It’s no pleasure to see the once-great (and make no mistake, Gérard Depardieu is, or was, the most charismatic French actor since Jean Gabin) turn themselves into a laughing stock. But the sheer grotesqueness of the mountainous actor’s tax-evading cavalcade through Belgium and Russia should not be allowed to obfuscate the important lessons it contains about the nature of the 1 per cent and how they get and keep their status.
A street kid who grew up on the wrong side of the tracks, and intermittently the law, in the unprepossessing French town of Chateauroux, Depardieu – as he recounts it – was saved from a life of petty crime or worse by the discovery that he could act. He started out on the stage, but stardom, and wealth, were a consequence of his breakthrough in the cinema in a string of arthouse and commercial successes from the 1970s on.
Now, Depardieu was rightly rewarded for his remarkable acting gifts, and if he has successfully parlayed his cinematic earnings into a business empire comprising vineyards, restaurants and property worth €120m according to one count, chapeau to him.
But raw talent was only one element in his financial success. The other was the existence of a thriving film industry and vibrant film culture that recognised and valued his talent. And one reason why the French film industry is in good enough health to do that – only Holly- and Bollywood turn out more films a year than France, and only the US exports more – is that it has benefited from enlightened and consistent long-term state support, primarily in the shape of levies on ticket and DVD sales and internet access that are ploughed back into film production.
So when le grand Gérard exports himself to Belgium or Russia to avoid paying taxes in France, it is not just an issue of an individual’s right to do what he likes with his own money. It is an indirect attack on the industry that nurtured him.
In that, as in other things, Depardieu is a true member of the 1%. He systematically underestimates the role played in his success by the industry ‘commons’, ie collaborative effort, and the support contributed by the state. Put another way, the risks and rewards applying to the different economic actors are out of sync, in both time and space. Increasingly, risk-bearers and reward-takers are different people, the benefits disproportionately accruing to a few prominent individuals who have positioned themselves directly under the tap to gobble the jackpot when it pays out. It’s perhaps not an accident that the Depardieu affair (‘Obélix chez les Belges’, as a newspaper headline dubbed it in a nod to the Asterix films in which he plays the plucky Gaul’s enormous egg-shaped sidekick) coincides with a furious row in France over the ‘bloated’ fees demanded by the most bankable French stars, alledgedly undermining the prospects of even the most popular films.
In their paper The Risk-Reward Nexus, academics William Lazonick and Mariana Mazzucato show how writ large a similar process of value-extraction (pillaging, in less decorous terms) operates to stunt innovation, hold back growth and promote inequality over whole economies, particularly the US and UK. Their examples are CEOs and top managers of venture-capital and hi-tech electronics and biotechnology firms operating on a scale that makes even Depardieu’s financial appetites look puny. But the mechanism is the same.
The role of venture capitalists and entrepreneurs in creating new economic value is as exaggerated as any Hollywood epic, they claim, while the state’s part is written out. Thus, it may surprise many to learn that the algorithms used in Google’s search engine, some of the technologies in the Apple iPhone, nanotechnology and indeed the internet itself, all emerged from publicly-funded rather than private research. The US National Institutes of Health currently spend $30bn a year, double the real levels of the 1990s, to develop the biotech and biopharmaceutical knowledge base, without which ‘the US, and probably the world would not have a biopharmaceutical industry,’ according to the authors.
Having the public fund innovation in this manner absolves firms from the hard work of doing R&D or building human capital and frees them to do other things with their profits – like paying them out to shareholders, which they do with abandon. To take just one example, Lazonick and Mazzucato calculate that in the decade to 2010, the $170bn that Microsoft spent on dividends and share buyback (directly benefiting its own executives as shareholders) amounted to a stunning 138 per cent of net income. Public funding also helps explain the phenomenon of PLIPOS, or ‘product-less IPOs’ – the launch on the stockmarket of speculative start-ups which might strike it rich but generally don’t, but in the meantime provide players for hedge funds and others to bet and make money on even in the absence of products. Given the amounts of money raised in this way, returns in terms of innovation have been small, note the authors, ‘while financial interests, including highly remunerated... executives have done very well’ from a truly alchemical business model.
The final insult is that, like Depardieu, companies such as Google, Amazon and others make a virtue out of paying as little tax as possible (it’s called maximising shareholder value) and often lobby to reduce the government spending that has underpinned a part of their success. As Depardieu’s odyssey all too graphically illustrates, at these levels of wealth both individuals and their companies have become ‘loose’, unmoored, unconstrained by ties to place or norms such as fairness and solidarity, loyal only to others of their class and their own pocket books.
Tell you what – when he’s finished his next screen project playing Dominique Strauss-Kahn, another rotund French 64-year-old who’s fallen foul of the authorities, shouldn’t he make a film about it?