PARIS — My family was once invited to lunch at a chateau owned by a friend of a friend. As we drove up to the enormous castle in our rental car, my kids gasped and said, “They must be rich!”
“Whatever you do, don't talk about money,” I warned them.
An hour later, I found my 6-year-old son pacing in circles on the lawn and talking to himself. Looking closer, I could hear him repeatedly muttering, “Money, money, money, money.”
France's delicate relationship with its wealthy class is under global scrutiny as Paris races to become Europe's post-Brexit financial capital. London alone is home to more than 700,000 finance and related jobs, mostly in foreign exchange trading, European hedge funds and private equity firms. While some of these companies may have their eye on Paris, a recurring negative on the pros and cons list is France's inconsistent attitude towards business and the wealthy. The country's reputation was tarnished by a short-lived 75% tax on incomes over 1 million euros.
Can the French overcome their ambivalence about money and attract London bankers? Should they?
This ambivalence goes back centuries: during the French Revolution, aristocrats were executed by guillotine, and new taxes were imposed based on the appearance of wealth, measured by the number of doors and windows a house had. The wealthy learned to be cautious.
Of course, Paris still has a lot of rich people. One attraction for financial companies is that it is full of high-end restaurants and luxury apartments, and it already has a big business district, La Défense, on the west side of the city. Every summer, an entire district of the capital empties out as its residents retreat to their villas.
But flaunting it is still a no-no: Parisians rarely walk around wearing the enormous diamonds that are de rigueur in certain parts of New York. “Wealth is revealed at private dinners,” explained a French friend.
In France, it's okay to talk about money as long as you complain about not having enough and brag about getting a good deal. No one here understands the American excitement I get from overspending, just like they don't understand why we have a national holiday (Thanksgiving) that practically forces us to overeat.
And when money trumps everything, they fight back. Last summer, locals erupted when the Saudi king and his entourage were allowed to close off the Riviera's public beaches. “What we want to say is that money can't buy everything,” explained a politician leading the protests.
The typical “French dream” (at least the one people recognize) is not about vast wealth, but about a steady income and a great sense of security, including a pension. If you apply for a mortgage here, the bank doesn't care what stocks you own, because they can go down. The bank wants a monthly salary and a permanent employment contract.
The French don't believe everyone should have the same bank balance, but they do resent extreme inequality: The chairman and CEO of Renault (who also serves as chairman and CEO of Nissan) earned 764 times France's minimum wage last year, Le Monde said, adding that “in a half-functioning economy and with mass unemployment, this is an unacceptable fact.”
I see this principle in my daily life: When I told a Parisian official that a group of parents was willing to buy new security cameras for our children's school (the city was reluctant to comply with our request), he was surprised and asked: “What about the other schools where parents can't afford the new cameras?”
All this is playing out amid post-Brexit debate. Meanwhile, France is eager to woo London's financial industry. On Wednesday, Prime Minister Manuel Valls announced new tax incentives for individuals and companies wanting to relocate to London, including French expatriates returning home. The government will open centers in September to help with obtaining visas, apartments, office space and bilingual school places. “We want to make Paris the best financial market in Europe,” Valls said.
Valls urged the UK executive to remind its British counterpart that the notorious 75% tax was gone, saying: “I would be grateful if any of you have a patriotism to explain to the British media that that tax no longer exists.”
But the welcome is not unconditional. Jean-Louis Missica, Paris' deputy mayor for urban planning and economic development, said in an interview this week that Brexit also offers a lesson in what happens when the super-rich control a city, effectively shutting out everyone else. I recently visited friends in London who are middle-class and at the top of their careers, crammed with their kids in rented studios. There are people in the north of England, many of them people who voted for Brexit, who can barely afford a coffee in the capital. Paris isn't cheap, but it's more affordable.
Mishka said France still faced a “complex, difficult but urgent challenge” on how much it was prepared to cut taxes to attract financial companies. “I'm in favor of finance, but I'm in favor of ethical finance that respects fiscal rules and the environment,” Paris Mayor Anne Hidalgo said on Wednesday.
“I think the red carpet needs to be rolled out,” said Misika, who has worked in private equity. “But if rolling out the red carpet means making France's tax system and finances consistent with what's practiced in London or Jersey, I don't think that's serious. It's not possible. And I hope that Germany, the Netherlands and other cities competing with Paris don't make such a big mistake.” He predicted that different sectors of the financial industry would flock to different cities.
Meanwhile, Paris is stepping up efforts to attract technology companies, start-ups and jobs in the so-called creative economy. These jobs are more connected to the rest of Paris, Misika says, and will help the city thrive in the long run. There will no doubt be finance jobs in Paris, but it's unlikely that Paris will become the next London. It doesn't really want to be that way. And maybe it's right.
