You wouldn’t know it from listening to the mainstream media, but some powerful, left-wing European and Asian countries are emulating Donald Trump’s economic plans, including tax cuts, regulatory reforms, and fair and equitable trade policies.
These reforms are America’s most historic economic changes in 25 years, for which President Trump has been roundly criticized. Even so, influential nations are not only copying these policies, they are also describing them as historic cultural shifts.
Deciphering America’s mood and what’s going on in the heart of the country won the election for Trump. But the president has also tapped into the world’s mood, and other countries have picked up on his agenda. This is radical and revolutionary stuff. Practices, proposals, legislative changes, and economic agendas unseen since the Reagan presidency are once again on the table. What is fascinating is how little awareness of these events the American press or elected officials seem to have, nor do they have any idea of their significance.
Two examples: France and India, European and South Asian countries that are the world’s sixth and seventh largest economies ($2.5 trillion and $2.3 trillion, respectively). These are not insignificant examples, considering India is also the world’s largest democracy with 1.2 billion people.
Macron’s Surprising Reforms
France recently elected Emmanuel Macron as president, and he appointed Bruno Le Maire as finance minister. Macron in July told the French media he would cancel a traditional press conference for Bastille Day; suggest via plebiscite or referendum that the size of the French Parliament be reduced one-third to address bureaucratic bloat; cut French tax rates, and take his message directly to French citizens to rally support. I asked then, “Can such Trump-like assertions continue?”
Just 90 days later, earlier this month, Le Maire proclaimed: “The French need to know that we are determined to reduce their taxes.” He stated that France’s tax burden is “far too high” and that they would cut corporate tax rates because that will create jobs. He also added that France would reform its labor markets because they need French and foreign companies to become more efficient. To drive home the point even further, Le Maire declared the government would make payroll tax cuts a permanent decrease in employer’s charges and that the country’s problems won’t be solved by more public spending.
France would reduce rather than increase public spending because, as Le Maire explained, “experience has shown us that more public spending was not leading to less unemployment, on the contrary.”
This is the absolute opposite of what you hear daily in the U.S. press. These are the pillars of the French jobs proposal for economic reform, not rhetoric. They are active policies being presented for legislation, to be passed into law and explained to French citizens, not a theoretical economic agenda.
If you placed Marcon on the American political spectrum, he would certainly be categorized as a liberal or progressive. France is part of the European Union, not isolationist or protectionist. One could argue the French are generally globalists. But they know what hasn’t worked. Their countries are in stress, their economies are in trouble, and they want to fix it.
Has the French press pointed out that the new administration might be emulating Trump? Have their policy assertions been raised as a matter of global or political embarrassment?
As a matter of fact, yes. In a recent interview regarding French government efforts to require U.S. tech companies to pay more French taxes (U.S. tech companies such as Google, Apple, Facebook, and Amazon, all do business in France but, because of 28 different EU tax laws, skirted paying virtually any French taxes) the current French administration stated they want to impose an “equalization tax” on U.S. tech companies.
A reporter asked, “Isn’t that like President Trump’s protectionism?” Le Maire answered, “It has nothing to do with protectionism, it has to do with equity, with fairness.” Guess who else has described foreign taxation and tariffs as a tool for fairness? Trump, of course. When questioned further, Le Maire replied, “I don’t want to criticize U.S. tax reform, I want to introduce very important tax reform in France.”
Firing ‘Inspector Raj’ in India
The notion of fair and equitable trade is a sovereign nation’s prerogative. And reducing taxes to create jobs is what France is fighting for, as is India.
India is a very different country than France, although it appears close based on the relative scale of their national economies. Yet, India is emulating Trump in the same, if not identical, ways of France.
Indian Prime Minister Narendra Modi has recently passed both tax and regulatory reform, described as the biggest reforms in the past 70 years—the most ambitious since independence from British colonial rule, in fact.
The Indian Parliament approved the Goods and Services Tax (GST), a flat-tax reform to eliminate tedious compliance and simplify tax burdens. Modi declared the GST would create a tax system that will be transparent, simple and keep tabs on corruption. “GST will end tax terrorism and Inspector Raj, two big hurdles to the country’s growth,” Modi said. Less regulation would mean less “babudom.” Inspector Raj and “babudom” are pejorative terms for regulators who incessantly hassle Indian businesses.
Indian leaders know tax and regulatory reform had to happen. So many citizens and business viewed their government with distrust and hostility, and an increasing number of Indians openly despised their political leaders.
The French finance minister describes tax reform as not only changing tax policies but the tax culture. Both India and France look at reform efforts as culturally and historically significant. Both countries have many citizens who dislike their governments because of their history of confiscatory tax and regulatory burdens.
That’s what is happening in French and Indian experiences, not a left- or right-wing perspective or economic theory. This is empirical experience of what regulations and taxation does to countries, and they don’t want it anymore. Just like Trump and his supporters don’t want it anymore.