The evolution of a European planned economy is progressing full tilt. With the independence of the ECB dismantled, and without any counterbalance remaining against the excesses of big government, the EU is intent on regulating everything you can think of. “No market, not product, and no sector are to be exempt from public control in the future. This is precisely what I do, and what Europe does,” said EU Commissioner Michel Barnier in an interview with the FRANKFURTER ALLGEMEINE SONNTAGSZEITUNG, published on 10 March.
In the previous issue of IMMOBILIEN NEWS, I predicted the following vis-à-vis the cap contemplated for the bonus payments to bankers: “Once you start regulating the pay checks of senior executives, you set a precedent that will not remain limited to banks, but spread to other sectors and segments of the economy.” This is exactly what Barnier is calling for: “The salaries and bonuses of some top managers are incompatible with a fair distribution of income… We must put a stop to excessive salaries in the entire economy, not just in banking,” demanded Barnier, who announced an initiative for a cap on executive salaries. Before the end of the year, the EU intends to submit a bundle of measures for limiting executive salaries.
Statism and egalitarianism are on the rise in Europe. And the elites are thinking about clearing out. The latest “Wealth Report 2013” by Knight Frank reported that an increasing number of HNWIs (high net worth individuals) consider moving abroad. Listed below you will find the percentages of the super-rich who are thinking about leaving their respective region:
- Latin America 73%
- Russia 67%
- Middle East, Africa 61%
- Europe 60%
- Asia 43%
- North America 33%
- Australia 26%
This ranking is not incidental: In Latin America, socialist regimes are making life difficult for HNWIs, threatening them with expropriation and going ahead with the plans, too. Russia is not a free country, and if you get on the business end of Putin and his state apparatus, you run a risk of ending up in prison. In Europe, the witch hunt – or shall we say “rich hunt”? – is taking on increasingly absurd forms. A major French daily ran the front-page headline “Beat it, Scrooge” after an entrepreneur announced he would leave the country because of a planned income tax of 75 percent on incomes of one million euros or more.
Meanwhile, the tone of the envy-fuelled debate is getting shriller, too. There is no minority in this country that can be lambasted with as much as impunity as the “bankers,” the “managers” and the “rich.” These social groups are labelled exclusively with negative attributes, such as “greedy,” “rapacious” and “asocial.” According to a recent poll conducted by the Dimap demoscopic institute, 89 percent of all Germans believe that salary caps are necessary in this country.
Strangely, no one has called yet for a cap on the salaries of footballers and race car drivers. The probable reason is that, in this case, it would be more obvious what would happen to countries that enforce such caps: the exit from the premier league. The same is true though for national economies that make life so hard for elites that they leave the country eventually.
The following words are attributed to Abraham Lincoln, 16th President of the United States (1861-1865):
by weakening the strong.
You cannot help the poor
by destroying the rich.
You cannot keep out of trouble
by spending more than you earn.
You cannot build character
and courage by taking away
man’s initiative and independence.
Sweden learned these lessons the hard way in the 1970s. When the top tax rate was raised to 90% at the time, the founder of IKEA, among others, emigrated first to Denmark and later to Switzerland. I am acquainted with quite a number of very affluent individuals, and there is not one among them who has not at least pondered the option of emigrating or of setting up a secondary place of business or residence abroad – be it Florida, Zürich, or Cape Town.