France Is Trying to Reinvent Global Capitalism
French Finance Minister Bruno Le Maire will arrive in Davos on Wednesday with an ambitious mission statement for the world’s richest economies: rebuild capitalism.
Le Maire’s pitch is part of France’s 2019 presidency of the Group of Seven. He delivered an opening salvo at a conference in Paris Tuesday before heading to Davos to meet with leaders in finance and business.
“If we are not on our guard, we will go toward a total disaster because a capitalism that creates ever more inequality, conflict and rivalry will get us absolutely nowhere,” Le Maire said.
He will tell chief executives in Davos that their companies are too big, too powerful and pay too little tax. France’s presidency of the G-7 will be dedicated to combating inequalities that Le Maire says stem from this.
It may be a hard sell for President Emmanuel Macron’s government given its domestic troubles. The so-called Yellow Vests protests have upended his presidency with demands for higher incomes and better living standards. On the international stage, the French leader is struggling to advance his European reforms -- including a tax on big tech companies -- while Donald Trump’s America First agenda is challenging the multilateral solutions that Macron says are key to France’s prosperity.
“We are living in exceptional times when everything is toppling over,’’ Le Maire said. “We need to defend our vision of capitalism, our French and European vision of capitalism.”
There’s also the fact that the G-7 doesn’t have the economic sway it once had. Growth in China and other Asian nations means the group’s share of global gross domestic product has fallen to around 30 percent from over 50 percent at the start of the 1990s. The Indian economy is set to overtake France in size this year and continue growing faster in years to come, IMF forecasts show.
France’s primary objective for the financial track of the G-7 in 2019 is to get companies to pay more tax, in part with the creation of a minimum tax. Such a baseline, Le Maire says, would stop big companies booking profits in tax havens or low-tax jurisdictions.
The minister said companies with market capitalization larger than the GDP of most countries also pose a growing economic and political challenge to the world order. The G-7 should address this issue, he said, without giving details of what steps could be taken.
©2019 Bloomberg L.P.