“To live in a totally Darwinian world is not good and certainly it is not good for our populations,” said French President Emmanuel Macron in an appeal for global cooperation at the World Economic Forum (WEF) in Davos, Switzerland. Macron said that a “race to the bottom,” driven by cutthroat capitalism and tax competition, would lead to the erosion of the common good.
Speaking a day before President Donald J.Trump arrives in Davos, Macron warned that tax cuts and aggressive tax avoidance strategies used by dominant U.S. technology companies threatened the basis of the social contract and risked erasing the benefits of globalization. (His reference to “Darwinian” is to the concept of “survival of the fittest” outlined by Charles Darwin in his On the Origin of Species.)
“A race to the bottom will hurt the common good,” Macron told the WEF. He addressed both corporate tax avoidance and nations that use tax as a competitive strategy. Macron’s speech came weeks after the United States made major cuts in corporate tax rates and cut taxes on repatriating foreign profits – prompting Apple alone to bring back tens of billions of dollars held offshore in the expectation of a tax cut.
He also called on major internet companies – effectively Google, Amazon, Facebook, and Microsoft – to pay their fair share of taxes in the countries in which they operate, just as local tech firms must do. He criticized elaborate corporate strategies to minimize taxes by making payments in the lowest cost jurisdiction possible.
“It is an unfair model and that is obvious, so we’ve got to put an end to an unjust system,” Macron said in a speech delivered in a combination of French and English.
In proposals unlikely to conform with the “America First” approach advocated by the current U.S. administration, Macron called for global action on avoiding tax competition and closing tax loopholes. He also called for the International Monetary Fund to be given a mandate to manage emerging and unregulated financial instruments such as cryptocurrencies.
“It (the IMF) doesn’t look at the least regulated parts of the sector: bitcoin, cryptocurrencies, shadow banking, the most aggressive operators on the financial markets,” said Macron. “We have to have a discussion about this.”
Other key points in the Macron speech:
- Climate change. Referring to the withdrawal of the United States from the Paris Agreement on climate change, Macron said: “We haven’t been able to live up to our commitments. We are losing the battle. If we are not able to deliver concrete result, how are we going to explain that we are more vulnerable?”
- European Union integration. If necessary, a core group could move faster on integration than all 27 could together: “We need a stronger Europe. It’s absolutely key. We have to design a 10-year strategy to make Europe an actual economic, social, green, scientific, and political power.”
- Migration. Mass migration risks creating “societies made of nomads who take advantage of globalization, whose lives and interests are more similar to the people in Bombay and San Francisco [than] to the people who live just across the hall.”