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Why America should import France’s plan to become ‘the nation of startups’

Rob Pegoraro
Contributing Editor
French President Emmanuel Macron delivers a speech during the Viva Technology conference dedicated to start-ups development, innovation and digital technology in Paris, France, June 15, 2017. REUTERS/Martin Bureau/Pool

PARIS—There was a funny thing about the pep talk France’s new president gave to his economically stagnant nation at a tech conference here: how much of his advocacy for such entrepreneur-friendly policies as lower tax rates, looser labor laws and lighter regulations could have come from a Republican.

You might not expect that from a politician who has sparred so publicly with President Donald Trump on issues like climate change. But Emmanuel Macron’s speech Thursday afternoon at the Viva Technology conference on his ambitions to make France “a startup nation” hit those notes anyway—while also advancing policies to open the country’s doors to immigrants who want to start businesses in France.

And the results included some passages the United States could learn from.

Streamline taxes and regulations

After a tour of the show floor that saw Macron mobbed by selfie-seeking attendees, the president took the center stage to declare, “France is on the way to becoming the nation of startups, and it must be successful.”

That, he emphasized, will require major changes. Macron pledged to reform labor laws that limit the official workweek to 35 hours and impede firing people after two years in a job, lower the corporate tax rate and simplify regulations.

“The first action of government should no longer be to control and sanction,” said Macron, who worked in government as Socialist president François Hollande’s economics minister before May’s sweeping win over National Front candidate Marine Le Pen. Hollande had similar reformist ambitions, but he did not have the massive legislative majority that Macron’s new République en Marche party secured in Sunday’s parliamentary elections.

Today, those obstacles and others—for instance, weak venture-capital funding—discourage many startups and push others to exile themselves. As Macron put it, too many startups have told him, “It’s great, we’ve launched things, and now to develop our innovation we have to leave the country.”

And France’s economic problems run deeper than a stunted startup ecosystem: GDP increased only .4% GDP in the first quarter, while unemployment remained stuck at 9.6%.

Macron’s pledge to “generate a more attractive context for the entrepreneur” did include the kind of state involvement the GOP would not endorse: a €10 billion “fund for innovation.”

Welcome immigrants

Macron delivered most of his speech in French (in which “the startup” is spelled “le startup”), but he switched to English at the end to make a point Trump wouldn’t appreciate: ”At a time when some people think that walls are the solution, we do think that openness is the right path.”

France is backing those words with a new tech-specific visa that’s good for four years, with simplified “administrative possibilities,” resident permits for immediate family members and work permits provided for spouses. Foreign entrepreneurs could begin applying for it Thursday.

The United States not only has no comparable offering but sends foreign students packing after they graduate from American schools. Our overall message to the rest of the world increasingly sounds like “go away.” That’s accentuated every time arriving international visitors see their computers and phones searched at the border or Trump tweets about the courts stalling his travel ban.

As a candidate, Trump also called for an end to the H-1B worker-visa program, although his administration is now moving to focus that job-linked program on higher-skilled immigrants.

Don’t punish failure or scorn success

The most French part of Macron’s speech may have been his repeated defense of what he called “a right to error.” France has traditionally not looked too kindly on companies failing, while in the States that’s practically a bucket-list item for entrepreneurs.

“I want people to be able to try and sometimes fail,” Macron said.  

But he also scolded his countrymen for resenting the entrepreneurs who succeed.

“We like entrepreneurs, on the condition that they don’t succeed too much,” he said. “When an entrepreneur starts to succeed too well, one is jealous, one says there is something suspicious, it is stigmatized and generally it is taxed.”

Changing a country’s mindset—as Macron phrased it in English, making France “a nation that thinks and moves like a startup”—is a lot harder than redoing its tax system or rewriting its regulations. Even if he can install that psychological-firmware upgrade, the European Union’s own moves to expand online intellectual-property rights in ways that seem designed mainly to hinder American tech giants like Google (GOOG, GOOGL) may sandbag his efforts.

Green tech over old tech

Macro took another jab at Trump’s agenda in declaring global warming one of France’s “two major transitions” after its need to embrace a startup economy. That, he emphasized, can’t come at the cost of protecting “jobs of the past”—France will not cling to coal.

Trump, obviously, has different thoughts on the subject, most recently voiced when he announced that the U.S. will leave the Paris climate-change agreement (although we can’t actually complete that until November of 2020) by saying he was “elected to represent the citizens of Pittsburgh, not Paris.”  

That leaves climate-change activism in the U.S. to cities and states that have pledged to follow the Paris commitments themselves, as well as businesses pursuing their own green-tech goals… which Macron invited in his speech to come to France to work on them.  

(Disclosures: I moderated three panels at Viva Tech and had my travel expenses covered.)

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Email Rob at rob@robpegoraro.com; follow him on Twitter at @robpegoraro.