Welcome to the Contrepoint YouTube channel, the liberal reference journal in France. We have the pleasure of welcoming Pierre Gattaz. Pierre Gattaz, good morning.
You are the chairman of the executive board of Radiall, a company specialized in electronic components. You were chairman of MEDEF and Business Europe. An entrepreneur, you have been committed for over 30 years to the defense and development of business in France and Europe. So, first question: you wrote 'Gagner plus C éditions Fire'. Why did you write this book?
Because when I was at MEDEF, I faced French socialists under Hollande who curiously, or rather pleasantly, embraced a supply-side and competitiveness policy and somehow became social democrats, like Schröder in Germany or the Swedes or Scandinavians – that is, accepting and defending the market economy and business. And I thought, good, after MEDEF, that's it; political alternations between right and left, left and right, could happen without pain for us. We would not be taken hostage, there would be no risk. And I left quite relieved, frankly, of that scenario. And then the dissolution arrived, and for me it was catastrophic, with far-left rhetoric coming back against business, against success, against entrepreneurs. Horrible little phrases, we must punish the bosses, awful things. And I thought we really have to do something to fight, to defend ourselves. Especially since the presidential campaign is coming. We are still a year away from the 2026 presidential campaign. I thought, this is an appetizer, it's going to be horrible. So we need to defend ourselves. How? By writing this book with three fellow bosses: Maxime Ayach, Xavier Fontanais, and Michel de Rosen. We wrote this book and created a think tank, a reflection circle, to follow up on this book and propose reforms, about thirty basic economic reforms that almost every country in the world has done in some way, or at least all those that succeeded by putting the market economy, liberal economics, business, and work at the top, which the Chinese communists did with Deng Xiaoping in 1978, communist as they are. And I said we absolutely must write this book and get these reforms accepted. So to get them accepted, it was not a list of 30 economic reforms; it was to link them to the purchasing power of the French. So each reform is associated with an increase in the net salary of the French.
So you propose 30 measures to increase the purchasing power of the French. Can we go back to the initial observation? Do you think the record of economic policies in recent decades argues in favor of state intervention? Can you maybe give an example, the 35-hour week for instance?
Look, you have to look at the numbers. All numbers are bad in France. For example, for 20 years we have had an average GDP growth of 1%. The Swiss are at 2% on average. The Americans are even higher than that. The Singaporeans are between 3 and 4. So we have weak growth. That is not good. Like a company, a country cannot live sustainably with very low growth. Secondly, we still have a very high unemployment rate in France. It came down to 7.2% at the end of my time at MEDEF. I was quite happy about that. We created 1 million jobs, even 2 million in that period. And then suddenly it went back up to 8% while others are still around full employment. Thirdly, we have a colossal debt: 3,300 billion in debt, that is 115% of GDP. All of this is dramatic. It is as if we were a company in crisis for 20 years. I think we need to stop this and it is fundamental to put the church back in the middle of the village, that is, the company. And I have the impression for 40 years that it started with François Mitterrand, who began to move retirement from 50 to 60, increase the minimum wage by 15%, increase civil servants, and it feels like money fell from the sky and we distributed social benefits without realizing the revenue to fund that social. So we did social without economy, and that is terrible. So we have reached the end of the stretched elastic of taxes, public spending, and debt. We must stop, we must now return to good peasant common sense, which is what we are trying to do with all these poor numbers. I'll cite another: GDP per capita. For a few weeks, I think we have fallen below the European average. We were among the top five 40 years ago and now we are between 25th and 30th. So all indicators are bad and France is becoming poorer. It is time to put an end to all this.
And if we come back to your experience, this is a point I found interesting in your book: you experienced three major economic crises – the fall of the Berlin Wall, the explosion of the internet bubble in 2001, and the Covid crisis. What distinguishes an entrepreneur from the French state in this kind of situation?
But we even experienced four crises in 35 years at Radiall. I arrived in 1992 at Radiall and so I experienced the fall of the Berlin Wall in 92. Then I experienced Lehman Brothers, the telecoms crisis in 2001, Lehman Brothers in 2008, and Covid in 2020. Four crises. Each time what we do is manage crises and prepare the crew to handle crises. That means giving them enthusiasm, energy, and vision that allows the crew to be confident. A leader secures the teams during a crisis, takes measures, makes decisions. I realized that one year of crisis is manageable. Two years of crisis is difficult; everyone starts to get nervous. Three years of crisis is terrible; they want to fire you, shareholders want to fire you, employees lose confidence, hard extreme unions start to gain power. So it's not possible. A crisis must be managed in one year, maximum two. And what is true for a company is true for a country. France has been in crisis for 20 years, everyone is hyper-nervous, wages are not high enough, we increased charges, we increase spending and we don't make savings. In a crisis, what do we do in a company? We lower the break-even point. We make savings. So we let people go, we manage overhead, we watch every expense, we optimize, we reorganize, and then we try to remotivate everyone for revenue because a crisis is a drop in revenue that drags cash flow down. So we absolutely must also go on the offensive to seek growth. So I say France has been in permanent crisis for 20 years. That is unbearable. So we must do two things. We must make savings on public spending. That is the goal of our book. There are plenty of savings in the civil service, in the territories, as you saw. We must have the courage to do it, share these savings with the French because we need to explain to them, and then motivate all entrepreneurs, all those who can create wealth and growth. So when you insult us, as since the dissolution, there are parties that take malicious pleasure in insulting success, bosses, etc., but people want to leave. You want to sell your company and leave. And they say no, they won't leave. But that's false. My 20 competitors at Radiall in the 35 years I've been running this company, they all disappeared. They all disappeared. They were bought out, and most went to live elsewhere than France. That's not a lie; I am the last of the Mohicans of French electronics, almost. There are three of us actually, but we were 25 35 years ago. So when you give signals that you are not loved, that you will be taxed, that they impose the wealth tax on you, and you can pay, well, you don't follow. That's why you have to love your employees. I know that in a company, a good manager loves his teams and it's not paternalistic. You take them far, you embark them, you love them, you are demanding but benevolent. We are also treated like criminals, like bosses, all the time on social media. And that's why I fight to say: political parties, be a little reasonable, be responsible. What you are doing, what you are saying, is irresponsible.
But what would you say to someone who tells you that a company is not necessarily managed like a state? You can't just copy the model. What do you think?
France is not entirely a company. But yes, France is clearly not a company. There are the sick, the poor, a heritage, 1,500 years of history, we are a country. But there are countries that disappear, empires that disappear. All history has shown countries that have disappeared, integrated into empires, empires that have disappeared, like the Roman one. It moves. On the other hand, what is needed is not that a country is a company, but that it should be managed like a company. Nobody can demonstrate the opposite to me. They say but there are the sick, the poor. Well yes, but in companies, you manage, you must have revenue to manage your disabled, your poor, your sick. Yes, there are sovereign functions. True, there are four sovereign functions. Well, these must be financed. In a company, like a large company, you also have security problems. When you call Total, you have security problems, you have sovereign functions to pay. You also have people in difficulty. So of course there are four sovereign functions: the army, police, justice, foreign affairs. These cannot be privatized. However, they must be funded. The less finance you have, the less strong you can be in these areas. And that's why, if you want, you have to manage a country like a company, that is, with revenue and expenses, limited debt, and seek growth, and especially manage its wage bill extremely well, its break-even point as we say, and thus its civil service and its sovereign functions. And it's there that revenue minus expenses must be profitable, and when it's not profitable, it's debt and you have to repay the debt. That's where you have to manage France like a company. I insist, and I am really ready to debate with people who disagree on this. But you see, we have managed the social, the nanny state.
The less finance you have, the less you manage in any case, or the more you scatter maybe because that's what the French state does. But you know, we managed the social, the nanny state.
Yes, the welfare state, which is very characteristic of our state. But absolutely, the welfare state, but we did social without paying attention to the economy. I said it earlier, we now need to make savings again. Who makes savings? Companies, companies that create wealth, jobs, human dignity through work, integration of foreigners through work, fading away. A company is magical. It is the most beautiful human community after the family, I often say. And we must protect it. The countries that succeeded, like Switzerland, Singapore, the communist Chinese, they put the company at the center of the game. Deng Xiaoping, the Chinese president in 1978, who made this revolution in reverse, was surrounded by engineers. In his team of 20 ministers, there were 18 engineers. There are still many countries that build the future and manage. We, we did politics, we did social out of the ordinary, out of this world, formidable. And this social model is no longer a social model; it is a bankrupt social model. So we have to say things. So now we have to fix it. We are at the end of the end, we have to go back to the basics, and the basics are the book with a reform center that I propose with my peers.
And then, why doesn't it make sense to you to distinguish between economy and social as those who generally adhere to a socio-communist ideology do?
Because their model has failed everywhere. The socio-communist model has failed everywhere. I don't know a country that worked. So stop giving us that talk. Social liberalism, social democracy is different. The Scandinavian countries are social democrats. They abolished lifelong civil servant status, they abolished the wealth tax, they understood that the company was fundamental. Nothing else, market economies, they couldn't do otherwise. Innovation, foreign trade was a company. Schröder and his party are social democrats. They made incredible reforms in 2003-2004 that allowed this revolution, this German miracle for 20 years. So I make a distinction between center-left social democrats who somehow understood that the company was the magical engine of all successful countries. They are a bit more open to the market economy in any case. But absolutely. I rubbed shoulders with them if you like: Bernard Cazeneuve, Manuel Valls, Emmanuel Macron, including Arnaud Montebourg who recognize the role of the private sector, and Arnaud Montebourg became an entrepreneur so even more, I saw him defend the Dutreil pact in the Senate incredibly for the transmission of family businesses. So if it's good peasant common sense. What I expect is not ideology. So social democrats are people who come from the left but are not in total ideology. Where I fight, and I fight very strongly, is against the social-unionists, the socio-communists, with the recent example of the socialist program that came out a fortnight ago which is a monster of irresponsibility. They only think about taxing. They tax everything that moves. They continue to tax. There is not a single blade of grass of economy. There is not a single vision for 2040 for the country. There is nothing on reindustrialization, nothing on full employment, nothing on the competitiveness of companies and the economy. It's insane. Completely insane. With a program like that, you fold France, you give the exit or you become Cuba or Venezuela. We have to say things. So I say it because I no longer want to be intimidated by anyone. I say it as I see it. I have visited 50 countries in my life as an exporting boss. I have seen the 10, 15, 20 wonderful countries that succeed and I have seen the 5, 10 countries that do not succeed, that are in great misery. And I just spoke about the former Soviet bloc. So I don't even understand that we can still have as a reference somewhere the values of the former Soviet bloc. It baffles me. I say how can they, what are they thinking? I'm a bit caricatural because they maybe don't go that far but yes because the economy they propose is a totally administered economy, almost communist when they want to limit salaries from 1 to 20, when they want to nationalize a number of things, we know what renationalization did under Mitterrand. It was an absolute catastrophe. When they want to add a hardened wealth tax so that assets are not passed on, whereas we know that the strength of Germany, Italy, these successful countries are essentially models of family businesses. The German Mittelstand is families. We, because of the wealth tax, drove these families away. So what do we prefer? American pension funds that come to manage French companies. It's completely crazy. So I say it is a monument of irresponsibility what I saw. So I am a primary anti-socio-communist.
Yes. Yes but we must say it. We must stop being intimidated. We must stop. We must say it. It is taking us to the wall and we have been going there for 45 years. So yes, we must say it with arguments, with passion, but explain that all the facts of the whole world today, the countries that succeed succeed through business, therefore through liberalism, including the social democrats that I include, but not through socio-communism. That does not work.
And I've already heard you talk about liberal Trotskyism or entrepreneurial Trotskyism. What do you mean by that?
But Trotskyism worked wonderfully well in France. I think it was Gorbachev who said that France is the last communist country that succeeded. Well, that was 20 or 30 years ago. I think it no longer succeeds. I think it is perhaps the influence of Sartre, of leftist intellectualism, that makes another slogan: it is better to be wrong with Sartre than right with Aron. All of this to say that we have been impregnated with this leftism, excuse me, non-liberal, which has led us to a situation where the state is huge, obese. There are 5.7 million civil servants, whom I do not criticize. My wife is a civil servant, I have many civil servants in my family who work like crazy. But it is the administration of the administration. There are more people in France who live from administration than from the private sector. That is completely unreasonable. So we have to use the methods of Trotskyism: speak to the media, discuss, debate, be on the airwaves, be on social networks, because that worked. And when there was that famous Zucman saga about taxing 2% of assets over 100 million, you say to the French, yes for 100 million, he can well pay 2%. But no, the 100 million are very often professional assets. They are tables, chairs, patents, test equipment, manufacturing equipment. It's not cash. So we would have to explain to the French that a company with 100 million euros in turnover, like a watchmaker in Savoie, valued at 100 million, the guy would be forced to take out 2% of his cash every year. If he makes 3% net, well he would have absorbed all his results in one year to pay the Zucman tax. So what remains for him? Nothing. Nothing to invest, nothing for himself. That is the madness. And when there was this Zucman saga that will come back, you had 15 people from the PS and LFI, Cocquerel, Zucman, Piketty on the airwaves. I disagree, there was nobody on the other side. So I say to bosses: we need to get up, we are going to create an army with our employees moreover because our employees agree with us. My employees ask me every time I see them: you're not going to sell your company, right? No, no, because they want to protect their jobs, they want to protect the tool of work, they want to protect that. And we don't hear them. We hear the Trotskyists. So I am sorry, we will have to do liberal Trotskyism: Trotskyism in form, liberal in substance, of course not the opposite.
And perhaps if we heard more from entrepreneurs, business leaders in the media, it would recreate a myth around the entrepreneur, a positive myth, a bit like in the United States where we can talk about the joys of wealth, capital, margins, the rich because we want – what's wrong with that? And elevate entrepreneurs as heroes of the nation. Bernard Arnault, for example, who created thousands of jobs, pays a lot of taxes, but is still vilified.
