-to-GDP ratio is over 100 percent). It had zero GDP growth in the first quarter of 2012 and has an unemployment rate of 10.2 percent. Taxes, as a percent of GDP, are 56 percent. (U.S. state, local and federal tax take is 33 percent of GDP, excluding the dollar value of government-issued mandates on the private sector).
France is a mess. Hollande, like Obama, pays no attention to the many examples of government-controlled economies versus those where government takes less from people and relies on the private sector to create jobs.
Let's look at just one such example. Hong Kong became a British colony following the first Opium War in the mid-1800s. As mainland China fell to communist control a century later, many Chinese migrants and corporations fled to the island. In 1961, Britain named Sir John Cowperthwaite, a proponent of the Austrian school of free-market economics, as financial secretary of Hong Kong. Residents of Hong Kong faced a maximum 15 percent in personal taxes, no tariffs, no subsidies, no government borrowing and minimal red tape. Cowperthwaite called it "positive non-intervention."
Hong Kong, under his guidance, saw a 50 percent rise in wages and a two-thirds fall in the number of households in acute poverty. Exports rose by 14 percent a year, as Hong Kong evolved from a trading post to a major regional hub and manufacturing base. Hong Kong is a water-surrounded rock with no natural resources -- other than the industry of its people.
In his first budget speech, Cowperthwaite said: "In the long run, the aggregate of decisions of individual businessmen, exercising individual judgment in a free economy, even if often mistaken, is less likely to do harm than the centralized decisions of a government, and certainly the harm is likely to be counteracted faster."