Why Is the French Government Running Off Foreign Investors?
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The American economist Henry George once said protectionism is the way to inflict on ourselves in peacetime what our enemies inflict on us in wartime. Note, in fact, that the American leaders ban American investments in Iran—so the American regime threatens heavy criminal sanctions for those who would invest in the strategic sectors of the Islamic Republic.
Those who implement trade restrictions for punitive purposes do something similar, and they know that a nation's prosperity depends on its ability to accumulate ever more capital, be it local or foreign.
That too many nations shoot themselves in the foot by practicing protectionism is no reason to emulate them. After all, we have never heard a South Korean official claim that North Korea is practicing autarky to encourage the closure of South Korea to foreign investment. This is why South Korea has gone from being a third world country to being a powerhouse of the world economy in sixty years.
Alas, the interests of the nation are of little importance to those who are driven only by low political considerations. This is how French economy minister Bruno Le Maire—who knows nothing about the industries he claims to rule—saw fit earlier this year to veto the proposal by Canadian distributor Couche-Tard to buy French supermarket giant Carrefour.
It would be pointless to seek any logic behind this arbitrary intervention. It only serves to flatter our old protectionist instincts while allowing politicians to don the white knight's costume for a few moments to rescue a national industry allegedly threatened by foreigners. Politically, it is easier to indulge in this kind of posturing than to succeed in the vaccination campaign that would lift France out of the economic and health slump in which it finds itself.
Protectionist and Xenophobic Prejudices
Le Maire’s argument sounds like an insult to our Canadian friends. According to him, the takeover of Carrefour by Couche-Tard would pose a risk to the “food sovereignty” of the French. As if it were in the best interests of a Canadian multinational—that makes a living from the sale of goods—to starve the country in which it is located. But Carrefour itself is present abroad. So is it endangering the food security of Taiwanese, Brazilians, or Spaniards just because it is French?
This pretext serves above all as a legal alibi in order to stick as well as possible to the regulations relating to the control of foreign investments. However, by brandishing this motif for populist ends, the French leaders are showing that they are learning nothing from their mistakes. We know that it is this kind of xenophobic reflex that deprived Europeans of abundant vaccines. Indeed, the press reports that the European authorities wanted to favor the laboratories of the old continent over foreign pharmaceutical companies.
Protectionists nevertheless persist in confusing their ideology with economic sovereignty. However, economic security is achieved by preferring the quality, abundance, and variety of goods while ignoring the origin of the supplier's passport. Moreover, a sign of a certain hypocrisy is the fact France has no complaints when its national companies make lucrative acquisitions abroad. One thinks of the acquisition of Bombardier by Alstom. Some would say that the rail industry is of more "strategic" interest than a declining distributor which has less than 20 percent of the French market.
Hurting both France and Carrefour
Le Maire's veto is not only an insult to our Canadian friends and an arbitrary obstruction of free trade. It also contravenes the interests of the French economy. It signals to French and foreign savers that they run the risk of not being able to dispose of their capital freely when they invest in France. However, the liquidity of financial investments is one of the reasons for investing in the stock market. It is not by damaging the financial attractiveness of a country that one promotes its prosperity. Unless our leaders like to multiply civic conventions to console a declining people? We can therefore question the usefulness of all these "Choose France" summits if it is to upset all the investors who have the courage to choose to invest in our country.
Of course, the first victim of this interference is the Carrefour Group, which saw the Canadian proposal as a chance to breathe new life into the company. Finally, remember that economists tend to consider takeover bids as a virtuous instrument for regulating capitalism, by allowing well-managed firms to acquire less efficient companies to make them more competitive. Enough to consolidate the only tangible economic sovereignty: that of the consumer. Who really threatens the food sovereignty of the French? In 1960, about 35 percent of mankind suffered from undernutrition. The French spent 35 percent of their budget on food. As a sign of improved food security for humanity, these rates fell to 10.7 percent and 15.6 percent respectively in 2017. This progress has been made thanks to tremendous innovations in the agricultural sectors, distribution, and logistics.
The green revolution has resulted in an incredible increase in yields thanks to mechanization, variety selection, pesticides, and fertilizers. Stimulated by competition, the distribution and logistics sector has also participated in increasing the purchasing power of populations. The increase in the productive capacities of all sectors of the economy is also a product of the opening up of international trade.
Meanwhile, our leaders like to burden these sectors with all kinds of unproductive constraints. The modernization of French agriculture thus comes up against a multitude of political obstacles. We can think of the bans on recent biotechnologies. This same agricultural sector is also in many ways closed to competition from outside Europe, which has repercussions for the wallets of French consumers. Likewise, large-scale retailers are subject to numerous violations of the freedom to trade which force them to inflate their prices, such as the recent increase in the threshold for resale at a loss. Under these conditions, anyone who really cares about French food sovereignty would be ill advised to point a vengeful finger in the direction of Ottawa. Rather, he should be interested in what is happening with the governments in Paris and Brussels.
[Originally Published in Le Figaro. Translated by Ryan McMaken.]