24 May 2012 by Pelle Neroth
He has his country with him. Only 31% of the French believe that the free market economy is the best economic system available. In no other country polled is the figure that low. In another survey, 80% believe that globalisation is bad for their livelihoods, and want less foreign investment. Catching the mood, Nicholas Sarkozy, the outgoing president, called on the European commission a few weeks ago to erect trade barriers against non-EU companies seeking to participate in the EU's public procurement market, the world's largest.
And yet - French business has been one of the main beneficiaries of globalisation, this system so many of them affect to despise. Londoners will tell you. They pay their electricity bills to EDF energy, the British subsidiary of 80% state owned Electricite de France. Their rubbish is collected by Veolia Environnement. Many of their bus routes are run by RATP, the Parisian transport authority whose logo, a stylised image of the river Seine meandering through Paris, now sits on the side of red double decker buses on the Old Kent Road. The Pendolino trains that whisk passengers across England's Green and Pleasant Land are built by France's Alstom. The list goes on: Brits eat their canteen food from Sodexo and make their phone calls on Orange and T-Mobile, networks co-owned by France Telecom/Deutsche Telekom. France has more Fortune 500 companies than either the UK or Germany.
French voters seem uniquely hostile to these companies which have helped maintain France's position as the fifth largest economy in the world. Anglo-American economic liberal commentators blame this disconnect on an opinion forming elite of journalists and politicians based in the posh parts of Paris who all went to the same universities and have had beliefs about the evils of the market drummed into them. At the same time these Anglo-American commentators say France is riding for a fall. Their companies might be global, but domestic labour costs that are higher than Germany's and the state devours a high 56% of GDP. The French should learn to love capitalism and slim down their state, seems to be the British economic liberals' message to the new socialist president Hollande. Well, maybe.
But I can't help thinking that, if the French have their delusions about globalisation, so do the British, but in a different way. If the French are too critical of the process, the British have not been critical enough. That in fact seems to be thesis of a new book* by Alex Brummer, a financial journalist. Britain has sold more than half its assets now to foreign owners - and at a growing rate, £54.5bn just in 2010.
Nearly 40% of UK patents are owned by global firms, triple the EU average figure. Brummer blames the cheap costs of borrowing in the 1990s and 2000s, takeover friendly legislation, and the presence of City investment banks able to make the rules for themselves. Foreign companies took advantage and bought up British companies at bargain rates, on borrowed money, helped by rules that allow interest paid on loans to be deducted from their tax bills. He blames British executives who often had their share option deal in their contracts rewritten so the shares could be immediately cashed in when their companies were taken over, rather than wait some years. It was like winning the lottery, a cash bonanza that was hard to resist.
For sure, these sell offs have injected cash into the British economy, but it is all very short termist. Tax revenues migrate and domestic supply chains and R&D skills are lost when control passes to a headquarters abroad. The French have a developed strategy to prevent key technologies from falling into foreign hands. They range from nuclear power - to yoghurt. Control over home markets has undoubtedly facilitated their international expansion. Rather than be superior about the French, see where they are being canny and smart.
*Britain for Sale, Alex Brummer, 2012
Pelle Neroth -- EU correspondent
Posted By: Pelle Neroth @ 24 May 2012 01:19 PM General
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